Trade union training on employment policies ITCILO, Turin, March 2004

Trade union training on employment policiesTrade union training on employment policies

ITCILO, Turin, March 2004ITCILO, Turin, March 2004

Trade union training on employment policiesTrade union training on employment policies

ITCILO, Turin, March 2004ITCILO, Turin, March 2004

Labour market policiesLabour market policiesConcepts and definitionsConcepts and definitions

Presented by Nicolas Serrière, ITCILOPresented by Nicolas Serrière, ITCILO

Key words and conceptsKey words and concepts labourlabour

Labour forceLabour force

Labour marketLabour market

Labour market informationLabour market information

Labour market analysisLabour market analysis

Labour market policyLabour market policy

Labour force – stocks and flowsLabour force – stocks and flows

stocks

31 December 2002

stocks31 December 2003

leaving entering

staying

flows

The labour marketThe labour market


exchange

supply demand

allocation and price

determination

production exchange utilisation


supply demand


Worker or potential worker

Employer, or employment opportunity


Virtual spaceVirtual spaceIn which are matched, in a more or less In which are matched, in a more or less

organised manner…organised manner…

The supply and demandThe supply and demandOf all sorts of labourOf all sorts of labour

And in which wagesAnd in which wagesAre determined.Are determined.

0

10

20

30

40

50

60

1998 1999 2000 2001

demand

supply

industrialised countries


0

10

20

30

40

50

60

1998 1999 2000 2001

demand

supply

developping countries


0

10

20

30

40

50

60

1998 1999 2000 2001

demand

supplyStructural over-supply


developing countries

Employment in developping countriesEmployment in developping countries

Wageemployment

Own-accountemployment

rural urban

Informal economy

Segmentation by, for example:Segmentation by, for example: geographic locationgeographic location gendergender industrial sectorindustrial sector occupationoccupation level of incomelevel of income level of educationlevel of education formal or informal sector formal or informal sector


A free market?A free market?

= No government intervention= No government intervention

= = in a “free market”, demand and supply in a “free market”, demand and supply (the “market forces”) determine (the “market forces”) determine together the price of labour and, hence, together the price of labour and, hence, how much of it will be employedhow much of it will be employed

It doesn’t exist!It doesn’t exist! Labour is not a commodityLabour is not a commodity

Workers have rightsWorkers have rights Workers have preferencesWorkers have preferences

Competition is never perfectCompetition is never perfect Contractual relations are biasedContractual relations are biased There is a lack of informationThere is a lack of information

Decisions are subject to regulationsDecisions are subject to regulations Whether formal or notWhether formal or not

A free market?A free market?

Which regulations?Which regulations?

official (laws and decrees)official (laws and decrees)Employment, laying off, security at Employment, laying off, security at

workworkMinimum wageMinimum wage

Collective negotiationCollective negotiationWage and working conditionsWage and working conditions

Shaped by the marketShaped by the marketMobility, availability of specific skillsMobility, availability of specific skills

International regulationsInternational regulations

the ILO Declaration on Fundamental the ILO Declaration on Fundamental Principles and Rights at Work (1998)Principles and Rights at Work (1998) freedom of association and the effective right to freedom of association and the effective right to

collective bargainingcollective bargaining the elimination of all forms of forced or the elimination of all forms of forced or

compulsory labourcompulsory labour the effective abolition of child labourthe effective abolition of child labour the elimination of discrimination in employment the elimination of discrimination in employment

and occupationand occupation

Factors affecting labour marketsFactors affecting labour markets

affecting both supply and demand sideaffecting both supply and demand side

failing institutionsfailing institutions labour market informationlabour market information

political instability, conflictpolitical instability, conflictnatural disastersnatural disastershealth criseshealth crises

factors affecting labour marketsfactors affecting labour markets

affecting the supply sideaffecting the supply side

population growthpopulation growthchanges in labour force participationchanges in labour force participationmigration within and between countriesmigration within and between countriesthe state of education and trainingthe state of education and training

factors affecting labour marketsfactors affecting labour markets

affecting the demand side:affecting the demand side:economic/financial criseseconomic/financial criseschanges in economic structurechanges in economic structuretechnological change (ICT!)technological change (ICT!)

process innovationprocess innovation product innovationproduct innovation

globalisationglobalisation

selected labour market issuesselected labour market issues

gender issuesgender issues

child labourchild labour

youth unemploymentyouth unemployment

people on the movepeople on the move

HIV/AIDSHIV/AIDS

two questions:two questions:

does your country face serious does your country face serious employment (-related) problems of any employment (-related) problems of any sort?sort?

what can the government do about it?what can the government do about it?

answer:answer: it is the main business of the government,it is the main business of the government, based on adequate information, based on adequate information,

to design and implement policies to design and implement policies

meant to prevent or to correct problems meant to prevent or to correct problems affecting the country and its population affecting the country and its population

Proportion of people living on less Proportion of people living on less than $1 a day (%)than $1 a day (%)

