Transcript European Policies of Economic Adjustment and their Impacts on Job Security and Employment Website: http://www.stanford.edu/~weiler/ERT_website.htm. Marina Bourgain European University Institute.

European Policies of Economic
Adjustment and their Impacts on Job
Security and Employment
Website: http://www.stanford.edu/~weiler/ERT_website.htm.
Marina Bourgain
European University Institute
Main points
• (1) EU – From hard law to soft law.
• (2) EU- Past actions to accompany sectoral
employment evolution.
• (3) EU- The future of cohesion policies.
Main interpretations of the Welfare State
• <1>
The provision of welfare services by the state:
• A set of government programs that attempts to protect the health and the
well-being of its citizens ….
• … in particular when they are unemployed, ill, or elderly…
• … especially those in financial need.
• <2> An ideal model:
• A "safety net" is not enough nor are minimum standards.
• Aims to reduce the impact of economic inequality.
• Is universal, because it covers every person as a matter of right.
• The responsibility is comprehensive, because all aspects of welfare are
considered.
• The state assumes primary responsibility for the welfare of its citizens.
Andre Sapir – 4 EU-Welfare models (2005)
Type
Anglosaxon
Characteristics
Level of
employment
Level of poverty
UK-IRL: last resort, linked to work,
LM unregulated, weak unions.
=> Efficient BUT poverty
high
high
(lack of educ-stdd)
Rhineland
Continental
FR,DE,AU, BL,LX: protection
(employment, unemployment,
pension, sickness). Legal support for
LM or strong unions.
=> Equitable
lower
lower
Mediterranean
GR, IT, SP, PO: old age spending,
heavy regulation.
lower
higher
high
low
=> « NOT sustainable »
Nordic
SW, DK: Universal
LM unregulated. Strong unions
=> Efficient + Equitable
Labour market policies:
In Europe today, the search is for the right balance of
flexibility, stability and security to accommodate
structural change and worker's need for security
• In Organized Market Economies (EU),
as opposed to Liberal Market Economies,
the difficulty resides in the capacity
to put in place comprehensive and dynamic instruments
allowing for flexibility
without alienating the social consensus to which these
countries aspire.
Growing Anxiety over Job Insecurity
France’s opposition to CPE - EU-constitution…
• CPE Contrat Première Embauche
= First Employment Contract
• Comment
• Perdre les
• Elections
= How to loose the elections
• The “Equality of chances” French Law, Art. 8, institutes the CPE:
Contrat Première Embauche = First Employment Contract
• for youths under 26
• creates a two-year probation period
• during which they can be fired without cause.
• 9th of March 2006: bill was approved on (by 329 for – 159 against).
It is an extension of the already existing “CNE” for Small Entreprises
passed last June.
• Start of the unrests. Recourse for unconstitutionality (03/30
• 2nd of April - Psdt Jacques Chirac signed the bill into law while
announcing its inoperability pending revision (end of April). All trade
unions want its withdrawal.
• Sarkozy (Interior and UMP-Psdt) linked the Nov and March unrests
calling for constitutional reforms, including a stronger Parliament
and a more accountable President. Boost his image as the
“candidate of Rupture” for the presidential elections next year.
National-Laws “Promoting Employment” and
the ECJ
• GERMANY
• Abolished the limit on FTcontract duration
• For workers 52y+
• FRANCE
• Ordinance n° 2005-892
• When establishing the size of a
company,
• Excludes employees under 26y
• ECJ opinion Case C-144/04
Mangold vs Helm
• Suspended by the F-State Council
(introduced by AG-München)
 German law is contrary to
• Pending ECJ-decision as to its
Community Law – National
conformity with directive 2002/14
legislation must insure the full
(workers information &
effect of the non-discrimination
consultation).
principle.
• // TzBfG Art. 14 § 3
(1) Europe: from hard law to soft law
• “The European Economic Community
is a Regulatory Machine,
not a spending spree.”
