El uso masivo de la tecnología provocará que, al final de esta década, el volumen de datos almacenados electrónicamente sea de 44 trillones de GB (diez veces más que en el año 2013). Este universo digital en expansión, lo que conocemos como Big Data o datos masivos, está revolucionando nuestro conocimiento sobre los fenómenos sociales, ya que ahora contamos con información (como la geolocalización o el historial de navegación) que antes no era medible con fuentes tradicionales. ¿Qué se puede hacer con estos datos? ¿Es posible emplearlos para mejorar las políticas laborales?
Internet ya ha demostrado ser una herramienta valiosa en la búsqueda de empleo o candidatos: redes sociales, plataformas de intermediación, portales de empleo… Además de su potencial para conectar trabajadores y empresas a un menor costo, internet representa una oportunidad para recolectar nuevos datos sobre el mercado de trabajo que no siempre encontramos en las encuestas tradicionales. Burning Glass, por ejemplo, extrae información sobre la ocupación, habilidades requeridas, certificaciones necesarias, requisitos educacionales, nivel de experiencia del puesto, información sobre el empleador, industria y el salario ofrecido, entre otras variables.
Datos útiles frente a la brecha de habilidades
La experiencia de los países desarrollados nos demuestra que el Big Data tiene gran potencial para guiar las decisiones de política en temas de formación profesional e intentar resolver la brecha de habilidades(que también padecemos en América Latina y el Caribe). El Centro Europeo para el Desarrollo de la Formación Profesional (CEDEFOP) está llevando adelante un proyecto para producir información en tiempo real sobre el mercado de trabajo a partir de las vacantes online. Nueva Zelanda, por su parte, comenzó a publicar en 2009 Jobs Online, un reporte mensual que monitorea la evolución de las vacantes publicadas en internet. Con este instrumento, se pone de manifiesto cómo la publicación de vacantes en medios impresos está perdiendo terreno frente a las opciones en línea. Jobs Online reporta los cambios en el número de vacantes por ocupación (con alto nivel de desagregación), industria y región. Esta información se utiliza después para gestionar las políticas migratorias.
Desafíos para la región
El cambio tecnológico asociado a los datos masivos representa una oportunidad para que los gobiernos de América Latina y el Caribe mejoren sus políticas laborales. Ahora bien, este es un camino en el que también hay desafíos importantes.
El cambio tecnológico asociado a los datos masivos representa una oportunidad para que los gobiernos de América Latina y el Caribe mejoren sus políticas laborales.
Uno de los mayores retos que plantea el Big Data tiene que ver con la generación de acuerdos y el diseño de mecanismos para la colaboración público-privada, ya que el sector privado no solo suele ser dueño de los datos, sino que también en muchos casos tiene el liderazgo en la innovación tecnológica y en el desarrollo de algoritmos de inteligencia artificial. Por otro lado, las cuestiones legales y éticas vinculadas con la privacidad también son un aspecto a considerar cuando se trata de datos de esta naturaleza. Finalmente, dadas las limitaciones de Big Data (por ejemplo, el hecho de que no se trata de datos representativos de todo el mercado de trabajo sino que están sesgados hacia determinadas industrias, ocupaciones y regiones), es necesario considerar a esta estrategia como complementaria y no sustituta de los enfoques más convencionales.
Cuanto más alto sea el porcentaje sobre salarios que paga el empresario, menor será la generación de empleo formal, afectando especialmente a los jóvenes desocupados y distorsionando la economía al premiar la informalidad.
Esto notorio en Costa Rica, donde pese al crecimento sostenido de la economía en los últimos años, el desempleo se mantiene alrededor del 10% de la población económicamente activa, y la informalidad ronda el 40% del empleo.
El artículo en Crhoy.com reseña que “… El sistema de impuestos sobre el trabajo de Costa Rica dificulta significativamente la participación en el mercado de trabajo formal, especialmente para trabajadores poco calificados y jóvenes, según el informe ´Estudios de la OCDE sobre el Mercado Laboral y las Políticas Sociales´, elaborado por la Organización para la Cooperación y el Desarrollo Económicos (OCDE). La tasa impositiva de la nómina de seguro social total es de 36,5%, muy por encima del promedio de la organización (27,2%). Las cargas patronales son especialmente altas (26,33%) haciendo con que los costos laborales no salariales en Costa Rica sean más altos que la mayoría de los países de la OCDE y casi 9 puntos porcentuales por encima del promedio de la organización.”
En el año 2013 se firmó el último Pacto Colectivo entre el Ministerio de Educación y el Sindicato de Trabajadores de la Educación de Guatemala. Actualmente se indica que ya ha vencido y que deberá firmarse nuevamente. En el ambiente se ciernen muchas interrogantes acerca de esto, pues aunque el Sindicato ha planteado que desean un nuevo aumento, se desconoce si el Gobierno se ha comprometido en algunos puntos.
El Pacto Colectivo que ya venció contemplaba diversos temas, pero el más relevante por su impacto sobre el gasto público fue el aumento de 30% a los salarios de los docentes que incluyó. Los aumentos se dieron de la siguiente forma: 8% en 2013, 10% en 2014 y 12% en 2015. El costo de oportunidad de esos recursos tuvo un claro impacto sobre la cobertura y la calidad de la educación. Durante varios años no se pudo implementar el nuevo sistema de acompañamiento escolar debido a que no se contaba con fondos para hacerlo. Además, se dejó de ampliar la cobertura en preprimaria y en el nivel medio. Tampoco fue posible programar fondos significativos para dotar a las escuelas de equipo tecnológico y conectividad.
Negociar un nuevo Pacto Colectivo no debe traducirse en un cheque en blanco. No se debe perder de vista que todo aumento salarial debe ir acompañado de acciones para mejorar la educación en Guatemala. Es preocupante que pueda hablarse de un incremento salarial si éste no ha sido contemplado en el presupuesto del año 2018, como ha señalado el Ministerio de Finanzas en diversas sesiones enmarcadas en el Presupuesto Abierto. Cualquier asignación presupuestaria deberá pasar el filtro del Sistema Nacional de Inversión Pública, SNIP, que se gestiona desde SEGEPLAN. Además, para elevar la calidad de la educación necesitamos elevar el nivel de los docentes; ello requiere que avancemos hacia una Meritocracia, donde se contrate a los mejores.
Hay varias preguntas que hacer, entre éstas las siguientes: ¿Se considera inviable un aumento o podría éste presionar negativamente la situación macroeconómica y fiscal del país? ¿Estamos dispuestos a dejar de invertir en reducción de la desnutrición crónica o en carreteras? ¿O va a salir directamente de la asignación del Ministerio de Educación? ¿Dejará de comprarse libros de texto o se reducirá la asignación a capacitación docente? Son interrogantes que deberemos resolver antes de meternos en un lío de priorización del gasto público.
En todo caso, antes de abordar de aumento al salario, se debe tomar en cuenta que hay otros rubros prioritarios de inversión a los que estamos recién comprometiéndonos como país. Ha sido aprobada la Ley de Alimentación Escolar que conlleva un aumento superior a los Q. 500 millones para el próximo año, lo cual absorberá parte del aumento contemplado para Educación en el presupuesto del 2018. Además, se ha iniciado la transformación del sistema de acompañamiento escolar y se requerirán recursos para su implementación. La estrategia de que fortalecer preprimaria y reducir la edad de ingreso a primer grado a 6 años también genera necesidad de inversión. Es decir, hay rubros que compiten con otros por captar fondos provenientes de los impuestos. ¿Cuáles son más importantes?
