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Chapter 1: The legacy of the crisis: resilience and challenges
labour market institutions whose higher levels of competitiveness than achieve their full employment poten-
reform may need to be utilised to those who do not. tial throughout their lifetime. In this
combat unemployment and a dual respect, for example, expenditure
labour market. Countries display- • Faced with a prolonged recession on childcare is supporting the active
ing the best returns to employment and the increase in long-term unem- participation of women in the labour
from short-term unemployment ployment most countries did not, or market, with countries starting from
and transitions from temporary to could not, strengthen the automatic low levels benefiting the most.
permanent contracts in 2012 were stabilisation dimension of their wel-
those that had the most developed fare systems, thus undermining the • The evidence from the complex,
and balance set of labour market effectiveness of social protection. and mixed, experience of the Mem-
institutions. The best perform- This argues for increasing the respon- ber States during the recession has
ers combined significantly higher siveness of unemployment benefits underlined the importance of ensur-
spending in ALMP, stronger acti to the economic cycle, by allowing a ing balanced and purposeful reforms
-
vation conditionality, higher par- temporary increase in the duration of of both labour market institutions and
ticipation in lifelong learning and benefits and a relaxation of the eligi- welfare systems. It showed that, in
higher coverage and adequacy of bility criteria during recessions. Other contrast to experiences in previous
unemployment benefits than the measures, such as minimum income recessions, recent policy reforms in
countries with the lowest labour schemes linked to activation and a areas such as pensions and childcare
market performance. During the more responsive indexation of family have helped prevent a massive with-
crisis, countries with the lowest per- benefits and pensions may also sup- drawal of older workers and women
formance reduced the strictness of port these efforts. In times of growth, from the labour markets. It showed
their employment protection legis- the eligibility and duration of unem- the successful complementarity of
lation, but they did not improve the ployment benefits can be readjusted, short-time working arrangements
other labour market institutions. just as the pressures to increase and partial unemployment benefits
labour market flexibility may decrease, during the crisis. It also highlighted
• Short-time working schemes accom- in order to limit possible employment the important role that social partners
panied by partial unemployment ben - disincentives and support the financial can play in the successful design and
efits were extensively used during the sustainability of social expenditure. implementation of such schemes.
early phase of the recession and were
successful in maintaining employ- • The sustainability of social expendi- Adequate levels of social investment,
ment and containing unemployment. ture is influenced by the structure investment in lifelong learning, a greater
of its financing arrangements. The responsiveness of social expenditure to
• Investments in lifelong learning can apparent move away from financing the economic cycle, and integrated wel-
play a crucial role in both supporting a through social security contribution fare reforms supported by well-func-
recovery and ensuring long-run com- to financing from general taxation tioning labour markets can contribute
petitiveness. There is a strong positive may open the way for a more inclu- to better prepare people and societies
relationship between the participation sive system, but the design of benefit to face any future crises, as well as pro-
rates of the unemployed in educa- systems also need to be appropri- vide the necessary foundations for more
tion and training, and their chances ately adjusted. productive economies and societies. In
to go back to work. Even when con- this respect, recent efforts to stimulate
trolling for differences in education • A number of Member States are pro- labour demand, such as the reduction of
levels, Member States with the high- gressively moving towards a social the tax wedge and incentives to entre-
est levels of participation in lifelong investment model that supports preneurship, can also serve to strengthen
learning and whose employers value all those who wish to participate in the impact of reforms in pursuit of job-
and invest in human capital achieve the labour market by helping them rich and inclusive growth.
91
labour market institutions whose higher levels of competitiveness than achieve their full employment poten-
reform may need to be utilised to those who do not. tial throughout their lifetime. In this
combat unemployment and a dual respect, for example, expenditure
labour market. Countries display- • Faced with a prolonged recession on childcare is supporting the active
ing the best returns to employment and the increase in long-term unem- participation of women in the labour
from short-term unemployment ployment most countries did not, or market, with countries starting from
and transitions from temporary to could not, strengthen the automatic low levels benefiting the most.
permanent contracts in 2012 were stabilisation dimension of their wel-
those that had the most developed fare systems, thus undermining the • The evidence from the complex,
and balance set of labour market effectiveness of social protection. and mixed, experience of the Mem-
institutions. The best perform- This argues for increasing the respon- ber States during the recession has
ers combined significantly higher siveness of unemployment benefits underlined the importance of ensur-
spending in ALMP, stronger acti to the economic cycle, by allowing a ing balanced and purposeful reforms
-
vation conditionality, higher par- temporary increase in the duration of of both labour market institutions and
ticipation in lifelong learning and benefits and a relaxation of the eligi- welfare systems. It showed that, in
higher coverage and adequacy of bility criteria during recessions. Other contrast to experiences in previous
unemployment benefits than the measures, such as minimum income recessions, recent policy reforms in
countries with the lowest labour schemes linked to activation and a areas such as pensions and childcare
market performance. During the more responsive indexation of family have helped prevent a massive with-
crisis, countries with the lowest per- benefits and pensions may also sup- drawal of older workers and women
formance reduced the strictness of port these efforts. In times of growth, from the labour markets. It showed
their employment protection legis- the eligibility and duration of unem- the successful complementarity of
lation, but they did not improve the ployment benefits can be readjusted, short-time working arrangements
other labour market institutions. just as the pressures to increase and partial unemployment benefits
labour market flexibility may decrease, during the crisis. It also highlighted
• Short-time working schemes accom- in order to limit possible employment the important role that social partners
panied by partial unemployment ben - disincentives and support the financial can play in the successful design and
efits were extensively used during the sustainability of social expenditure. implementation of such schemes.
early phase of the recession and were
successful in maintaining employ- • The sustainability of social expendi- Adequate levels of social investment,
ment and containing unemployment. ture is influenced by the structure investment in lifelong learning, a greater
of its financing arrangements. The responsiveness of social expenditure to
• Investments in lifelong learning can apparent move away from financing the economic cycle, and integrated wel-
play a crucial role in both supporting a through social security contribution fare reforms supported by well-func-
recovery and ensuring long-run com- to financing from general taxation tioning labour markets can contribute
petitiveness. There is a strong positive may open the way for a more inclu- to better prepare people and societies
relationship between the participation sive system, but the design of benefit to face any future crises, as well as pro-
rates of the unemployed in educa- systems also need to be appropri- vide the necessary foundations for more
tion and training, and their chances ately adjusted. productive economies and societies. In
to go back to work. Even when con- this respect, recent efforts to stimulate
trolling for differences in education • A number of Member States are pro- labour demand, such as the reduction of
levels, Member States with the high- gressively moving towards a social the tax wedge and incentives to entre-
est levels of participation in lifelong investment model that supports preneurship, can also serve to strengthen
learning and whose employers value all those who wish to participate in the impact of reforms in pursuit of job-
and invest in human capital achieve the labour market by helping them rich and inclusive growth.
91