(G. Majone)
DG Employment and Social Affairs
(Vladimir Spidla)
•
Activating the Social Policy Agenda
Developing Quality at Work
Promoting Employment
Improving Economic Performance
Investing in people through the ESF
•
Enhancing Skills through Training
Eliminating Discrimination
Achieving Gender Equality
Combatting Racism and Xenophobia
Empowering People with Disabilities
Integrating the Excluded
Strengthening Social Dialogue
Building an Enlarged Social Europe
Acting in Europe for Global Progress
Social “Acquis Communautaire”
• General Principles in the Treaty: Free movement of workers,
Gender Equality (Art. 119), Non-Discrimination (Art. 13
Amsterdam Treaty = to combat any discrimination based on sex,
race, ethnic origin, religion or belief, disability, age or sexual
orientation) (Art.4 TEU)
• Regulations Free movement of workers, Gender Equality
• Directives on Collective Redundancies (1975, 1992,1998), Transfer
of Undertaking (1977, 1998,2001), European Works Council
(1994), Parental Leave, Fixed-Term Contracts, European Society
(2001), Information & Consultation (2002), Non-discrimination
(2002)
• Advice: Green paper on Corporate Responsibility
Social “Acquis Communautaire” (2)
• Procedures for decision-making at unanimity :
ex-Art. 100 “Harmonization of laws distorting the Common market”
ex-Art. 235 “Necessary action for the functioning of the Common
market”
• 1986-SEA-Procedures for decision-making at majority - in health
and safety
• 1993- Maastricht: Agreements by the ESP
• 1995 Entry of Sweden and Finland: Social / Economy/Employment
under Integrated approach
• Amsterdam Treaty in 1997 – Employment Chapter
• Lisbon 2000 - Open Method of Coordination
European Employment Strategy
Probability that a Social Directive is not
transposed after its deadline
(Linos p.16 dataset of 50 social directives 1982-98)
country
Average
12 EEC
•
Germany
France
UK
Italy
Not ontime
1 year
2 year
3 year
4 year
68%
38%
18%
8%
4%
70%
43%
15%
3%
0
57%
27%
13%
9%
9%
47%
21%
4%
2%
0
91%
64%
34%
13%
0
Economic and employment indicators, EU,
Japan and the USA, 2003-4
EU25
Japan
USA
GDP growth
2.0%
3.4%
4.2%
Inflation (CPI)
1.9%
0.2%
1.4%
Employment rate (2003) 62.9%
68.4%
71.2%
Employment growth
0.2%
-0.2%
0.9%
Unemployment rate
(Eurostat definition)
9.1%
4.8%
5.5%
Employment Levels in the
European Union, USA and Japan
Total
Employment Level
(15-64 years old)
1979
2003
Women
1979
2003
Older People
(55-64 years)
1979
2003
EU-25
62.9%
62.7%
45.0%
45.3% 38,8%
64.3%
54,1%
EU-15
Japan 70.3% 68.4% 53.6%
USA
64%
60%
61.0%
55%
68.0%
71.2%
54.9%
67%
54.6%
OCDE- Employment Perspectives (1999)
Indicators of Employment
Protection strictness <0-6>
Unemployment
level
Employment
level
New-Zealand (0.4)
8%
68%
6%
76%
Sweden
(4.5)
• Little or no association between EPL strictness and overall
unemployment. However, EPL may be more strongly associated
with the demographic composition of employment and
unemployment and its duration.
• => Youths and women appear to bear a larger share of the burden
of unemployment.
• => Research suggests that stricter EPL raises employment for
prime-age men.
2000- European Employment Strategy (EES)
Defined following Target :
• Overall employment rate of 70% in 2010
• Women employment of 60% in 2010
• Older workers (55-64) of 50% in 2010
• The Open Method of
Coordination (OMC)
and the future of Social Europe
Quid: Open Method of Coordination
• The OMC is a new approach to EU-governance
• based on benchmarking national progress
• towards commonly agreed objectives
• and organized mutual learning.
• 1- Define common objectives
• 2- Develop a mutual feedback process of planning,
examination, comparison and adjustment of the
policies of member states.
Defining features of OMC
• Joint definition by EU member states of
initial objectives, indicators, priorities or
guidelines, and sometimes targets.
• Nl reports or Nl action plans (NAPs):
to assess performance against objectives and
metrics and to propose reforms accordingly.