Se considera importante un diálogo abierto y técnico, ya que al firmarse un nuevo Pacto Colectivo es imperativo que incluya acciones que generen resultados para los niños y que en todo caso el aumento pueda ser factible conforme al contexto fiscal. En todo caso y debería ser central en el diálogo del país: Es altamente deseable que todo aumento salarial vaya atado a los resultados en el aprendizaje de los estudiantes y solamente debería realizarse si hay alguna fuente de gasto que no ponga en riesgo gastos prioritarios en la agenda actual del Gobierno.
Es uno de los temas más complicados, y que según especialistas puede afectar las actuales renegociaciones del Tratado de Libre Comercio de América del Norte (TLCAN), también conocido como NAFTA, por sus siglas en inglés: los bajos sueldos de los trabajadores en México, que sus socios en el acuerdo consideran una competencia desleal.
Canadá y Estados Unidos piden que se promueva un incremento sustancial de los salarios mexicanos.
Es un requisito para mantener por buen camino las negociaciones del nuevo TLCAN, señalan los funcionarios estadounidenses y los sindicatos de Canadá.
Pero el gobierno y empresarios de México aseguran que no hay condiciones en el país para aceptar la propuesta.
Además según el secretario de Economía, Ildefonso Guajardo, la decisión de incrementar los salarios “es un asunto interno“del país.
No se ve una salida fácil, coinciden expertos consultados por BBC Mundo.
Por un lado la diferencia de las economías del TLCAN hace difícil nivelar los salarios entre los tres países.
Y al mismo tiempo, la realidad es que México sí tiene un margen para incrementar el ingreso mínimo de los trabajadores.
Es el más bajo de la Organización para la Cooperación y Desarrollo Económico (OCDE) de la que forma parte.
La disparidad salarial entre los socios del TLCAN es importante.
De acuerdo con el Departamento del Trabajo de Estados Unidos, este año el sueldo promedio en la industria maquiladora y empresas exportadoras de bienes fue de US$26,19 por hora.
En cambio, los trabajadores mexicanos que realizan las mismas funciones en su país obtuvieron un salario de 340 pesos por jornada laboral completa. Es decir, un promedio de US$2,36 por hora: el 9% de los ingresos de sus pares estadounidenses.
Wilbur Ross, secretario de Comercio de Estados Unidos, insiste en que los bajos ingresos son un atractivo para la migración a México de empresas de su país.
“El salario mínimo en México apenas ha cambiado en pesos desde hace varios años, y el peso se ha depreciado bastante frente al dólar”, dijo ante senadores.
“En términos de poder adquisitivo, el trabajador mexicano promedio está mucho peor que como estaba hace cinco o 10 años. Esa no era la intención original del TLCAN”.
En Canadá comparten la idea.
Jerry Dias, líder de Unifor, el sindicato más grande de ese país y que representa a los trabajadores del sector de la automoción, las comunicaciones, la energía y las papeleras, dice que un nuevo tratado en la región debe incluir mejores ingresos para los mexicanos.
“No podemos tener un acuerdo trilateral donde el salario mínimo en México es de US$0,90 la hora”, afirmó.
Para el sindicato canadiense, lo menos que debería pagarse a un trabajador mexicano son US$4; es decir, 72 pesos por hora.
Las estimaciones se refieren a los trabajadores de la industria de manufactura y de exportación, la competencia más directa de los sindicatos de Canadá y Estados Unidos.
Pero ellos representan sólo una parte de los 52 millones de mexicanos con algún tipo de empleo en el país.
“Sí se puede”
¿En verdad no es posible incrementar el salario mínimo en México, como proponen los socios del TLCAN?
Las autoridades y grupos empresariales dicen que eso depende del mercado, la competencia y la productividad de los trabajadores.
No es un asunto que pueda realizarse por decreto, insiste la Secretaría de Economía.
Y según la Cámara Nacional de la Industria de la Transformación (Canacintra), una decisión de este tipo provocaríaaumento en la inflación.
Pero no es tan cierto, le dice a BBC Mundo Oliver Santín Peña, del Centro de Investigaciones sobre América del Norte (CISAN), de la Universidad Nacional Autónoma de México (UNAM).
“Es falso, es un argumento para manipular a la opinión pública porque de cualquier manera este año hemos tenido aumento de inflación, y no precisamente por los incrementos salariales”, explica.
Además existen estudios oficiales, como los realizados por el Instituto Nacional de Estadísticas y Geografía (Inegi) que contradicen la idea de que incrementar el sueldo mínimo provoca una escalada de aumentos.
Eso dice Juan Carlos Moreno-Brid, investigador de la Facultad de Economía de la UNAM.
“Había un mito de que todos los ingresos subían al aumentar el salario mínimo”, explica a BBC Mundo.
“Se ha visto que no, los estudios del Inegi revelan que cuando subes los salarios mínimos aumentan los que ganan dos o hasta tres veces” ese sueldo.
Legalmente el ingreso mínimo de un trabajador es de 67,29 pesos por jornada laboral de ocho horas; es decir, poco más de US$3,7 al día.
Según datos oficiales, el ingreso de poco más de seis millones de personas es de un salario mínimo al día. Es decir, representan el 11% de la población económicamente activa del país.
El 97% de quienes tienen ese ingreso no tienen seguridad social, como servicio médico o derecho a jubilación.
Hay más que números en la resistencia mexicana para incrementar los salarios.
El investigador Santín Peña recuerda que una parte del éxito de consorcios empresariales y comerciales tiene su base en los bajos sueldos de sus empleados.
Por eso un incremento de los salarios en México no es tan complicado.
“Sí se puede pero debe haber voluntad política no solo del gobierno sino de los sectores empresariales mexicanos, que se benefician enormemente maximizando sus ganancias al mantener niveles bajos de salarios”, asegura.
No es todo. Empresarios, autoridades y algunos analistas insisten en que la mejor forma de incrementar los salarios es con base en la productividad de los trabajadores.
Pero es un elemento al alza en los sectores más competitivos del TLCAN, como la industria automotriz.
En los últimos años México se convirtió en uno de los mayores exportadores de automóviles en el mundo.
La industria genera un promedio de US$52.000 millones al año en ganancias.
Y como esa industria existen otras que ubican al país entre las 15 mayores economías del mundo.
Sin embargo, el ingreso de sus trabajadores no camina en el mismo sentido. La capacidad de compra de este dinero se ha reducido en términos reales desde hace décadas, sostienen los especialistas.
Y al mismo tiempo las cifras macroeconómicas rinden buenas cuentas.
En los últimos años el discurso oficial y de grupos empresariales es que los aumentos de sueldo están atados a una mayor productividad.
Buena idea, dice el investigador Moreno-Brid. “Sería buenísimo que se hiciera, pero en el tiempo que los salarios mínimos cayeron la productividad no bajó”.
BBC Mundo solicitó entrevistas sobre el tema a la Secretaría de Economía y a la Confederación de Cámaras Industriales de Comercio (Concamin), que representa a la mayor parte de los consorcios de manufacturas en el país.
Better understanding of skills mismatch is essential to finding effective policy options
Evidence suggests that productivity would be much higher and unemployment much lower if the supply of and demand for skills were better matched. As a result, skills mismatch between workers (supply) and jobs (demand) commands the ongoing attention of policymakers in many countries. Policies intended to address the persistence of skills mismatch focus on the supply side of the issue by emphasizing worker education and training. However, the role of the demand side, that is, employers’ wage-setting practices, garners comparatively little policy attention.
Analysis shows that 4% of workers are under-skilled, and 10% are over-skilled for their jobs.
Mismatch is an important determinant of productivity and wages.
The harmful effect on wages of being mismatched early in one’s career is large and persistent.
Joblessness in an economic downturn would affect one-third fewer people if the mismatch problem were resolved.
