Unemployment and social polarization

Introduction

• The post-war economic boom brought about nearly full employment across most of Western Europe

• However the oil crisis, socio-economic restructuring, and globalization have provoked a radical change in the panorama– Greater participation of women in the labour market...– But a significant rise in the levels of structural unemployment

• In the 1990s measures have been adopted to flexibilize labour markets:– Unemployment has decreased...– But social polarization has increased

The process of socio-economic restructuring

• Collapse of the (Fordist) system of mass production – Demise of the three pillars of the post-war consensus: full

employment, prosperity, and social citizenship

• Rise in unemployment levels– From unemployment rates below 5% (bar Ireland and Italy), before

1975– To 23% in Spain, 20% in Finland, and Ireland– By the mid-1990s the main economies in the EU (bar the UK) had

unemployment rates in excess of 10%

• Unemployment rates as a European phenomenon:– Much lower unemployment rates in the US and Japan

UnemploymentFinland

0

5

10

15

20

2519

70

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

France

0

5

10

15

20

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

Italy

0

5

10

15

20

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

Spain

05

101520253035

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

Japan

0

1

2

3

4

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

USA

0

2

4

6

8

10

1219

70

1973

1976

1979

1982

1985

1988

1991

1994

1997

Female

Male

Total

Unemployment (II)

• Regional unemployment differences are even greater:– Unemployment in excess of 20% in Southern

Italy, Southern and Western Spain, and the former East Germany

– High rates in many old industrial regions of Northern France, Belgium, and West Germany

– Low unemployment in the peripheries of large urban regions...

– And in many intermediate regions

R egional unem ploym ent1999

m ore than 2016 to 2012 to 16

8 to 124 to 8

less than 4

The problems of structural unemployment

• Having a large percentage of the population willing to work idle represents a waste for any economy– Especially since often the unemployed tend to be younger and

better prepared than those employed

• Social exclusion– Large sections of the population are excluded from the labour force– Increase in long-term unemployment rates

• Serious financial problems for the state– Expansion of unemployment benefits– Unemployment benefits disguised as other benefits in certain

countries (Italy and the Netherlands)

Long-term unemployment

• Long-term unemployment is positively linked to total unemployment– Highest long-term unemployment in the poorest

regions of Spain, Greece, and the South of Italy...– But also in West Germany and Belgium– Lowest long-term unemployment in the UK and

Scandinavia

• And negatively linked to total employment levels

Long term unemployed1998

more than 5550 to 5545 to 5040 to 4535 to 40less than 35

Unemployment in social expenditure

Unemployment expenditure as a percentage of total social expenditure

Evolution of unemployment expenditure at constant prices.

1990=100 1997 1993 1980 1997 1993 1980 EU 12 7.2 9.1 - 135.8 158.1 - Austria 5.3 5.4 2.0 149.1 140.2 34.7 Finland 13.0 15.6 4.3 274.1 314.1 40.5 France 7.5 8.8 - 115.1 124.6 59.6 Germany 8.7 10.2 3.7 224.1 240.2 53.3 Ireland 15.0 16.2 - 157.4 141.9 47.0 Italy 1.8 2.2 - 127.2 149.2 79.0 Netherlands 10.5 8.8 - 140.7 117.3 58.0 Spain 13.8 21.1 15.4 96.5 150.4 55.7

Measures to combat high unemployment

• Main aim: to make European labour markets more flexible• Meaning of flexibility: making employees more disposable:

– Easier and cheaper to dismiss– Less covered by constraining agreements and regulations over

conditions– Less health, safety, and security offered to workers

• Two interpretations of flexibility:– Outright labour market deregulation: In the UK– The reform of labour market laws and of the welfare state:

Netherlands, followed by Continental Europe• Combination of restrictive measures with greater worker training

The impact of labour market reform

• Reduction of unemployment– Britain and the Netherlands (the early adopters) have enjoyed lower

unemployment rates– Spectacular effect in Spain. Between the introduction of labour market

flexibility in 1996/97 and 2000, Spain has created half of all the new jobs in the EU. Unemployment came down from 22 to 14%

– Reduction of unemployment in Germany and France– Reduction even in the countries more reluctant to introduce flexibility

measures: Belgium and Italy

• But the timing of the reforms has coincided with a period of economic expansion– And in the past economic growth has been associated with job creation

The informal economy

Average 1989/90

Average 1999/00

Increase 1990-2000

Austria 6.9 9.8 2.9 Belgium 19.3 22.2 2.9 Denmark 10.8 18.0 7.2 Germany 11.8 16.0 4.2 Greece 22.6 28.7 6.1 Finland 13.4 18.1 4.7 France 9.0 15.2 6.2 Ireland 11.0 15.9 4.9 Italy 22.8 27.1 4.3 Netherlands 11.9 13.1 1.2 Portugal 15.9 22.7 6.8 Spain 16.1 22.7 6.6 Sweden 15.8 19.2 3.4 UK 9.6 12.7 3.1

US 6.7 8.7 2.0

Japan 8.8 11.2 2.4 Source: Schneider (2001)

The impact of labour market reform (ii)

• The concentration of atypical employment forms among women, the young, the elderly, ethnic minorities, and immigrants and the less skilled is contributing to the segmentation of society:– The ‘A-team’: Highly qualified stable wage-earners– The ‘B-team’: An underclass of unstable and precarious workers (MacJobs)

• According to some (Harvey, 2000) this represents a return to the period prior to the mid-century compromise– ‘Proletarianization’ of the labour force– Employer having increasing control to the detriment of workers rights and

stability

Conclusion• Europe seems to be stuck between a rock

(unemployment) and a hard place (atypical work)

• Unemployment has decreased as a result of the flexibilization of labour markets...

• But, inequalities have increased– Managerial and executive wages have been rising at a

greater rate than those of stable employees– And the gap between stable employees and those in

precarious employment has also been widening