OMC and democracy
• The Open Method of Coordination aims to
promote the participation of the widest
possible range of actors in policy
formulation, implementation and evaluation :
• NGOs, trade unions, experts ...
• from all levels : European, national, regional,
local levels
• OMC is a mechanism for “experimental
learning”
• Peer review of national plans through mutual
criticism and exchange of good practices, backed
up by recommendations in some cases.
• In light of experience gained during implementation
-> Periodic re-elaboration of plans
-> and, less frequently, re-elaboration of broader
objectives and metrics.
Fields of application OMC
•
•
•
•
• Social protection:
Social inclusion / fight over poverty
Pensions
Health, care for the elderly (not yet
formalized)
Disability (under discussion)
Fields of application OMC (2)
• Education/ Training:
- common objective for national systems
• Immigration/ asylum
- OMC as a tool for monitoring/ complementing
implementation of EU-legislation
• Other dimensions of the Lisbon-strategy:
- R&D innovation, knowledge-based and information
society….
OMC- Employment Results so far
• EU missed the intermediate employment rate
target of 67% in 2005.
• However four Member States (DK, NL, S,
UK) have already achieved the 70%
employment rate at their national level.
Results-2- Women
• Having said that, the employment rate for
women continues to improve and is on track to
meet the 2010 target of 60%.
• Seven Member States (DK, NL, A, P, FIN, S,
UK) currently meet or exceed the 2010 target of
60%.
The Employment Challenges
• In some member states the employment
rate of older workers is less than 33%,
in particular :
• Belgium, France, Italy, Luxemburg,
Austria.
Pace of Progress on Employment
EMT-Rates
in 2004 (%)
Low pace of
progress since
1997
> 70%
Close to average
High pace of
progress since
1997
DK, SE, UK, NL
65-70%
AT
CY, DE, PT, FI, SI
< 65
CZ, EE, LT
MT, PL, SK
BE, EL, HU, FR, LU,
LV
ES, IT
Explanation: Pace of progress is defined as the percentage point change in the
employment rate between 1997 and 2004:
• a) Low progress: the employment rate increased below the EU25 average minus
half of the (un-weighted) standard deviation
Has employment become more flexible in Europe?
Defining Flexibility: External versus Internal*
*Internal flexibility means the adjustment within jobs or firms, while the
employment relationship is maintained.
A- The long-term employment relationship has not
disappeared in Europe
Job-tenure as a mesure of Job stability.
Over 1992-2002, tenure averaged:
* 10 y. in Europe (11y. FR-DE , 12y. IT, 13y. GR)
• 6.6 y. in the USA * 8 y. in the UK * 12.2 y. in Japan
• B- But a growing dual labor market
• New Flexible forms of employment: FT, PT, work through a
Temporary Work Agency are becoming regular forms of
employment.
• It concerns women, youths, older workers more than primeage-men.
Job flexibility has increased “at the margin”.
Has employment become more flexible in Europe?
1950-2000
EU-15 Workforce in 3 main sectors
(agric-ind –service) as a percentage of total workforce
Agriculture
70
Ind. Manufacturière
60
Services
50
40
30
20
10
0
1950
1960
1970
1980
1990
2000
Main points
• (2) EU- Past actions to accompany sectoral
employment evolution.
• Heavy Industry
• Agriculture
(40% workforce)
• 1951 European Coal and Steel
Community (ECSC)
• 1957 Common Agricultural Policy
(CAP)
• Both have their own fundings
European Coal and Steel Community (ECSC)
Paris Treaty 1951
•
Preamble: 1. CONSIDERING that world peace can be safeguarded only by creative efforts
commensurate with the dangers that threaten it, […] 4. ANXIOUS to help, by expanding their basic
production, to raise the standard of living and further the works of peace, 5. RESOLVED [to merge of
their essential interests to create the basis for a broader and deeper community among peoples; and to
lay the foundations for institutions which will give direction to a destiny henceforward shared,]
HAVE DECIDED to create a EUROPEAN COAL AND STEEL COMMUNITY ;
• The foreseeable consequences of Modernization and
Building a common market for Coal and Steel were
companies downsized, closed, relocated
+ increased competition, mergers and acquisitions.
