To what extent do existing labor market institutions support or hinder the transition to an adaptive labor market?
Labor market institutions are fully aligned with the goal of an adaptable labor market.
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9
Denmark
The Danish labor market has proven to be adaptive. Unemployment rates, including long-term unemployment, have consistently been among the lowest in the EU. Unemployment spells are generally short, and the levels of job inflows and outflows are typically high.
These features are generally attributed to the so-called flexicurity model, which comprises flexible hiring and firing rules for employers, a generous social safety net, and active labor market policies focused on returning the unemployed to work. There has been a long list of reforms over the years adapting the system to developments in the labor market (Andersen (2023)). The unemployment benefit cannot exceed 90% of the previous wage and is capped, making the compensation rate higher for low-income groups than for high-income groups. The average compensation rate is about 60% for a skilled average worker during the first three months of unemployment, after which it declines (Ministry of Employment 2021). Unemployment insurance is voluntary and tied to insurance contributions. Those who are not insured must resort to social assistance.
The Danish labor market offers extensive opportunities for acquiring job-relevant education. It is required that the unemployed actively apply for jobs or participate in educational programs. Failure to meet these requirements results in a sanction (Kreiner and Svarer 2022). Educational activities are typically determined through negotiations among labor unions, employer associations and the state in tripartite agreements. The most recent of these agreements emphasizes the need to develop skills related to the green transition and increasing IT demands.
Projections indicate that the labor force will remain roughly constant over the next couple of decades, raising concerns about a labor shortage, particularly within the public sector due to increasing needs from an aging population. Meanwhile, there is ongoing debate about how the labor market will be impacted by AI and robotics. Mismatch problems between demand and supply – in terms of both quantity and quality (qualifications) – are likely to develop.
The government has proposed various initiatives intended to influence educational choices, including IT skills, and to facilitate reeducation for sector shifts. The recent tripartite agreement also notes that university education will become available to students without a conventional educational background, such as a high school diploma (Trepartsaftale 2023). Additionally, following a cross-party reform compromise passed in 2023, 10% of master’s degree programs at Danish universities will be restructured from two years to one year and three months (i.e., 120 to 75 ECTS). Furthermore, the reform incorporated a more direct focus on labor market demands by introducing new part-time master’s programs that expect students to combine employment and studies.
Labor immigration has been a contested issue in Denmark, but views have recently changed. Migrant workers have contributed significantly to the increase in employment in recent years. Initiatives have been launched to recruit workers from outside the EU for so-called welfare professions and in crafts. There is a concern that the country may be facing a labor shortage.
These features are generally attributed to the so-called flexicurity model, which comprises flexible hiring and firing rules for employers, a generous social safety net, and active labor market policies focused on returning the unemployed to work. There has been a long list of reforms over the years adapting the system to developments in the labor market (Andersen (2023)). The unemployment benefit cannot exceed 90% of the previous wage and is capped, making the compensation rate higher for low-income groups than for high-income groups. The average compensation rate is about 60% for a skilled average worker during the first three months of unemployment, after which it declines (Ministry of Employment 2021). Unemployment insurance is voluntary and tied to insurance contributions. Those who are not insured must resort to social assistance.
The Danish labor market offers extensive opportunities for acquiring job-relevant education. It is required that the unemployed actively apply for jobs or participate in educational programs. Failure to meet these requirements results in a sanction (Kreiner and Svarer 2022). Educational activities are typically determined through negotiations among labor unions, employer associations and the state in tripartite agreements. The most recent of these agreements emphasizes the need to develop skills related to the green transition and increasing IT demands.
Projections indicate that the labor force will remain roughly constant over the next couple of decades, raising concerns about a labor shortage, particularly within the public sector due to increasing needs from an aging population. Meanwhile, there is ongoing debate about how the labor market will be impacted by AI and robotics. Mismatch problems between demand and supply – in terms of both quantity and quality (qualifications) – are likely to develop.
The government has proposed various initiatives intended to influence educational choices, including IT skills, and to facilitate reeducation for sector shifts. The recent tripartite agreement also notes that university education will become available to students without a conventional educational background, such as a high school diploma (Trepartsaftale 2023). Additionally, following a cross-party reform compromise passed in 2023, 10% of master’s degree programs at Danish universities will be restructured from two years to one year and three months (i.e., 120 to 75 ECTS). Furthermore, the reform incorporated a more direct focus on labor market demands by introducing new part-time master’s programs that expect students to combine employment and studies.
Labor immigration has been a contested issue in Denmark, but views have recently changed. Migrant workers have contributed significantly to the increase in employment in recent years. Initiatives have been launched to recruit workers from outside the EU for so-called welfare professions and in crafts. There is a concern that the country may be facing a labor shortage.
Citations:
Andersen, T.M. 2023. “The Danish Labor Market 2000-2022.” IZA World of Labor 2023:404. https://wol.iza.org/articles/the-danish-labor-market/long
Kreiner, Claus Thustrup and Michael Svarer. 2022. “Danish Flexicurity.” Journal of Economic Perspectives 36 (4): 81–102.
Ministry of Employment. 2021. Balancer i dagpengesystemet. København.
Trepartaftale. 2023. Trepartsaftale om langsigtede investeringer i voksen-, efter- og videreuddannelse, September 2023 https://www.uvm.dk/aktuelt/nyheder/uvm/2023/sep/230912-ny-trepartsaftale-langsigtede-investeringer-i-voksen-efter-og-videreuddannelse
Andersen, T.M. 2023. “The Danish Labor Market 2000-2022.” IZA World of Labor 2023:404. https://wol.iza.org/articles/the-danish-labor-market/long
Kreiner, Claus Thustrup and Michael Svarer. 2022. “Danish Flexicurity.” Journal of Economic Perspectives 36 (4): 81–102.
Ministry of Employment. 2021. Balancer i dagpengesystemet. København.
Trepartaftale. 2023. Trepartsaftale om langsigtede investeringer i voksen-, efter- og videreuddannelse, September 2023 https://www.uvm.dk/aktuelt/nyheder/uvm/2023/sep/230912-ny-trepartsaftale-langsigtede-investeringer-i-voksen-efter-og-videreuddannelse
Norway
Responsibility for full employment for all individuals with a willingness and capacity to work lies within the Norwegian Labor and Welfare Administration (NAV), which operates employment offices in all local authorities (Ministry of Labour and Social Inclusion, 2008). NAV also administers social security rights for the population and is responsible for all active labor market measures. Employment policies are guided by three objectives: full employment, high levels of job mobility and efficient assistance for individuals facing difficulties in obtaining or maintaining employment due to skill or health challenges.
For the past decade, welfare state employment policies have been quite successful. Total employment rates are high, the level of unemployment is low, and mobility rates are also high. On average, 15% of the workforce changes jobs every year. However, the number of vacant jobs has remained higher than the number of unemployed, indicating a structural skills gap. To help companies and workers manage short-term losses in demand for their products, there is a lay-off scheme that is partly employer-funded and partly state-funded, providing income security for employees. This program was extensively used during the pandemic in the 2020 – 2021 period.
Generally, responsibility for providing a workforce with the necessary skills for the economy lies within the state education system. However, a widespread shortage of key personnel in many occupations incentivizes companies to invest in lifelong learning programs and the skills upgrading of their employees. Furthermore, there are state incentives for the education system and universities to offer more programs and courses for older segments of the workforce.
For the past decade, welfare state employment policies have been quite successful. Total employment rates are high, the level of unemployment is low, and mobility rates are also high. On average, 15% of the workforce changes jobs every year. However, the number of vacant jobs has remained higher than the number of unemployed, indicating a structural skills gap. To help companies and workers manage short-term losses in demand for their products, there is a lay-off scheme that is partly employer-funded and partly state-funded, providing income security for employees. This program was extensively used during the pandemic in the 2020 – 2021 period.
Generally, responsibility for providing a workforce with the necessary skills for the economy lies within the state education system. However, a widespread shortage of key personnel in many occupations incentivizes companies to invest in lifelong learning programs and the skills upgrading of their employees. Furthermore, there are state incentives for the education system and universities to offer more programs and courses for older segments of the workforce.
Citations:
Ministry of Labour and Social Inclusion. 2008. “Areas of Responsibility and Policy Instruments.”
https://www.regjeringen.no/en/topics/labour/labour-market-and-employment/innsikt/den-norske-arbeidsmarknaden/institusjoner-og-organisering/areas-of-responsibility-and-policy-instr/id86901/
Statistics Norway. 2024. “Labour force survey.” https://www.ssb.no/en/arbeid-og-lonn/sysselsetting/statistikk/arbeidskraftundersokelsen
Norwegian Labour Inspection Authority. n.d. “Temporary lay-off.” https://www.arbeidstilsynet.no/en/working-conditions/temporary-lay-off/
Ministry of Labour and Social Inclusion. 2008. “Areas of Responsibility and Policy Instruments.”
https://www.regjeringen.no/en/topics/labour/labour-market-and-employment/innsikt/den-norske-arbeidsmarknaden/institusjoner-og-organisering/areas-of-responsibility-and-policy-instr/id86901/
Statistics Norway. 2024. “Labour force survey.” https://www.ssb.no/en/arbeid-og-lonn/sysselsetting/statistikk/arbeidskraftundersokelsen
Norwegian Labour Inspection Authority. n.d. “Temporary lay-off.” https://www.arbeidstilsynet.no/en/working-conditions/temporary-lay-off/
Switzerland
In Switzerland, developing skills throughout working life may happen by way of vocational training, professional education, continuing education and training, universities of applied sciences, and general university training (see SERI 2022). In international comparison, there are arguably two outstanding elements of the system of opportunities to develop skills in Switzerland: a) Switzerland is a prominent case of strong reliance on vocational training. About two-thirds of all school leavers start vocational training, in the form of basic training within enterprises that is accompanied by study within public vocational training schools. b) The educational system is highly permeable: After vocational training, a frequently utilized route to higher qualification at the tertiary level is via vocational education either at universities of applied sciences or at universities. The fields most frequently studied at professional education institutions are nursing, business management and social pedagogy (data of 2020).
The universities of applied sciences were introduced in 1997. A typical route to universities of applied sciences is via vocational training which is combined with a vocational baccalaureate (either in parallel or after vocational training), the latter being the criterion for acceptance at the universities of applied sciences. In 2019, entrants at universities of applied sciences made up 1.8% of the cohort aged 20 to 29, as compared to 2.0% at universities (Emmenegger et al. 2023: 365). This indicates that the route to tertiary degrees via universities of applied sciences is almost as important as the traditional route via general universities. There is also some permeability between professional education institutions and universities of applied sciences, and between the latter and universities. Hence, while in countries such as Germany, upskilling in the knowledge economy relies very heavily on the expansion of general universities, the Swiss pathway is marked by the strong expansion of both general universities and universities of applied science. Having said this, the total share of people holding tertiary education degrees in Switzerland (45% of the population between 25 and 64) is still lower than in neighboring Austria (50%) and Germany (51%) – but higher than in Italy (43%) or France (41%) (OECD 2023).
High-quality vocational education and opportunities for closely related upskilling depend strongly on employers’ willingness to invest in education. In the literature, it is frequently argued that in coordinated market economies based on high-quality industrial production such as Switzerland, employers have strong incentives to support vocational education (Hall/Soskice 2001). A second argument for the peculiarities of the Swiss system of upskilling points to weak trade unions and the strong role played by employers in defining vocational training curricula, making upskilling after vocational training an attractive option (Emmenegger et al. 2023).
The employment agencies (Regional Arbeitsvermittlungszentren) are organized in a decentralized way. Their efficiency varies by region, but can be judged as being at least sufficient. Hence, they facilitate worker mobility across firms, industries and regions. There is no explicit attempt to facilitate worker mobility to other countries. However, Switzerland is seeking formal membership or association with the European Network of Public Employment Services (SECO 2023) – which is dependent on Switzerland’s future relations with the EU. Two major problems within the system of employment agencies are the strong variation in efficiency across regions and the lack of sufficient coordination with other public institutions (such as social assistance and social security agencies). There have been attempts to improve this interinstitutional cooperation (Federal Council 2013; Bonoli & Fossati 2022; Interinstitutionelle Zusammenarbeit 2023).