Though reliable estimates show that skills mismatch lowers individual workers’ productivity, effects on aggregate productivity remain largely speculative.
Estimates of the effect of skills mismatch on unemployment suffer from serious measurement issues.
Recent literature indicates that focusing on education and training to boost worker skills may be misguided; rather, firms’ actions (e.g. adjusting wages to reflect relative skill shortages) may be a key determinant of skill mismatch.
US evidence shows that geographic mismatch has a negligible effect on productivity and unemployment.
Author’s main message
Skills mismatch has large effects on productivity and unemployment, and is therefore an important concern for economic policymakers. Almost all proposed policy interventions suggest reforms of education and training as solutions to perceived shortages of skills, while little attention is paid to wage setting. This is problematic because such reforms, which are often expensive, will be ineffective if wages do not reflect relative skill shortages. If mismatch instead reflects an unresponsiveness of wages, then workers will “sell” their skills where they fetch the best price, rather than where they are most needed.
The idea that the labor market suffers from severe imbalances in terms of skills offered by workers and those required by employers is a pervasive one. Skills mismatch is viewed as a structural issue—that is, an issue that is present whether the economy is in good shape or in crisis. However, its salience re-emerges during recessions. During the recent Great Recession, for example, questions arose about whether increased mismatch was the reason that unemployment remained high long after the initial, precipitating events. In government circles, the issue is perceived as independent of business cycles. It is not uncommon for some sectors to complain about the trouble they experience finding workers, while unemployment rates remain stubbornly high.
As shown in the Illustration, three possible reasons could explain why a skills gap persists: (i) workers do not adjust to changes in skills demand by acquiring the new skills needed to find a job; (ii) firms do not adjust to changes in skills supply by creating jobs that utilize the skills available in the labor market; or, (iii) wages do not reflect skills shortages by creating incentives for workers to acquire scarce skills, or to abandon other occupations.
An important component of the EU’s strategic framework for education policy, for example, aims “to better identify and manage the availability of required skills, competences, and qualifications, and to help prevent skills gaps and mismatches.”European countries and other advanced economies worry about the “growing gulf between the skills workers possess today and the skills businesses say they need,” as stressed in the 2014 report of the Economist Intelligence Unit. Concerns often focus on shortages of workers with skills in science, technology, engineering, and mathematics (STEM) subjects, but, increasingly, concerns also extend to “soft skills,” such as communication, team work, and problem solving.
At the same time, many academic economists remain unconvinced of the existence of a skills gap. Accustomed to the idea of the “invisible hand” equating supply and demand, they are naturally skeptical about the idea that large segments of the labor market would persistently be in disequilibrium; that is, they find it hard to believe that employers would not be able to convince workers who have, or could acquire, needed skills to work for them, perhaps in return for a higher wage than they might earn elsewhere.
Discussion of pros and cons
Researchers have begun to examine issues related to skills mismatch in greater detail and in new ways. The availability of large datasets containing information about workers and firms has made it possible to gauge the effect of skills mismatch on workers’ productivity and aggregate unemployment. The literature has also started to explore the causes of mismatch, suggesting policies that may or may not be effective in addressing the issue.
Workers and jobs: Skills mismatch and productivity
The most immediate problem associated with mismatch concerns its effect on productivity. The literature studying this effect looks at existing matches of workers and jobs and tries to determine the extent to which workers have adequate skills to perform their jobs. This issue has two sides. Over- or under-qualification (also called vertical mismatch) occurs when workers have the right type of skills, but are too skilledor not skilled enough. Think of, in the over-skilled category, a linguist teaching a Spanish class, or, in the under-skilled category, a mechanic working as an engineer. Horizontal mismatch (also called field-of-study mismatch) occurs when workers do not have the type of skills required by the job, but they have other skills at a similar level—such as a biology teacher taking over physics classes in a school that fails to recruit a physics teacher.
The early literature on mismatch used self-reported data generated from workers’ responses to questions about whether they felt under- or over-qualified for their job. A limitation of this approach is that self-reported questions capture workers’ under- or over-confidence at the same time as potential mismatch. Beginning in 2011, the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) began its Survey of Adult Skills, an assessment designed to provide representative data on workers’ skills. The survey delivered an innovation by producing data involving skill proficiencies that are assessed, rather than self-declared. Thus far, the data include skill measurements of 250,000 individuals in 33 countries.
The official OECD measure was introduced by a group of researchers in 2013 . The approach combines declarative measures of job qualification with objective measures of skill proficiency. For each occupation and country included in the PIAAC data, the authors determine a range of skill proficiencies based on the minimum and maximum proficiencies of workers who have defined themselves as being well-matched to their positions. A worker is defined as over-skilled if their skill proficiency is higher than this maximum, under-skilled when their skill proficiency is lower than theminimum. The authors find that 86% of workers are well-matched, 4% are under-skilled, and 10% are over-skilled. Another study using PIAAC data shows that there is a negative correlation between this measure of mismatch and labor productivity at the industry level: industries where there are more under-qualified or over-skilled workers exhibit lower levels of labor productivity .
Two studies offer evidence beyond developed countries. The first provides a review of worldwide mismatch research . It finds that over-education affects 30% of workers, and under-education affects 26% of workers, with some variation surfacing across continents. The second study applies the OECD method to measure mismatch in developing countries, using the World Bank’s STEP Household Skills Survey. The authors find that over-education is the most prevalent form of mismatch.
A framework developed in 2015 analyzes worker–occupation matches . If a worker does not possess the abilities that are necessary to learn the skills required by an occupation, then theyare “mismatched.” Estimating a structural model on US data, the study finds that being mismatched early in one’s career harms a worker’s wages in a large and persistent manner.
Quantifying the effect of the overall level of labor market mismatch is much more difficult than measuring the effect of being mismatched on the productivity of individual workers. For example, given the skills workers have and the skills jobs require at some point in time, how much would production increase if it were possible to reallocate mismatched workers to different jobs where their skills are better matched to the requirements, so that production could be maximized? Answering this question convincingly is difficult because it requires assumptions about the functions that link production inputs to outputs. Considering both labor and physical capital, very large effects are shown from misallocation across firms . The analysis claims that mismatch is responsible for a productivity gap of 40–60% between India and the US, and 30–50% between China and the US. These results show that the mismatch of production inputs (labor and capital) is a substantial source of inefficiencies and a large contributor to the differences between developing and developed countries.
Job seekers and vacancies: Skills mismatch and unemployment
If the skills that firms require and the skills that workers possess are sufficiently far apart, then at least some workers will not be hired. Therefore, skills mismatch generates not only a productivity loss, but unemployment as well. Unemployment carries with it huge economic and personal costs. Hence, understanding the effect of skills mismatch on unemployment is important for crafting effective policy.
Labor market mismatch generates unemployment if the unemployed workers looking for jobs and firms with vacant positions looking for workers cannot form a match because the worker and vacancies are “not right” for each other. This idea can be formalized by modeling the labor market as being divided into segments, with workers (and vacancies) unable to move from one labor market segment to another. If there are deviations between the distributions of workers and jobs among the various segments of the labor market, then some workers will remain unemployed, while, at the same time, some firms will not be able to fill all positions.
If unemployment is caused by mismatch, then there is a tight link between the dispersion in labor market conditions across labor market segments and the aggregate unemployment rate. The idea is that, if there are jobs in occupations with certain skill sets while unemployed workers are available with different skill sets, then one should see large differences in the ratio of vacancies over unemployment across occupations with different skill requirements. This prediction allows empirical researchers to quantify the aggregate effect of mismatch on unemployment. The challenge is to measure how much lower the unemployment rate would be if—hypothetically, of course—it was possible to reallocate unemployed workers to those occupations where they are most likely to find jobs.
