Page 15 - ePaper
P. 15
Job creation, productivity
and more equality for
sustained growth ( )
1
3
While the EU has been seeing a recovery growth ( ), putting further pressure on health services, and hence sub-optimal
from the recession, with output, employ - ensuring that the best use is made of use of human capital.
ment and household incomes growing all available human resources.
and unemployment falling, the recovery They can also lead to political instability,
remains extremely fragile and unequal, In so far as the contribution of employ- weaken trust in institutions and under-
as witnessed by the recent downgrading ment to overall GDP growth declines mine the capacity of governments to
of the GDP outlook in the Commission over the coming 20 years, then produc- conduct the reforms that are necessary
2
autumn forecast ( ). tivity growth will be the only source of to ensure that policies and institutions
increased output in the EU ( ) – hence are supportive of growth. Such effects
4
At the same time, the employment and the need to fully understand the links may also have impacts beyond borders
social imbalances (and their cross-border between productivity and education, skill and are therefore of common EU con-
impacts) that occurred during the crisis formation and innovation. cern. Moreover, these effects contribute
must as far as possible be prevented to increased divergence within the EU,
from happening in the future. The ‘key After several years of decline, household specifically since the start of the crisis
employment and social indicators’ score - incomes started increasing again slightly and which recently has stabilised at a
board introduced in the 2014 European in real terms at the end of 2013. In some high level.
Semester should help with the close countries, very significant declines have
monitoring of key factors – unemploy- led to strong increases in poverty, and The EU economy is facing an uncertain
ment; young people not in employment, together with high household debt lev- outlook, the recovery is not assured and
education or training; household income; els, this is likely to undermine aggre- isolated demand or supply policies can-
poverty; and inequality – and will help gate demand for some time, especially not bring a sustainable recovery with
detect challenges early and enable in countries where inequalities have job growth.
timely policy responses to be made. also increased. 1. Growth, jobs and
Nevertheless, the EU’s prosperity ulti- We examine the potential role of well- household incomes:
mately depends on economic growth, functioning labour markets and tax and recent developments
which results from employment growth transfer systems to restore a sustain-
and productivity growth. In order to able recovery of household incomes and Although employment growth in
develop this further we have looked at a reduction of poverty and inequalities. EU-28 turned positive at the end of 2013,
those labour market factors that constrain as did growth in household disposable
5
job creation, apart from weak demand Unemployment, poverty and inequalities income ( ) after nearly four years of con-
and legacy effects from the crisis. undermine sustainable growth by weak- tinuous decline (Chart 1) ( ), employment
6
ening aggregate demand in the short 5
In this respect we particularly identify term and by affecting potential GDP in ( ) The real GDHI growth for the EU is a DG
EMPL estimation, and it does not include
demographic developments as being the longer term through reduced access Member States for which quarterly data are
missing (eight Member States). The nominal
liable to constrain future employment for many households to education and GDHI is converted into real GDHI by deflating
with the deflator (price index) of household
3
( ) ‘The quantitative evidence shows that in less final consumption expenditure. The real
1
( ) By Guy Lejeune and Isabelle Maquet. than 20 years EU employment will almost GDHI growth is a weighted average of real
2
( ) European Commission (2014), ‘European inescapably start declining in volume due GDHI growth in Member States.
Economic Forecast Autumn 2014’, Directorate- to the intensity of workforce shrinking’, ( ) See Section 5 for a detailed analysis of
6
General for Economic and Financial Affairs, Peschner and Fotakis (2013). recent trends of the EU GDHI in real terms
European Economy N° 7/2014. ( ) Peschner and Fotakis (2013). and its components.
4
13
and more equality for
sustained growth ( )
1
3
While the EU has been seeing a recovery growth ( ), putting further pressure on health services, and hence sub-optimal
from the recession, with output, employ - ensuring that the best use is made of use of human capital.
ment and household incomes growing all available human resources.
and unemployment falling, the recovery They can also lead to political instability,
remains extremely fragile and unequal, In so far as the contribution of employ- weaken trust in institutions and under-
as witnessed by the recent downgrading ment to overall GDP growth declines mine the capacity of governments to
of the GDP outlook in the Commission over the coming 20 years, then produc- conduct the reforms that are necessary
2
autumn forecast ( ). tivity growth will be the only source of to ensure that policies and institutions
increased output in the EU ( ) – hence are supportive of growth. Such effects
4
At the same time, the employment and the need to fully understand the links may also have impacts beyond borders
social imbalances (and their cross-border between productivity and education, skill and are therefore of common EU con-
impacts) that occurred during the crisis formation and innovation. cern. Moreover, these effects contribute
must as far as possible be prevented to increased divergence within the EU,
from happening in the future. The ‘key After several years of decline, household specifically since the start of the crisis
employment and social indicators’ score - incomes started increasing again slightly and which recently has stabilised at a
board introduced in the 2014 European in real terms at the end of 2013. In some high level.
Semester should help with the close countries, very significant declines have
monitoring of key factors – unemploy- led to strong increases in poverty, and The EU economy is facing an uncertain
ment; young people not in employment, together with high household debt lev- outlook, the recovery is not assured and
education or training; household income; els, this is likely to undermine aggre- isolated demand or supply policies can-
poverty; and inequality – and will help gate demand for some time, especially not bring a sustainable recovery with
detect challenges early and enable in countries where inequalities have job growth.
timely policy responses to be made. also increased. 1. Growth, jobs and
Nevertheless, the EU’s prosperity ulti- We examine the potential role of well- household incomes:
mately depends on economic growth, functioning labour markets and tax and recent developments
which results from employment growth transfer systems to restore a sustain-
and productivity growth. In order to able recovery of household incomes and Although employment growth in
develop this further we have looked at a reduction of poverty and inequalities. EU-28 turned positive at the end of 2013,
those labour market factors that constrain as did growth in household disposable
5
job creation, apart from weak demand Unemployment, poverty and inequalities income ( ) after nearly four years of con-
and legacy effects from the crisis. undermine sustainable growth by weak- tinuous decline (Chart 1) ( ), employment
6
ening aggregate demand in the short 5
In this respect we particularly identify term and by affecting potential GDP in ( ) The real GDHI growth for the EU is a DG
EMPL estimation, and it does not include
demographic developments as being the longer term through reduced access Member States for which quarterly data are
missing (eight Member States). The nominal
liable to constrain future employment for many households to education and GDHI is converted into real GDHI by deflating
with the deflator (price index) of household
3
( ) ‘The quantitative evidence shows that in less final consumption expenditure. The real
1
( ) By Guy Lejeune and Isabelle Maquet. than 20 years EU employment will almost GDHI growth is a weighted average of real
2
( ) European Commission (2014), ‘European inescapably start declining in volume due GDHI growth in Member States.
Economic Forecast Autumn 2014’, Directorate- to the intensity of workforce shrinking’, ( ) See Section 5 for a detailed analysis of
6
General for Economic and Financial Affairs, Peschner and Fotakis (2013). recent trends of the EU GDHI in real terms
European Economy N° 7/2014. ( ) Peschner and Fotakis (2013). and its components.
4
13
