Contributions to the discussion on the European Pillar of Social Rights
Thank you for the invitation to participate in this debate (link)
It is a great pleasure to do so and also to meet Mr Nicolas Schmit again
The questions that were posed for this debate concerned the gaps in the European Pillar of Social Rights and the challenges in its implementation
These questions involved potential contributions of the participants
In my short response, I would like to focus on three inter-related subjects. I would also like to try to make relatively concrete and novel proposals that may have some relevance for the action plan.
The three subjects are the following:
-labour market information
-social dialogue and social partners
-public employment services
The first subject, labour market information, is an area where there may be gaps in the pillar and also an area where academics and researchers like myself could contribute
The pillar correctly emphasises the importance of equal opportunities and access to the labour market. However, no reference is made to the provision of labour market information in this regard.
This information may concern the employment opportunities and wage levels that students or jobseekers may expect depending on their choice of education or training courses. This information would therefore support their choices and lead to better outcomes for all. This is particularly important at a time where labour markets may be changing rapidly.
This type of information can also be of great use for governments and education and training providers to improve the range and contents of the courses they offer.
Labour market information can also be used to develop statistical indicators around the 20 principles of the Pillar. These would be used to compare the extent to which the principles are gradually achieved across member states and over time.
These indicators could also greatly facilitate the monitoring and evaluation of different policies and programmes and even contribute to benchmarking and mutual learning across the EU.
The second subject I would like to raise here is about social partners and social dialogue. Social dialogue is a cornerstone of the European social model and it is fully appropriate that the several principles of the Pillar make reference to the role of social partners.
At the same time, it is important to be aware of the considerable differences in representativeness of the social partners across the EU. In Portugal, for instance, trade union density is estimated at 15% and falling. In some other member states, trade union density is even lower. Moreover, the distribution of unionised workers is typically very uneven across sectors and job types.
I believe this situation calls for a debate on the modernisation of employee (and employer) representation in Europe. Why is it that so many workers are not affiliated with trade unions (or worker’s councils)? Should there be more support for the modernisation of the existing trade unions and employers’ associations and the emergence of new social partners?
I believe that social dialogue can be an engine for economic growth, and economic growth is a key ingredient behind the promotion of sustainable social rights. More representative social partners can be very important in this process.
The third subject I wanted to raise is public employment services.
These public agencies are key operators behind the delivery of several of the principles of European Pillar. These include some areas that will be more directly recognisable as “European principles” by the general public. An important example is principle 4, which includes the Youth Guarantee.
However, again there are significant differences across member states in the ability of public employment services to deliver effectively and efficiently and therefore fully meet the goals of the European Pillar.
There is an important effort to be made in some countries so that their public employment services can catch up and get closer to the best performing PES in the EU. In this regard, further support from the EU would potentially be very welcome.
Some efforts are already taking place, including through the EU PES Network and its activities around bench-learning, for instance. EURES is also a very important tool. However, I think there is a case to be made for widening and strengthening of this support, taking place in a larger and more systematic way.
For instance, this could involve widening the remit of the new European Labour Authority to include public employment services as well. This could facilitate the provision of additional support to PES across the EU making sure that they are all better able to deliver on the ambitious goals of the European Pillar.
Thank you for your attention
Do fim do princípio para o princípio do fim?
O potencial do teletrabalho em Portugal
What do employers' associations do?
Abstract: While trade unions have been studied in detail, there is virtually no economics research on employer associations (EAs), trade unions' counterparts in many countries. However, besides conducting collective bargaining, EAs perform several other activities that can in uence economic outcomes, including training and coordination. This paper studies the contributions of EAs by comparing affiliated and non-affiliated firms in terms of sales, employment, productivity, and wages. Using matched employer-employee panel data for Portugal, we find that affiliated firms exhibit better outcomes along most of these dimensions, even when drawing on changes in affiliation status over time; and that this affiliation premium tends to increase with EA coverage (defined as the percentage of workers in the relevant industry/region domain that are employed by affiliated firms). Sectors as a whole also appear to benefit from EA coverage, even if non-affiliated firms do worse.
New research on employee training and firm performance
LSE blog: http://cver-blog.blogspot.com/2020/03/training-grants-useful-policy-to.html
Weathering the storm: Employment policy and the coronavirus
Europe’s labour markets may be hit hard by the coronavirus. What can employment policy do to soften its effects? I offer below some first thoughts on this potential crisis.
The best response will depend first on a good understanding of the nature of the shock. So far, the coronavirus crisis appears to be essentially a temporary supply-side shock.
People are getting sick and unable to work. Healthcare will be absorbing more resources. Above all a large share of the workforce will have to stay at home - to reduce the chances of getting infected and or to provide support to others. Global value chains are disrupted as access to and demand for intermediate inputs breaks is affected.