Despite severe measurement issues, there is remarkable consensus in the literature on some basic facts about unemployment due to labor market mismatch. This consensus can be summarized around three main findings: first, that geographic mismatch is negligibly small; second, that skills mismatch, as measured by mismatch across occupations or industries, is an important contributor to unemployment; and third, that skills mismatch is larger during recessions. These three findings are discussed in the following sections.
The importance of geographic mismatch
A study from 2014 finds that mismatch across US counties and metropolitan statistical areas contributed less than half a percentage point to unemployment—and that this contribution did not rise notably in the Great Recession . The authors thus conclude that “geographic mismatch plays no apparent role [in the unemployment rate].” This finding is confirmed in a subsequent analysis, which accounts for the fact that workers are not stuck in their counties or states: they look for jobs not only where they live but also in surrounding areas . This is also consistent with evidence showing that geographic (inter-state) mobility did not decrease during the Great Recession. Therefore, mismatch is unlikely to have contributed much to the very large increase in unemployment during this recession.
A recent study investigates this phenomenon in greater detail by measuring the impact of local fiscal policy and transport improvements on neighboring areas to assesses “how local” a given labor market is . Specifically, the authors investigate how far a local stimulus propagates thanks to worker mobility. They estimate the extent to which job seekers tend to apply for jobs that are further away by combining data on flows into and out of unemployment in England and Wales at the census ward level, and a structural model of job searching and matching. Overall, they find little mobility and modest ripple effects of local policies.
Another recent study applies a similar approach to measure mismatch in the US . Instead of specifying the level of analysisad hoc (states might be too coarse and zip codes too fine), the researchers allow job seekers to apply everywhere, with different probabilities. They use data from the website CareerBuilder.com to observe the locations (at the zip code level) of job seekers, vacancies, and applications. They estimate a measure of “distaste for distance,” which captures the reluctance of job seekers to apply for vacancies that are far away. They inject this parameter into a model (as in ), in which job seekers decide to apply somewhere based on two criteria: (i) the distance to the vacancy, and (ii) how many job seekers compete for a given vacancy. The authors find that ten more miles decreases the probability of applying for a job by around 35%. This information is then used to predict how many matches will result from a given allocation of job seekers across zip codes, and the authors draw conclusions about the gulf between a “perfect” situation—one that would maximize the number of hires—and the situation that occurs when taking into account these geographical and competitive realities. Accordingly, the share of unemployment that is due to geographic mismatch is only around 5%. In other words, reassigning workers over space to maximize hiring would only increase the number of hires by 5%.
Skills mismatch and unemployment
Using Standard Occupational Classification (SOC) codes to categorize the nature of certain kinds of work, a 2014 study finds that increased mismatch across three-digit occupations accounted for around 1.5 percentage points (or about one-third) of the increase in unemployment in the US during the Great Recession . Related research shows similar results for the US and the UK.
The countercyclicality of skills mismatch
It has been shown that US unemployment due to mismatch across industries from 1979 to 2010 evolved over time in a very similar fashion to the overall unemployment rate . A very similar pattern was revealed using the 2001–2012 sample . These results were surprising to many, because early commentators attributed the rise in mismatch unemployment to a structural change in the labor market .
The causes of skills mismatch and how to address them
Unexpected events or phenomena may affect occupations in different ways. For instance, a 2003 study illustrates that the emergence of computers and information technologies (IT) reduced the demand for routine jobs, which were to some degree made obsolete by computers, and increased the demand for non-routine jobs, which proved to be relatively complementary to the computer . For example, bank tellers and bank managers have likely been affected in opposite ways by the IT revolution in general, and by automated teller machines (ATMs) in particular. Like technological changes, recessions also change the relative demand of different goods. Sectoral shocks may translate into asymmetric occupational shocks; for example, bakers may be less sensitive to recessions due to the relative inelasticity of baked goods, while the jobs of restaurant waiters may be more sensitive because people eat out less during hard times. Because of these shocks, the fact that mismatch exists is not in itself surprising. The relevant question is: why does it seem to be so persistent?
Workers who work (or look for a job) in an occupation where the number of workers exceeds the number of positions have ways to adjust. They can apply to other higher-demand occupations that require similar skills, or they can acquire new skills through training. Alternatively, employers could adjust to workforce shortages by changing the skill content of occupations, or by training up workers from similar occupations to fit new skill requirements. Some recent empirical literature documents that employers adjust the task and skill content of jobs (for the same occupation) with the business cycle, “upskilling” when workers are more abundant in a recession .
Adjustment, whether by workers or employers, may be difficult and costly to achieve in the short term, especially when confronting large skill differences between origin and target occupations. Most policy interventions are based on the implicit assumption that this is the reason for the skills gap. The European Commission, for instance, believes that “Europe needs a radical rethink on how education and training systems can deliver the skills needed by the labor market.”As a result, it set up the Rethinking Education initiative “to reform education systems across the EU so as to meet growing demand for higher skills levels and reduce unemployment.”
A recent analysis uses data on wages and profits across industries in addition to data on job-finding rates to show that it is possible to quantify how much of mismatched unemployment stems from a lack of adjustment by workers or from a lack of adjustment by firms. On the workers’ side, the following scenario is identified: There are industries where workers have a hard time finding jobs, but where they earn high wages if they do; and there are other industries where jobs are plentiful, but wages are low. This is what one would expect to see if workers operate along a “no arbitrage” condition. That is, if they can move between industries, but will only do so if they are given the right incentives. If, on the other hand, there are many industries where both job-finding rates and wages are high, and others where both are low, the logical conclusion would be that mismatch persists because workers lack the skills required to move into better jobs. Using data for the US over the 1979–2010 period, the study finds that mismatch cannot be fully explained by barriers faced by workers and firms in adjusting to changing skills demand and supply, respectively.
This then raises the question: If workers adjust to changes in skills demand, and employers adjust to changes in supply, how can mismatch persist? The answer lies in the way wages are set. If wages reflect the relative abundance or the relative shortage of skilled workers, then workers’ and employers’ capacities to adjust would lead to the elimination of mismatch. However, jobs in industries that generate high profits (such as the retail trade, educational services, mining, and forestry) tend to pay low wages, and are therefore unattractive to workers, while jobs in industries that pay higher wages (like finance, computer and electronics manufacturing, and paper and printing) are not profitable to firms.
Other researchers, based on very different approaches, have also emphasized the role of wage setting. Among the forces suggested to be at work are: automated screening systems that rule out potential candidates who might have surfaced in subjective, human resources screening processes; and a preference for hiring experienced candidates over investing in training for inexperienced but promising candidates. If workers do not move into low-unemployment occupations, the problem may not be that they cannot train or adjust, but that wages are too low to attract them. In the UK, for instance, less than half of STEM graduates work in scientific occupations, and there is no wage premium in other occupations for having a STEM degree. Firms, on the other hand, are more interested in hiring workers with STEM skills because these workers are not only very productive but also relatively cheap—despite widespread public perception that STEM graduates earn high salaries. Thus, companies open lots of vacancies for STEM positions, but then find it very difficult to fill them.
Limitations and gaps
While the literature has progressed in the last decade when it comes to measuring the extent of mismatch and how it affects unemployment and productivity, many measurement-related issues still raise concerns. Potentially, these issues are large enough to affect the qualitative conclusions drawn in this article.