Short-time work programs are an established practice in Switzerland. The scheme was extensively applied during the recent pandemic, based on corporatist tripartite policy development by employers, the state and trade unions (Armingeon & Sager 2022).
The universities of applied sciences were introduced in 1997. A typical route to universities of applied sciences is via vocational training which is combined with a vocational baccalaureate (either in parallel or after vocational training), the latter being the criterion for acceptance at the universities of applied sciences. In 2019, entrants at universities of applied sciences made up 1.8% of the cohort aged 20 to 29, as compared to 2.0% at universities (Emmenegger et al. 2023: 365). This indicates that the route to tertiary degrees via universities of applied sciences is almost as important as the traditional route via general universities. There is also some permeability between professional education institutions and universities of applied sciences, and between the latter and universities. Hence, while in countries such as Germany, upskilling in the knowledge economy relies very heavily on the expansion of general universities, the Swiss pathway is marked by the strong expansion of both general universities and universities of applied science. Having said this, the total share of people holding tertiary education degrees in Switzerland (45% of the population between 25 and 64) is still lower than in neighboring Austria (50%) and Germany (51%) – but higher than in Italy (43%) or France (41%) (OECD 2023).
High-quality vocational education and opportunities for closely related upskilling depend strongly on employers’ willingness to invest in education. In the literature, it is frequently argued that in coordinated market economies based on high-quality industrial production such as Switzerland, employers have strong incentives to support vocational education (Hall/Soskice 2001). A second argument for the peculiarities of the Swiss system of upskilling points to weak trade unions and the strong role played by employers in defining vocational training curricula, making upskilling after vocational training an attractive option (Emmenegger et al. 2023).
The employment agencies (Regional Arbeitsvermittlungszentren) are organized in a decentralized way. Their efficiency varies by region, but can be judged as being at least sufficient. Hence, they facilitate worker mobility across firms, industries and regions. There is no explicit attempt to facilitate worker mobility to other countries. However, Switzerland is seeking formal membership or association with the European Network of Public Employment Services (SECO 2023) – which is dependent on Switzerland’s future relations with the EU. Two major problems within the system of employment agencies are the strong variation in efficiency across regions and the lack of sufficient coordination with other public institutions (such as social assistance and social security agencies). There have been attempts to improve this interinstitutional cooperation (Federal Council 2013; Bonoli & Fossati 2022; Interinstitutionelle Zusammenarbeit 2023).
Short-time work programs are an established practice in Switzerland. The scheme was extensively applied during the recent pandemic, based on corporatist tripartite policy development by employers, the state and trade unions (Armingeon & Sager 2022).
Citations:
Armingeon, Klaus, and Fritz Sager. 2022. “Muting Science: Input Overload Versus Scientific Advice in Swiss Policy Making During the Covid-19 Pandemic.” The Political Quarterly 93(3): 424-432.
Bonoli, Giuliano, and Flavia Fossati. 2022. “Les politiques sociales.” In *Handbuch der Schweizer Politik*, eds. Yannis Papadopoulos, Pascal Sciarini, Adrian Vatter, Silja Häusermann, Patrick Emmenegger, and Flavia Fossati. 7th ed. 883-902.
Emmenegger, Patrick, Scherwin M. Bajka, and Cecilia Ivardi. 2023. “How Coordinated Capitalism Adapts to the Knowledge Economy: Different Upskilling Strategies in Germany and Switzerland.” Swiss Political Science Review 29(4): 355-378.
Federal Council. 2023. Wirksamkeit und Effizienz der öffentlichen Arbeitsvermittlung. Bericht in Erfüllung des Postulates 13.3361 der Kommission für Wirtschaft und Abgaben NR vom 22. April 2013. Bern: Federal Council.
Hall, Peter A., and David Soskice, eds. 2001. Varieties of Capitalism. The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press.
Interinstitutionelle Zusammenarbeit (Interinstitutional co-operation): https://www.iiz.ch/de/ueber-uns
OECD. 2023. “Adult Education Level (Indicator).” doi: 10.1787/36bce3fe-en.
SECO (State Secretariate for Economy). 2018. “Die Wirkung von.”
Arbeitsmarktlichen Massnahmen. 2018. “Eine Analyse bisheriger Evaluationen.” SECO Publikation, Arbeitsmarktpolitik No 54. https://www.seco.admin.ch/seco/de/home/Publikationen_Dienstleistungen/Publikationen_und_Formulare/Arbeit/Arbeitsmarkt/Informationen_Arbeitsmarktforschung/wirkung-arbeitsmarktlichen-massnahmen.html
SECO (State Secretariate for Economy). 2023. “https://www.arbeit.swiss/secoalv/en/home/menue/institutionen-medien/internationale-kooperation.html”.
State Secretariate for Education, Research and Innovation (SERI). 2022. Vocational and Professional Education and Training in Switzerland. Facts and Figures 2022. Bern: SERI.
Armingeon, Klaus, and Fritz Sager. 2022. “Muting Science: Input Overload Versus Scientific Advice in Swiss Policy Making During the Covid-19 Pandemic.” The Political Quarterly 93(3): 424-432.
Bonoli, Giuliano, and Flavia Fossati. 2022. “Les politiques sociales.” In *Handbuch der Schweizer Politik*, eds. Yannis Papadopoulos, Pascal Sciarini, Adrian Vatter, Silja Häusermann, Patrick Emmenegger, and Flavia Fossati. 7th ed. 883-902.
Emmenegger, Patrick, Scherwin M. Bajka, and Cecilia Ivardi. 2023. “How Coordinated Capitalism Adapts to the Knowledge Economy: Different Upskilling Strategies in Germany and Switzerland.” Swiss Political Science Review 29(4): 355-378.
Federal Council. 2023. Wirksamkeit und Effizienz der öffentlichen Arbeitsvermittlung. Bericht in Erfüllung des Postulates 13.3361 der Kommission für Wirtschaft und Abgaben NR vom 22. April 2013. Bern: Federal Council.
Hall, Peter A., and David Soskice, eds. 2001. Varieties of Capitalism. The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press.
Interinstitutionelle Zusammenarbeit (Interinstitutional co-operation): https://www.iiz.ch/de/ueber-uns
OECD. 2023. “Adult Education Level (Indicator).” doi: 10.1787/36bce3fe-en.
SECO (State Secretariate for Economy). 2018. “Die Wirkung von.”
Arbeitsmarktlichen Massnahmen. 2018. “Eine Analyse bisheriger Evaluationen.” SECO Publikation, Arbeitsmarktpolitik No 54. https://www.seco.admin.ch/seco/de/home/Publikationen_Dienstleistungen/Publikationen_und_Formulare/Arbeit/Arbeitsmarkt/Informationen_Arbeitsmarktforschung/wirkung-arbeitsmarktlichen-massnahmen.html
SECO (State Secretariate for Economy). 2023. “https://www.arbeit.swiss/secoalv/en/home/menue/institutionen-medien/internationale-kooperation.html”.
State Secretariate for Education, Research and Innovation (SERI). 2022. Vocational and Professional Education and Training in Switzerland. Facts and Figures 2022. Bern: SERI.
Labor market institutions are largely aligned with the goal of an adaptable labor market.
8
Austria
The Austrian labor market’s development over the past 15 years has been characterized by a substantial increase in labor supply and influenced by cyclical economic factors. Although the total hours worked did not rise, the number of employees did increase. Unemployment levels have fluctuated in accordance with economic trends. Despite a relatively developed active labor market policy, unemployment has increasingly concentrated on certain groups over time.
The overall number of employees in 2022 was 3.9 million, higher than ever in Austrian postwar history, with a 15.5% increase over 2008. Over the past 15 years, the labor supply increased more than labor demand, with certain groups specifically affected by this development. The share of long-term unemployed people increased from 21% in 2008 to 39% in 2022.
Politically, measures concerning active labor market policies, including the creation and maintenance of an adaptable labor market, have faced minimal contestation between different parties and social partners. All relevant actors have strongly supported a broad and inclusive set of measures, including qualification and support (see AMS 2022; BMAW 2022). Active labor market policies have been continuously expanded since the 1990s. Regarding public expenditures in this field, Austria has ranked No. 5 among OECD countries (see BMAW 2022).
Short-time work schemes have played a significant role in recent Austrian labor policy. They have had a notably positive impact on the employment rate during the COVID-19 pandemic (see BMAW 2022).
However, the Austrian Court of Audit noted the exceptional generosity of the various programs and highlighted the tremendous costs and the considerable danger of misuse by employers (Rechnungshof 2022).
In late 2023, the Chamber of Labor harshly criticized the government for wide-ranging cuts in active labor market policy. The reduction of about one-fifth of the resources previously devoted to this field was considered to obstruct the necessary steps in qualifying the Austrian workforce to meet new challenges, such as social-ecological transformation, digitalization and artificial intelligence.
The Austrian industry benefits from a robust apprenticeship system that provides comprehensive vocational training for low-educated workers, both on and off the job. This extensive vocational system enables workers to remain flexible throughout their careers. The apprenticeship system should be systematically reformed to integrate new occupations.
The overall number of employees in 2022 was 3.9 million, higher than ever in Austrian postwar history, with a 15.5% increase over 2008. Over the past 15 years, the labor supply increased more than labor demand, with certain groups specifically affected by this development. The share of long-term unemployed people increased from 21% in 2008 to 39% in 2022.
Politically, measures concerning active labor market policies, including the creation and maintenance of an adaptable labor market, have faced minimal contestation between different parties and social partners. All relevant actors have strongly supported a broad and inclusive set of measures, including qualification and support (see AMS 2022; BMAW 2022). Active labor market policies have been continuously expanded since the 1990s. Regarding public expenditures in this field, Austria has ranked No. 5 among OECD countries (see BMAW 2022).
Short-time work schemes have played a significant role in recent Austrian labor policy. They have had a notably positive impact on the employment rate during the COVID-19 pandemic (see BMAW 2022).
However, the Austrian Court of Audit noted the exceptional generosity of the various programs and highlighted the tremendous costs and the considerable danger of misuse by employers (Rechnungshof 2022).
In late 2023, the Chamber of Labor harshly criticized the government for wide-ranging cuts in active labor market policy. The reduction of about one-fifth of the resources previously devoted to this field was considered to obstruct the necessary steps in qualifying the Austrian workforce to meet new challenges, such as social-ecological transformation, digitalization and artificial intelligence.
The Austrian industry benefits from a robust apprenticeship system that provides comprehensive vocational training for low-educated workers, both on and off the job. This extensive vocational system enables workers to remain flexible throughout their careers. The apprenticeship system should be systematically reformed to integrate new occupations.
Citations:
Fink, M. 2023. “Arbeitslosigkeit, Unterbeschäftigung und Arbeitsmarktpolitik.” In A. Buxbaum, U. Filipič, S. Pirklbauer, N. Soukup, and N. Wagner, eds., Soziale Lage und Sozialpolitik in Österreich 2023: Entwicklungen und Perspektiven, 25-39. Wien: ÖGB-Verlag. https://nbn-resolving.org/urn:nbn:de:0168-ssoar-86874-5
BMAW. 2022. Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2022. Dokumentation. Wien.
Bundesministerium für Arbeit und Wirtschaft. “Online verfügbar unter.” https://www.bmaw
gv.at/dam/jcr:2a6dff0d-f5f4-456d-99c9-07d9c2baf353/Final_Aktive%20AMP%20in%20
%C3%96sterreich%202014%20-%202022_Dokumentation.pdf
Rechnungshof. 2022. “COVID-19-Kurzarbeit: Konzept zur gezielten Aufdeckung von Missbrauch fehlte.” https://www.rechnungshof.gv.at/rh/home/news/news/aktuelles/COVID-19-Kurzarbeit.html#
https://www.ots.at/presseaussendung/OTS_20230915_OTS0142/baustellen-in-der-arbeitsmarktpolitik-arbeiterkammer-kritisiert-minister-kochers-kuerzungswahn
https://www.oecd.org/employment-outlook/2022/#country-notes
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-austria_en
Fink, M. 2023. “Arbeitslosigkeit, Unterbeschäftigung und Arbeitsmarktpolitik.” In A. Buxbaum, U. Filipič, S. Pirklbauer, N. Soukup, and N. Wagner, eds., Soziale Lage und Sozialpolitik in Österreich 2023: Entwicklungen und Perspektiven, 25-39. Wien: ÖGB-Verlag. https://nbn-resolving.org/urn:nbn:de:0168-ssoar-86874-5
BMAW. 2022. Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2022. Dokumentation. Wien.
