the european challenge mobilise labour supply and increase productivity growth
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US and European Economies in Comparative Perspective Berkeley 12/13 September The EU Labour Market Challenge Background Charts & Tables Karl Pichelmann. DG ECFIN. The European Challenge mobilise labour supply AND increase productivity growth. Very Unsatisfactory Performance - PowerPoint PPT PresentationTRANSCRIPT
US and European Economies in Comparative Perspective
Berkeley 12/13 September
The EU Labour Market Challenge
Background Charts & Tables
Karl Pichelmann
2
The European Challengemobilise labour supply AND
increase productivity growth
• Very Unsatisfactory Performance
• Demographic Change
• Globalisation
• Will Systems Competition Help ?
DG ECFIN
3
EU GDP per capita in PPS (US=100)
DG ECFIN
4
EU GDP per capita in PPS (US=100)
DG ECFIN
5
Total Employment Rates
DG ECFIN
6
Employment Rates: Females
DG ECFIN
7
Employment Rates: Older workers
DG ECFIN
8
Long-term Unemployment Rate
DG ECFIN
9
Trend Growth Labour Productivity Per Hour
DG ECFIN
1966 1971 1976 1981 1986 1991 1996 20010
1
2
3
4
5
6Annual % Change
US
EU
10
Decomposition of Labour Productivity Trends
DG ECFIN
1991 1994 1997 2000 20030
0,5
1
1,5
2Annual % Change
EU
US
Capital Deepening
1991 1994 1997 2000 20030
0,5
1
1,5
2Annual % Change
TFP
EU
USRest of World
Rest of World
11
Cumulated euro area employment shock
DG ECFIN
1995Q1 1996Q2 1997Q3 1998Q4 2000Q1 2001Q2 2002Q3 2003Q4
0
0,01
0,02
0,03
0,04
0,05
0,06
-0,01
Employment
Productivity
12
Cumulated euro area productivity shock
DG ECFIN
1995Q1 1996Q2 1997Q3 1998Q4 2000Q1 2001Q2 2002Q3 2003Q4
0
0.01
-0.01
-0.02
-0.03
-0.04
-0.05
Employment
Productivity
13
A flip-side of poor productivity growth
DG ECFIN
Job-content of growth (Employment growth/GDP growth)
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Euro area EU-25 New MS-10
2005-06 Forecasts
14
DG ECFIN
Old-age dependency ratios in the EU-15
0 5
10 15 20 25 30 35 40 45 50 55 60 65
B DK D GR E F IRL I L NL A P FIN S UK EU15
% 20000
2050
15
DG ECFIN
Projections of age related public expenditures
0
5
10
15
20
25
30
35
B DK D EL E F IRL I L NL A P FIN S UK
Pensions Health Long term care
20002040
16
The Impact of Ageing • Ageing may reduce GDP by 20 % relative to
baseline, and public expenditure on pensions as a
share of GDP may increase by about 7 pp
• Parametric reforms can go quite some way to
offset these effects and stabilise PAYG systems
• Increasing the effective retirement age is the single
most potent reform option
• Impact on TFP growth ?
DG ECFIN
17
Globalisation: Threat to job and wages ?