• The title III of the ECSC-Treaty enclosed procedures to
control Mergers (ch.6 & 7)
and for social provisions (Art.46) incl. on financial aid
(Art.56) and on wages (Art.68)
ECSC – Title III-Economic and social provisions
Art. 46 – General provisions
• The [High Authority] / Commission shall study the possibilities
for re-employing workers made redundant in existing industries
or through the creation of new activities
• it shall assess the possibilities for improving working
conditions and living standards for workers;
• The Commission may at any time consult governments, the various
parties concerned (undertakings, workers, consumers and dealers)
and their associations, and any experts. [These, in turn] shall be
entitled to present any suggestions or comments to the
Commission on questions affecting them.
ECSC – Title III-Economic and social provisions
Art. 56-2§ - Financial Aid provisions
• 1. In case of exceptional large labor reduction, the
Commission shall provide non repayable aid towards:
- monthly allowances to workers (early retirement or
temporary inactivity or until they find employment)
- financing of vocational retraining and/or resettlement of
workers;
• 200 000 co-financed houses were built.
• 900 000 miners benefited from aids for training,
relocation, and housing loans (until 1997).
ECSC – Title III-Economic and social provisions
Art. 68 - Wages
• 1. The methods used for fixing wages and welfare benefits are the competence of the
companies and the Member States …subject to the following provisions:
• ….
• 2. if undertakings are charging abnormally low prices because they are
paying abnormally low wages,
OR
• 3. if wage reduction entails a lowering of the standard of living of
workers and at the same time is being used as a means for the
permanent economic adjustment of undertakings or as a means of
competition between them…
• Then, the Commission shall make appropriate recommendations
[to the undertaking or the government], at the expense of the
undertakings, to benefit the workers in order to compensate for
the reductions.
Has employment become more flexible in Europe?
1950-2000
EU-15 Workforce in 3 main sectors
(agric-ind –service) as a percentage of total workforce
Agriculture
70
Ind. Manufacturière
60
Services
50
40
30
20
10
0
1950
1960
1970
1980
1990
2000
Agricultural population (FAO)
Italy
1950 1960 1970
21
15
10
(80%)
Germany
16
(45%)
11
(50%)
France
13
1980
7
7
(68%)
7
2000
3
2010
1.8
2
1.3
2
1.2
(20%)
5
(19%)
10
1990
5
3
(7%)
4
(30%)
3
(10%)
Greece
4
2.5
1.7
1.2
(25%)
0.8
Spain
14
7
5
3
(17%)
1.8
Portugal
4
3
1.9
1.4
(28%)
1.0
Poland
13
7
(35%)
6
UK
3
1.0
0.8
2
1.5
1.4
1.2
CAP- A flagship of European
collaboration
• France, before agreeing to free trade in industrial goods,
insisted on a system of agricultural subsidies during the
negotiations on the creation of a Common Market.
• The 6 MS were net importers of agricultural products.
• The need to ensure food security became particularly
important during the Cold War era. Food shortages and
price instability were frequent in the 1950s.
Common Agricultural Policy (CAP)
Part of the EEC-Rome Treaty 1957
•
•
•
•
Objectives – Art. 33 (ex Art. 39-1957) (a) to increase agricultural productivity by promoting
technical progress and by ensuring the rational development of agricultural production and
the optimum utilization of the factors of production, in particular labor;
(b) thus to ensure a fair standard of living for the agricultural community, in particular by
increasing the individual earnings of persons engaged in agriculture;
(c) to stabilize markets; (d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices.
• The foreseeable consequences
= more competition = a Common Market for agricultural goods
= fewer workers = increase productivity through technical progress
and optimum utilization of labor
• Employment in the agriculture sector has collapsed due to
productivity increase. Between 1970 and 1990, the number of
farmers in Europe halved.
The six main mechanisms of CAP
• 1- Price support: guarantees minimum prices set by
agricultural ministers
• 2- (Since 1988) Production control: quotas (e.g. on milk) and
"set aside" (refers to land)
•
2- Import taxes: to ensure external prices cannot undercut
internal EU prices
•
3- Intervention: by storing surpluses or selling them over time
•
4- Stock disposal: to dispose of surpluses by other means
(e.g. Free Food Scheme)
•
5- Subsidized exports (often resulting in a destabilization of
prices in third countries)
European Budget Revenues 2004
Inc. Agr-sugar =73,7%
Customs duties =10%
VAT =15%
Nat. Contributions = 1,3%
European Budget Expenses 2004
Inc.agric. = 43%
Structural funds =36%
Internal pol. = 8%
Administration =5%
External actions = 5%
Reserves, accession,
compensations, etc…=4%
EU funds for other economic sectors ?