Bundesministerium für Arbeit und Wirtschaft. “Online verfügbar unter.” https://www.bmaw
gv.at/dam/jcr:2a6dff0d-f5f4-456d-99c9-07d9c2baf353/Final_Aktive%20AMP%20in%20
%C3%96sterreich%202014%20-%202022_Dokumentation.pdf
Rechnungshof. 2022. “COVID-19-Kurzarbeit: Konzept zur gezielten Aufdeckung von Missbrauch fehlte.” https://www.rechnungshof.gv.at/rh/home/news/news/aktuelles/COVID-19-Kurzarbeit.html#
https://www.ots.at/presseaussendung/OTS_20230915_OTS0142/baustellen-in-der-arbeitsmarktpolitik-arbeiterkammer-kritisiert-minister-kochers-kuerzungswahn
https://www.oecd.org/employment-outlook/2022/#country-notes
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-austria_en
Estonia
In 2022 – 2023, Estonia made substantial changes to the regulatory framework governing labor market policies. A new Labor Market Measures Act, effective in 2024, provides general principles for measures implemented through public employment services. The detailed description of services is defined in the Employment Program (EP), which is a government decree. This arrangement allows for greater flexibility in adapting labor market measures to specific labor market situations and target groups.
The latest EP (2024 – 2029) lasts longer than the previous three-year EPs, and is aligned with the state budget planning process and EU funding mechanisms. The biggest changes concern labor market training. The Unemployment Insurance Fund (UIF) will primarily fund training courses that prepare workers for regions with a labor shortage. The areas and professions are defined based on reports on workforce needs (OSKA Reports), sectoral development plans and labor market statistics. Training courses will be longer and must end with an evaluation of learning outcomes. It is hoped that these measures will facilitate improved employability and upskilling of service users. Employed, unemployed and inactive persons are all eligible for UIF-funded training; however, employed persons must have at least 12 months of contributions to the UIF.
Estonia’s upskilling policies are quite statist, with employers not playing a central role. The organization of training is voluntary. Although employers must provide paid leave for employees in graduate studies, they can also receive subsidies from the UIF to cover training for individuals with lower employability, including young workers.
The Estonian Public Employment Service (PES) does not make a special effort to promote worker mobility across industries or borders. Immigration policy is strict and only a limited number of work permits are granted to foreign workers each year. Priority is given to high-skilled professionals; for example, IT specialists are excluded from the immigration quota. In 2022, the number of recipients of first-time temporary residence permits for employment purposes increased by 9% compared to 2021. The number of residence permits issued for the employment of top specialists increased by 14%, and the number of residence permits issued for employment in startups increased by 82% (EMN 2023). The number of short-term seasonal workers, in contrast, decreased by 46% compared to 2021 due to the war in Ukraine and the changed geopolitical situation with the country’s eastern neighbors.
There are some profession-specific government programs designed to encourage young professionals, such as teachers and doctors, to move to remote regions. The brown industry-dominated northeast of the country deserves special attention because of the challenges in making a green and fair transition. To facilitate a transition to a green economy, a special EU-funded just transition program is being executed in the northeast region. However, retraining the workforce is given less prominence in the program instruments than the creation of new firms and investment in existing companies (Ministry of Finance 2024).
The latest EP (2024 – 2029) lasts longer than the previous three-year EPs, and is aligned with the state budget planning process and EU funding mechanisms. The biggest changes concern labor market training. The Unemployment Insurance Fund (UIF) will primarily fund training courses that prepare workers for regions with a labor shortage. The areas and professions are defined based on reports on workforce needs (OSKA Reports), sectoral development plans and labor market statistics. Training courses will be longer and must end with an evaluation of learning outcomes. It is hoped that these measures will facilitate improved employability and upskilling of service users. Employed, unemployed and inactive persons are all eligible for UIF-funded training; however, employed persons must have at least 12 months of contributions to the UIF.
Estonia’s upskilling policies are quite statist, with employers not playing a central role. The organization of training is voluntary. Although employers must provide paid leave for employees in graduate studies, they can also receive subsidies from the UIF to cover training for individuals with lower employability, including young workers.
The Estonian Public Employment Service (PES) does not make a special effort to promote worker mobility across industries or borders. Immigration policy is strict and only a limited number of work permits are granted to foreign workers each year. Priority is given to high-skilled professionals; for example, IT specialists are excluded from the immigration quota. In 2022, the number of recipients of first-time temporary residence permits for employment purposes increased by 9% compared to 2021. The number of residence permits issued for the employment of top specialists increased by 14%, and the number of residence permits issued for employment in startups increased by 82% (EMN 2023). The number of short-term seasonal workers, in contrast, decreased by 46% compared to 2021 due to the war in Ukraine and the changed geopolitical situation with the country’s eastern neighbors.
There are some profession-specific government programs designed to encourage young professionals, such as teachers and doctors, to move to remote regions. The brown industry-dominated northeast of the country deserves special attention because of the challenges in making a green and fair transition. To facilitate a transition to a green economy, a special EU-funded just transition program is being executed in the northeast region. However, retraining the workforce is given less prominence in the program instruments than the creation of new firms and investment in existing companies (Ministry of Finance 2024).
Citations:
EMN. 2023. “Migration Statistics, 2018–2022.” https://www.emn.ee/wp-content/uploads/2023/08/migration-statistics-2023-eng-uus.pdf
Ministry of Finance. 2024. “Ida-Virumaa õiglane üleminek.” https://www.fin.ee/ida-virumaa#ulevaade
EMN. 2023. “Migration Statistics, 2018–2022.” https://www.emn.ee/wp-content/uploads/2023/08/migration-statistics-2023-eng-uus.pdf
Ministry of Finance. 2024. “Ida-Virumaa õiglane üleminek.” https://www.fin.ee/ida-virumaa#ulevaade
Finland
Over the last decade, Finland has maintained a robust labor market with high participation and employment rates. In 2022, these were respectively 79.3% and 73.8%, surpassing the corresponding figures in many OECD countries. Despite a relatively strong recovery in employment following the pandemic, the unemployment rate stood at 6.9% in 2022, which is comparatively high within the OECD. Notably, about one in four unemployed individuals in 2021 had remained jobless for over a year, and 6.8% of the labor force not actively seeking work indicated that they would accept job offers.
Existing policies and regulations encourage and empower people to develop their skills throughout their working life in response to changing labor market demands. However, there is no special emphasis on incentivizing employers to anticipate sustainability challenges in the labor market and invest in upskilling or reskilling their workforces. The unemployment program has long been applied to short-term layoffs, allowing firms to absorb short-term economic shocks by implementing short-time work schemes. Prime Minister Orpo’s government has proposed a discontinuation of the adult education allowance, thus weakening financial incentives for reskilling or professional reorientation for adults with degrees.
Ongoing reforms aim to improve active labor market policy (ALMP) measures by focusing on job-search obligations, expanding support and shifting responsibilities to municipalities. The country’s significant ALMP spending, particularly on training (0.36% of GDP), seeks to foster adult learning, address labor shortages and facilitate labor market transitions. According to OECD (2023), evaluating the effectiveness of these programs, specifically labor market training (LMT) and self-motivated education with unemployment benefits (SMT), is crucial.
Services provided by employment agencies facilitate worker mobility across firms, industries and regions through upskilling and reskilling training. However, there are no policies to support mobility across countries. Employment office authorities develop integrated action plans jointly with claimants. The intensity and content of these plans vary based on individual needs. In principle, the measures include several components such as labor market training, self-motivated studies, part-time work, preparatory work training, on-the-job training, integration measures for immigrants and various types of rehabilitative work activities.
Existing policies and regulations encourage and empower people to develop their skills throughout their working life in response to changing labor market demands. However, there is no special emphasis on incentivizing employers to anticipate sustainability challenges in the labor market and invest in upskilling or reskilling their workforces. The unemployment program has long been applied to short-term layoffs, allowing firms to absorb short-term economic shocks by implementing short-time work schemes. Prime Minister Orpo’s government has proposed a discontinuation of the adult education allowance, thus weakening financial incentives for reskilling or professional reorientation for adults with degrees.
Ongoing reforms aim to improve active labor market policy (ALMP) measures by focusing on job-search obligations, expanding support and shifting responsibilities to municipalities. The country’s significant ALMP spending, particularly on training (0.36% of GDP), seeks to foster adult learning, address labor shortages and facilitate labor market transitions. According to OECD (2023), evaluating the effectiveness of these programs, specifically labor market training (LMT) and self-motivated education with unemployment benefits (SMT), is crucial.
Services provided by employment agencies facilitate worker mobility across firms, industries and regions through upskilling and reskilling training. However, there are no policies to support mobility across countries. Employment office authorities develop integrated action plans jointly with claimants. The intensity and content of these plans vary based on individual needs. In principle, the measures include several components such as labor market training, self-motivated studies, part-time work, preparatory work training, on-the-job training, integration measures for immigrants and various types of rehabilitative work activities.
Citations:
OECD. 2023. Evaluation of Active Labour Market Policies in Finland, Connecting People with Jobs. Paris: OECD Publishing. https://doi.org/10.1787/115b186e-en
Kantola, Anu and Kananen, Johannes. 2013. “Seize the Moment: Financial Crises and the Making of the Finnish Competition State.” New Political Economy 18(6): 811-826.
OECD. 2023. Evaluation of Active Labour Market Policies in Finland, Connecting People with Jobs. Paris: OECD Publishing. https://doi.org/10.1787/115b186e-en
Kantola, Anu and Kananen, Johannes. 2013. “Seize the Moment: Financial Crises and the Making of the Finnish Competition State.” New Political Economy 18(6): 811-826.
Germany
Germany’s labor market increasingly faces shortages across all sectors and qualification levels. In this setting, employers have a growing self-interest in retaining and developing the skills of their workforce. Moreover, Germany has a tradition of long and stable employment where employees tend to stay with their employers for extended periods. The average duration of employment with a given company is 11.2 years (2020) and has not substantially changed from the levels in the 1990s (iwd, 2022). This environment encourages employers to invest in their workforce’s skills.
However, participation in training measures is only at 8% (the survey asks about participation in a measure in the past four weeks), which is clearly below the EU average of 12% with much higher numbers in Scandinavia (Destatis, 2023). Regulation on paid leave for external training measures is the responsibility of the federal states. In 14 of the 16 states, there is a legal claim for this type of paid leave amounting, in most cases, to 5 days per year (DGB, 2022).
Employers and employees alike must be incentivized to invest in their skills. Germany faces an issue due to high marginal tax rates (see “Policies Targeting Adequate Tax Revenue”), which not only disincentivize longer working hours but also higher skill-related salaries. Moreover, Germany’s labor market is heavily regulated with high hurdles for dismissals. On one hand, this provides job security; on the other hand, it can reduce incentives for demotivated workers to invest in their skills.
Germany leads the countries with a particularly generous and established short-time work scheme system. The German system provided a template for many other industrial countries, especially during the COVID-19 pandemic. In severe crises like the pandemic, the support is intensified.
The mission of the Federal Agency for Labor (Bundesagentur für Arbeit: BA) is to support worker mobility across firms, industries, regions, and countries. Current evaluations of the BA’s effectiveness are lacking. Although high employment growth in recent years suggests effective mobility, it is unclear whether the BA has played a significant role in this success.