Of course, some jobs can be carried out at home with little disruption. But in many other cases that will be difficult or nearly impossible – manufacturing, construction, restaurants, hotels, retail, events, etc. Note that many of these industries are strongly labour-intensive and pay relatively low wages, which speaks to their resilience and potential wider social and economic impacts.
But there’s a demand-side element as well, even if focused on particular industries, namely tourism and transport. Financial credit may dry up for some businesses. The loss of labour income in some professions may also affect aggregate demand to some extent.
Is this a temporary or permanent shock? The recent developments in some Asian countries – China, South Korea and Japan – suggest the virus can be contained. With a bit of luck, the warm weather from Spring and Summer may also help in slowing down or reverting the virus. A vaccine may be available sometime next year. But it seems highly unlikely that the disruption from the virus will go away in less than six months or perhaps even more.
If nothing is done, what will happen in labour markets? The most likely first impact is an abrupt freezing in hirings leading to higher unemployment. Given the uncertainty ahead and the diminished demand that many firms are already experiencing, plans regarding new appointments firms will be put on hold or cancelled. This will affect people that are in between jobs and now will take much longer to find employment.
A second stage of this process will involve the renegotiation, non-renewal or termination of non-standard contracts (fixed-term, temporary and service contracts). In contrast to the case of hiring freezes above – which may involve mostly younger individuals that are not yet entitled to unemployment benefits -, in this second stage such automatic stabilisers will kick in and provide income support to most of those who lost their jobs.
Finally, a third stage will involve some combination of dismissals - and further increases in unemployment - and pay cuts. This would arise in deeply affected firms or, more generally, in a more extreme version of the crisis, of widespread contagion. Fortunately, this does not appear to be on the cards given the apparently successful recent developments in China and other more developed Asian countries.
Fortunately, many firms will have financial buffers to deal with shocks like this - many have enjoyed several years of economic growth since the last recession. The understanding that this is a temporary shock will also make them hold on to their workers for as long as they can.
Firms will also be trying to adapt their production models, making greater use of telework. Fortunately, broadband coverage is so widespread that virtually anyone can conduct meetings, deliver presentations, meet customers, answer calls and emails, access data or write reports over the internet from home (if these activities are important parts of their jobs). Greater flexibility in telework was long overdue and this crisis will probably represent a watershed in its widespread adoption in the labour market.
So, what can employment policy do to alleviate the negative effects of the virus on the labour market? Several dimensions deserve attention – below I list four:
1. Short-time work schemes: these involve the reduction of the hours of work or the suspension of the employment contract of some percentage of the workers in firms badly affected by the virus. The cost of this measure is typically split between workers and social security. Workers are paid a lower total salary; social security fund the part of the new salary that is not paid by the firm; firms pay more than if they dismissed their workers. However, all parties can be better off: workers keep their jobs, firms keep their workers – and can resume their business quickly when the crisis comes to an end -, and social security would have to pay more in unemployment benefits if the workers were dismissed. These schemes are rightly credited with the resilience of the German labour market during the financial crisis. Of course, their usefulness in 2020 will depend considerably on the nature of the shock – these schemes will not be effective in sectors where the shock may be long-lasting.
2. Training: firms can use this challenging time to upgrade the skills of their workforce. Again, training activities can increasingly be conducted online from home. Part of the training content may involve teleworking itself. Financial support through grants to pay for the direct and indirect costs of training can make a big difference in persuading firms to use this period to invest in their workers. To be more effective and minimise deadweight, these training grants should be made available to firms that may benefit the most from the training activities while also facing the most challenging financial constraints. Public employment services should also advertise and make widely available their online training modules not only to jobseekers but also to employees stuck at home.
3. Sick pay extensions: many countries offer sick pay benefits but make them available only from the fourth day of sickness – i.e. there is a waiting period of three days. This acts as a screening device to deal with moral hazard issues. However, this may dissuade many from suspending work at a time when they may be highly contagious. It will make sense to shorten or even eliminate this waiting period.
4. Employment law: greater flexibility in working conditions may be important to soften the employment impact of the crisis. Any increases in minimum wages or other costs for employers planned for the next months should be cancelled or at least postponed. While minimum wage increases appear not to have had significant effects on employment over the last few years, the economic context at the time was very different. The likely negative effects on hirings are already significant – there is certainly no need to make them even worse by increasing minimum wages. Additional flexibility in teleworking arrangements or even in the setting of holidays or leave days may also be useful.
Fortunately, most labour markets will be resilient enough given the low unemployment rates and the long period of expansion over the last years. However, this shock seems to be very different from the previous ones. Quick and decisive action may pay off handsomely later. Better safe than sorry.