Labour market segmentation vs. EPL reform Jrg PESCHNER European - - PowerPoint PPT Presentation
Labour market segmentation vs. EPL reform Jrg PESCHNER European Commission, DG EMPL, Employment Analysis Warsaw 8 October 2014 Climbing unemployment rates in most places, Strong divergence DG EMPLs regional projection software
Jörg PESCHNER European Commission, DG EMPL, Employment Analysis Warsaw – 8 October 2014
Climbing unemployment rates in most places, Strong divergence
Source: LFS data, displayed using DG EMPL‘s regional projection software
Source: LFS data, displayed using DG EMPL‘s regional projection software
Climbing unemployment rates in most places, Strong divergence
Source: Eurostat EU LFS Temporary employment, % change in selected Member States
0% 20% 40% 60% 80% 100% 2003-2007 2007-2013
4 6 8 10 12 14 16 18 20 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EU28 Poland 25 30 35 40 45 50 55 60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EU28 Poland
Unemployment rate in % Share of long-term in all unemployed (%)
BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT
PL
PT RO SI SK FI SE UK
0.00 0.50 1.00 1.50 2.00
0.00 0.50 1.00 1.50 2.00
Segmentation Strong performance
High share in (involuntary) temporary employment, high share of low-skilled, … High (youth) employment, low unemployment, strong employment growth, strong LLL, long working life,…
BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT
PL
PT RO SI SK FI SE UK
0.00 0.50 1.00 1.50 2.00
0.00 0.50 1.00 1.50 2.00 2.50
Segmentation Adequacy problem, high inequality
High inequality, low ULC dynamics, high (in-work) poverty, … High share in (involuntary) temporary employment, high share of low-skilled, …
Duality and Wages: Results of a contrast regression (2011) Considerable wage penalty on temporary contracts !
Source: DG EMPL calculations, based on EU-SILC 2010, SES 2006, see also EiE2010
0.0 5.0 10.0 15.0 20.0 25.0 30.0 BG SK UK LU BE CZ AT HU GR IT EU27 DE FI SI NL PT ES PL Share of temporary workers Wage-penalty adjusted - regression contrast
Source: Eurostat EU-LFS
BE CZ DK DE EE IE GR ES FR IT LV LU HU NL AT PL PT SI FI SE UK IC NO CH TR 1 2 3 4 5 6 5 10 15 20 25 30 EPL on temporary contracts Share of temporary in all employees
EPL and Temporary Contracts
Source: OECD (EPL), Eurostat EU LFS
Source: Eurostat EU-LFS
OECD Index III Modified Index Share of Severance Pay Austria 2.41 2.37 30.8% Belgium 2.61 2.36 36.3% Czech Republic 2.32 2.76 30.1% Germany 2.63 2.90 35.5% Denmark 1.91 1.82 23.4% Spain 3.11 2.88 38.6% Finland 2.29 2.35 40.5% France 3.00 2.66 49.3% Italy 2.58 2.31 38.5% Netherlands 2.23 2.59 44.8% Poland 2.41 2.35 23.2% Sweden 2.06 2.62 34.1% Slovak Republic 2.13 2.61 42.6% United Kingdom 1.09 1.41 30.7% Source: Berger, Gstrein, Keuschnigg, Miess, Müllbacher, Strohner, Winter-Ebmer: Development/Maintenance of the Labour Market Model (Final Report), Institut für Höhere Studien, Universität St. Gallen, p. 25.
Overall EPL .. weighted
Labour-Market Model: Calibrated parameters on EPL
Reduction of firing costs Job surplus of an employment relationship Wage bargaining Higher wages Higher firms' rent Higher LM participation Higher labour demand More job separations Higher frictional Unemployment Elasticity(EPL)=0.17 Higher Employment Lower Employment
Unemployment rate: +0.11 %-pts Labour market participation +0.04%-pts
0.0% 0.1% 0.2% 0.3% 0.4%
Wages Employment Hours Worked per worker Output GDP Lowering EPL in Poland: Long-term impact on …
Lowering EPL in Poland: Long-term impact on wages…
0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% All Low-Skilled Medium-Skilled High-Skilled
0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18
Lowering EPL in Poland: Long-term impact on unemployment… %-pts.