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Job creation, productivity and more equality for sustained growth
catching-up Member States with a high to the added value of well-designed Such developments will need significant
level of inequality whose real GDP per combinations of social protection reforms and investments (specifically in
capita in 2013 was at least 10 % higher and activation. Some of these soci- education, training, ALMPs and health).
than it had been in 2007 ( Bulgaria, eties did so, while having relatively Such reforms and investments require a
Lithuania, Poland and Romania). strict employment protection legisla- stronger growth environment, as struc-
tion. At the same time less resilient tural reforms need stronger aggregate
It can also be noted that in the present societies have loosened EPL in recent demand (and vice versa) and invest-
‘secular stagnation’ debate on lower years and may need to address other ments need to be paid for.
long-term growth perspectives for the policy challenges.
US economy, several authors mention Among these reforms, tax shifts away
inequality as one of the contributing fac - Thirdly, societies that invest more from labour could have a vital role to
tors (see Teulings and Baldwin, 2014 and in human capital and share human play by reducing labour costs for the
S&P Capital IQ, 2014). capital more equally also show higher low-skilled and the young, where such
resilience. This is linked to the impact reductions can have a strong impact and
6.3. Lessons from that productivity has on growth, which are most needed. This makes handling
the different interactions is likely to increase over time, given the distributional implications of such
between GDP growth the likely reduction in the size of the shifts even more important.
and labour market and working-age population due to ageing.
social developments Stronger aggregate demand can come
These conclusions suggest that the EU either from the public or private sec-
Some overall conclusions could be should try to develop its comparative tor, but it is important that it occurs in a
advantage on issues such as appren-
drawn from the literature and the way that does not weaken the structural
analysis presented in this Chapter (with ticeship, enterprise training, internal improvements in budgets – hence an EU-
cross-references to other chapters). flexibility, workers’ involvement and led public investment initiative is such
participation, ensuring that opportuni- an attractive idea since it paves the way
Firstly, more equal societies appear ties are widely shared and that access for more productivity in the months and
to do better in terms of growth and to the labour market at all levels is not years to come.
employment resilience. This is linked to decided simply by market forces.
differences in the propensity to spend As ECB President Draghi concluded: ‘the
(short-term growth) and differences in They also imply that the EU would ben- way back to higher employment… is a
access to education and health services efit by restoring the sustainability and policy mix that combines monetary, fis-
(affecting human capital and long-term effectiveness of its social model, nota- cal and structural measures at the union
growth). bly by improving its design (e.g. combin- level and at the national level. This
ing protection and activation) and by the will allow each member of our union
Secondly, high-employment socie- orientation of its expenditure towards to achieve a sustainably high level of
94
ties show higher resilience, pointing greater social investment. employment’ ( ).
( ) Draghi (2014).
94
37
catching-up Member States with a high to the added value of well-designed Such developments will need significant
level of inequality whose real GDP per combinations of social protection reforms and investments (specifically in
capita in 2013 was at least 10 % higher and activation. Some of these soci- education, training, ALMPs and health).
than it had been in 2007 ( Bulgaria, eties did so, while having relatively Such reforms and investments require a
Lithuania, Poland and Romania). strict employment protection legisla- stronger growth environment, as struc-
tion. At the same time less resilient tural reforms need stronger aggregate
It can also be noted that in the present societies have loosened EPL in recent demand (and vice versa) and invest-
‘secular stagnation’ debate on lower years and may need to address other ments need to be paid for.
long-term growth perspectives for the policy challenges.
US economy, several authors mention Among these reforms, tax shifts away
inequality as one of the contributing fac - Thirdly, societies that invest more from labour could have a vital role to
tors (see Teulings and Baldwin, 2014 and in human capital and share human play by reducing labour costs for the
S&P Capital IQ, 2014). capital more equally also show higher low-skilled and the young, where such
resilience. This is linked to the impact reductions can have a strong impact and
6.3. Lessons from that productivity has on growth, which are most needed. This makes handling
the different interactions is likely to increase over time, given the distributional implications of such
between GDP growth the likely reduction in the size of the shifts even more important.
and labour market and working-age population due to ageing.
social developments Stronger aggregate demand can come
These conclusions suggest that the EU either from the public or private sec-
Some overall conclusions could be should try to develop its comparative tor, but it is important that it occurs in a
advantage on issues such as appren-
drawn from the literature and the way that does not weaken the structural
analysis presented in this Chapter (with ticeship, enterprise training, internal improvements in budgets – hence an EU-
cross-references to other chapters). flexibility, workers’ involvement and led public investment initiative is such
participation, ensuring that opportuni- an attractive idea since it paves the way
Firstly, more equal societies appear ties are widely shared and that access for more productivity in the months and
to do better in terms of growth and to the labour market at all levels is not years to come.
employment resilience. This is linked to decided simply by market forces.
differences in the propensity to spend As ECB President Draghi concluded: ‘the
(short-term growth) and differences in They also imply that the EU would ben- way back to higher employment… is a
access to education and health services efit by restoring the sustainability and policy mix that combines monetary, fis-
(affecting human capital and long-term effectiveness of its social model, nota- cal and structural measures at the union
growth). bly by improving its design (e.g. combin- level and at the national level. This
ing protection and activation) and by the will allow each member of our union
Secondly, high-employment socie- orientation of its expenditure towards to achieve a sustainably high level of
94
ties show higher resilience, pointing greater social investment. employment’ ( ).
( ) Draghi (2014).
94
37