However, participation in training measures is only at 8% (the survey asks about participation in a measure in the past four weeks), which is clearly below the EU average of 12% with much higher numbers in Scandinavia (Destatis, 2023). Regulation on paid leave for external training measures is the responsibility of the federal states. In 14 of the 16 states, there is a legal claim for this type of paid leave amounting, in most cases, to 5 days per year (DGB, 2022).
Employers and employees alike must be incentivized to invest in their skills. Germany faces an issue due to high marginal tax rates (see “Policies Targeting Adequate Tax Revenue”), which not only disincentivize longer working hours but also higher skill-related salaries. Moreover, Germany’s labor market is heavily regulated with high hurdles for dismissals. On one hand, this provides job security; on the other hand, it can reduce incentives for demotivated workers to invest in their skills.
Germany leads the countries with a particularly generous and established short-time work scheme system. The German system provided a template for many other industrial countries, especially during the COVID-19 pandemic. In severe crises like the pandemic, the support is intensified.
The mission of the Federal Agency for Labor (Bundesagentur für Arbeit: BA) is to support worker mobility across firms, industries, regions, and countries. Current evaluations of the BA’s effectiveness are lacking. Although high employment growth in recent years suggests effective mobility, it is unclear whether the BA has played a significant role in this success.
Citations:
Destatis. 2023. “Weiterbildung: Teilnahmequote in Deutschland mit 8 % unter dem EU-Durchschnitt, Zahl der Woche Nr. 42 vom 17. Oktober 2023.”
DGB. 2022. “Bildungsurlaub: Wie beantragen? Wer hat Anspruch? Wer zahlt?” www.dgb.de/urlaub/++co++fe6281e0-b9eb-11e5-a576-52540023ef1a#uuid-b23937a4-66a0-11ee-8b49-001a4a160123
Iwd. 2022. “Betriebszugehörigkeit: Lange im Betrieb.” Informationsdienst des Instituts der deutschen Wirtschaft, February 17.
Destatis. 2023. “Weiterbildung: Teilnahmequote in Deutschland mit 8 % unter dem EU-Durchschnitt, Zahl der Woche Nr. 42 vom 17. Oktober 2023.”
DGB. 2022. “Bildungsurlaub: Wie beantragen? Wer hat Anspruch? Wer zahlt?” www.dgb.de/urlaub/++co++fe6281e0-b9eb-11e5-a576-52540023ef1a#uuid-b23937a4-66a0-11ee-8b49-001a4a160123
Iwd. 2022. “Betriebszugehörigkeit: Lange im Betrieb.” Informationsdienst des Instituts der deutschen Wirtschaft, February 17.
Slovenia
The unemployment rate remained low in 2022 and 2023. Data from the Slovenian Statistical Office for the third quarter of 2023 show the rate was 3.9% and is expected to remain at this level or even lower in 2024 and 2025. Among young people, it was 8.4%. Among those aged 50 – 64 years, 2.9% were unemployed. By gender, slightly more women than men were unemployed, at 4.0% and 3.7%, respectively.
The Employment Service of Slovenia reported on registered unemployment in December 2023: 20% of all registered unemployed were young people, 37.5% were over 50, 43% were long-term unemployed, and 48.6% were women.
Active employment policy in Slovenia is diverse. This policy includes a range of measures in the labor market aimed at increasing employment, reducing unemployment, improving the employability of individuals in the labor market, and enhancing the competitiveness and flexibility of employers. Measures under this policy encompass education and training programs.
Under the Labour Market Regulation Act, the ministry can implement additional measures for unemployment benefits in response to significant labor market discrepancies or during times of crisis. These measures aim to maintain a higher number of jobs and prevent transitions to open unemployment, or to facilitate education and training for employment with a new employer.
During the COVID-19 pandemic, the government under Prime Minister Janša supported the labor market and various economic sectors. Similarly, the government under Prime Minister Golob introduced measures in early 2023 to address the energy crisis, such as short-time work, which helped employers manage the crisis and retain employees. Full-time employees worked 5 – 20 hours less per week under this measure and were considered to be temporarily waiting for work. Compensation for the reduced working hours was set at 80% of the base salary.
The legislation defines various forms of work adapted to actual life circumstances, such as part-time work and remote work, though full-time positions still prevail. Despite underdeveloped regulations and experience, remote work has become widespread in the post-pandemic period, particularly in government administration, public service, and public organizations.
The Employment Service of Slovenia reported on registered unemployment in December 2023: 20% of all registered unemployed were young people, 37.5% were over 50, 43% were long-term unemployed, and 48.6% were women.
Active employment policy in Slovenia is diverse. This policy includes a range of measures in the labor market aimed at increasing employment, reducing unemployment, improving the employability of individuals in the labor market, and enhancing the competitiveness and flexibility of employers. Measures under this policy encompass education and training programs.
Under the Labour Market Regulation Act, the ministry can implement additional measures for unemployment benefits in response to significant labor market discrepancies or during times of crisis. These measures aim to maintain a higher number of jobs and prevent transitions to open unemployment, or to facilitate education and training for employment with a new employer.
During the COVID-19 pandemic, the government under Prime Minister Janša supported the labor market and various economic sectors. Similarly, the government under Prime Minister Golob introduced measures in early 2023 to address the energy crisis, such as short-time work, which helped employers manage the crisis and retain employees. Full-time employees worked 5 – 20 hours less per week under this measure and were considered to be temporarily waiting for work. Compensation for the reduced working hours was set at 80% of the base salary.
The legislation defines various forms of work adapted to actual life circumstances, such as part-time work and remote work, though full-time positions still prevail. Despite underdeveloped regulations and experience, remote work has become widespread in the post-pandemic period, particularly in government administration, public service, and public organizations.
Citations:
Statistični urad Republike Slovenije. 2024. https://pxweb.stat.si/SiStatData/pxweb/sl/Data/-/0762003S.px
Statistični urad Republike Slovenije. 2024. https://www.stat.si/StatWeb/News/Index/10717
Zavod Republike Slovenije za zaposlovanje. 2024. “Trg dela v številkah.” https://www.ess.gov.si/partnerji/trg-dela/trg-dela-v-stevilkah/
Statistični urad Republike Slovenije. 2024. https://pxweb.stat.si/SiStatData/pxweb/sl/Data/-/0762003S.px
Statistični urad Republike Slovenije. 2024. https://www.stat.si/StatWeb/News/Index/10717
Zavod Republike Slovenije za zaposlovanje. 2024. “Trg dela v številkah.” https://www.ess.gov.si/partnerji/trg-dela/trg-dela-v-stevilkah/
Sweden
The purpose of Swedish labor market policy is threefold. It aims to provide work opportunities for citizens, supply labor to employers, and assist those struggling to find employment.
“`Despite earlier predictions that unemployment would decrease to 6.7% in 2023 (Konjunkturinstitutet 2021), it remained relatively high at 8.5% (SCB 2024a). Nonetheless, the percentages of full-time employment and the employment of people born outside Sweden have increased significantly (SCB 2024b). Both part-time employment and the employment of people born outside Sweden have been problematic issues in the past.“`
In the aftermath of the pandemic, professions in IT, education, and social work show more potential for mobility, while employees in transportation, manufacturing, and maintenance services have more constrained mobility opportunities (Arbetsförmedlingen, 2022).
In order to promote lifelong learning and professional mobility, the government announced a “transformation package” [omställningspaket] with, among other provisions, subsidies for mid-career individuals who choose to return to school or change careers (Government Offices of Sweden, 2022). According to recent EU data, Sweden is the “top performer” in the EU, with more than a third of adults participating in lifelong learning schemes in 2021 (Eurostat 2023).
“`Despite earlier predictions that unemployment would decrease to 6.7% in 2023 (Konjunkturinstitutet 2021), it remained relatively high at 8.5% (SCB 2024a). Nonetheless, the percentages of full-time employment and the employment of people born outside Sweden have increased significantly (SCB 2024b). Both part-time employment and the employment of people born outside Sweden have been problematic issues in the past.“`
In the aftermath of the pandemic, professions in IT, education, and social work show more potential for mobility, while employees in transportation, manufacturing, and maintenance services have more constrained mobility opportunities (Arbetsförmedlingen, 2022).
In order to promote lifelong learning and professional mobility, the government announced a “transformation package” [omställningspaket] with, among other provisions, subsidies for mid-career individuals who choose to return to school or change careers (Government Offices of Sweden, 2022). According to recent EU data, Sweden is the “top performer” in the EU, with more than a third of adults participating in lifelong learning schemes in 2021 (Eurostat 2023).
Citations:
Arbetsförmedlingen. 2022. Yrkesmobilitet på den svenska arbetsmarknaden: en analys av olika yrkesgruppers förutsättningar för rörlighet. https://arbetsformedlingen.se/download/18.3f29801717d5618f8df6231/1642161909624/ykesmobilitet-pa-den-svenska-arbetsmarknaden.pdf
Eurostat. 2023. “Participation in lifelong learning increases in 2021.” https://ec.europa.eu/eurostat/web/products-eurostat-news/-/edn-20230130-1
Government Offices of Sweden. 2022. “Frågor och svar om regeringens omställningspaket.” https://www.regeringen.se/artiklar/2022/06/fragor-och-svar-om-regeringens-omstallningspaket/
Konjunkturinstitutet (NIER). 2021. “Konjunkturläget, December 2021.” https://www.konj.se/download/18.10535f7c17db81574dd3f47b/1640074614038/KLDec2021.pdf
SCB [Statistikmyndigheten]. 2024a. “Arbetskraftsundersökningarna.” https://www.scb.se/AM0401
SCB [Statistikmyndigheten]. 2024b. “Avmatting på arbetsmarknaden under 2023.” https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/pong/statistiknyhet/arbetskraftsundersokningarna-aku-20233/
Arbetsförmedlingen. 2022. Yrkesmobilitet på den svenska arbetsmarknaden: en analys av olika yrkesgruppers förutsättningar för rörlighet. https://arbetsformedlingen.se/download/18.3f29801717d5618f8df6231/1642161909624/ykesmobilitet-pa-den-svenska-arbetsmarknaden.pdf
Eurostat. 2023. “Participation in lifelong learning increases in 2021.” https://ec.europa.eu/eurostat/web/products-eurostat-news/-/edn-20230130-1
Government Offices of Sweden. 2022. “Frågor och svar om regeringens omställningspaket.” https://www.regeringen.se/artiklar/2022/06/fragor-och-svar-om-regeringens-omstallningspaket/
Konjunkturinstitutet (NIER). 2021. “Konjunkturläget, December 2021.” https://www.konj.se/download/18.10535f7c17db81574dd3f47b/1640074614038/KLDec2021.pdf
SCB [Statistikmyndigheten]. 2024a. “Arbetskraftsundersökningarna.” https://www.scb.se/AM0401
SCB [Statistikmyndigheten]. 2024b. “Avmatting på arbetsmarknaden under 2023.” https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/pong/statistiknyhet/arbetskraftsundersokningarna-aku-20233/
7
Australia
The Australian government envisions a dynamic labor market providing good jobs (well-paid, safe, and secure) and responsive to a changing economy. Due to technology and policy settings, the current Australian labor market is more flexible than in the past. The government has identified several forces of change shaping labor market conditions: population aging, rising demand for quality care and support services, expanded use of digital technologies, climate change and the economic transformation it demands, and geopolitical risks. While policies have been developed to address these challenges, the government acknowledges that current labor market institutions are not fully aligned with the changing context’s requirements (Australian Government 2023). For example, there are critical workforce shortages in care and support services, and particular challenges facing regional labor markets. Immigration of workers with critical skills has been an important aspect of labor market management, disrupted during the pandemic when the country closed its international borders. The economy is still recovering and realigning post-COVID, resulting in critical shortages in industries that rely heavily on immigrant workers (Read 2023).
