Page 21 - ePaper
P. 21
Job creation, productivity and more equality for sustained growth
reforms designed to increase the flex- Chart 11: Evolution of hours worked and persons employed in the EU,
ibility and responsiveness of educational 2008Q2=100
and training systems – including those to
ensure the recognition of skills acquired 100 Total EU economy
outside of formal education or in another 2008Q2 = 100
country – will need to be balanced by 99
the creation of sufficient innovative and 98
high-skilled jobs.
97
Tackling skills mismatches should also 96
involve a significant degree of anticipa- 95
tion as, going forward, job creation will 94 Persons employed
require different or higher skills and Hours worked
competencies (see Section 4.1), point- 93
ing to the need to invest in skills and 92
adaptation of business strategies and 03 04 05 06 07 08 09 10 11 12 13
human capital. Source: Eurostat, namq_nace10_e.
Low working hours and changes
to work organisation volume of employment and may equally and have quite high EPL; see for exam-
give a misleading impression of the qual - ple the EPL values for Germany, Sweden,
Since mid-2008 the total number of ity and sustainability of many of the jobs. the Netherlands and the Czech Republic
hours worked has fallen much more than (Chart 27).
the total number of people in employ- As a result of all these developments,
ment (see Chart 11), and has contin- the share of full-time employed persons Labour taxation
ued to drop even as employment levels in total employment fell by some 2 pps
have stabilised (since mid-2010). This between 2002 and 2008, and again For employers, the level of their labour
suggests that employment growth in between 2008 and 2013, leaving the costs is a key determinant of their capac -
headcounts may disappoint when eco- total number of full-time employed in ity to create jobs. An important part of
nomic growth accelerates, in so far as 2013 5 % below the level of 2008, with labour costs is labour taxation, which
employers can be expected to increase the risk that ongoing structural changes affects both labour demand and labour
hours of existing employees first before associated with technological changes supply. Cutting labour taxation can
hiring additional workers. and globalisation may reinforce such reduce labour costs and hence encourage
31
developments ( ). employers to employ more workers ( ).
34
This overall decline in hours worked is, At the same time, empirical evidence
of course, linked to an increased reliance Apart from its effect on job crea- shows that a high level of labour taxa-
on part-time employment, but also to tion, fewer working hours also weigh tion (as well as its design) can hamper
35
a reduction in the average number of on household incomes and consump - the labour supply of workers ( ). In par-
hours worked by full-time workers, fall- tion, in particular if part-time jobs are ticular, the interaction of labour taxation
ing from a weekly average of 41.0 in concentrated at the bottom of the and social benefits can create disincen-
2008 to 40.6 in 2013. wage distribution. tives to work for specific groups such
as young people, low-income workers,
The number of those employed part- 2.3. Recurrent obstacles single parents, second-income earners
time exceeds the 2008 level by 8 %, and older workers.
with a particularly significant increase This section focuses on the roles of
for men and young people. Moreover, labour taxation, undeclared work and In view of the negative labour mar-
among those part-time employed the labour mobility for job creation. ket effects of high labour taxation, the
share of involuntary part-timers – i.e. EU has consistently asked many Mem-
those who would prefer to be working However, it does not focus on employ- ber States to shift taxation away from
full-time – increased from just over ment protection (which is analysed in labour onto other tax bases in order to
20 % of the total in 2004 to almost Section 3), as the impact of employment
30 % in 2013, with the proportion of protection legislation on the aggregate
male workers at 40 %. labour market seems less significant ( ) The tax wedge on labour includes personal
34
32
than the impact on specific groups ( ). income tax, social security contributions of
The increased reliance on part-time EPL needs to be looked at as part of an employers and employees and payroll taxes.
In a perfectly competitive labour market with
33
employment is linked to the uncertainty overall labour market picture ( ). For flexible wages, only the size of the total tax
in demand prospects both during and example, some of the Member States wedge matters since different components
of the tax wedge exert identical effects on
since the crisis as well as to more flexible that were most resilient in the crisis had employment (see Chapter 4 of European
work organisation models that accom- Commission, 2013c).
35
modate both companies’ and work- ( ) See Chapter 3 in European Commission (2014a). ( ) Theoretically, the overall effect of labour
31
taxation on labour supply is uncertain or
32
ers’ needs. While it may lead to higher ( ) See Scarpetta (2014). ambiguous. See also the summary of the
33
employment numbers in the short term, ( ) See also Section 4.1., ‘The institutional theoretical and empirical literature on the
impact of direct taxation on employment in
balance of a healthy labour market: EPL,
it gives a misleading impression of the activation and support’, in Chapter 1. OECD (2011).
