International employment performance.
How's that for a sexy title?
Via New Economist, here's a new study (pdf) from the UK's Work Institute on labour market flexibility in Europe.
The most fun part of the report is its bite-size history of the dominant trends in macro/labour economics in Europe (and the West in general) during my lifetime. The "New Right" economics -- monetarism in England and supply side economics in the US -- were rejected in the early 90s in favour the neoliberal model: a renewed emphasis on fiscal responsibility/austerity (but with a Keynesian spend-out-of-recessions foundation). The neoliberal cw also emphasised investment in human capital, hostility to large-scale collective bargaining, "making work pay", and discouraging people from subsisting outside the labour force, mainly by making unemployment and welfare benefits small and difficult to qualify for. The major document of the neoliberal/ New Labour/ Third Way policy concensus was the OECD's 1994 Jobs Study. The movement's buzzword was (labour market) "flexibility".
According to David Coats and the Work Foundation, however, there's recently been something of another sea change in how European economists and policy makers approach optimal labour market policy. From page 23:
Indeed, the OECD believe that they have identified two demonstratively successful policy packages, which might be summarized as follows:
The Anglo-Saxon model: This is characterised by strong product market competition, low welfare benefits, relatively low levels of taxation and "light" EPL. Trade unions are weak and collective bargaining plays a limited role. The results is a high employment rate achieved at a low cost to the taxpayer. But these countries have also experienced rapidly growing earnings inequality and a high leve lof in-work poverty.
The Nordic Model: These countries are characterised by a strong emphasis on collective bargaining and social dialogue. They offer generous welfare benefits but impose stringent job search requirements and limited durations. EPL is more restrictive than in the Anglo-Saxon countries. Taxes are higher to fund a more generous welfare state. Earnings inequality is narrower and there is a relatively low level of in-work poverty.
The only element common to both approaches is the emphasis on competition and low levels of product market regulation -- otherwise everything else is different - taxes, the strength of employment protection laws, the role of trade unions, the generosity of benefits and the importance of government funded active labour market programmes.
There's a lot more in the report, and certainly many of the neoliberal goals (public fiscal responsibility, active labour market policies, the need for flexible work time regimes, limited regulation of product markets) remain in place in the various studies and reports cited. But the authors argue that, starting with the Lisbon summit in 2000 and continuing in follow-up reports, in the OECD's most recent research, and in recent analyses from Britain's Treasury department (with the exception that the latter remains sceptical of union power), the powers that be have been backing off the neoliberal consensus. That's in the face of empirical evidence that other, more regulatory and redistributive, policy and institutional arrangements can also produce good growth and employment outcomes, like the ones in Denmark, Sweden, Austria and the Netherlands. Who says economists can't learn?
Via New Economist, here's a new study (pdf) from the UK's Work Institute on labour market flexibility in Europe.
The most fun part of the report is its bite-size history of the dominant trends in macro/labour economics in Europe (and the West in general) during my lifetime. The "New Right" economics -- monetarism in England and supply side economics in the US -- were rejected in the early 90s in favour the neoliberal model: a renewed emphasis on fiscal responsibility/austerity (but with a Keynesian spend-out-of-recessions foundation). The neoliberal cw also emphasised investment in human capital, hostility to large-scale collective bargaining, "making work pay", and discouraging people from subsisting outside the labour force, mainly by making unemployment and welfare benefits small and difficult to qualify for. The major document of the neoliberal/ New Labour/ Third Way policy concensus was the OECD's 1994 Jobs Study. The movement's buzzword was (labour market) "flexibility".
According to David Coats and the Work Foundation, however, there's recently been something of another sea change in how European economists and policy makers approach optimal labour market policy. From page 23:
Indeed, the OECD believe that they have identified two demonstratively successful policy packages, which might be summarized as follows:
The Anglo-Saxon model: This is characterised by strong product market competition, low welfare benefits, relatively low levels of taxation and "light" EPL. Trade unions are weak and collective bargaining plays a limited role. The results is a high employment rate achieved at a low cost to the taxpayer. But these countries have also experienced rapidly growing earnings inequality and a high leve lof in-work poverty.
The Nordic Model: These countries are characterised by a strong emphasis on collective bargaining and social dialogue. They offer generous welfare benefits but impose stringent job search requirements and limited durations. EPL is more restrictive than in the Anglo-Saxon countries. Taxes are higher to fund a more generous welfare state. Earnings inequality is narrower and there is a relatively low level of in-work poverty.
The only element common to both approaches is the emphasis on competition and low levels of product market regulation -- otherwise everything else is different - taxes, the strength of employment protection laws, the role of trade unions, the generosity of benefits and the importance of government funded active labour market programmes.
There's a lot more in the report, and certainly many of the neoliberal goals (public fiscal responsibility, active labour market policies, the need for flexible work time regimes, limited regulation of product markets) remain in place in the various studies and reports cited. But the authors argue that, starting with the Lisbon summit in 2000 and continuing in follow-up reports, in the OECD's most recent research, and in recent analyses from Britain's Treasury department (with the exception that the latter remains sceptical of union power), the powers that be have been backing off the neoliberal consensus. That's in the face of empirical evidence that other, more regulatory and redistributive, policy and institutional arrangements can also produce good growth and employment outcomes, like the ones in Denmark, Sweden, Austria and the Netherlands. Who says economists can't learn?
1 Comments:
Neither, I guess, on the face of it; but what's interesting is that Coats says that the high-regulation countries also aren't much less "flexible" in their labour markets. Workers still move from job to job and task to task and collectively bargained wages still adjust to macro conditions.
I still think there's a philisophical case to be made for liberalism as opposed to corporatism or social democracy, but the neoliberal concensus that only liberalism would promote growth seems to be breaking down.
There's a related argument too that high-employment regulation countries might be able to sustain, in terms of political support for it, higher tax rates and so higher redistribution. In Sweden, for instance, which is ranked something like the second most competitive country, pre-tax inequality increased 25% in the past quarter century, despite the more worker-friendly regulatory environemnt, but post-tax inequality didn't change because of progressive taxation. I still think that it's really straight tax-and-transfer and not labour market regulation that determines how ex-post equitable a country is. But taxes might themselves have a smaller impact on growth and be more politically sustainable with corporatist or social-democratic institutions as opposed to liberal ones.
I'm just noodling here though.
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