Resumen de Factores influyentes para la consecución de mercados laborales europeos resilientes
The fight against unemployment and job exclusion has been an essential objective in the policies of the EU and its member states since the very beginning.
From the White Paper on Growth, Competitiveness and Employment (1963) to the present 2020 Strategy, Europe has undergone a change in its employment model. The Treaty of Amsterdam (1997) prepared the ground for the European Employment Strategy with the double aim of reducing unemployment and creating new jobs. These aims were later confirmed by the Lisbon Strategy (2000-2010) in order to face the challenges of the new millennium and reach full employment. However, during the period, the financial crisis that began in 2008 gave rise to the currently in force Europe 2020 Strategy, which in turn was strongly conditioned by the context of the crisis.
The financial crisis reached considerable international dimensions and hit the EU economy in the second half of 2008, reducing the Gross Domestic Product of most of its member countries.
The negative effects were also felt in the labour market, showing territorial differences in terms of increased unemployment and recovery rates. In spite of the economic recovery experienced by some countries in 2010, many others found themselves in the middle of a second recession.
The study of resilience has become increasingly important in many fields of study as a result of the 2008 crisis. In general terms, this concept refers to the ability of a system to return to its previous state after a disruptive shock. Due to the latest economic crisis, this term has now become a study framework to explain the different behaviour of different economies and labour markets during a recession. Although the study of resilience is traditionally subject to various interpretations, such as the engineering, ecological and adaptive approaches, it has also been regarded as a process made up of a number of consecutive stages including vulnerability, adaptation and adaptability.
In spite of its different interpretations, the fundamental question in the study of resilience focuses on the factors that favour a resilient result in the presence of a shock. In the context of labour market, this means identifying the causes that explain the vulnerability of labour markets to a crisis, the factors that influence their reactions and the key elements that promote recovery in the new context after the shock.
In order to find the answers to these questions, in the present study resilience is understood to be a process comprised of three dimensions: “vulnerability”, “adaptation” and “adaptability”. The first is considered to be a condition existing before the shock, while the other two are understood as subsequent states that allow a system to return to its previous state, re-organise itself and learn the appropriate lessons from the after-effects of the shock.
Starting from this premise, the main aim of this thesis was to identify the combination of conditioning factors that led to either labour market resilience or non-resilience in each of these stages after the 2008 economic crisis. In this thesis, labour market resilience is specifically studied from an engineering approach, understood to be the ability of a labour market to return to its pre-crisis situation (2007).
With this in mind, this thesis describes three longitudinal studies based on Crisp-set Qualitative Comparative Analysis (csQCA) carried out to obtain a short explanation of a complex phenomenon. This method enables the identification of different configurations of factors that lead either to the expected result or to its absence. The Qualitative Comparative Analysis (QCA) can be used for two types of analysis: the necessity analysis and the sufficiency analysis.
Thanks to the possibilities of the QCA method, the results obtained show the diverse necessary and sufficient conditions required by European States to reach labour market resilience or non-resilience in the above-mentioned three dimensions.
A vulnerability study first tested the model composed of the dependent variables: labour flexibility, labour market policies, educational qualifications and cyclical temporary work. The study was based on the assumption that certain working conditions existing at the start of the crisis could affect short-term labour market resilience in order to reduce vulnerability to economic shocks.
The necessity analysis results on vulnerability showed the existence of certain conditions that could be considered a requirement for resilience, although individually they did not lead to a resilient result. This analysis specifically showed that the labour markets that had achieved resilience in 2010 had certain pre-crisis conditions in 2007 characterised by either a higher proportion of an active population with a high level of education or a labour market flexibility that was lower than the median of the countries in the study sample. These results firstly underline the importance of human capital as a short-term cushioning factor against economic shocks and unemployment. Secondly, the solution found could help to explain the role of labour flexibility in the development of European labour markets when the active population has a lower educational level than the median of the countries in the study. In countries whose active population had a lower education level, less flexible working conditions were required to maintain employment levels. The sufficiency analysis identified a combination of pre-crisis conditions which were only found in Austria, Poland and Germany. In 2007, all these countries had a higher proportion of an active population with a higher educational level and higher spending on active employment policies, together with a higher level of temporary jobs than the sample median. Even though temporary work in cyclical sectors can be understood to be a potential risk factor, these countries were in fact resilient. This result agrees with and reinforces the “Singapore Paradox”, which asserts that an apparently vulnerable country, due to having a number of risk factors, may indeed become resilient. The findings thus suggest that certain risk factors, in the presence of other protective factors, such as human capital or a high level of investment in active labour policies, may generate a positive result. This finding therefore stresses the importance of reinforcing job-protecting factors since they can potentially be used as a cushion after an economic shock in the presence of certain risk factors, such as a large number of temporary jobs in cyclical sectors.