An important feature of the Australian labor market is its minimum wages, which are set by an independent statutory authority, the Fair Work Commission. The national minimum wage is approximately 45% of the median full-time wage. More importantly, many industry- and occupation-specific minimum wages can be substantially higher than the national minimum wage. Minimum wages have been growing faster than average wages in recent years. For example, in July 2023, the minimum wage was increased by 8.6% to AUD 23.23 per hour, compared with average annual wage growth of 3.9%. Higher growth in minimum wages might constrain employment, although there is little evidence of this; as recently as December 2023, the unemployment rate remained below 4%
There are no broad-based government policies that explicitly seek to impact on reskilling or upskilling of workers. However, the country’s public programs and subsidies for education and training arguably have a positive impact . Immigration policy arguably adversely impacts firm incentives to invest in domestic worker training, as they can obtain workers with requisite skills via sponsoring immigrants through temporary and permanent skilled migration programs.
The existing institutional and regulatory environment does not help firms absorb short-term economic shocks through short-time work schemes, but at the same time there are few impediments to firms using these schemes. Employment agencies in Australia generally help facilitate worker mobility, but their impact is not large.
An important feature of the Australian labor market is its minimum wages, which are set by an independent statutory authority, the Fair Work Commission. The national minimum wage is approximately 45% of the median full-time wage. More importantly, many industry- and occupation-specific minimum wages can be substantially higher than the national minimum wage. Minimum wages have been growing faster than average wages in recent years. For example, in July 2023, the minimum wage was increased by 8.6% to AUD 23.23 per hour, compared with average annual wage growth of 3.9%. Higher growth in minimum wages might constrain employment, although there is little evidence of this; as recently as December 2023, the unemployment rate remained below 4%
There are no broad-based government policies that explicitly seek to impact on reskilling or upskilling of workers. However, the country’s public programs and subsidies for education and training arguably have a positive impact . Immigration policy arguably adversely impacts firm incentives to invest in domestic worker training, as they can obtain workers with requisite skills via sponsoring immigrants through temporary and permanent skilled migration programs.
The existing institutional and regulatory environment does not help firms absorb short-term economic shocks through short-time work schemes, but at the same time there are few impediments to firms using these schemes. Employment agencies in Australia generally help facilitate worker mobility, but their impact is not large.
Citations:
Australian Government. 2023. “Skills Shortage Update.” https://www.jobsandskills.gov.au/publications/skills-shortage-quarterly-march-2023https://www.dewr.gov.au/skills-and-training/announcements/labour-market-update
Read, M. 2023. “Skilled migration only for jobs paying more than $90k, unions urge ALP.” Financial Review January 10. https://www.afr.com/politics/federal/unions-urge-labor-to-require-foreign-workers-earn-more-than-90k-20230110-p5cblr
Australian Government. 2023. “Skills Shortage Update.” https://www.jobsandskills.gov.au/publications/skills-shortage-quarterly-march-2023https://www.dewr.gov.au/skills-and-training/announcements/labour-market-update
Read, M. 2023. “Skilled migration only for jobs paying more than $90k, unions urge ALP.” Financial Review January 10. https://www.afr.com/politics/federal/unions-urge-labor-to-require-foreign-workers-earn-more-than-90k-20230110-p5cblr
Canada
There are important connections in Canada between labor adjustment policies and immigration, and between the tax system and welfare payments, such as educational tax credits and employment insurance programs, which provide income support for workers transitioning between jobs. Initiatives like increased federal infrastructure and skills training investments aim to address skills shortages and better align labor supply with demand. Provincial nominee programs help employers recruit global talent to meet localized skills demands more efficiently. This allows individuals more latitude to receive training and education and enables job seekers to pursue better matches with labor market needs.
Economists and others argue many barriers still exist. Overly strict employment regulations around termination make employers reluctant to take risks by hiring workers they may need to lay off. Occupational licensing restrictions reduce labor market flexibility and mobility between provincially regulated occupations. Additionally, limited mid-career education and training funding makes it harder for older workers to retool for new jobs (Ghadi et al. 2023).
Economists and others argue many barriers still exist. Overly strict employment regulations around termination make employers reluctant to take risks by hiring workers they may need to lay off. Occupational licensing restrictions reduce labor market flexibility and mobility between provincially regulated occupations. Additionally, limited mid-career education and training funding makes it harder for older workers to retool for new jobs (Ghadi et al. 2023).
Citations:
Ghadi, Needal, Charles Gyan, Daniel Kikulwe, Christine Massing, and Crystal J. Giesbrecht. 2023. “Labour Market Integration of Newcomers to Canada: The Perspectives of Newcomers in a Smaller Urban Centre.” International Migration 61 (6): 133–54. https://doi.org/10.1111/imig.13151
Ghadi, Needal, Charles Gyan, Daniel Kikulwe, Christine Massing, and Crystal J. Giesbrecht. 2023. “Labour Market Integration of Newcomers to Canada: The Perspectives of Newcomers in a Smaller Urban Centre.” International Migration 61 (6): 133–54. https://doi.org/10.1111/imig.13151
Czechia
The unemployment rate in Czechia has been the lowest in the European Union in recent years, but regional and gender disparities persist. As of September 2023, women comprised 55.8% of total job seekers. Youth unemployment among 15-24-year-olds has decreased compared to the pandemic years, yet remains higher than the national average, albeit low by international standards (6.8% in 2022). Long-term unemployment is a persistent issue, predominantly affecting older and unqualified former workers in regions that were once dependent on older industries.
A major labor market challenge is the continuous labor shortage, estimated at approximately 300,000 against an employed labor force of 5.3 million. This shortage coincides with regional unemployment disparities and a skills mismatch for impending economic changes. Employers’ organizations advocate for immigration to address the labor shortage, a step conflicting with anti-immigration rhetoric from certain political factions. Despite this, flexibility has largely been achieved through the recruitment of foreign workers, who constituted 23% of the registered labor force in 2022, bolstered by the arrival of refugees from Ukraine. While some foreign workers came independently seeking employment, many are recruited by employment agencies that supply labor across the economy, including routine manual work in the manufacturing industry. Although a legal framework regulates these agencies’ activities, they often offer lower pay and worse conditions compared to regular Czech employees working alongside them.
Maximizing the use of existing resources – which would not fully address the current gaps – requires better transport, housing in areas of labor shortages, and, above all, adequate childcare facilities. These needs clash with policies that restrict public spending and a 1990s decision to support parents staying at home with young children rather than working.
Czech economic development has heavily depended on relatively routine work within branches of multinational companies, particularly in the motor-vehicle industry. These companies are attracted by lower wages than those in Western Europe and primarily produce for export. Higher pay for more skilled work in Western Europe makes it difficult to develop more demanding activities in Czechia. Technological advancements and the shift to electric vehicles indicate either a reduction in employment in Czechia or the emergence of new products with changed skill requirements. This long-term threat has not been a primary concern for employees, who are most aware of the continuing labor shortage; for multinational companies, which have tended to keep the most modern products at their home bases; or for the government.
A major labor market challenge is the continuous labor shortage, estimated at approximately 300,000 against an employed labor force of 5.3 million. This shortage coincides with regional unemployment disparities and a skills mismatch for impending economic changes. Employers’ organizations advocate for immigration to address the labor shortage, a step conflicting with anti-immigration rhetoric from certain political factions. Despite this, flexibility has largely been achieved through the recruitment of foreign workers, who constituted 23% of the registered labor force in 2022, bolstered by the arrival of refugees from Ukraine. While some foreign workers came independently seeking employment, many are recruited by employment agencies that supply labor across the economy, including routine manual work in the manufacturing industry. Although a legal framework regulates these agencies’ activities, they often offer lower pay and worse conditions compared to regular Czech employees working alongside them.
Maximizing the use of existing resources – which would not fully address the current gaps – requires better transport, housing in areas of labor shortages, and, above all, adequate childcare facilities. These needs clash with policies that restrict public spending and a 1990s decision to support parents staying at home with young children rather than working.
Czech economic development has heavily depended on relatively routine work within branches of multinational companies, particularly in the motor-vehicle industry. These companies are attracted by lower wages than those in Western Europe and primarily produce for export. Higher pay for more skilled work in Western Europe makes it difficult to develop more demanding activities in Czechia. Technological advancements and the shift to electric vehicles indicate either a reduction in employment in Czechia or the emergence of new products with changed skill requirements. This long-term threat has not been a primary concern for employees, who are most aware of the continuing labor shortage; for multinational companies, which have tended to keep the most modern products at their home bases; or for the government.
Lithuania
In Lithuania, labor market institutions align largely with the goal of an adaptable labor market. The most recent labor market reform occurred with the revision of the Labor Code in 2016, which made hiring and firing practices more flexible. However, both before and after the reform, the Lithuanian economy has demonstrated flexibility in adapting to external shocks such as the COVID-19 pandemic.
This flexibility results from the adaptability of companies rather than from the use of active labor market policies. There is a mismatch between the high demand for labor and restrictive immigration policies, which is frequently criticized by business associations. According to Eurostat, the unemployment rate in Lithuania in November 2023 was 6.5%, above the EU average of 5.9%. In its 2023 report on Lithuania, he European Commission noted the presence of skills mismatches, as well as the fact that tightness in the labor market – measured as the ratio of job vacancies to the number of unemployed people – had reached the highest level in the last 15 years. According to the Lithuanian Public Employment Service in December 2023, employers registered 8,400 available positions. Despite the influx of refugees from Belarus and Ukraine and active policies assisting their employment, there was a demand for employees in transport, construction and other service sectors.
The Lithuanian Public Employment Service acts as an intermediary between employers and employees. In December 2023, the Lithuanian Public Employment Service provided job offers to 12,300 individuals (while there were 1.45 million insured participants in the labor market). It also offers subsidies for training and educational programs. However, employers usually provide their own training services tailored to their particular needs.
In its 2023 report on Lithuania, the OECD recommended creating a framework to attract, develop, upgrade and retain skills that align more closely with labor market needs by strengthening firm-based learning, better balancing the attractiveness of firm-based and school-based learning, and benefiting from international firms’ experiences with apprenticeship systems.
This flexibility results from the adaptability of companies rather than from the use of active labor market policies. There is a mismatch between the high demand for labor and restrictive immigration policies, which is frequently criticized by business associations. According to Eurostat, the unemployment rate in Lithuania in November 2023 was 6.5%, above the EU average of 5.9%. In its 2023 report on Lithuania, he European Commission noted the presence of skills mismatches, as well as the fact that tightness in the labor market – measured as the ratio of job vacancies to the number of unemployed people – had reached the highest level in the last 15 years. According to the Lithuanian Public Employment Service in December 2023, employers registered 8,400 available positions. Despite the influx of refugees from Belarus and Ukraine and active policies assisting their employment, there was a demand for employees in transport, construction and other service sectors.
The Lithuanian Public Employment Service acts as an intermediary between employers and employees. In December 2023, the Lithuanian Public Employment Service provided job offers to 12,300 individuals (while there were 1.45 million insured participants in the labor market). It also offers subsidies for training and educational programs. However, employers usually provide their own training services tailored to their particular needs.
In its 2023 report on Lithuania, the OECD recommended creating a framework to attract, develop, upgrade and retain skills that align more closely with labor market needs by strengthening firm-based learning, better balancing the attractiveness of firm-based and school-based learning, and benefiting from international firms’ experiences with apprenticeship systems.
Citations:
Kuokštis, V., and R. Vilpišauskas. 2022. “Economic Adaptability in the Absence of Democratic Corporatism: Explaining Lithuania’s Export Performance.” Politologija 108 (4): 116-157. https://doi.org/10.15388/Polit.2022.108.4
European Commission. 2023. “Country Report: Lithuania.” https://economy-finance.ec.europa.eu/publications/2023-country-report-lithuania_en
Lithuanian Public Employment Service. “https://uzt.lt/en” (accessed 15.01.2024)
European Commission. 2023. 2023 Country Report: Lithuania. Institutional Paper 239.
OECD. 2023. “Lithuania.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing.
DOI: https://doi.org/10.1787/910abee8-en
Kuokštis, V., and R. Vilpišauskas. 2022. “Economic Adaptability in the Absence of Democratic Corporatism: Explaining Lithuania’s Export Performance.” Politologija 108 (4): 116-157. https://doi.org/10.15388/Polit.2022.108.4
European Commission. 2023. “Country Report: Lithuania.” https://economy-finance.ec.europa.eu/publications/2023-country-report-lithuania_en
Lithuanian Public Employment Service. “https://uzt.lt/en” (accessed 15.01.2024)
European Commission. 2023. 2023 Country Report: Lithuania. Institutional Paper 239.
