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Employment and Social Developments in Europe 2014
6. Conclusions the unemployed through activation, market. Moreover, the rise of social
(re)training services, quality of the exclusion has a very negative impact
This chapter has taken stock of the public employment services, and well- on public trust in institutions and gov -
impact of the recession on people and designed income support contributed ernments, contributing to the political
institutions, analysed the role of social to a faster recovery. uncertainty that already undermines
protection systems and labour market the effectiveness of policy action.
institutions in explaining the various • Activity rates continued to increase
levels of resilience to the crisis, and during the recession, with fewer peo- In relating the pre-crisis situation of
assessed how well policy changes since ple leaving the labour market than labour market institutions and patterns
2008 are likely to help the EU to promote might have been expected on past of social expenditure to the post-cri-
a job-rich and inclusive growth as well experience of periods of high unem- sis outcomes, as well as to the policy
as being better prepared in the future. ployment. This contrasts quite signifi - changes by Member States since 2008,
cantly with experiences in previous the following lessons can be drawn:
We find that Member States have shown recessions. It is seen to be driven by
different levels of resilience to the eco- the structural rise in participation of • The development of social expendi-
nomic shock experienced across the EU. women and older workers, supported ture has proved to be an important
While employment levels have declined by policy measures that have not factor in explaining the resilience
and unemployment increased in most been reversed during the recession. of some Member States during the
countries, some have managed to limit recession. Social protection expendi-
the worst effects, because of their initial • Employment rates of young people ture increased in the first phase of
position and/or the policies implemented entering the labour market are cur- the crisis, absorbing part of the shock
in reaction to the crisis. rently below pre-recession levels in in most Member States, thanks to
most countries. This is of particular ‘automatic’ stabilisation and to ad-
The design of different labour market concern given the known negative hoc discretionary measures. How-
institutions contributed to mitigate or consequences of facing unemploy - ever, as the recession has persisted,
exacerbate the impact of economic ment early in a career, although social expenditure has started to be
shocks on employment. The effective- highly educated young people are cut back.
ness of automatic stabilisers in sustain- relatively well protected against such
ing incomes of those directly affected scarring effects. • The design and operational character -
and in stabilising the economy depends istics of welfare systems and labour
on the extent to which they provide • Many young people entered or market institutions help explain dif-
longer term support in the case of a pro - stayed in education, especially in fering degrees of resilience to eco-
longed period of weak labour demand, Member States where participation nomic shocks across Member States.
while not creating disincentives to work. had previously been low and where The transmission of economic shocks
At the same time, using the opportunity youth unemployment is currently to employment and income was
of the recession to invest in skills and high. However, the extent to which smaller in those with a lower share
ensure that they are properly used can this will improve their future employ- of temporary contracts, a greater
be crucial in helping maintain an adapta - ment and earnings opportunities will availability and use of short-time
ble and productive workforce and speed - depend on the quality of education, working arrangements, a stronger
ing recovery. which may be undermined by recent investment in labour market activa-
cuts in expenditure. tion measures and lifelong learning,
In terms of the short- and long-term as well as widely available unemploy -
impacts of the recession, the following • Future employment growth will need ment benefits linked to activation,
points stand out: to be widely shared if it is to contribute and responsive to the economic cycle.
to reducing inequalities and prevent-
• The recession generated large ing long-term exclusion. In the face • The relationship between employ-
increases in the number of unem - of declining job opportunities, people ment protection legislation (EPL),
ployed, especially among some have developed multiple strategies labour market activation policies and
specific groups (youth, low-skilled) for finding work, going beyond the use income support changed somewhat
and long-term unemployment rose of public employment services, such during the recession. The loosening
in nearly all countries, and doubled as mobilising family ties and social of EPL has not been so far a strong
overall. The recession also impacted networks, as well as adjusting their predictor of transitions out of unem-
negatively on job quality, notably due quantity of work (part-time, on call, ployment or of general labour mar-
to increasing involuntary part-time informal work, etc.). ket performance, signalling that the
and temporary employment. effects of EPL reforms during peri-
• Unemployment and economic hard- ods of low labour demand may have
• The large variation across countries ship has led many households to limited impacts and that they may
in the ability to prevent long-term drastically adjust their expenditure require longer than the short- and
unemployment (as measured by exit and draw on savings, with many medium-term to have an effect.
