Session 4 – What can we see about the structure of the fututre labour demand and supply?Session 4 – What can we see about the structure of the fututre labour demand and supply?
WP7 – Public/Private mix
WP10 – Demagraphic changes and labour market
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Presentation of NEUJOBS findings
WP7 - Public/private mix and social innovation in service provision, fiscal policy and employment
T. Sirovátka and B. Greve with contributions by O. Hora, M. Horáková and P. Horák
WP9 – Global scenarios for European socio-ecological transition
B. Boitier, Lancesseur N. and Zagamé P.
WP10 - The consequences of demographic change on labour supply, wages and labour demand
H. Schneider, Dolls M., Lichter A. and Sommer E.
Critical review by Thomas Hemmelgarn (DG Taxud)
Questions/remarks from audience
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NEUJOBS mid-term conference Brussels, February 18-19, 2013 WP 7: Public/private mix and social innovation in service provision, fiscal policy and employment
T. Sirovátka and B. Greve
with contributions by O. Hora, M. Horáková and P. Horák
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scope/level of employment
quality of jobs
How fiscal consolidation context matter?
How governance is changing? (regulation, financing, delivery)
What kind of innovations in (governance) of social services?
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Findings: employment in social services demand drivers
Changing women’s roles, their growing labour market participation (women’s role revolution)
Demand shift towards services - broadening purchasing power throughout the population (role of income differentials?)
Ageing of population
Path dependency of WS development
Service dependency ?
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Findings: employment in social services supply drivers
Productivity lag (Baumol) should foster employment growth in sector of services ?
Possible responses:
to adjust earnings in services to overall economy earnings
to subsidize services
Technical complexity of the provision of social services (Health Care)
Vested/professional interests
Political considerations – electoral gains, buffer against uncertainty/unemployment
Governance reforms (their own urgencies)
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Employment in SS 2000-2010
Health and social services sector in 2010: in average 6% employment rate in the EU
Increased in last ten years by 0.7 percentage points
Differences among EU countries are remarkable (from 14% in Denmark to 2.7% in Romania)
Crisis in 2008-2010 did not change much on the continuous growth of employment in social services
78% of employment in HSW are women
Growing older: in 2010 overall 26.5 % workers older than 50 years while in HSW it is 30.3 %
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Employment in SS 2000-2010
First cluster: countries where employment rate is between 10.6% to 14.0% (Sweden, Finland, The Netherlands and Denmark)
Second cluster: countries where employment rate is between 8.4% to 9.1% (Belgium, France, Germany and UK)
Third (North-West) cluster: between 6.1% to 7.7% (Luxembourg, Austria and Ireland)
Large South-Central-East cluster employment rate in social services is between 2.7% (Romania) and 4.8% (Portugal)
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Employment rate HSS (+ GOV)
Employment rate HSS (+ GOV)
HSS + GOV 2010
Jobs in social services
Wages in HSW sector grew more slowly than in other parts of the economy and are in most EU member states bellow average wage in the economy
Although skill levels are relatively high and working conditions are often demanding
Sufficient labour supply in future ??
Above average job quality in cognitive demands on jobs, job complexity, learning new things, monotony of the job + job security
But lower level of job autonomy, higher psychical and physical health risks
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Examination of the factors shaping employment in SS, 2000-2010
Financing of the welfare state (government receipts, tax on labour, social protection expenditure, social protection expenditure in kind)
Demographic (ageing of population – old age dependency, fertility rate)
Political-economic cycle (proxy variables - GDP growth, public deficit, unemployment rate total, men, women)
Employment pattern/modernization (employment rate total, men, women)
Static (values) + dynamic (change in values) view
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Findings: factors of employment growth in SS
Employment rate in social services is stably and strongly correlated with three kinds of variables:
financing of the welfare state (receipts, exp)
overall employment rate
and fertility rate
? GDP growth , O-A dependency
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strong > 0.66
Moderate > 0.33
Weak, insignificant
Employment rate women (.637) **
Employment rate men (.636) **
Unemployment rate women (- .502) *
Employment rate total (.748) **
Unemployment rate total (- .472) *
Tax on labour (.670) **
Unemployment rate men (- .426) *
The labour force in the HSW sector is rapidly ageing
The younger generations of workers in HSW less often have a high level of education when compared to the older generations
Workers with a medium level of education are usually NOT specifically educated in health and welfare
Risk to lack of manpower despite high levels of unemployment, due to demanding working conditions and low job quality
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There may be two worlds of social services emerging:
The world of formal, more standardized, high quality services provided by a relatively highly qualified workforce
The world of hidden, semi-formal, unknown quality services provided by less qualified people who are often neighbours or immigrant workers.