In the same study, the necessity analysis ruled out the existence of any necessary condition for non-resilience. However, the sufficiency analysis found a single solution with five prime implicants that explained 85% of the non-resilient cases. In general it found that non-resilience was not subject to a greater concentration of risk factors. Diverse combinations of the results indicated that countries that were potentially less vulnerable due to a smaller concentration of risk factors did not achieve resilience in the absence of protective factors.
In conclusion, the results related to reducing the vulnerability of labour markets after an economic shock underline the importance of protecting jobs by investing in labour market policies and human capital to be used as potential cushions after a crisis when certain risk factors are present, such as a high proportion of temporary jobs in construction and manufacturing. The second study aimed at identifying any labour adjustments that could have improved or reduced European labour market adaptation during the crisis up to 2010. For this, a model was tested comprising of the following conditions: average weekly hours worked, temporary jobs, active labour policies, GDP fluctuations, and the relationship between increasing unemployment and a drop in GDP.
The results of this phase revealed that the severity of the crisis impact was a key factor. The necessity analysis showed that, regardless of the size of the drop in GDP, low sensitivity of unemployment to reduced economic activity was a necessary condition for resilience. Also, given the diversity of the impact of the economic crisis in the different countries, the sufficiency analysis showed two different strategies required to achieve resilience according to the severity of the impact. In this way, the strategies adopted by the labour markets to become resilient in the adaptation phase differed according to the severity of the economic impact they had to absorb. The resilient countries in which the impact was lower than the EU-28 average in terms of unemployment and reduced GDP, like Poland and Austria, applied a strategy based on higher spending on active labour policies and fewer total hours worked per worker. Although both these measures were shown to be factors that helped to mitigate the effects of the crisis, the results of the present study have contributed to clarifying the context in which these measures lead to a resilient result. The double strategy was successful in the countries in which the crisis was less severe in economic terms than the EU-28 average. The sufficiency analysis identified another combination of factors in the resilient countries most affected by the crisis, like Germany and Luxembourg, which used an adaptation strategy based on increasing the number of hours worked, which could be considered to be a recovery strategy, since both these countries had already recovered the pre-crisis employment levels in 2009. In general terms, the solutions found by the sufficiency analysis in the present study show that the labour markets’ adaptive capacity is not just subject to the severity of the crisis they experienced, since both Germany and Luxembourg managed to become resilient. In the results on the absence of resilience in the adaptation phase, the necessity analysis showed a configuration that was shared by all the non-resilient countries, with a reduced number of hours worked between 2007 and 2010 or a smaller impact in economic terms than the EU-28 average. This finding firstly pre-supposes the difficulty of labour markets to recover lost jobs after small reductions in economic activities, and secondly the lack of success of the measures considered to be key factors, such as reduced working hours in certain contexts. The sufficiency analysis identified four combinations of factors that led to labour market non-resilience in the short term and explained 73% of these cases. The results showed that small disturbances in the economy can often have a serious effect on employment in certain countries. They also showed that the successful recovery strategies highlighted in the literature do not work in the short term in countries going through a severe economic crisis, as experienced by the Baltic Nations.
The results achieved here thus reveal firstly the existence of different recovery rates in Europe during the crisis, and secondly the short-term effects of a drop in GDP on the labour market. They also highlight the fact that a non-resilient result was obtained for some countries that did not reinforce active employment policies, even when the crisis had limited impact on their economies. Finally, the aim of the third study was to determine the long-term labour adjustments that promoted market adaptability up to 2012. In this study the model was comprised of the dependent variables: flexibility, working time, temporary work, active labour market policies and GDP variation.