rates out of short-term unemploy- moving into debt. The weakening of
ment) reflects differences both in the social ties or the increased reliance • The analysis highlighted that EPL
severity of economic conditions and in on informal support may undermine alone cannot explain labour market
the policies implemented. Supporting integration in society and the labour outcomes but is just one of several
90
6. Conclusions the unemployed through activation, market. Moreover, the rise of social
(re)training services, quality of the exclusion has a very negative impact
This chapter has taken stock of the public employment services, and well- on public trust in institutions and gov -
impact of the recession on people and designed income support contributed ernments, contributing to the political
institutions, analysed the role of social to a faster recovery. uncertainty that already undermines
protection systems and labour market the effectiveness of policy action.
institutions in explaining the various • Activity rates continued to increase
levels of resilience to the crisis, and during the recession, with fewer peo- In relating the pre-crisis situation of
assessed how well policy changes since ple leaving the labour market than labour market institutions and patterns
2008 are likely to help the EU to promote might have been expected on past of social expenditure to the post-cri-
a job-rich and inclusive growth as well experience of periods of high unem- sis outcomes, as well as to the policy
as being better prepared in the future. ployment. This contrasts quite signifi - changes by Member States since 2008,
cantly with experiences in previous the following lessons can be drawn:
We find that Member States have shown recessions. It is seen to be driven by
different levels of resilience to the eco- the structural rise in participation of • The development of social expendi-
nomic shock experienced across the EU. women and older workers, supported ture has proved to be an important
While employment levels have declined by policy measures that have not factor in explaining the resilience
and unemployment increased in most been reversed during the recession. of some Member States during the
countries, some have managed to limit recession. Social protection expendi-
the worst effects, because of their initial • Employment rates of young people ture increased in the first phase of
position and/or the policies implemented entering the labour market are cur- the crisis, absorbing part of the shock
in reaction to the crisis. rently below pre-recession levels in in most Member States, thanks to
most countries. This is of particular ‘automatic’ stabilisation and to ad-
The design of different labour market concern given the known negative hoc discretionary measures. How-
institutions contributed to mitigate or consequences of facing unemploy - ever, as the recession has persisted,
exacerbate the impact of economic ment early in a career, although social expenditure has started to be
shocks on employment. The effective- highly educated young people are cut back.
ness of automatic stabilisers in sustain- relatively well protected against such
ing incomes of those directly affected scarring effects. • The design and operational character -
and in stabilising the economy depends istics of welfare systems and labour
on the extent to which they provide • Many young people entered or market institutions help explain dif-
longer term support in the case of a pro - stayed in education, especially in fering degrees of resilience to eco-
longed period of weak labour demand, Member States where participation nomic shocks across Member States.
while not creating disincentives to work. had previously been low and where The transmission of economic shocks
At the same time, using the opportunity youth unemployment is currently to employment and income was
of the recession to invest in skills and high. However, the extent to which smaller in those with a lower share
ensure that they are properly used can this will improve their future employ- of temporary contracts, a greater
be crucial in helping maintain an adapta - ment and earnings opportunities will availability and use of short-time
ble and productive workforce and speed - depend on the quality of education, working arrangements, a stronger
ing recovery. which may be undermined by recent investment in labour market activa-
cuts in expenditure. tion measures and lifelong learning,
In terms of the short- and long-term as well as widely available unemploy -
impacts of the recession, the following • Future employment growth will need ment benefits linked to activation,
points stand out: to be widely shared if it is to contribute and responsive to the economic cycle.
to reducing inequalities and prevent-
• The recession generated large ing long-term exclusion. In the face • The relationship between employ-
increases in the number of unem - of declining job opportunities, people ment protection legislation (EPL),
ployed, especially among some have developed multiple strategies labour market activation policies and
specific groups (youth, low-skilled) for finding work, going beyond the use income support changed somewhat
and long-term unemployment rose of public employment services, such during the recession. The loosening
in nearly all countries, and doubled as mobilising family ties and social of EPL has not been so far a strong
overall. The recession also impacted networks, as well as adjusting their predictor of transitions out of unem-
negatively on job quality, notably due quantity of work (part-time, on call, ployment or of general labour mar-
to increasing involuntary part-time informal work, etc.). ket performance, signalling that the
and temporary employment. effects of EPL reforms during peri-
• Unemployment and economic hard- ods of low labour demand may have
• The large variation across countries ship has led many households to limited impacts and that they may
in the ability to prevent long-term drastically adjust their expenditure require longer than the short- and
unemployment (as measured by exit and draw on savings, with many medium-term to have an effect.
rates out of short-term unemploy- moving into debt. The weakening of
ment) reflects differences both in the social ties or the increased reliance • The analysis highlighted that EPL
severity of economic conditions and in on informal support may undermine alone cannot explain labour market
the policies implemented. Supporting integration in society and the labour outcomes but is just one of several
90