OECD. 2023. “Lithuania.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing.
DOI: https://doi.org/10.1787/910abee8-en
Spain
One of the RRP goals is to create “new policies for a dynamic, resilient, and inclusive labor market.” Following this plan, the Spanish Strategy of Active Support to Employment 2021–2024 was approved, and in April 2022, a labor reform came into effect. The reform introduced stricter restrictions on temporary contracts, reducing temporary employment in the private sector, while increasing flexibility in employment contracts. This enables companies to efficiently mobilize and demobilize labor in response to fluctuations in the demand for their products and services.
During periods of short-term economic shocks, companies have the flexibility to suspend labor contracts or reduce working days, helping them navigate crises without costly redundancies. In cases where the challenges faced by a company are not linked to a temporary downturn in the business cycle but are caused by a more enduring shift in demand, a training plan for the affected workers must be formulated.
Law 3/2023, enacted on February 28, aims to transform the decentralized Servicio Público de Empleo Estatal (SEPE) into a state agency to enhance speed, agility, and flexibility in active labor policy. The law prioritizes job training, offering two types of training contracts: alternation training, which combines paid work with training, and training for professional practice suitable to the level of studies.
Coordination and planning of employment policy between the Spanish Employment Agency and the public employment services of the autonomous communities is a priority. Local corporations, other public entities, and private entities involved in employment policy implementation will collaborate with the Spanish Employment Agency. The law also aims to improve the effectiveness of public employment services through continuous evaluation. The Civil Service Law adopted in December 2023 reinforces transparency and agility in selection processes and performance evaluation.
During periods of short-term economic shocks, companies have the flexibility to suspend labor contracts or reduce working days, helping them navigate crises without costly redundancies. In cases where the challenges faced by a company are not linked to a temporary downturn in the business cycle but are caused by a more enduring shift in demand, a training plan for the affected workers must be formulated.
Law 3/2023, enacted on February 28, aims to transform the decentralized Servicio Público de Empleo Estatal (SEPE) into a state agency to enhance speed, agility, and flexibility in active labor policy. The law prioritizes job training, offering two types of training contracts: alternation training, which combines paid work with training, and training for professional practice suitable to the level of studies.
Coordination and planning of employment policy between the Spanish Employment Agency and the public employment services of the autonomous communities is a priority. Local corporations, other public entities, and private entities involved in employment policy implementation will collaborate with the Spanish Employment Agency. The law also aims to improve the effectiveness of public employment services through continuous evaluation. The Civil Service Law adopted in December 2023 reinforces transparency and agility in selection processes and performance evaluation.
Citations:
Law 3/2023 of 28 February
Law 3/2023 of 28 February
UK
Although the UK is known for having a flexible labor market, high employment rates, and low unemployment rates, a new challenge since the pandemic has been the rise in economic inactivity, reversing the trend of the previous decade. The most recent estimates from the Office for National Statistics show the inactivity rate is around 21%, with a markedly higher rate of 27% for the 50-64-year-old cohort. One of the main causes of the recent increase is a significant rise in long-term sickness, up by 474,000 since 2020.
The long-standing problem in the UK labor market is skills shortages. Despite numerous initiatives over the decades, UK employers continue to face skills gaps. The explanations are complex, but a report by the Institute for Fiscal Studies (IFS) finds that public funding for skills has fallen by 31% since its peak 30 years ago. The IFS also highlights the lack of coherent and consistent policies on skills, noting that “few areas of public policy have experienced as much turbulence and churn over the past two decades. Any future reforms must be weighed against the risk of adding to the policy instability and inconsistency which have plagued the sector.”
Following EU enlargement in 2004, the number of mobile workers from Poland, Lithuania, and other Central and Eastern European countries greatly exceeded projections. This flow reversed somewhat due to Brexit and the pandemic, although immigration from Commonwealth countries and, more recently, from Hong Kong and Ukraine has led to a higher net migration rate. The overall impact on the labor market has been mixed, as inward migration was often driven by humanitarian needs rather than economic factors.
A furlough scheme implemented early in the pandemic succeeded in stabilizing employment, which soon bounced back. However, vacancies reached record highs, exceeding unemployment rates from mid-2022 before falling somewhat in 2023.
The national minimum wage, now called the “living wage,” has been rising faster than average earnings or inflation since its introduction by the New Labour government in 1999. It is credited with reducing in-work poverty for the lowest-paid workers, although challenges remain, particularly in areas with high housing and transport costs. The most recent rise, announced in November 2023 for 2024, ensures that those on the living wage will again see relative gains compared to average earnings. An analysis of 20 years of the minimum wage by the Low Pay Commission, the statutory body responsible for recommending the minimum wage to the government, mentions several positive outcomes and states that it has not “found any strong evidence of negative effects.”
The long-standing problem in the UK labor market is skills shortages. Despite numerous initiatives over the decades, UK employers continue to face skills gaps. The explanations are complex, but a report by the Institute for Fiscal Studies (IFS) finds that public funding for skills has fallen by 31% since its peak 30 years ago. The IFS also highlights the lack of coherent and consistent policies on skills, noting that “few areas of public policy have experienced as much turbulence and churn over the past two decades. Any future reforms must be weighed against the risk of adding to the policy instability and inconsistency which have plagued the sector.”
Following EU enlargement in 2004, the number of mobile workers from Poland, Lithuania, and other Central and Eastern European countries greatly exceeded projections. This flow reversed somewhat due to Brexit and the pandemic, although immigration from Commonwealth countries and, more recently, from Hong Kong and Ukraine has led to a higher net migration rate. The overall impact on the labor market has been mixed, as inward migration was often driven by humanitarian needs rather than economic factors.
A furlough scheme implemented early in the pandemic succeeded in stabilizing employment, which soon bounced back. However, vacancies reached record highs, exceeding unemployment rates from mid-2022 before falling somewhat in 2023.
The national minimum wage, now called the “living wage,” has been rising faster than average earnings or inflation since its introduction by the New Labour government in 1999. It is credited with reducing in-work poverty for the lowest-paid workers, although challenges remain, particularly in areas with high housing and transport costs. The most recent rise, announced in November 2023 for 2024, ensures that those on the living wage will again see relative gains compared to average earnings. An analysis of 20 years of the minimum wage by the Low Pay Commission, the statutory body responsible for recommending the minimum wage to the government, mentions several positive outcomes and states that it has not “found any strong evidence of negative effects.”
Citations:
https://assets.publishing.service.gov.uk/media/5c9e0e72e5274a527faae38a/20_years_of_the_National_Minimum_Wage_-_a_history_of_the_UK_minimum_wage_and_its_effects.pdf
https://ifs.org.uk/news/adult-skills-spending-down-third-early-2000s-its-about-much-more-funding-levels
https://assets.publishing.service.gov.uk/media/5c9e0e72e5274a527faae38a/20_years_of_the_National_Minimum_Wage_-_a_history_of_the_UK_minimum_wage_and_its_effects.pdf
https://ifs.org.uk/news/adult-skills-spending-down-third-early-2000s-its-about-much-more-funding-levels
USA
The federal government has some capacity to shape the adaptability of the U.S. labor market to sustainability, but it is ultimately limited by the system of federalism. Nonetheless, some initiatives are worthy of comment. One is “Tech Hire” (Gertner 2015). This was a $150 million program established by the Obama administration aimed at transitioning blue-collar manual workers to coding and other tech career paths, reducing reliance on polluting heavy industry as a source of blue-collar employment (Eyster et al. 2016). The Tech Hire program allocated grants to various initiatives, such as coding “boot camps” – intensive courses over a few months – to train individuals how to make computer code (Brock 2019).
Labor market policies are significantly shaped by labor law in the 50 different U.S. states. Some states, for example, have “right-to-work” laws under the 1947 Taft-Hartley Act. These laws allow beneficiaries of union-negotiated contracts to refuse to pay toward the union that negotiates those contracts, facilitating a free rider effect that diminishes private sector union membership.
It is notable that while public sector union density remains at about 1 in 3 public sector workers – similar to the levels reached during the heyday of American union density (peak density was about 35% of the non-farm workforce in 1954) – private sector density today is about 1 in 18.
Defenders of a flexible labor market, however, would praise such schemes for reducing the power of unions, who are associated with greater labor market rigidity (which is not always a bad thing) (Moody 2014).
Local governments can hinder labor market adaptability through their licensing practices (Kleiner 2000). For example, some localities impose rigid licensing rules on who can be certified as a taxi driver, hairstylist, or interior designer, which inhibits people’s ability to switch careers (Gelhorn 1976).
Labor market policies are significantly shaped by labor law in the 50 different U.S. states. Some states, for example, have “right-to-work” laws under the 1947 Taft-Hartley Act. These laws allow beneficiaries of union-negotiated contracts to refuse to pay toward the union that negotiates those contracts, facilitating a free rider effect that diminishes private sector union membership.
It is notable that while public sector union density remains at about 1 in 3 public sector workers – similar to the levels reached during the heyday of American union density (peak density was about 35% of the non-farm workforce in 1954) – private sector density today is about 1 in 18.
Defenders of a flexible labor market, however, would praise such schemes for reducing the power of unions, who are associated with greater labor market rigidity (which is not always a bad thing) (Moody 2014).
Local governments can hinder labor market adaptability through their licensing practices (Kleiner 2000). For example, some localities impose rigid licensing rules on who can be certified as a taxi driver, hairstylist, or interior designer, which inhibits people’s ability to switch careers (Gelhorn 1976).
Citations:
Walter Gelhorn. 1976. “The Abuse of Occupational Licensing.” University of Chicago Law Review.
Morris Kleiner. 2000. “Occupational Licensing.” Journal of Economic Perspectives.
Jon Gertner. 2015. “Inside Obama’s Stealth Startup.” Fast Company.
Kevin Brock. 2019. “Treating Code as Persuasive Argument.” In Rhetorical Machines, eds. J. Jones and L. Hirsu. Tuscaloosa: University of Alabama Press.
Lauren Eytner, Christin Durham, and Theresa Anderson. 2016. “Federal Investments in Job Training at Community Colleges.” Income and Benefits Policy Center.
Walter Gelhorn. 1976. “The Abuse of Occupational Licensing.” University of Chicago Law Review.
Morris Kleiner. 2000. “Occupational Licensing.” Journal of Economic Perspectives.
Jon Gertner. 2015. “Inside Obama’s Stealth Startup.” Fast Company.
Kevin Brock. 2019. “Treating Code as Persuasive Argument.” In Rhetorical Machines, eds. J. Jones and L. Hirsu. Tuscaloosa: University of Alabama Press.
Lauren Eytner, Christin Durham, and Theresa Anderson. 2016. “Federal Investments in Job Training at Community Colleges.” Income and Benefits Policy Center.
6
Belgium
The Belgian labor market is often described as rigid, partly due to its neo-corporatist structure. The tradition of social dialogue, strong labor market institutions, and a generous social model contribute to a notable lack of flexibility, according to employers’ associations. The OECD, in its 2023 recommendations, criticizes the wage-setting mechanism, asserting that while it reduces wage inequality, it may impede job reallocation. The OECD advocates for using sector-level agreements to align wages more effectively with productivity at the firm level (OECD 2023). The European Semester points to low labor market participation and regional disparities as ongoing structural challenges (European Commission 2023). According to Eurostat data, Belgium’s unemployment and labor market slack figures are below European averages, while employment rates lag behind at around 72%.
The previous right-wing government implemented measures aimed at stimulating labor market participation. These measures included gradually increasing the retirement age, restricting access to unemployment benefits, and reducing labor costs. Studies at the time, such as those by Bodart, Dejemeppe, and Fontenay (2019), suggested that the impact of these measures was relatively modest. Additionally, the efficacy of these reforms might be diminished, as unemployment insurance reforms tend to correlate with an increase in the number of individuals receiving disability benefits, as evidenced by De Brouwer and Tojerow (2023).
