“Job Quality, Labour Market Performance and Well-Being” 27-28 November 2014, Brussels

1. Policy Discussion
Joint EC/OECD Seminar, Brussels, 27-28 November 2014
Hans-Peter Klös, Cologne Institute for Economic Research

2. Stylized „employment production function“
Employment regulation Wage regulation
Taxes and Social
security contributions Labour market policy
Social security law
Labor Law
Management and
worker representatives
Human Resources
Management
Vocational Education
Compensation
policy
Demography
policy
Government Company
Employment
by quantity and quality
Employers' /
Trade associations
Trade unions
Wage bargaining Demography
Tariff
parties
parties
wage agreements
Alliances for work
Coverage
of collective
agreements
and Training
Source: Cologne Institute for Economic Research
Brussels, November 27-28, 2014 2

3. Major challenge GDP-Performance, …
Change in real GDP, year-to-year, in percent
-0,7
2012 2013 2014 2015
-0,4
-0,4
1,2
1,7
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
-0,5
-1
Euro Area EU World
Source: EU, European Economic Forecast, Spring 2014
3,2
0,1
2,9
1,6
3,5
2,0
3,8
Brussels, November 27-28, 2014 3

4. … unemployment rate …
Unemployment as percent of labour force, 2013
30
25
20
15
10
5
0
* Source: ILOSTAT, 2014
Brussels, November 27-28, 2014 4

5. … or job quality?
Relationship between job quality and job quantity
Source: OECD Employment Outlook 2014
Brussels, November 27-28, 2014 5

6. It depends – because …
 … priorities are path-depending and changing.
 … various transmission channels are influencing
labour market outcomes.
 … each country has idiosyncratic strenghts and
weaknesses.
 … institutional settings are the main driver of
difference in labor market-KPI‘s, both in terms of
quantity and quality.
 … different „paradigms“ pose different challenges.
Brussels, November 27-28, 2014 6

7. „Paradigm I“: OECD-Framework for
structural reforms
Country groCuopunitnriegs s Main challenges Strengths
Group 1 ESP, GRC, ITA, PRT, SVN High structural unemployment, low
competitiveness
Productivity levels close to average
Group 2 CZE, EST, HUN, IRL, ISR,
POL, SVK
Significant productivity gap, high long-term
unemployment, low internal mobility
an participation of certain groups
Flexible wage adjustments, high
percentage of population with at least
secondary education
Group 3 DNK, NOR, NLD, SWE Low average hours worked and
overheated housing market
Good productivity level, above average
shares of population with tertiary
education
Group 4 AUT, BEL, FIN, FRA, LUX Low participation of older workers and
persistently high unemployment
Good productivity level, relatively high
and broadly-based business R&D
intensity
Group 5 AUS, CAN, CHE, GBR,
NZL, USA
Low productivity growth, high variance in
education outcomes and healthcare costs
High investment in knowledge-based
capital and good quality tertiary education
Group 6 DEU, JPN, KOR Fast population ageing, low participation
of woman, relatively weak productivity in
services
High overall employment rates, strong
export base, including of capital goods
Group 7 BRA, CHN, CHL, IDN, IND,
MEX, RUS, TUR, ZAF
Widespread informality, uneven access to
quality education, infrastructure
bottlenecks
Strong potential for productivity catching-up,
fast-growing labour force
Source: OECD, Economic Policy Reforms 2014 - Going for Growth Interim Report
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8. „Paradigm II“: OECD-Framework for job quality
Broad outcome measures of job quality and their subcomponents
Dimensions Aggregate outcome
measure of job
quality
Subcomponents (at the individual level) Main labour market and
social policies that affect
job quality
Earnings
quality
Earnings index taking
into account both
earnings level and its
distribution
(inequality).
Level of earnings. Wage setting systems.
In-work benefits schemes.
Minimum wage.
Labour
market
security
Expected earnings
loss associated with
unemployment.
Unemployment risk:
- Risk of becoming unemployed.
- Expected duration of unemployment.
Insurance against unemployment risk:
- Eligibility to unemployment benefits.
- Generosity of benefits (replacement rates.)
Employment protection
legislation.
Tax and benefit systems.
Active labour market
policies.
Quality of the
working
environment
Proportion of workers
experiencing job strain
(i. e. imbalance
between work
stressors and
workplace resources).
Work-related stress factors:
- Time pressure at work.
- Exposure to physical health risk factors.
- Workplace intimidation.
Support and resources to accomplish job duties:
- Work autonomy and learning opportunities.
- Good management practices.
- Good workplace relationships.
Working-time regulations.
Health-related labour laws.
Sickness insurance
schemes.
Occupational health care
services.
Labour inspection bodies.
Vocational training.
Source: OECD, Employment Outlook 2014
Brussels, November 27-28, 2014 8

9. Synthesis: competing or complementary?
 Regaining more growth and employment requires
balanced and targeted structural reforms.
 Structural reforms could adress quality issues as
well.
 Labor market participation is a stepping stone for
well-being.
 Trade-offs between quantity and quality can only
partially be offset.
 Improving educational outcomes seems to be a high
road for matching quantity with quality.
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