The concept of skills is multi-dimensional, including the amount and quality of education, field of study, and experience in current and previous jobs. Additionally, there are many sorts of skills: technical skills, cognitive skills, soft skills (such as communications, problem solving, the ability to work well in teams), and perhaps even having certain personality traits. Moreover, the extent to which skills are transferable varies. Some skills are general; others are entirely job specific. An ideal dataset would account for this broad range of factors and detail the precise set of skill requirements for the job, as well as the precise skill set of the worker. However, most data sources, particularly the ones that cover a representative sample of the labor force, rely on responses to just a few questions that generate a description of a worker’s skill set. A related issue stems from the difficulty in gathering symmetric information about workers’ skill sets and jobs’ skill requirements.
The studies described in this article differ in the ways they address this measurement issue. As a result, it is difficult to pinpoint a “consensus estimate” of the effect of skills mismatch on productivity. The measurement problem is made even more difficult if one tries to estimate the effect of overall mismatch on aggregate productivity, rather than just the effect of being mismatched on an individual worker’s productivity. Moreover, a substantial amount of uncertainty shrouds the few results discussed here.
In the literature on mismatch and unemployment, the measurement issue takes a different form. Here, researchers think of the labor market as being segmented into submarkets, and the primary difficulty with measuring the effects of mismatch lies in finding the correct partitioning of the labor market. Ideally, the partition satisfies two properties. First, submarkets must be closed: No job seeker should end up finding a vacancy in a different submarket than her own. This means that the empirical definition of a submarket should be coarse enough to accommodate some degree of labormarket mobility. The second property is homogeneity: Two job seekers (or two vacancies) should be close enough that they can be considered identical by employers (or workers). This means that the definition of segments should be sufficiently precise, otherwise the measure of mismatch will underestimate the true phenomenon. If submarkets are too small, mismatch may be overestimated. So, what is the right partitioning of the labor market? This question first arose in the literature on geographic mismatch, where the submarkets are geographic areas. As discussed previously, accounting for the interconnection between geographic areas is crucial to correctly estimating the aggregate effect of mismatch.
Measuring skills mismatch suffers from the same dilemma as geographic mismatch in terms of the difficulty in defining sensible submarkets. The SOC, although a detailed and systematic categorization of the nature of different kinds of work, is an imperfect vessel for this analysis. For instance, one might surmise that workers in the same four-digit occupation codes can move to and from the same positions with relative ease. But, should this be taken to mean that former post-secondary English teachers can fill post-secondary physics teachers’ positions? By contrast, workers slotted into different two-digit occupation codes might seem “unmovable.” Yet it would seem logical that examiners and tax preparers could segue to and from positions in their differently coded jobs. Ideally, a measure of skills mismatch should account for the fact that job seekers move, to some extent, across occupations.
An impressive dataset created recently by the US Department of Labor may help alleviate some of the above issues. It is called O*NET OnLine, and provides a detailed mapping between six-digit SOC occupations and the usual tasks and skill requirements associated with jobs in eachoccupation. A 2013 study motivates this effort by showing that tasks explain a substantial amount of wage heterogeneity within occupations . However, research using these data is just beginning.
Most studies on mismatch use three- or four-digit occupations, or even industries, to operationalize the concept of a skill-based labor market segment. The results of these studies are likely to be revisited, and may very well be overthrown as researchers find ways to use the opportunities provided by the O*Net data.
A separate issue involves the question of what data to use. In the US, job seekers are counted using the Current Population Survey (CPS), which assumes that the industry and occupation of a job seeker are both the same from one job to another. For vacancies, two US data sources are available. The first is the Job Openings and Labor Turnover Survey (JOLTS), which serves as a source of demand-side indicators of labor shortages at the national level, and allows researchers to compute the number of vacancies by industry (at a two-digit SOC level). The second is the Conference Board’s Help Wanted OnLine (HWOL), which is made up of the universe of unique online job vacancies in the US; these are collated into counts of vacancies by occupations. These two sources (JOLTS/HWOL) provide the most straightforward measure of the vacancy–unemployment ratio across industries and occupations. Many papers use these sources at the price of working on a relatively short time window , . Other papers have to rely on assumptions about the matching technology to compute the vacancy–unemployment ratio from the job-finding probabilities measured in the CPS . This technique results in a much longer time series. Luckily, findings look very similar in research relying on these different sources, lending additional credibility to the results.
Finally, when it comes to the causes of mismatch, the evidence is very thin indeed. It should be expected that the thinking on this issue will progress substantially as further research sheds light onto the mechanisms and trade-offs behind wage determination.
Summary and policy advice
Skills mismatch is an important cause of productivity loss and unemployment. Thus, policymaking tools that diminish its presence and persistence can benefit economies, firms, and people who are unemployed or underemployed.
However, in the context of the European Commission’s proposed “radical rethink on how education and training systems can deliver the skills needed by the labor market,”a reform of education and training systems may be neither needed nor desired. The most striking conclusion from current research is that worker mobility frictions may not be the main contributor to labor market mismatch. Yet, almost all proposed solutions to the skills gap treat the phenomenon as a problem of the education system. Such interventions in education and training are likely to be expensive, and, at the same time, may not be as effective as expected.
Why would increasing the emphasis on “scarce” skills in schools and universities fail to guarantee that skills mismatch will be reduced? The reason is simply that students choose, first, what skills to acquire in school and university, and then, whether and how to use these skills in the labor market. If wages do not reward certain skills, students will either choose not to pursue such skills, or, will pursue the skills but seek employment in other, higher-paying occupations. The STEM “gap” offers the most obvious example of this problem. While firms complain about a shortage of qualified physicists and engineers in the labor market, a very large number of graduates in these fields work in the financial sector, where they use only a subset of their STEM skills, but earn more money than they would in the shortage niches. Encouraging universities to educate more physicists and engineers will not solve the mismatch problem if these graduates look for—and find—better-paying jobs with investment banks.
These questions underline the need for additional research to understand the forces that foster and perpetuate mismatch. While the message from the current research should not be interpreted as a call to “do nothing,” greater knowledge is needed to guide policymakers in devising effective solutions.
The authors thank an anonymous referee and the IZA World of Labor editors for many helpful suggestions on earlier drafts. Previous work of the authors contains a larger number of background references for the material presented here and has been used intensively in all major parts of this article , .
EU supranational policies should be more active at promoting institutional reforms that reduce unemployment
Unemployment in Europe is excessively high on average, and is divergent across countries and population groups within countries. On the one hand, over the past decades, national governments have implemented incomplete institutional reforms to amend dysfunctional labor markets. On the other hand, EU supranational policies—those that transcend national boundaries and governments—have offered only limited financial support for active labor market policies, instead of promoting structural reforms aimed at improving the functioning of European labor markets. Better coordination and a wider scope of EU supranational policies is needed to fight unemployment more effectively.
Some EU countries have effective institutional setups in place for handling shocks while avoiding high unemployment, indicating that best practices do exist.
Improvements in the EU coordination framework for employment policies could promote reforms to reduce unemployment.
A significant step forward would be the establishment of an EU unemployment insurance program and introduction of wage subsidies partially financed by EU funds and implemented using individual accounts.
Key reforms were not undertaken during the recent crisis, leaving many EU countries with semi-reformed labor markets that are still not fully capable of handling negative shocks.
The EU has lost credibility regarding its ability to coordinate policy, stabilize member economies, and promote efficient structural reforms.
EU supranational initiatives are often seen as a means of imposing unwarranted reforms that may not benefit specific member countries.
Author’s main message
During the Great Recession and the European debt crisis, the EU framework for policy coordination failed to provide either sufficient economic stabilization or clear guidelines for structural reforms. As a result, unemployment in Europe remains high, as does its dispersion across countries and population groups. Dysfunctional labor markets still prevail in many countries and, because of reform fatigue and strong insider resistance, progress in structural reforms seems highly unlikely. Improvements in the coordination of economic, social, and employment policies, and, in particular, new EU labor market programs are needed to promote successful structural reforms.
