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Employment and Social Developments in Europe 2014
systems also need to adapt to long and well designed, they can have distribu- While this is understandable for the
short-term changes in labour markets, tive impacts which need to be moni- indexation of benefits that aim at replac -
including more frequent unemployment tored (see Chapter 1). ing labour market incomes, it is unclear
spells, as well as increased segmentation that it is the most efficient in terms of
(see Chapter 1). Employment and social protection sys- stabilisation for benefits which are less
tems play a key role in stabilising aggre - directly related to the labour market such
Furthermore, employment and social gate demand. Unemployment benefits as (taken up) pensions or to a lesser
protection systems support the pres - are particularly important and their extent family benefits. For these ben-
ervation and accumulation of human stabilisation potential can be strength- efits, indexation rules could be smoothed
capital, leading to higher employment ened provided they can be made more over the cycle, enabling to strengthen
and productivity growth. They contribute responsive to cyclical developments automatic stabilisers more directly linked
to a life-cycle approach of building and (see Blanchard et al. 2010 and below, to labour market developments (see also
preserving human capital, with impacts such as for instance unemployment Chapter 1).
on education systems, childcare services benefit duration). Other aspects need
and post-education systems, notably to be considered, including short-time Unemployment insurance
vocational training and active labour compensation systems and smoothing could be more sensitive
market policies (see Chapter 2). the price indexation of benefits, such as to the business cycle …
pensions, which are not directly linked to
Employment and social protection the active population. The ability of unemployment insur-
systems should also provide the right ance schemes to stabilise an economy
incentives to work and hire. Attention Towards more efficient depends largely on their design, nota-
needs to be given to inactivity traps, stabilisation at national level bly in terms of eligibility conditions and
including linked to pensions, disabil- through better welfare systems duration. The coverage of unemployment
ity or early retirement schemes (see spells of less than one year is particularly
Chapter 1). The financing of employ- In recent years, the contribution to the relevant and there were signs of weaken -
ment and social protection systems stabilisation of households’ income ing of coverage for periods of between 3
can also be made more favourable to through social protection expenditure and 12 months in the crisis (Chart 30a),
employment and growth, notably by was significant in 2009, but declined with declines in a number of Mem-
broadening the financing base from from mid-2010, reversed in 2012 and ber States since 2010 (see Chart 30b,
64
wages towards other financing basis, was negligible in 2013. ( ) Actually, as notably in Greece or Spain). Beyond 12
as well as introducing some social con- indexation of social benefits is generally months, coverage has eroded in 2009
tribution exemptions for certain cat- based upon the previous year’s inflation, and then stabilised, but went on declining
egories of workers (notably the lower this leads to an increase in real terms of for the very long-term unemployment
waged, as the employment elasticity benefits in periods of declining inflation (more than 24 months).
to labour costs is higher). While some (such as periods of low growth), amplify -
positive impact on employment can ing the stabilisation impact, with poten- Making unemployment benefits more
be expected when these measures are tially sizeable budgetary impacts. sensitive to the business cycle could for
Chart 29: Trends in unemployment coverage by duration in Europe (2000–13)
Coverage by duration (aged 15–64)
Total 3 to 23 months From 3 to 11 months Coverage unemployment spell 3–12 months (aged 15-64)
24 months or over Less than 3 months
45 From 13 to 23 months Total 100
80 2010-13 2000-08
2000
2008-10
40
60
35 40
% 20
30 0
-20
25
-40
20 -60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IT BG MT SK PL LT HR RO EL CZ LV SI EE SE UK ES CY PT EU-28 LU HU FR DK AT BE FI DE
EA-18
Source: Eurostat, LFS, calculations DG EMPL.
Note: This measure of coverage of unemployment benefits does not reflect coverage by other types of benefits. Missing data for some: BG (2006–13),
IE and HR (2004–13), LU (2002–13), MT (2005–13), NL and AT (2012), UK (2009–10). Breaks in series for: EE, PL and FI in 2000, BE, BG, ES, HU, PL and SE
in 2001, LV, LT and RO in 2003, BG, FR, HR, LU, PL, RO and SK in 2004, all countries except SE in 2005, DE, ES, FR and HR in 2006, LV, LT, LU, FI and UK in 2007,
BE, PL, FI and UK in 2008, EL, CY, LT and HU in 2009, PL in 2010, BE, BG, CZ, DE, PT and SK in 2011, DE in 2012, FR and AT in 2013.
64
( ) See European Commission (2014a) and
European Employment and Social situation
report, March 2014.