The subsequent necessity analysis obtained the necessary conditions present in all the resilient countries. According to the first solution, they all experienced increased economic activity between 2007 and 2012, suggesting that recovering lost jobs is associated with economic recovery, although this does not imply labour market resilience. The necessity analysis’ second solution showed that all the resilient countries could either reduce the number of working hours or reduce their labour flexibility. In particular, with the exception of Germany and Luxembourg, the remaining resilient countries reduced the number of working hours. This underlines the importance of employment measures based on reduced working hours in order to achieve a positive long-term result. However, both Germany and Luxembourg reduced their labour flexibility between 2007 and 2012 to achieve resilience, suggesting that the countries that did not reduce their working hours during this period had to reduce their labour flexibility in order to recover jobs in the long term. However, given that these were only necessary conditions, underlines the fact that these factors by themselves are not sufficient conditions to generate a resilient result. The sufficiency analysis on adaptability carried out in the study provided two different strategies to tackle the long term effects of the crisis, explaining the cases of the Czech Republic, Malta, Austria and Luxembourg. The first three increased their labour flexibility and temporary employment between 2007 and 2012 while Luxembourg increased its total hours worked and number of temporary jobs in the same period to achieve resilience. In the latter case, increasing both the numbers of hours worked and temporary jobs could be a sign of economic recovery. In fact, measures based on reducing working hours were used as a temporary strategy during the crisis to deal with the drop in production. In this way, both strategies in general show the importance of flexibility as they increase the number of temporary jobs in addition to other measures to get out of the crisis. The above indicates that recovery after the crisis and labour market adaptability are characterised by applying measures based on improving “labour flexibility” in combination with other factors. Despite the fact that this result supports the EU’s directives and strategies put in place since the nineties, there is a danger that the trend towards making labour markets more flexible is not associated with appropriate measures for job protection. The present study shows that similar strategies may in fact obtain different results, as in the specific case of Estonia, which although they applied the same strategy as the Czech Republic, Malta and Austria, did not become resilient, showing the importance of the context in which certain measures are applied. The results on non-resilience did not show any necessary condition for this phenomenon, although the sufficiency analysis gave a solution with four prime implicants that explained 74% of the non-resilient cases. The results obtained on the adaptability phase firstly showed the effects of a drop in economic activities as the prime cause of a negative result. In some countries the mere fact of not having recovered their pre-crisis GDP levels was a sufficient condition for not achieving labour market resilience, underlining the negative effect on European labour markets of persistent and long-lasting economic shocks. Secondly, the results indicate that to achieve non-resilience there should be an imbalance between flexibility and job security, or flexicurity. Despite the wide range of European flexicurity models, the results show that failing to reinforce any of the potential flexicurity dimensions, in addition to an imbalance between flexibility and job protection, can lead to a non-resilient result in certain countries in the long term. Therefore the results of the last study reveal three important questions. Firstly, that the same strategy produced different results, as in the case of Estonia, which underlines the importance of the context in which the measures are applied. This, in turn, emphasises that there is no single model or universal prescription to achieve labour market resilience in Europe, showing that the study of labour policies and their transferability is an extremely complex field. Secondly, the resilient strategies underline the importance of increasing “flexibility” combined with other measures to escape from a crisis. Finally, the non-resilient results show the importance of the imbalance between the flexicurity dimensions and the effects of a recession to achieve long-term non-resilience. The analysis of the different strategies adopted by EU countries during the stages of vulnerability, adaptation and adaptability thus shows that certain factors, such as human capital and investment in active employment policies, can be especially important when it comes to protecting labour market vulnerability against economic shocks, since they can contribute to obtaining short-term labour market resilience.
After the crisis hit, during the adaptation phase, the severity of the impact on the economy was shown to be a determining factor for deciding on the appropriate recovery strategy. The countries less severely affected in terms of GDP loss applied measures based on strengthening certain parts of the job protection dimension within the EU’s recommended “flexicurity” strategy, including the much used active employment policies and others based on internal numerical flexibility, such as reducing the working day and total hours worked. Increasing labour flexibility was also a crucial element in the adaptability phase. In view of the results obtained, this aspect could be considered to involve certain risks if this trend were to continue without applying job protection measures. As the first study in this thesis showed, reinforcing certain elements in order to protect jobs was an especially vital factor in reducing labour market vulnerability in a crisis. Based on the results obtained in this work, a number of recommendations can be made that would help to design policies aimed at reinforcing labour market resilience. Firstly, given the importance of protection factors in certain resilience phases, the EU countries should opt for greater investment in their active employment policies and human capital in order to reduce their vulnerability to economic crises. These results highlight the importance of promoting permanent worker re-training to make the most of the human capital in the active population as well as maintaining and adapting working skills to market requirements. During the crisis, reinforcing this factor was considered to be essential in view of the reduction in “job matching”. Better qualified and better trained workers would promote temporary internal flexibility within companies and could be obtained by applying measures based on internal functional flexibility as an alternative to dismissing workers in a crisis. Increasing investment in educational and training plans would reduce the vulnerability of unskilled workers and provide them with greater possibilities of finding jobs during a long-term crisis. The different models tested in this work warn of the danger of creating flexible markets without appropriate job protection measures. It is necessary to choose an authentic “flexicurity” strategy, without forgetting job security, within the every-day more global and competitive economy, in which the processes of labour flexibility, evident signs of globalisation, would appear to be irreversible.