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Financing
Sustainable financing is a necessary condition for employment in social services (stable revenue within a decided tax-structure, ability to finance social services given the changes in the global economy and over the business cycle)
In the EU the tax systems have not become more sustainable in the last 10 years – this implies a higher level of pressure on the financing of the welfare states
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Social Innovations
Social innovation plays an increasing role in social services, especially when understood and implemented as systematic change
This includes several elements:
mobilising resources and combining different ways of financing social services – public and private;
participation of a broader range of actors and synergy of their actions.
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Future scenario I: low road
Uncertain public financing of social services due to either increasing public debt and unsustainable public finances (like in some South-European countries), or a deliberate strategy to dismantle the welfare state (like in some East European countries)
Low public expenditure on social services and a limited role of social services as a buffer against unemployment or social investment measures
Limited role of the state in regulating and financing social services
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Lack of social innovation in social services
Limited quality standards in social services
Slow growth of employment in social services
Lower quality of employment in social services
Lower employment rates of women, lower employment rates in general (i.e. higher unemployment rates), considerable child employment penalty, e.g. the work family balance will not really be supported
Dualisation of social services in terms of quality, access and employment characteristics
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Sound and sustainable public finance (balanced public finances, with reasonable public expenditures), no strong attacks on the welfare state
Sufficient public expenditure on social services and the active role of social services as social investment measures
Strong role of the state in regulating and financing social services
Social innovations in social services embedded in broader governance reforms
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Important role of quality standards in social services
rapid growth of employment in social services
higher quality of employment in social services
higher employment rates of women, higher employment rates in general (i.e. lower unemployment rates), low child employment penalty
less diverse conditions and access to social services
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The driving forces summarized
Strong path dependency in WS model – financing and employment patterns matter
Employment growth in SS: positive correlated with WS finance, overall employment, fertility rate, GDP growth
Maturation of the revolution of gender roles (gender order)
Ageing of society will mater in future more
Two (three) possible scenarios: low road, high road, mixed strategy
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Private funding plays an increasing role
State governance and regulation is essential (quality standards, choice)
Social innovations as systemic change (consumer focus, mix of resources, actors)
Politics matter – commitment to social investments
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SEURECO
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Outline
Introduction
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1. Introduction
To make a quantitative assessment of the “Friendly” and the “Tough” scenario.
“Friendly” potential growth enhanced by labor force. Natural and financial conditions allows to get near by the potential
“Tough”: low potential growth and bad natural and financial conditions
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Enhancement of potential growth by labour force and high-skilled labour (+15 million and +35 million)
Natural and financial conditions allow to approach potential growth after a recovery period
The engine of growth is mainly internal demand, private and public (finance recovery)
2. Macroeconomic results 2.1 Friendly scenario: towards potential growth (1)
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2% in average for Europe but, on the whole period (2010-2030) the growth is dependant on initial debt for every country
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2. Macroeconomic results 2.1 Friendly scenario: towards potential growth (2)
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Slowing down of potential growth by labour force shortage (-2 million) even with an increase of high-skilled labour (+15.5 million)
After the “austerity” period the natural (price for oil) and financial (interest rates) conditions do not allow to reach the weakened potential growth
The engine of growth is mainly private internal demand because financial conditions get worse with slow growth
1.2% growth rate in average for Europe but the financial constraint reinforces inequalities among countries
2. Macroeconomic results 2.1 Tough scenario: obstacle to growth
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19.3 million jobs created and an unemployment rate of 7.5% in 2030
Jobs destruction in Agriculture (-3 million) and Industries (-6 million)
Jobs creation in Construction (+4.4 million), Private services (+13.7 million) and Non Market Services (+10 million)
2. Global results on employment 2.1 Friendly scenario: toward services
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6.6 million jobs destruction and an unemployment rate of 12% in 2030
Jobs destruction in Agriculture (-4 million) and Industries (-7 million)
Stagnation of employment in Non Market Services
Jobs creation in Construction (+3 million), Private services (+13 million)
2. Global results on employment 2.2 Tough scenario
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Jobs destruction in distribution (-0.8 million in the friendly case and -3 million in the tough case) transport services (respectively-0.4M and -1M ) and communication (respectively -0.8M and -1M)
Jobs creation in Lodging and catering (+2M and +1M) Bank. Finance and Real Estate (+4M and +2M) and Other Private services (+9.5M and +5M)
High-skilled jobs creation in all services sectors
3. Employment in services
Low-skilled destruction everywhere except for Lodging and catering
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Destruction of Low-skilled jobs on both scenarios (-12.7M and -17.4M).