Unemployment in Europe is not only unbearably high, but also insupportably different across nations belonging to an economic and monetary union. Failure to cope with this situation may lead to the collapse of the common EU institutional architecture.
Unemployment differentials have never been as marked as they are today. As of 2014, the top four (Portugal, Croatia, Greece, and Spain) and bottom four (Austria, Luxembourg, Germany, and the Netherlands) national unemployment rates in the EU28 differed by a factor of almost four. In the US by contrast, the corresponding figure for the top five (Michigan, California, Illinois, Rhode Island, and Nevada) and bottom five states (South Dakota, North Dakota, Nebraska, Utah, and Vermont) was only 2.4. Clearly, talking about “European unemployment” or, even more so, of a “European structural unemployment problem” is highly misleading. Moreover, reducing this divergence among unemployment rates is a prerequisite for the smooth functioning of the economic and monetary union.
EU unemployment divergence has its roots in institutional differences. Moreover, EU policy coordination and conditionality during the crisis did very little to improve employment policies or to make labor markets more resilient to shocks in countries with high unemployment (mostly in southern European countries). Additionally, EU employment policies, notably EU conditionality for countries involved in rescue programs, failed to account for the cyclical nature of economic conditions, and did not put enough emphasis on productivity-enhancing structural reforms. Learning from these mistakes is essential to improving the economic policy coordination framework in Europe. Completing Europe’s Economic and Monetary Union, as called for by the “Five Presidents’ Report” , will not be possible without a more decisive intervention of supranational polices in structural reforms.
Discussion of pros and cons
Figure 1 provides the mean unemployment rates and their standard deviations (both aggregate and by age groups) in a sample of EU countries during the 1984–2015 period (the corresponding annual series are plotted in Figure 2). There were two main recessions during this period, one in the early 1990s, and the double-dip recession during the aftermath of the Great Recession and the European debt crisis (in bold).
Looking at these developments, the performance of European labor markets during the Great Recession and the European debt crisis could be characterized by a number of observations set out in the following paragraphs.
First, unemployment in Europe is not only unbearably high, but also increasingly divergent across countries. During the 2009–2013 crisis, both the unemployment rate and its cross-country dispersion (in the sample of 13 countries considered) were higher than in the previous recession, regardless of the population age group considered. The fact that the aggregate unemployment rate was lower in 2009–2013 than in 1992–1993, while the corresponding rates for separate age groups were higher, is obviously due to the composition effect arising from the aging labor force. During the mild recovery of 2014–2015, mean unemployment rates and their cross-country dispersion continued to rise, both at the aggregate level and for each age-specific group.
Second, youth unemployment (for the 15–24 age group) climbed above (often well above) 40% in southern Europe , while remaining mostly unchanged in Austria and Germany. As shown in one study, the rise in unemployment was due both to a youth hiring freeze and to heavy destruction of those jobs held by young people . Since 2009, alongside low educational attainment and lack of skills, younger age has been associated with higher probability of losing a job and lower likelihood of moving from unemployment to employment, especially in countries where the rise in unemployment has been highest.
Third, the rise in unemployment is associated with decreasing GDP. The shocks driving the crisis (for example, the presence and magnitude of housing bubbles in the pre-crisis period and the poor resilience of financial markets), and challenges related to the policy responses to it (for example, fiscal and external financing problems and bail-out issues), explain a great deal of the cross-country dispersion in both GDP growth and unemployment.
However, about half of the cross-country variation in unemployment is not explained by GDP, but instead seems to be associated with labor market institutions and employment policies. For example, the change in unemployment per point of variation in GDP growth turned out to be significantly higher in countries where dual employment protection legislation (EPL) leads to strong segmentation between employees with full-time, regular contracts, and those with atypical contracts (part-time, temporary, or seasonal).
Finally, microeconomic evidence shows that firms followed a variety of strategies to adjust to the shocks, using different combinations of employment, wages, hours worked, and other adjustment mechanisms, and that these strategies were to some extent conditioned by the labor market institutional framework prevailing in each country . Thus, while some countries had the proper institutions in place to deal with shocks, others were in more difficult positions. These countries lacked the appropriate institutions to accommodate the large reallocation of resources needed given the nature of the shocks.
Functional and dysfunctional labor market institutions
The above observations show that some countries allowed several margins of adjustment to their labor market institutions that accommodated the crisis’s negative shocks. In others, labor market institutions amplified the negative consequences of the shocks. The most evident examples are:
Subsidizing reductions in working hours. Some countries (most notably Germany) activated a variety of instruments to concentrate the adjustment to the Great Recession on the intensive margin (i.e. a reduction of working hours). First, the scope of subsidized short-time work was increased. Second, German firms made heavy use of working time accounts (essentially a scheme allowing firms to borrow from their employees: rather than being paid for overtime work, employees had the right to work fewer hours at a later date). Third, the introduction of mini-jobs increased the scope of multiple job holdings, which helped prevent outright unemployment for many workers who lost their primary (or secondary) jobs.
Decentralized bargaining. There has been a clear trend toward decentralized wage-setting in some EU countries since the early 1990s. This is the case in Germany, which has been a pioneer in the introduction of so-called “exit clauses.” These clauses allow firms to use plant-level “pacts for employment and competitiveness,” which enable wage reductions rather than collective dismissals. In contrast, until at least 2012, collective bargaining institutions in Spain imposed wages established at “higher” (provincial or sectoral) levels that included very limited exit clauses. This prevented firms from being able to trade wage concessions with their workers for more employment security, as was the case in Germany.
Dual employment. The coexistence of two different segments in the labor market (employees with open-ended contracts and employees with temporary contracts) generated larger fluctuations in employment than those observed in fully flexible labor markets. Countries with a higher level of contractual dualism display a stronger responsiveness of unemployment to output changes. Since dismissing temporary workers is much less expensive than firing permanent employees, employment adjustments are mostly concentrated on those in temporary employment, which insulates workers holding permanent contracts from the consequences of negative shocks. Thus, large job losses among temporary workers may well coexist alongside wage rises among those employed under permanent contracts.
Active labor market policies (ALMPs). The effectiveness of ALMPs at reducing unemployment remains a controversial issue. Some surveys tend to conclude that, when taking into account deadweight, substitution, lock-in, and general equilibrium effects, ALMPs are not cost-effective at reducing unemployment ; others suggest that some programs, in particular those aimed at human capital accumulation, can have positive long-term effects on the employability of some targeted groups, especially in a recessionary climate . In any case, the effectiveness of ALMPs seems to be rather dependent on the institutional framework in which they are implemented. Thus, human capital accumulation programs tend to be less effective in countries where dual EPL leads to job instability due to a high degree of worker turnover across short-term jobs. In sum, dysfunctional institutions not only lead to bad labor market performance, but also reduce the effectiveness of ALMPs.
The effects of labor market reforms throughout the business cycle
A huge literature on the effects of institutions on labor market outcomes offers insights into the long-term effects of institutional reforms . The appropriate timing to implement labor market reforms is also an important topic for policy discussions. In principle, it seems that employment can be made more resilient to negative shocks by increasing wage flexibility during recessions, instead of increasing employment flexibility, which amplifies employment volatility, especially when done by promoting contract dualism.
Moreover, since the optimal level of unemployment benefits is lower when unemployment duration increases with benefits, generosity should be higher when the unemployment rate is high and be reduced during economic expansions , generosity should increase when the unemployment rate increases, and be reduced during economic expansions, although this raises the fiscal costs at the moment in which budgetary constraints are more binding. There are also conceptual reasons and empirical evidence to advocate that the counter-cyclicality of unemployment rates should be embedded in replacement rates (the ratio of benefits to past wages) rather than in duration entitlements.