The advent of the COVID-19 crisis prompted a shift in the government’s approach, leading to the implementation of measures designed to safeguard specific job categories. Workers were given government allowances or temporary unemployment benefits, similar to measures used during the 2008 crisis, which appeared effective both times. These actions demonstrate the state’s capacity to preserve the labor market from short- to medium-term economic shocks.
The current government, formed at the end of 2020, articulated in its government agreement the ambition to achieve an employment rate of 80% without explicitly outlining specific reforms. The agreement underscored a commitment to ongoing training initiatives, particularly through tax breaks for companies investing in employee training. Belgium’s performance is mixed in this regard: on one hand, it consistently performs decently in continuing vocational training (which is a legal obligation), with 50.7% of employees reporting that their employer contributes to financing some training. However, only 10% of the adult population reports having participated in a continuing education program over the last four weeks, which is close to the EU average but significantly lower than figures in Sweden (34.7%), the Netherlands (26.6%), or Slovenia (18.9%). The European Semester stresses that current adult learning incentives may not effectively reach those who need upskilling the most, such as less-educated individuals and older workers (European Commission 2023).
The previous right-wing government implemented measures aimed at stimulating labor market participation. These measures included gradually increasing the retirement age, restricting access to unemployment benefits, and reducing labor costs. Studies at the time, such as those by Bodart, Dejemeppe, and Fontenay (2019), suggested that the impact of these measures was relatively modest. Additionally, the efficacy of these reforms might be diminished, as unemployment insurance reforms tend to correlate with an increase in the number of individuals receiving disability benefits, as evidenced by De Brouwer and Tojerow (2023).
The advent of the COVID-19 crisis prompted a shift in the government’s approach, leading to the implementation of measures designed to safeguard specific job categories. Workers were given government allowances or temporary unemployment benefits, similar to measures used during the 2008 crisis, which appeared effective both times. These actions demonstrate the state’s capacity to preserve the labor market from short- to medium-term economic shocks.
The current government, formed at the end of 2020, articulated in its government agreement the ambition to achieve an employment rate of 80% without explicitly outlining specific reforms. The agreement underscored a commitment to ongoing training initiatives, particularly through tax breaks for companies investing in employee training. Belgium’s performance is mixed in this regard: on one hand, it consistently performs decently in continuing vocational training (which is a legal obligation), with 50.7% of employees reporting that their employer contributes to financing some training. However, only 10% of the adult population reports having participated in a continuing education program over the last four weeks, which is close to the EU average but significantly lower than figures in Sweden (34.7%), the Netherlands (26.6%), or Slovenia (18.9%). The European Semester stresses that current adult learning incentives may not effectively reach those who need upskilling the most, such as less-educated individuals and older workers (European Commission 2023).
Citations:
https://www.lalibre.be/belgique/politique-belge/2023/09/30/pieter-timmermans-ce-quon-a-gagne-en-reformant-les-pensions-de-2010-a-2019-a-ete-largement-neutralise-par-tout-ce-qui-a-ete-decide-par-la-vivaldi-HGZEWS7MPFHLLMMR2VWHRYXWUQ/
OECD. 2023. “Belgium.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing. DOI: https://doi.org/10.1787/b5f1297c-en
European Commission. 2023. “2023 European Semester: Country Report – Belgium.” Brussels. Available at: https://economy-finance.ec.europa.eu/publications/2023-european-semester-country-reports_en#details
Bodart, V., Dejemeppe, M., and Fontenay, S. 2019. “Évolution de l’emploi en Belgique : tentons d’y voir plus clair.” Regards Economiques 146.
De Brouwer, O., and Tojerow, I. 2023. “The Growth of Disability Insurance in Belgium: Determinants and Policy Implications.” IZA Discussion Paper No. 16376. http://dx.doi.org/10.2139/ssrn.4541358
Eurostata – Participants in continuous vocational training (CVT) courses by sex and size class – % of persons employed in all enterprises: https://ec.europa.eu/eurostat/databrowser/view/trng_cvt_12s/default/table?lang=en
Participation rate in education and training (last 4 weeks): https://ec.europa.eu/eurostat/databrowser/view/TRNG_LFSE_01__custom_4665066/bookmark/table?lang=en&bookmarkId=d88f7aa3-5cfa-4bfa-a913-3e92a647ee06
Data on the unemployment and employment rate in Belgium:
https://ec.europa.eu/eurostat/cache/recovery-dashboard/
https://www.lalibre.be/belgique/politique-belge/2023/09/30/pieter-timmermans-ce-quon-a-gagne-en-reformant-les-pensions-de-2010-a-2019-a-ete-largement-neutralise-par-tout-ce-qui-a-ete-decide-par-la-vivaldi-HGZEWS7MPFHLLMMR2VWHRYXWUQ/
OECD. 2023. “Belgium.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing. DOI: https://doi.org/10.1787/b5f1297c-en
European Commission. 2023. “2023 European Semester: Country Report – Belgium.” Brussels. Available at: https://economy-finance.ec.europa.eu/publications/2023-european-semester-country-reports_en#details
Bodart, V., Dejemeppe, M., and Fontenay, S. 2019. “Évolution de l’emploi en Belgique : tentons d’y voir plus clair.” Regards Economiques 146.
De Brouwer, O., and Tojerow, I. 2023. “The Growth of Disability Insurance in Belgium: Determinants and Policy Implications.” IZA Discussion Paper No. 16376. http://dx.doi.org/10.2139/ssrn.4541358
Eurostata – Participants in continuous vocational training (CVT) courses by sex and size class – % of persons employed in all enterprises: https://ec.europa.eu/eurostat/databrowser/view/trng_cvt_12s/default/table?lang=en
Participation rate in education and training (last 4 weeks): https://ec.europa.eu/eurostat/databrowser/view/TRNG_LFSE_01__custom_4665066/bookmark/table?lang=en&bookmarkId=d88f7aa3-5cfa-4bfa-a913-3e92a647ee06
Data on the unemployment and employment rate in Belgium:
https://ec.europa.eu/eurostat/cache/recovery-dashboard/
France
France has been characterized as a rigid labor market (Fougère and Kramarz 1997). Since 2017, the Macron administration has developed various policies aimed at making regulations more flexible, increasing professional mobility and creating a more fluid labor market. In this perspective, plans for professional training, both at the point of labor market entry and across a professional career, have focused on the development of professional skills. Adaptation plans have been made mandatory in case of major layoffs. A reform of the employment agency, renamed France Emploi in January 2024, is designed to place unemployed people in work more efficiently. Public benefit programs for unemployed recipients have been partially reduced to incentivize a return to work. However, the lack of resources has undermined the implementation of individual-level support. Focus is often placed on maintaining strict oversight of unemployed individuals rather than on making reintegration possible.
After the outbreak of the COVID-19 crisis, the danger of an economic breakdown and massive rise in unemployment led the government to substantially expand the existing – and modest – short-time work schemes. Together with massive and rapid support for businesses (tax cuts, financial aid, etc.), the measures successfully contributed to containing the development of mass unemployment. At the peak of the crisis, up to 8.4 million people working in 1.2 million companies participated in these short-time work schemes (UNEDIC 2022).
These policies have shown ambiguous overall results over time. The overall situation today is better than in 2016, before the Macron era. The employment rate has increased, the unemployment rate fell from 10.4% to 7.4% (2022), the youth unemployment rate fell from 24.5% to 17.3%, and the rate of involuntary part-time work has decreased. Nonetheless, France is still ranked in the lowest group of countries with regard to performance in this area (e.g., 26th out of 30 countries with regard to the unemployment rate).
After the outbreak of the COVID-19 crisis, the danger of an economic breakdown and massive rise in unemployment led the government to substantially expand the existing – and modest – short-time work schemes. Together with massive and rapid support for businesses (tax cuts, financial aid, etc.), the measures successfully contributed to containing the development of mass unemployment. At the peak of the crisis, up to 8.4 million people working in 1.2 million companies participated in these short-time work schemes (UNEDIC 2022).
These policies have shown ambiguous overall results over time. The overall situation today is better than in 2016, before the Macron era. The employment rate has increased, the unemployment rate fell from 10.4% to 7.4% (2022), the youth unemployment rate fell from 24.5% to 17.3%, and the rate of involuntary part-time work has decreased. Nonetheless, France is still ranked in the lowest group of countries with regard to performance in this area (e.g., 26th out of 30 countries with regard to the unemployment rate).
Citations:
UNEDIC. 2022. “Activité partielle 2020-2021. Etat des lieux et perspectives.” Retrieved 5 February from
https://www.unedic.org/storage/uploads/2023/07/24/ActivitC3A920partielle20C3A9tat20des20lieux20et20perspectives_uid_64be79b2c0012.pdf
Fougère, D., and F. Kramartz. 1997. “Le marché du travail en France.” Economie et statistiques 301-302: 51-60.
UNEDIC. 2022. “Activité partielle 2020-2021. Etat des lieux et perspectives.” Retrieved 5 February from
https://www.unedic.org/storage/uploads/2023/07/24/ActivitC3A920partielle20C3A9tat20des20lieux20et20perspectives_uid_64be79b2c0012.pdf
Fougère, D., and F. Kramartz. 1997. “Le marché du travail en France.” Economie et statistiques 301-302: 51-60.
Hungary
Hungary has a flexible labor market, and the unemployed are urged to take up jobs quickly, as unemployment benefits are low and short-term. Consequently, the employment rate, which is above 80%, is higher than the EU average. Incentives to be mobile are therefore high. More than 30% of employees work in the public sector, the highest such figure among International Labor Organization (ILO) countries (ILO 2022). This is in part due to public work programs designed to quickly reintegrate people into the labor market after unemployment. In this system, also called a “workfare regime” (Szombati 2021), incentives are relatively low, and push factors are rather high. Act LXXVII of 2013 on Adult Education regulates lifelong learning, aiming to establish vocational training programs for groups disadvantaged in the labor market, especially low-skilled adults, to improve their employability. In 2018, a new law colloquially dubbed the “Slave Law” extended the cap on annual overtime from 250 to 400 hours, provoking protests and international criticism (Karasz and Kingsley 2018). In 2019 and 2020, significant changes were introduced to adult training (VET Act Act LXXX of 2019) (European Commission 2023), lifting adult training out of the public education system. The pandemic created several hurdles to implementing the new program, and the transitional period is ongoing.
The aim is to finance all adult training fully or partly through government or EU funds. To date, the numbers are not entirely encouraging. Tax rebate instruments are available, and training grants for young parents are embedded in Hungarian family policy. However, the number of Hungarians using the programs is suboptimal; the country ranks in the lower third in the OECD comparison. In the EU comparison, the ratio of people aged 25 to 64 participating in adult training was 5.9% in 2021, compared to the 10.8% EU average (European Commission 2003a:63). Another issue is specific skills in the green transition. Labor shortages were reported in 31 occupations in this area (European Commission 2023a:14). During the pandemic, in 2020 and 2021, Hungary assisted companies by providing and extending wage cost subsidies by 90%. Wage subsidies for workers were provided, but were phased out after the pandemic. Several other instruments were also extended with the aim of stabilizing the labor market (NFSZ:4). Only public work schemes were reduced due to lockdowns. The programs reached around 360,000 persons in 2021, approximately 3% of the population, while programs addressing wages covered around 260,000 persons.
The aim is to finance all adult training fully or partly through government or EU funds. To date, the numbers are not entirely encouraging. Tax rebate instruments are available, and training grants for young parents are embedded in Hungarian family policy. However, the number of Hungarians using the programs is suboptimal; the country ranks in the lower third in the OECD comparison. In the EU comparison, the ratio of people aged 25 to 64 participating in adult training was 5.9% in 2021, compared to the 10.8% EU average (European Commission 2003a:63). Another issue is specific skills in the green transition. Labor shortages were reported in 31 occupations in this area (European Commission 2023a:14). During the pandemic, in 2020 and 2021, Hungary assisted companies by providing and extending wage cost subsidies by 90%. Wage subsidies for workers were provided, but were phased out after the pandemic. Several other instruments were also extended with the aim of stabilizing the labor market (NFSZ:4). Only public work schemes were reduced due to lockdowns. The programs reached around 360,000 persons in 2021, approximately 3% of the population, while programs addressing wages covered around 260,000 persons.