The proposed Globalization fund or
Shock-absorber fund
• 7 bn euros over 7 years
• Goal: to help workers retrain if they
loose their job as part of a significant
corporate restructuring – in order to
“soften the impact of globalization”
Main points
• (3) EU- The future of cohesion policies.
• The concept of social cohesion relates to
poverty, inequality and social exclusion.
Social cohesion
• Objective of an “ever-closer union of the people”
• Objective of promoting social cohesion:
• Regions under Objective # 1
The EU is co-funding projects in regions where the
GDP/inhabitant is lower than 75% of the European
average GDP/inhabitant.
European Social Model is determined by the
interaction between competitiveness, solidarity
and mutual trust
European regional policies in light of recent
location theories by Diego Puga
•NOTES
The EU-employment question since the 1970s
• 1984 approx. 4 millions LT-unemployed.
•
1985 Action Program for employment
• 1993 approx. 17 millions unemployed
• 1986 - The Single European Act gave new impetus to social policy, especially
in the areas of health and safety at work, dialogue with the social partners and
economic and social cohesion.
• 1989 First Commission report on Employment in the EU
• 1993 OECD – Employment Strategy
• 1995 Entry of Sweden and Finland brought the “Scandinavian model”:
economic, social and employment policies seen as complementary.
• 1997- Amsterdam Treaty introduces a chapter on Employment. Incorporate
the Maastricht Social Protocol.
Art. 13 refers to the adoption of provisions on non-discrimination. It authorizes
the Council, acting unanimously, to take appropriate action to combat any
discrimination based on sex, race, ethnic origin, religion or belief, disability, age
EU-12
mio
%
USA
mio
%
Japan
mio
%
Agricu 1983
lture
11
9.2%
3
3.5%
5
9.3%
1992
8
5.8%
3
2.9%
4
6.4%
1983
43
35%
28
28%
5
9.3%
1992
46
33%
29
24%
4
6.4%
1983
67
55%
69
68%
32
56%
1992
86
61%
85
73%
37
59%
Indust.
Servi.
Secteurs affectés par les « grandes restructurations »
France / Allemagne
Is OMC effective ?
Ambiguities and assessment criteria
• - how to establish clear causal connections between policy
and performance ?
•
•
•
•
•
•
Does OMC enhance the EU problem-solving capacities?
- in identifying common challenge ?
- in building consensus around objectives ?
- in developing agreed upon metrics ?
- i n identifying promising policy approach?
- in achieving measurable performance improvements?
A Real Impact ?
• Causal effects are hard to determine:
• - changes in member states' policy orientation often
preceded launch of OMC processes (EES)
• - member states themselves helped to define OMC
objectives, guidelines and approaches.
Still we observe
• Broad shifts in policy thinking of member states:
• - wide adoption of EU-concepts and categories
(employment-levels instead of unemploymentlevel, lifelong-earning, gender mainstreaming…)
• - but subject to local inflection and interpretation
• => we better speak of a two-way interaction than
one-way impact.
The Mechanisms of domestic
influence
• Persuasion / mutual socialization: influence of foreign
examples in domestic reform debates.
• Peer pressure : 'naming and shaming’.
• Strategic use of OMC by domestic actors:
• -> national governments, agencies, opposition parties,
organized interests, NGOs…
• Influence depends on public awareness and broader
attitudes towards the EU.
OMC and democracy ?
• But the OMC processes, objectives, guidelines and
recommendations are "authorized" by elected member
states governments.
• The civil society (trade unions, NGOs, local
associations) has only a limited role
• Most of the work is done by unelected committees of
national civil servants and Commission officials
(EMCO, SPC, EPC)
• Finally, the representative democratic institutions (EP,
national parliaments…) have a limited role
• And there is still a low public awareness within
member states.