Unemployment reduction in the “Friendly” case and increase in the “Tough” case.
Creation of High-skilled (+32M and +10.7M)
Increase in High-skilled unemployment in all scenarios from 5.6% to 7% (“Friendly”) and 10% (“Tough”)
4. High-skilled and Low-skilled employment
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“Tough”: Financial and Natural conditions prevent to reach potential growth
“Friendly”:
R&D and Intangibles
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None scenario reaches neither the objective of 20% reduction for energy consumption in 2020 nor the 20% of renewables
Both scenarios are under the -20% GHG emissions in 2020. None reaches the Roadmap -40% in 2030
A weak decoupling (GDP vs Energy) is reached in the “Friendly scenario”
5. Energy and Environment
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Conclusion Correcting policies
Employment policies for both scenarios but mainly for the “Tough” one
Energy and Environment Policies mainly for the “Tough” scenario : financial constraints does not allow energy efficiency compatible with SET
R&D policies or R&D based policies for potential growth, employment ,Energy and Environment in particular in the “Tough” case that does not allow a development of public services compatible with SET
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Governance, education, regulation. Modification of behavioural equations
The challenges identified in the “Tough” scenario will need a drastic modification of behaviours
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Thanks
Contact:
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The consequences of demographic change on labour supply, wages and labour demand
PD Dr. Hilmar Schneider, IZA Bonn Dr. Mathias Dolls, IZA Bonn Andreas Lichter, IZA Bonn Eric Sommer, IZA Bonn
NEUJOBS Midterm Conference, Session „What can we say about the structure of the future labour demand and supply?“ Brussels, February 18-19, 2013
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Outline
To what extent is population decline aggravated by structural effects (age-specific labour supply; skill-specific labour supply)?
How does labour demand react to increasing wages induced by declining labour supply?
How are wages affected by foreseeable changes of relative shortages of labour supply?
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Message 1
In the friendly scenario, labour supply in head counts is declining by 6%
Labour supply in hours worked is declining by 13% to 22% due to the increasing share of older workers who tend to work less
In the tough scenario, labour supply in head counts is declining by 15%
The relative decline of labour supply in head counts is c.p. aggravated by structural effects
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Message 2
The relative decline of labour supply is likely to increase average wages and also the skill-specific wage spread
Wages for low-skilled workers are likely to decline by up to 40% until 2030
Wages for high-skilled workers may increase by up to 35% until 2030
Wages for medium-skilled workers will only moderately increase until 2030
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Message 3
The increase of wages is likely to induce a decline of labour demand in parallel to the decline of labour supply
Demographic change will not automatically eliminate unemployment
Decline of labour demand may not be a problem for the labour market as such, but may impose huge problems for the stability of pension systems
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Labour supply and labour demand by working hours categories – Friendly scenario
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Labour supply and labour demand by working hours categories – Tough scenario
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IZA – Shaping the Future of Labor
http://www.iza.org
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EU
ATBEBGCYCZDEDKEEESFIFRGRHUIEITLTLULVMTNLPLPTROSESISKUK0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%0%20%40%60%80%100%120%140%160%
Average annual real GDP growth rate between 2010 and 2030 (%)Public Debt in 2010 (in GDP point)
1995-20052010-20202020-20302010-20202020-2030
-22%-12%-16%-13%-21%
-4 084-2 642-3 120-2 676-4 681
-9%-7%-9%-7%-14%
+1 533+3 0401 350+3 034-54
+11%+19%+7%+18.9%0%
+16 6979 3444 3317 978-4 717
+23%10%4%8%-5%
+16 697-6910 224-3 1651 334
+23%0%+16%-5%2%
FriendlyTough
Agriculture
Construction
Private
services
Non-market
services
Industry
-2%20%-4%-21%37%34%-16%6%-20%-36%-13%-8%66%126%62%40%98%91%-9%11%-9%-26%18%18%-17%2%-19%-36%-14%-8%31%76%31%14%58%53%-40%-20%0%20%40%60%80%100%120%140%DistributionLodging & CateringTransport servicesCommunicationBank. Finance &
Insurance
Growth rate of the employment between 2010 and 2030Total FriendlyLow-skilled FriendlyHigh-skilled FriendlyTotal ToughLow-skilled ToughHigh-skilled Tough
20052010
Gross domestic expenditures
on R&D
Greehouse gas emissions
gross final energy consumption
Primary energy consumption**