19
reforms designed to increase the flex- Chart 11: Evolution of hours worked and persons employed in the EU,
ibility and responsiveness of educational 2008Q2=100
and training systems – including those to
ensure the recognition of skills acquired 100 Total EU economy
outside of formal education or in another 2008Q2 = 100
country – will need to be balanced by 99
the creation of sufficient innovative and 98
high-skilled jobs.
97
Tackling skills mismatches should also 96
involve a significant degree of anticipa- 95
tion as, going forward, job creation will 94 Persons employed
require different or higher skills and Hours worked
competencies (see Section 4.1), point- 93
ing to the need to invest in skills and 92
adaptation of business strategies and 03 04 05 06 07 08 09 10 11 12 13
human capital. Source: Eurostat, namq_nace10_e.
Low working hours and changes
to work organisation volume of employment and may equally and have quite high EPL; see for exam-
give a misleading impression of the qual - ple the EPL values for Germany, Sweden,
Since mid-2008 the total number of ity and sustainability of many of the jobs. the Netherlands and the Czech Republic
hours worked has fallen much more than (Chart 27).
the total number of people in employ- As a result of all these developments,
ment (see Chart 11), and has contin- the share of full-time employed persons Labour taxation
ued to drop even as employment levels in total employment fell by some 2 pps
have stabilised (since mid-2010). This between 2002 and 2008, and again For employers, the level of their labour
suggests that employment growth in between 2008 and 2013, leaving the costs is a key determinant of their capac -
headcounts may disappoint when eco- total number of full-time employed in ity to create jobs. An important part of
nomic growth accelerates, in so far as 2013 5 % below the level of 2008, with labour costs is labour taxation, which
employers can be expected to increase the risk that ongoing structural changes affects both labour demand and labour
hours of existing employees first before associated with technological changes supply. Cutting labour taxation can
hiring additional workers. and globalisation may reinforce such reduce labour costs and hence encourage
31
developments ( ). employers to employ more workers ( ).
34
This overall decline in hours worked is, At the same time, empirical evidence
of course, linked to an increased reliance Apart from its effect on job crea- shows that a high level of labour taxa-
on part-time employment, but also to tion, fewer working hours also weigh tion (as well as its design) can hamper
35
a reduction in the average number of on household incomes and consump - the labour supply of workers ( ). In par-
hours worked by full-time workers, fall- tion, in particular if part-time jobs are ticular, the interaction of labour taxation
ing from a weekly average of 41.0 in concentrated at the bottom of the and social benefits can create disincen-
2008 to 40.6 in 2013. wage distribution. tives to work for specific groups such
as young people, low-income workers,
The number of those employed part- 2.3. Recurrent obstacles single parents, second-income earners
time exceeds the 2008 level by 8 %, and older workers.
with a particularly significant increase This section focuses on the roles of
for men and young people. Moreover, labour taxation, undeclared work and In view of the negative labour mar-
among those part-time employed the labour mobility for job creation. ket effects of high labour taxation, the
share of involuntary part-timers – i.e. EU has consistently asked many Mem-
those who would prefer to be working However, it does not focus on employ- ber States to shift taxation away from
full-time – increased from just over ment protection (which is analysed in labour onto other tax bases in order to
20 % of the total in 2004 to almost Section 3), as the impact of employment
30 % in 2013, with the proportion of protection legislation on the aggregate
male workers at 40 %. labour market seems less significant ( ) The tax wedge on labour includes personal
34
32
than the impact on specific groups ( ). income tax, social security contributions of
The increased reliance on part-time EPL needs to be looked at as part of an employers and employees and payroll taxes.
In a perfectly competitive labour market with
33
employment is linked to the uncertainty overall labour market picture ( ). For flexible wages, only the size of the total tax
in demand prospects both during and example, some of the Member States wedge matters since different components
of the tax wedge exert identical effects on
since the crisis as well as to more flexible that were most resilient in the crisis had employment (see Chapter 4 of European
work organisation models that accom- Commission, 2013c).
35
modate both companies’ and work- ( ) See Chapter 3 in European Commission (2014a). ( ) Theoretically, the overall effect of labour
31
taxation on labour supply is uncertain or
32
ers’ needs. While it may lead to higher ( ) See Scarpetta (2014). ambiguous. See also the summary of the
33
employment numbers in the short term, ( ) See also Section 4.1., ‘The institutional theoretical and empirical literature on the
impact of direct taxation on employment in
balance of a healthy labour market: EPL,
it gives a misleading impression of the activation and support’, in Chapter 1. OECD (2011).
19
