Notre Europe Conference

1
Notre Europe Conference

• Job creation and the
• European social model
• John Morley
• University of Nottingham Business School
• 9 March 2006, Brussels, Belgium

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Job creation and the European social model
The struggle against false ideologies and
mythologies There is something rotten in the
welfare state of Europe Martin Wolf Financial
Times March 1 2006
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3
Gross and net social expenditure
Gross public social expenditure
Net total social expenditure (incl. mandatory
private expenditure)


US
1995 data OECD calculations made in 1999 - all
figures expressed as percentage of GDP
815
4
Social spending
as of private household expenditure
840
5
Social Policy Agenda European Council Nice 2000
- creating a competitive and cohesive Europe -
Social
social quality - social cohesion
Economic Employment competitivenes
s - dynamism full employment -
quality of work
869
6
Job creation and the European social model

• Confusion regarding competitiveness
• Productivity per hour, worker, or head of pop
• Business friendly environment - subjective
• Trade performance that nobody mentions

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7
EU-US Real incomes and productivity
Average income GDP per person
Hourly per head - 000
employed productivity
Source Eurostat and US 2003
8
Increases in US-EU real living standards
US
GDP per head per year (Thousand euros) Purchasing
Power Standards
EU15
Growth in GDP per head in real terms aligned to
GDP per head in PPS in 2002 and expressed
relative to EU average
1960-2003
9
Average hours worked per week
Source EUROSTAT Note data
includes any second jobs worked as well as first
jobs
10
Job creation and the European social model

• Measuring employment performance
• Relative performances of Member States
• Part-time and full-time equivalents
• The new Member States and the US

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Employment rates 2003 - EU15
Unadjusted
Full time equivalents
population 15-64
Lisbon target 2010
Number employed 15-64 as a percentage of
working-age population, 15-64
Source Eurostat
3
12
Employment rates 2003 - EU15
Unadjusted
Full time equivalents
population 15-64
Lisbon target 2010
Number employed 15-64 as a percentage of
working-age population, 15-64
Source Eurostat
3
13
Employment rates 2004 MW ranked by FTE
population 15-64

Simple rate
FTE rate
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
DK
CY
PT
SW
FI
CZ
SI
AT
UK
EE
IE
LV
LT
FR
EL
ES
DE
SK
LU
HU
NL
BE
IT
MT
PL
EU15
EU25
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Gender and employment rates EU men and women 2004
population 15-64
Simple
FTE
80
70
60
50
40
30
20
10
0
EU15
EU25
EU15
EU25
EU15
EU25
Total
Men
Women
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15
Employment rates by age (men) EU15-US 2003
EU US

Men employed as a percentage of population in
different age groups
34
16
Employment rates by age (women) EU15-US 2003
EU US

Women employed as a percentage of population in
different age groups
35
17
Job creation and the European social model

• The importance of economic growth
• Growth and employment horse and carriage
• Long-run concern sluggish recovery
• Inflation why is it still seen as a threat?

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EU GDP and employment growth
Annual change
8
19
Investment and unemployment - EU15


Investment share of GDP
Unemployment rate
Investment share of GDP
Unemployment rate
899
20
Employment growth in EU15 and US
Annual percentage changes 1960-2001
EU15
US
920
21
Recovery in EU employment since late 1990s
Per cent of population aged 15-64 in employment
US
EU
Source US Household Survey and EU Labour Force
Survey
36
22
Inflation and unemployment EU15
EU15
Inflation rate
Unemployment rate
1002
23
Wages shares in EU, US, Japan

Japan
EU15
USA
Percentage of GDP at factor cost
830
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Job creation and the European social model

• High levels of quality employment
• Mainly found in countries where there are
• Egalitarian education systems
• Family-friendly social policies
• Flexible labour market systems
• supported by comprehensive social systems
• as well as supportive macro-economic policies

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Employment consequences of poor education
40 years working life - men
40 - 30 - 20 - 10 - 0 -
Unemployment
Inactive
Employment
Low education Medium education
High education
OECD 1996
908
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Literacy and economic inequality
USA
IRL
UK
AUS
CAN
DE
Economic Inequality - Gini coefficient
BE
CH
NOR
NL
SWE
FIN
DK
1.20 1.30 1.40
1.50 1.60 1.70
1.80 1.90 2.00
Literacy Inequality
Source International Adult Literacy Survey,
1994-1998 OECD, Trends in Income Distribution
Poverty in OECD Area 1999
965
27
Flexibility transitions year to year
Year 1
Year 2


PERMANENT
Permanent contract Temporary contract Unemployed
or inactive
TEMPORARY
FULL-TIME
Full time Part time Unemployed or inactive
INVOLUNTARY PART-TIME
ECHP 1995/1996 EU14
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Job creation and the European social model
Is the EU doing enough to strengthen
employment and social policies? Yes in terms of
exchanging experiences, mutual learning, peer
reviews etc. regarding labour market measures,
social security and pension systems No in
terms of re-enforcing the basic links between
economic, social and employment policies often
seem to be pushing in opposite directions
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Job creation and the European social model
Within social policy the divide is
between Comprehensive social support systems
which seem expensive. but enable the economy and
labour market to restructure with
confidence Targeted social support which may
be cheaper (but even doubts about that) but which
tends to perpetuate rather than solve social
problems, and does little to raise productivity
performance
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Job creation and the European social model

• The overall European agenda
• Set the record straight about the costs of EU
  social systems, and the nature of labour market
  flexibility
• Focus on the re-skilling of the workforce to
• match the re-structuring of the economy
• Recognise the deep interdependence between
• employment, social and economic policies
• Demand an EU macro-economic policy
• that is relevant to Europes needs.

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www.sowe.be
For more information and analysis of the EU
economy and labour market free download of the
2004 State of Working Europe www.thestateofworkin
geurope.org SOWE asbl Authors John Morley,
Terry Ward, Andrew Watt Available in FRENCH as
Travail et emploi en Europe from La Decouverte
Paris
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