Regarding ALMPs, there is some trade-off about their effectiveness and the resources available for financing them during the business cycle. In recessions, there are few job offers around, so even when some ALMPs are effective, the increase in the employment rate brought by these types of measures is small . However, increasing employability during recessions is especially important to avoid hysteresis (that leads to cyclical rises in unemployment becoming permanent), and to stave off the decrease in the rate of people moving into employment due to long-term unemployment spells. On the other hand, public resources to upgrade ALMPs are scarcer in recessions. Hence, whether ALMPs should be conducted more intensively during recessions is, as with their overall effectiveness, a controversial issue. Increasing expenditures on ALMPs during downturns is politically challenging due to budgetary constraints, and, most often, these expenditures end up being pro-cyclical.
A similar trade-off also appears in pension reforms. Reforms that steeply raise the retirement age just when labor demand is declining may backfire. Employers may end up freezing new hires, preventing recessions from serving as labor market cleansing devices, especially in countries where young workers are better educated than incumbents. Instead, early retirement under actuarially neutral adjustment of pension benefits may be desirable, so as not to increase social costs in the long-term.
Summing up, there are three important policy lessons about the timing of structural reforms. First, their effects depend on cyclical conditions. Second, the employment policies needed during recessions involve higher public expenditures. Finally, precisely because employment policies during recessions may involve more public resources, it is important to design a sequential strategy taking into account intertemporal budget constraints—those constraints faced by a decision maker who is making choices for both the present and the future—which are especially relevant in the case of pension reforms. This sequential strategy is also needed because of political feasibility issues, which frequently lead to the implementation of most reforms during downturns (when they may be most harmful), and far fewer reforms in good times (when they would be most palatable).
The shortcomings of labor market reforms in Europe during the crisis
Although describing and assessing all labor market reforms implemented in EU countries since 2007 in detail is beyond the scope of this article, there are some key features that are important to highlight (for a summary list of labor market reforms in EU countries during this period, see ).
First, while some countries were able to accommodate negative shocks via their existing institutions and without a significant increase in unemployment (for example, Austria, Germany, and Belgium), others experienced a large increase in unemployment and implemented fundamental labor market reforms. In most cases, these reforms followed recommendations by international institutions to national governments that were either under formal rescue programs or were suffering severe macroeconomic imbalances (for example, Portugal, Greece, and Spain).
Second, labor market reforms essentially focused on (i) promoting wage moderation, (ii) implementing reductions in severance pay and, more broadly, the strictness of employment protection, and (iii) increasing statutory retirement age.
Third, not the recommendations from international institutions were closely followed (for these recommendations see , , ). The following were all overlooked and mostly absent from the reform agendas: the elimination of contractual dualism; the implementation of schemes inducing more adjustment along the intensive margin, such as short-time work or working time accounts; the introduction of productivity enhancing measures; exploiting complementarities between ALMPs and unemployment benefits by making the latter conditional on activation (as recommended, for instance, by the OECD); and the introduction of actuarial reductions to early retirement, rather than forcing a rapid increase in the retirement age.
Thus, labor market reforms implemented by national governments were not fully rooted in key lessons from international experience. They did not adequately account for the differences in labor market responses to shocks in the euro area , nor for the counterproductive effects of labor market reforms under major recessions. As a result, the EU countries most affected by the rise in unemployment did not find any fiscal space to accommodate negative shocks, and were forced to undergo internal devaluation processes that turned out to be excessively costly in terms of employment losses. Although some of the measures implemented in those countries may have been desirable in normal times, incompleteness, lack of coherence, and bad implementation of the reform packages have left these countries in not much better positions compared to where they were prior to the crisis, with dysfunctional institutional labor market configurations.
Toward a new approach of EU supranational policies
The recent negative experience of structural reforms during the European crisis period suggests that the coordination framework and the conditionality principle behind EU supranational policies have not delivered a more efficient institutional framework, especially regarding European labor markets. Increasing cross-country divergence in unemployment is the result of the contrast between countries with an adequate combination of labor market institutions and those with dysfunctional policies. In the former, negative shocks were accommodated without a rise in unemployment, while in the latter, unemployment surged. Although reforms implemented during the crisis period in the latter countries moved their institutional frameworks in the right direction by promoting wage and employment flexibility, they failed to anticipate some negative consequences during downturns and did not address all the institutional drawbacks prevalent in these countries.
This sequence of events has two negative consequences. One is reform fatigue, especially in countries that implemented reforms during the crisis. The other is the lack of credibility of the EU framework for policy coordination, economic stabilization, and promotion of efficient structural reforms. National governments have difficulties introducing best practice institutions, and EU supranational initiatives in this respect are seen as instruments to impose unwarranted reforms or, in the less adverse case, to support the status quo.
Insisting on conditionality and imposing reforms from abroad are likely to present further barriers for efficient structural reforms. If national governments do not take full ownership of their own reforms, the most likely result will continue to be the implementation of incomplete policy packages that do not fully address the roots of dysfunctional labor markets. Similarly, if supranational institutions do not take full ownership of the policies that they recommend, implementation at the national level will most likely be inefficient.
Moreover, since reforms may have strong effects on income distribution, and may thus require compensating losers, there is a need for greater funding of employment programs. Supranational funding, if well-designed, could lessen the institutional shortcomings of some countries, while at the same time playing a stabilizing role across the eurozone. Admittedly, there are limitations to the financial resources that an EU budget can provide. However, the EU budget will have to be upgraded to meet the challenges of “completing Europe’s Economic and Monetary Union.” Additionally, the available resources already devoted to improving “competitiveness for growth and jobs” and “economic, social and territorial cohesion” (about €113.3 billion in 2016, amounting to around 73% of the total EU budget) could surely be more effectively spent in meeting some of these challenges.
There are ways to change this undesirable state of affairs by using EU supranational policies to promote efficient labor market reforms, while, at the same time, meeting some desirable criteria, namely, (i) not harming the subsidiarity principle—the belief that decisions should be made at the local level, if possible, (ii) keeping conditionality, and (iii) being financially feasible under reasonable budget constraints.
For instance, one study advocates “positive conditionality,” a concept based on the following four principles :
EU supranational policies should be complementary to national programs, not substitutes for them. The sole competence for employment policy should remain with the member states.
EU supranational policies should implement measures that neither involve large expenditures (given the EU budget constraints) nor deliver permanent transfers across countries.
EU supranational policies should empower people as opposed to national governments, by providing fully portable benefits across national jurisdictions in the form of EU-wide entitlements. These benefits could also contribute to reducing some barriers to transitory labor mobility, which could play a stabilizing role in case of asymmetric shocks.
Access to the benefits of EU supranational policies should be conditional on national governments accepting best practice institutional changes. National governments should be free to choose either to accept EU benefits, and thereby implement the required institutional reforms, or to retain their status quo institutional framework, but without gaining access to the EU benefits.
A useful instrument to achieve the above goals is the gradual introduction of individual accounts, which could make transfers involved in EU supranational policies to European citizens easily implementable, more visible, flexible, and better targeted to the most disadvantaged population groups.
The following discussion offers an example of how these principles could be put into practice by creating a specific program aimed at providing hiring incentives, unemployment insurance, and support for pension entitlements, all at once.