DG ECFIN
18
Export Market Shares
DG ECFIN
1992 1994 1996 1998 2000 20026
8
10
12
14
16
18% Share of World Exports
South East Asia
EU15
1992 1994 1996 1998 2000 20020,4
2,4
4,4
6,4
8,4
10,4
% Share of World Exports
EU Neighbours
US
Japan
Americas (excl. US)
China
EU10
India
19
Terms of Trade for Non-Oil Goods and Services
DG ECFIN
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200390
95
100
105
110
115
1201995 = 100
US
EU15Rest of the World
20
Extra-EU15 Trade Balances
DG ECFIN
0
0,2
0,4
0,6
-0,2
-0,4
-0,6
% of GDP
B92-97 B98-03
Americas (Excl US)
China
South East Asia (Excl China)
US
India
EU10EU Neighbours
Japan
21
Geographical Direction of Extra-EU15 Exports
DG ECFIN
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30
35% Share of Extra EU15 exports
South East Asia
EU Neighbours
1992 1994 1996 1998 2000 20020,4
2,4
4,4
6,4
8,4
10,4
12,4
% Share of Extra EU15 exports
Americas (excl USA)
US
Japan
EU10
China
India
22
Extra-EU15 Trade: Skill and Factor Intensity
DG ECFIN
1992 1994 1996 1998 2000 20025
10
15
20
25% Share of World Export Markets
Medium High Tech
MediumLow Tech
Low Tech
Skill Intensity Factor Intensity
1992 1994 1996 1998 2000 20025
10
15
20
25% Share of World Export Markets
Difficult to Imitate Research Goods
Capital Intensive
Easy to Imitate Research Goods
Raw Material Intensive
Labour Intensive
ICTHigh Tech
23
Top 6 Contributors to Non-Fuel World Export Growth
DG ECFIN
1992 1994 1996 1998 2000 20020
10
20
30
40
50% Share of World Export Markets
EU15
China
South East Asia
Semiconductors
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30% Share of World Export Markets
EU15
South East Asia
Passenger Cars
US
Japan
US
Japan
24
Top 6 Contributors to Non-Fuel World Export Growth
DG ECFIN
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30% Share of World Export Markets
EU15
China
South East Asia
Telecommunications
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30% Share of World Export Markets
Computers
EU15
China
South East Asia
South East Asia
Japan USJapan
US
25
Top 6 Contributors to Non-Fuel World Export Growth
DG ECFIN
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30
35
40% Share of World Export Markets
EU15
China
Computer Parts Pharmaceuticals
South East Asia
1992 1994 1996 1998 2000 20020
5
10
15
20
25
30
35
40% Share of World Export Markets
EU15
China
South East Asia
US
Japan
US
Japan
26
EU15 RCA’s for Specific Product Groupings
DG ECFIN
0
10
20
-10
-20
% of GDP
1992-1997 1998-2003
Cars
Pharma
Specialised Equipment
Car Parts
Paper and Paperboard
ElectricalMachinery
Semiconductors Clothing
Computer Parts
Computers
27
Unemployment and Trade Openess
DG ECFIN
NZ
AU
IS
NOCH
CA
JPUS
UKSE
FI
PT
ATNL
IT
IE
FR
ESEL
DE
DK
BE
0
2
4
6
8
10
12
0 20 40 60 80 100Openness (trade in g+s relative to GDP, avg 2001-05)
Rat
e of
une
mpl
oym
ent (
avg
2001
-05)
28
Displacement Rates by Industry
DG ECFIN
14 EU countries
1994-2001 USA
1979-99
Manufacturing 3.7 4.6
- High international
competition3.7 5.9
- Medium
international competition
4.4 6.2
- Low international
competition3.5 4.3
Services (and utilities
for USA)3.2 1.7
Total employment 2.8 2.2
Source: OECD Employment Outlook (2005)
29
Labour Market Prospects of Displaced Workers
DG ECFIN
EU 1994-2001 USA 1979-99
High C. Manuf. Services High C. Manuf. Services
Share re-employed two years later
52 57 57 63 65 69
Share with no earnings loss or earnings more
44 46 50 36 35 41
Share with earnings losses greater than 30%
5 7 8 25 25 21
Notes: Columns are manufacturing with high international competition, total manufacturing and services (and utilities for USA)Sources: OECD Employment Outlook (2005) for EU-15 (excl SE) on the basis of ECHP data and Kletzer (2001, “Job Loss from Imports: Measuring the Loss”, Institute for International Economics, Washington, DC) for USA on the basis of bi-annual Displaced Worker Surveys.
30
Systems Competition of Labour Compacts
• Despite quite widespread perceptions, only little
evidence for “ a race to the bottom” (tax system ?)
• Leader-follower behaviour in order to maintain
relative positions (wage setting ?)
• Regression towards the mean, “race to the top” ?
• (Open Method of) Co-ordination largely ineffective
• Heterogeneity of “Social Europe” likely to persist
DG ECFIN