1990

19992015

Progress to date

Rate of progress needed to meet goal

South Asia

3644

22

01020304050

1990 2015

Sub-Saharan Africa

4648

24

01020304050

1990 2015

East Asia Pacific

14

28

14

01020304050

1990 2015

Middle East and North Af rica

221

02468

10

1990 2015

Europe and Central Asia

4

21

02468

10

1990 2015

Latin America and the Caribbean

1517

8

01020304050

1990 2015

labour market policieslabour market policies

measures meant to address failure in measures meant to address failure in labour markets, in particular measures that labour markets, in particular measures that reduce unwanted distortions in the process reduce unwanted distortions in the process of supply meeting demand.of supply meeting demand.


for whom are these policies for whom are these policies intended?intended?

whom do they actually benefit?whom do they actually benefit?whom do they by-pass?whom do they by-pass?


production exchange use

supply demand


production

e.g. investing in human resources

exchange

e.g. labour market information


use

e.g. social protection


active labour market policiesactive labour market policies

the primary objectives are…the primary objectives are…

the placement of the unemployedthe placement of the unemployed

the improvement of the productivity and the improvement of the productivity and income of the under-employedincome of the under-employed


3 main tools to carry out these objectives:3 main tools to carry out these objectives:

Public employment servicesPublic employment services

training programmestraining programmes

direct job creation programmes (wage or direct job creation programmes (wage or self-employment)self-employment)


for instance…for instance…

facilitating the contact between workers and facilitating the contact between workers and employers (e.g. job search assistance, public employers (e.g. job search assistance, public employment services, mobility incentives) employment services, mobility incentives)

increasing the supply of needed skilled workers increasing the supply of needed skilled workers (e.g. training of the unemployed, specific (e.g. training of the unemployed, specific programmes for the disabled)programmes for the disabled)

increasing the demand for workers (e.g. direct job increasing the demand for workers (e.g. direct job creation, incentives to employers, self-creation, incentives to employers, self-employment/ SME promotion)employment/ SME promotion)

ALMPs: public employment ALMPs: public employment servicesservices

keep a record of job seekers’ requestskeep a record of job seekers’ requests match as much as possible employers’ match as much as possible employers’

needs with job seekers’ requestsneeds with job seekers’ requests register the unemployed for their register the unemployed for their

unemployment benefitsunemployment benefits

ALMPs: training programmesALMPs: training programmes

they have a dual rolethey have a dual role

improve the productivity of the employedimprove the productivity of the employed

improve the employability of the improve the employability of the unemployedunemployed

ALMPs: training programmesALMPs: training programmes

they mainly target:they mainly target:

the youththe youth womenwomen the unemployed, and especially the long the unemployed, and especially the long

term unemployedterm unemployed the disabledthe disabled

ALMPs: employment supportALMPs: employment support

4 kinds of employment support programmes4 kinds of employment support programmes

employment creation in the private sectoremployment creation in the private sector employment creation in the public sectoremployment creation in the public sector self-employment assistanceself-employment assistance support for vulnerable or specific groups support for vulnerable or specific groups

(disabled, women...)(disabled, women...)

ALMPs: direct job creationALMPs: direct job creation

in the private sectorin the private sector

recruitment incentives recruitment incentives subsidies (on social contributions, wages)subsidies (on social contributions, wages) tax incentivestax incentives

ALMPs: direct job creationALMPs: direct job creation

in the public sector, to reactivate the economyin the public sector, to reactivate the economy

public services (maintenance of local public services (maintenance of local infrastructure)infrastructure)

public workspublic works

aim must be to create sustainable aim must be to create sustainable employmentemployment

ALMPs: providing support for ALMPs: providing support for self-employmentself-employment

by providing credit equal to the total amount by providing credit equal to the total amount of unemployment benefitsof unemployment benefits

promoting funds for enterprise creationpromoting funds for enterprise creation

ALMPsALMPs

On the positive side…On the positive side…

Improve matching between supply and demandImprove matching between supply and demand Reduce discouraged-workers effectReduce discouraged-workers effect Keeps wage pressure low, and therefore pushes Keeps wage pressure low, and therefore pushes

supply highersupply higher Improves productivity, profitability and Improves productivity, profitability and

competitiveness of workerscompetitiveness of workers

ALMPsALMPs

The risks…The risks…

Deadweight lossDeadweight lossPaying to help those who would find work anyway!Paying to help those who would find work anyway!

Substitution effectSubstitution effectNo new jobs creation, if those helped only get someone No new jobs creation, if those helped only get someone

else’s jobelse’s job Displacement effectDisplacement effect

Wage subsidies creating unfair competitive advantage Wage subsidies creating unfair competitive advantage and pushing other firms to lay off workersand pushing other firms to lay off workers

passive labour market policiespassive labour market policies

primary objective: income support to the primary objective: income support to the unemployedunemployed

relevant particularly in industrialised relevant particularly in industrialised countries (or those with capacity: Korea)countries (or those with capacity: Korea)

passive labour market policiespassive labour market policies

primary objective: income support to the primary objective: income support to the unemployedunemployed

early retirementearly retirement severance payseverance pay unemployment insuranceunemployment insurance unemployment assistanceunemployment assistance public works programmespublic works programmes

Thank youThank you

Documents

Trade union training on employment policies ITCILO, Turin, March 2004