Inadequate EPL and contract dualism are the major sources of inefficient worker turnover and job instability, and act as a barrier to human capital accumulation and productivity growth. To combat this, the EU could create a “European Employment Contract for Equal Opportunity,” which would be an open-ended contract with severance pay gradually increasing along with worker tenure , as included in the new open-ended contract introduced in Italy and effective since March 2015. The contract comes with individual savings accounts that accumulate contributions by employers (as created in the Austrian system via reforms of severance pay implemented in 2003 ) and by a new European Fund (which could be constituted through the combination of resources from Structural Funds and the European Social Fund). The European contributions would play the role of hiring subsidies, since employers would benefit from the reduction in labor costs resulting from the EU contributions to individual accounts. Only if national governments implemented this contract, with the attached EPL provisions, could newly hired workers under the new European contract benefit from the contributions of the European Fund. In this way, national governments would have an incentive to implement the needed EPL reform.
Upon dismissal, workers could use the funds accumulated in their individual accounts to either finance training or complement unemployment benefits paid by national insurance programs. As such, this measure embeds the embryo of a complementary “European Unemployment Insurance Program,” which introduces some automatic stabilizers at the EU level while promoting solidarity and social and economic cohesion among member states, an explicitly stated goal of the European Treaties. By doing so, this policy could deliver both a smoother absorption of asymmetric shocks and more economic convergence . As suggested in another study, the presence of an experience rating in the financing of unemployment benefits (under which employers with higher firings contribute more to the funding of unemployment benefits) provided by national governments under this contract would also be convenient, and could be a required condition for EU funding .
Workers not dismissed could use the funds accumulated in their individual accounts to complement pension entitlements. Introducing some pre-funding of pension entitlements under defined contribution schemes could help promote actuarial neutrality and the portability of pension rights across jurisdictions. Greater information transparency about future pension rights and intertemporal budget constraints, both at the aggregate and the individual levels, is needed to improve flexibility in retirement age, which would soften the cost of adjustment to macroeconomic shocks while also rejuvenating the workforce. Moreover, generalizing actuarially neutral adjustments to pension entitlements enables the full and sustainable portability of pension rights across jurisdictions, and forces intra-EU bilateral agreements among social security administrations to be more transparent.
Limitations and gaps
Calls for more active involvement of EU supranational policies in the institutional reform of EU member countries and for larger funding of EU employment programs typically face both economic and political objections. The economic objection generally has three layers. The first deals with the nature of externalities and spillovers across countries that would justify strong intervention by supranational institutions in national labor markets. The second is the lack of consensus about the diagnosis and treatment of the causes of dysfunctional labor markets. Finally, there is the issue of the limited EU budget available to fund employment policies with positive conditionality. The main political objection is that these policies could potentially generate cross-country transfers and pressures to increase the EU budget. As argued above, these objections could be overcome by moving toward a new approach to designing and implementing EU supranational policies.
Summary and policy advice
Dysfunctional labor markets remain prevalent in multiple EU countries despite the reforms implemented during the recent crisis. These reforms were incomplete and, in some cases, counterproductive, as they were introduced without sufficient consideration of their consequences during downturns. Unemployment is becoming increasingly divergent across EU member countries and national governments seem incapable of delivering a complete package of efficient structural reforms. Reform fatigue, insiders’ resistance to alter the status quo, and the lack of scope of EU supranational policies make it very likely that the current unfortunate state of affairs will persist. Under this scenario, with this combination of policy failures at the national and supranational levels, it is difficult to foresee a bright future for a united Europe.
EU supranational policies should be reconsidered in a bid to change this situation. New EU programs with positive conditionality, rather than recommendations and guidelines either suggested or imposed under rescue programs, should be the norm rather than the exception. They could give national governments the necessary incentives to implement institutional changes based on best practices. Moreover, by empowering European citizens rather than national governments, these programs would make EU policies more credible, and, at the same time, more transparent and socially acceptable.
The author thanks an anonymous referee and the IZA World of Labor editors for many helpful suggestions on earlier drafts. Previous work of the author, especially joint work with Tito Boeri, contains a larger number of background references for the material presented here .
La crisis fiscal y la inexistencia de un genuino pacto colectivo, constituyen; en el marco del decaimiento socioeconómico y cultural actual; los desequilibrios más apremiantes que debe afrontar el Estado guatemalteco hacia el fortalecimiento del proceso democrático del país. Bien dicen pesadores latinoamericanos que un Estado no puede ser fuerte teniendo una sociedad debilitada. Esto podría traducirse, en que la crisis que se refleja en el Estado es producto de la crisis de la sociedad. Es falso que pueda existir un Estado eficiente en una sociedad poco organizada, ya que el Estado es creación de la sociedad; y en consecuencia, expresa tanto las cualidades como las debilidades del origen cultural de su población.
Es bien conocido que la modernización económica de un país descansa en dos pilares fundamentales: la modernización fiscal y la modernización financiera. En tal virtud, se puede afirmar que sin ambas modernizaciones (fiscal y financiera) los anhelos por un mejor país, en términos de prestación de servicios y entrega de bienes de calidad a la sociedad, no se podrán concretar y todo quedaría en ilusiones. Esto viene a colación en el sentido que el contenido de la columna anterior ´Presupuesto abierto y programas sociales´ sería una utopía si el organismo recaudador no procura agilizar sus niveles de recaudación fiscal; y peor aún, si el Congreso hace las asignaciones sin seguir la lógica de los programas de compensación social.
Lo anterior se hace más preocupante si se toma en cuenta que la cooperación internacional está, hoy por hoy, supeditada a los avances de los pueblos en materia de respeto a los derechos humanos y a la democratización de las sociedades. Además, esto viene enmarcado dentro de los diecisiete esenciales puntos de los Objetivos de Desarrollo Sostenible de las Naciones Unidas. Por lo que, en alusión al título del presente artículo, los guatemaltecos no debemos permitir que el concepto de democracia se quede sin sustento o vacío de contenido. ¿Cómo evitarlo? Estando atentos a que el presupuesto 2018 sea un proyecto responsable que le asigne un contenido presupuestario a nuestra democracia intercultural.
En realidad, la crisis fiscal es un problema tan complejo como diverso. Por un lado, la evasión y la elusión fiscal continúan siendo el talón de Aquiles de la estructura tributaria; pero por otro lado, la relación de la fuerza laboral, en materia de informalidad versus formalidad es de 80 a 20. Estas dos situaciones agudizan la crisis fiscal, pues no se tiene certeza numérica de los movimientos económicos informales, como tampoco de las pérdidas por evasión fiscal. Es acá, donde el Estado por la vía de su gobierno debe apoyar a las instituciones estatales relacionadas para que se tenga la capacidad de procesar estas cifras y plantear opciones de políticas económico-financieras, con números acordes dentro de la globalidad del tema; y luego entonces, bajo el genuino pacto colectivo arriba mencionado, trabajar en la modernización fiscal.
Estamos frente al desafío de nuestra propia historia; y para enfrentarla, Guatemala necesita de un Estado fuerte, política y financieramente. Por ello, la afirmación de que el fortalecimiento financiero del Estado sea inseparable del fortalecimiento democrático, cobra plena vigencia. Ya que la legitimidad se alcanza cuando el Estado es capaz de satisfacer la demanda social de sus ciudadanos. Sin embargo, es de valientes reconocer que el origen de nuestra cultura contemporánea está basada en la indiferencia. Y los que nos llamamos guatemaltecos lo único que compartimos es el territorio; al grado de ignorar, la valiosa cultura de la cosmovisión Maya. De esta indiferencia social acumulada en el tiempo, hoy, Guatemala está enfrentando el desafío de un futuro ya entre nosotros. Y solo si somos capaces de construir una economía eficiente y una sociedad etnocultural más igualitaria, alcanzaremos un mejor manejo de nuestra interculturalidad democrática; y así, tener viabilidad de nación ante la Aldea Global.