228
systems also need to adapt to long and well designed, they can have distribu- While this is understandable for the
short-term changes in labour markets, tive impacts which need to be moni- indexation of benefits that aim at replac -
including more frequent unemployment tored (see Chapter 1). ing labour market incomes, it is unclear
spells, as well as increased segmentation that it is the most efficient in terms of
(see Chapter 1). Employment and social protection sys- stabilisation for benefits which are less
tems play a key role in stabilising aggre - directly related to the labour market such
Furthermore, employment and social gate demand. Unemployment benefits as (taken up) pensions or to a lesser
protection systems support the pres - are particularly important and their extent family benefits. For these ben-
ervation and accumulation of human stabilisation potential can be strength- efits, indexation rules could be smoothed
capital, leading to higher employment ened provided they can be made more over the cycle, enabling to strengthen
and productivity growth. They contribute responsive to cyclical developments automatic stabilisers more directly linked
to a life-cycle approach of building and (see Blanchard et al. 2010 and below, to labour market developments (see also
preserving human capital, with impacts such as for instance unemployment Chapter 1).
on education systems, childcare services benefit duration). Other aspects need
and post-education systems, notably to be considered, including short-time Unemployment insurance
vocational training and active labour compensation systems and smoothing could be more sensitive
market policies (see Chapter 2). the price indexation of benefits, such as to the business cycle …
pensions, which are not directly linked to
Employment and social protection the active population. The ability of unemployment insur-
systems should also provide the right ance schemes to stabilise an economy
incentives to work and hire. Attention Towards more efficient depends largely on their design, nota-
needs to be given to inactivity traps, stabilisation at national level bly in terms of eligibility conditions and
including linked to pensions, disabil- through better welfare systems duration. The coverage of unemployment
ity or early retirement schemes (see spells of less than one year is particularly
Chapter 1). The financing of employ- In recent years, the contribution to the relevant and there were signs of weaken -
ment and social protection systems stabilisation of households’ income ing of coverage for periods of between 3
can also be made more favourable to through social protection expenditure and 12 months in the crisis (Chart 30a),
employment and growth, notably by was significant in 2009, but declined with declines in a number of Mem-
broadening the financing base from from mid-2010, reversed in 2012 and ber States since 2010 (see Chart 30b,
64
wages towards other financing basis, was negligible in 2013. ( ) Actually, as notably in Greece or Spain). Beyond 12
as well as introducing some social con- indexation of social benefits is generally months, coverage has eroded in 2009
tribution exemptions for certain cat- based upon the previous year’s inflation, and then stabilised, but went on declining
egories of workers (notably the lower this leads to an increase in real terms of for the very long-term unemployment
waged, as the employment elasticity benefits in periods of declining inflation (more than 24 months).
to labour costs is higher). While some (such as periods of low growth), amplify -
positive impact on employment can ing the stabilisation impact, with poten- Making unemployment benefits more
be expected when these measures are tially sizeable budgetary impacts. sensitive to the business cycle could for
Chart 29: Trends in unemployment coverage by duration in Europe (2000–13)
Coverage by duration (aged 15–64)
Total 3 to 23 months From 3 to 11 months Coverage unemployment spell 3–12 months (aged 15-64)
24 months or over Less than 3 months
45 From 13 to 23 months Total 100
80 2010-13 2000-08
2000
2008-10
40
60
35 40
% 20
30 0
-20
25
-40
20 -60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IT BG MT SK PL LT HR RO EL CZ LV SI EE SE UK ES CY PT EU-28 LU HU FR DK AT BE FI DE
EA-18
Source: Eurostat, LFS, calculations DG EMPL.
Note: This measure of coverage of unemployment benefits does not reflect coverage by other types of benefits. Missing data for some: BG (2006–13),
IE and HR (2004–13), LU (2002–13), MT (2005–13), NL and AT (2012), UK (2009–10). Breaks in series for: EE, PL and FI in 2000, BE, BG, ES, HU, PL and SE
in 2001, LV, LT and RO in 2003, BG, FR, HR, LU, PL, RO and SK in 2004, all countries except SE in 2005, DE, ES, FR and HR in 2006, LV, LT, LU, FI and UK in 2007,
BE, PL, FI and UK in 2008, EL, CY, LT and HU in 2009, PL in 2010, BE, BG, CZ, DE, PT and SK in 2011, DE in 2012, FR and AT in 2013.
64
( ) See European Commission (2014a) and
European Employment and Social situation
report, March 2014.
228
