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Employment and Social Developments in Europe 2014
Chapter 1: The legacy of the crisis: resilience and challenges ...........................41
1. Introduction ................................................................................41
2. The legacy of the crisis on the employment and social situation .....................41
2.1. Long and protracted recession .................................................................41
2.2. Participation in education and in the labour market continued to rise ....................................49
2.3. Falling incomes and rising market income inequalities put tax and transfers systems under pressure ...........54
3. The potential long-term impacts on people and society ...............................58
3.1. Scarring effects of unemployment — evidence from most recent data ..................................58
3.2. Households: running into debt, adjusting consumption and pooling resources ..............................60
3.3. Impact on health and access to healthcare .......................................................62
3.4. Weakening trust in institutions .................................................................63
4. The impact of the recession on welfare systems .......................................64
4.1. The three functions of social spending: investment, stabilisation and protection ...........................64
4.2. The developments of government and social expenditure during the crisis ................................64
4.3. Investing in children and families, young and working-age population ...................................66
4.4. The development of social protection as an automatic stabiliser .......................................70
4.5. The development in the financing of social protection: risks and opportunities .............................72
5. The impact of the recession on labour market institutions ............................73
5.1. A healthy labour market: balancing employment protection legislation, activation and support ................73
5.2. Employment protection legislation: reductions with results still pending ..................................74
5.3. The development of activation during the recession: investment in human capital and activation yielded positive
labour market outcomes .....................................................................77
5.4. The development of unemployment benefits and short-time working arrangements ........................82
5.5. The role of social partners: industrial relations and minimum wages ....................................87
5.6. The institutional balance to recover and benefit from growth: flexibility, activation and
support to prevent and tackle long-term unemployment .............................................88
6. Conclusions ................................................................................90
Annex 1: Employment change by job-wage quintile ........................................92
Annex 2: Review of literature on scarring effects ..........................................93
Annex 3: Coping strategies during the recession — Qualitative analysis ................95
Annex 4: RESCuE project — Patterns of Resilience during Socioeconomic Crises
among Households in Europe 98
References .....................................................................................99
4
Chapter 1: The legacy of the crisis: resilience and challenges ...........................41
1. Introduction ................................................................................41
2. The legacy of the crisis on the employment and social situation .....................41
2.1. Long and protracted recession .................................................................41
2.2. Participation in education and in the labour market continued to rise ....................................49
2.3. Falling incomes and rising market income inequalities put tax and transfers systems under pressure ...........54
3. The potential long-term impacts on people and society ...............................58
3.1. Scarring effects of unemployment — evidence from most recent data ..................................58
3.2. Households: running into debt, adjusting consumption and pooling resources ..............................60
3.3. Impact on health and access to healthcare .......................................................62
3.4. Weakening trust in institutions .................................................................63
4. The impact of the recession on welfare systems .......................................64
4.1. The three functions of social spending: investment, stabilisation and protection ...........................64
4.2. The developments of government and social expenditure during the crisis ................................64
4.3. Investing in children and families, young and working-age population ...................................66
4.4. The development of social protection as an automatic stabiliser .......................................70
4.5. The development in the financing of social protection: risks and opportunities .............................72
5. The impact of the recession on labour market institutions ............................73
5.1. A healthy labour market: balancing employment protection legislation, activation and support ................73
5.2. Employment protection legislation: reductions with results still pending ..................................74
5.3. The development of activation during the recession: investment in human capital and activation yielded positive
labour market outcomes .....................................................................77
5.4. The development of unemployment benefits and short-time working arrangements ........................82
5.5. The role of social partners: industrial relations and minimum wages ....................................87
5.6. The institutional balance to recover and benefit from growth: flexibility, activation and
support to prevent and tackle long-term unemployment .............................................88
6. Conclusions ................................................................................90
Annex 1: Employment change by job-wage quintile ........................................92
Annex 2: Review of literature on scarring effects ..........................................93
Annex 3: Coping strategies during the recession — Qualitative analysis ................95
Annex 4: RESCuE project — Patterns of Resilience during Socioeconomic Crises
among Households in Europe 98
References .....................................................................................99
4