Citations:
European Commission. 2023. “Euridice Mobility Scoreboard Hungary.” https://eurydice.eacea.ec.europa.eu/national-education-systems/hungary/national-reforms-related-transversal-skills-and-employability
International Labor Organization (ILO). 2022. “Labor Market Policies for Inclusiveness. A Literature Review with a Gap Analysis.” https://www.ilo.org/static/english/intserv/working-papers/wp078/index.html
European Commission. 2023a. “European Economy, Country Report Hungary, Institutional Paper 241.” https://economy-finance.ec.europa.eu/system/files/2023-06/ip241_en.pdf
Karasz, P., and Kingsley, P. 2023. “What Is Hungary’s ‘Slave Law,’ and Why Has It Provoked Opposition?” The New York Times, December 22. https://www.nytimes.com/2018/12/22/world/europe/hungary-slave-law.html
NFSZ. “Az aktív foglalkoztatáspolitikai eszközök fontosabb adatai 2021-ben.”
Szombati, K. 2021. “The consolidation of authoritarian rule in rural Hungary: Workfare and the shift from punitive populist to illiberal paternalist poverty governance.” Europe-Asia Studies 73(9): 1703-1725.
European Commission. 2023. “Euridice Mobility Scoreboard Hungary.” https://eurydice.eacea.ec.europa.eu/national-education-systems/hungary/national-reforms-related-transversal-skills-and-employability
International Labor Organization (ILO). 2022. “Labor Market Policies for Inclusiveness. A Literature Review with a Gap Analysis.” https://www.ilo.org/static/english/intserv/working-papers/wp078/index.html
European Commission. 2023a. “European Economy, Country Report Hungary, Institutional Paper 241.” https://economy-finance.ec.europa.eu/system/files/2023-06/ip241_en.pdf
Karasz, P., and Kingsley, P. 2023. “What Is Hungary’s ‘Slave Law,’ and Why Has It Provoked Opposition?” The New York Times, December 22. https://www.nytimes.com/2018/12/22/world/europe/hungary-slave-law.html
NFSZ. “Az aktív foglalkoztatáspolitikai eszközök fontosabb adatai 2021-ben.”
Szombati, K. 2021. “The consolidation of authoritarian rule in rural Hungary: Workfare and the shift from punitive populist to illiberal paternalist poverty governance.” Europe-Asia Studies 73(9): 1703-1725.
Ireland
Policies and regulations in Ireland could better encourage and empower individuals to develop their skills throughout their working lives in response to changing labor market demands. Current policies weakly incentivize employer engagement and full employment limits uptake on some skills shortage initiatives. The National Skills Strategy (2025) established the National Skills Council and nine Regional Skills Fora, along with related governance arrangements. National responses are managed through SOLAS, the national training agency, and programs like Springboard, which offers third-level upskilling opportunities focused on skills shortages in sectors such as data and IT. However, the OECD (2023) has identified governance arrangements as complex and highlighted concerns about gaps in lifelong learning and skills imbalances across different sectors. While policies and regulations have helped firms absorb short-term economic shocks through short-time work schemes and employment or wage subsidies, as demonstrated during the pandemic, more is needed for a just transition. Ireland lacks a national employment service, and the targeted public employment service primarily focuses on social welfare recipients. Most workers and job seekers rely on private employment agencies, often sector-specific, to enhance their mobility across firms, industries, regions and countries. Additionally, there is little adult career guidance beyond educational guidance.
Recent research commissioned by Skillnet Ireland (Siedschlag et al. 2022) found that developing new skills within the enterprise workforce is a top policy challenge for climate action. The research also noted that the demand for digital skills in Ireland’s enterprise sector is not being sufficiently met. It proposed that tailored training programs are necessary for each sector and enterprise group.
Recent research commissioned by Skillnet Ireland (Siedschlag et al. 2022) found that developing new skills within the enterprise workforce is a top policy challenge for climate action. The research also noted that the demand for digital skills in Ireland’s enterprise sector is not being sufficiently met. It proposed that tailored training programs are necessary for each sector and enterprise group.
Citations:
OECD. 2023. OECD Skills Strategy Ireland: Assessment and Recommendations. Paris: OECD Publishing. https://doi.org/10.1787/d7b8b40b-en
Siedschlag, I., W. Yan, and S. Meneto. 2022. “Talent for Ireland’s Green Economy: Examining Skill Needs to Support Enterprise Innovation and Ireland’s Transition to a Low-Carbon Economy.” https://www.esri.ie/publications/talent-for-irelands-green-economy-examining-skill-needs-to-support-enterprise
OECD. 2023. OECD Skills Strategy Ireland: Assessment and Recommendations. Paris: OECD Publishing. https://doi.org/10.1787/d7b8b40b-en
Siedschlag, I., W. Yan, and S. Meneto. 2022. “Talent for Ireland’s Green Economy: Examining Skill Needs to Support Enterprise Innovation and Ireland’s Transition to a Low-Carbon Economy.” https://www.esri.ie/publications/talent-for-irelands-green-economy-examining-skill-needs-to-support-enterprise
Japan
Japan has one of the lowest unemployment rates in the OECD (2.74% in 2022) and has one of the highest participation rates for men of working age. In recent years, the participation rate of women has increased rapidly, with Japan overtaking most countries in the G7. Moreover, Japan has mobilized an increasing number of elderly workers. This has helped keep the labor force stable, despite the fact that the Japanese working population has fallen by around 11% since 2000. The effects of the COVID-19 pandemic on the labor market were relatively mild. This suggests that employers and workers have overall adapted well to population aging and a shrinking workforce. The government has made it financially attractive for women to postpone retirement beyond 65. However, similar gains in worker mobilization seem unlikely without more migration – which has increased noticeably in recent years, but still remains comparatively limited.
Large Japanese companies generally recruit new employees from among fresh university graduates on an annual basis in spring, which does not encourage flexibility. Although many firms abandoned life-long employment and seniority wage systems during the period of economic stagnation in the 1990s, they are still common in big corporations.
A key concern regarding adaptability remains the dual labor market where so-called regular workers, especially in large firms, enjoy wide-reaching and continuous on-the-job training. Non-regular workers, including the large number of part-time workers who are often employed on a different contractual basis than regular workers, are usually excluded from training and upskilling. Hence, opportunities for non-regular workers to improve their skill levels and thus address labor shortages in certain sectors are limited. Wage profiles for the two groups of workers continue to differ considerably, which means the vast majority of non-regular workers remain in low-paying jobs throughout their working lives. Until recently, Japanese governments committed comparatively few resources to job training and placement.
Instead, commercial personnel agencies play a major role in recruiting workers and facilitating mid-career job changes. However, the 2018 Guidelines for Promoting Job Change and Re-employment Regardless of Age introduced basic principles for companies hiring people who change jobs. Meanwhile, a subsidy program for firms that establish pay schemes based on competence rather than seniority was also introduced in 2018. In 2020, it became obligatory for large companies to disclose their quotas for mid-career hires. These regulations have led to a gradual increase in the number of people who change jobs at the mid-career level. Corporations are also taking steps to make the very formalized hiring system for new recruits more fluid and flexible. This system makes it difficult for graduates who start in low-paying or non-regular positions to move into better jobs later, as these are typically reserved for graduates who succeed in the hiring process before graduation.
Large Japanese companies generally recruit new employees from among fresh university graduates on an annual basis in spring, which does not encourage flexibility. Although many firms abandoned life-long employment and seniority wage systems during the period of economic stagnation in the 1990s, they are still common in big corporations.
A key concern regarding adaptability remains the dual labor market where so-called regular workers, especially in large firms, enjoy wide-reaching and continuous on-the-job training. Non-regular workers, including the large number of part-time workers who are often employed on a different contractual basis than regular workers, are usually excluded from training and upskilling. Hence, opportunities for non-regular workers to improve their skill levels and thus address labor shortages in certain sectors are limited. Wage profiles for the two groups of workers continue to differ considerably, which means the vast majority of non-regular workers remain in low-paying jobs throughout their working lives. Until recently, Japanese governments committed comparatively few resources to job training and placement.
Instead, commercial personnel agencies play a major role in recruiting workers and facilitating mid-career job changes. However, the 2018 Guidelines for Promoting Job Change and Re-employment Regardless of Age introduced basic principles for companies hiring people who change jobs. Meanwhile, a subsidy program for firms that establish pay schemes based on competence rather than seniority was also introduced in 2018. In 2020, it became obligatory for large companies to disclose their quotas for mid-career hires. These regulations have led to a gradual increase in the number of people who change jobs at the mid-career level. Corporations are also taking steps to make the very formalized hiring system for new recruits more fluid and flexible. This system makes it difficult for graduates who start in low-paying or non-regular positions to move into better jobs later, as these are typically reserved for graduates who succeed in the hiring process before graduation.
Citations:
Fujimoto, Makoto. 2023. “Changing Jobs among Middle-aged Workers in Japan: What Affects Workers’ Personnel Treatment and Utilization of Skills and Knowledge at a New Job.” Japan Labor Issues 7 (44): 37-45.
Nishimura, Itaru. 2020. “Wages in Japan Part III: Wages and Forms of Employment.” Japan Labor Issues 4 (25): 22-25.
OECD. 2021. “Creating Responsive Adult Learning Opportunities in Japan, Getting Skills Right.” Paris: OECD Publishing. https://www.oecd-ilibrary.org/sites/0ea11b94-en/index.html?itemId=/content/component/0ea11b94-en
Fujimoto, Makoto. 2023. “Changing Jobs among Middle-aged Workers in Japan: What Affects Workers’ Personnel Treatment and Utilization of Skills and Knowledge at a New Job.” Japan Labor Issues 7 (44): 37-45.
Nishimura, Itaru. 2020. “Wages in Japan Part III: Wages and Forms of Employment.” Japan Labor Issues 4 (25): 22-25.
OECD. 2021. “Creating Responsive Adult Learning Opportunities in Japan, Getting Skills Right.” Paris: OECD Publishing. https://www.oecd-ilibrary.org/sites/0ea11b94-en/index.html?itemId=/content/component/0ea11b94-en
Latvia
In 2022, 61.8% of the population was of working age. The unemployment rate was 6.9% and has been steadily decreasing since 2015, when it was 9.9%. At the same time, the labor force is continuously aging and concentrating in urban areas. Sixty-eight percent of the population lives in urban areas where economic activity is concentrated and access to public services is better. Of the 1.3 million residents in the labor market, 55.4% are employees; the rest hold other labor statuses, such as employers, self-employed individuals, and part-time workers.
The government has prioritized the adaptability of the labor market and increased productivity. The “Growth and Employment” primary planning documents for the investment of EU funds include issues related to labor market adaptability. Latvia has developed a vast network of training courses for re-qualifying labor staff, supported by EU funding of €45 million. Between 2017 and 2023, it was expected to provide training for about 68,000 people over the age of 17 with no upper age limit, ensuring their integration into the labor market. This intensive and comprehensive training program complements the State Unemployment Agency’s regular training for unemployed individuals. The extensive training network addresses both current labor market needs and future demands, such as digital skills and ICT skills. However, no ex post evaluation has been conducted yet to assess the effectiveness of the training.
The government has prioritized the adaptability of the labor market and increased productivity. The “Growth and Employment” primary planning documents for the investment of EU funds include issues related to labor market adaptability. Latvia has developed a vast network of training courses for re-qualifying labor staff, supported by EU funding of €45 million. Between 2017 and 2023, it was expected to provide training for about 68,000 people over the age of 17 with no upper age limit, ensuring their integration into the labor market. This intensive and comprehensive training program complements the State Unemployment Agency’s regular training for unemployed individuals. The extensive training network addresses both current labor market needs and future demands, such as digital skills and ICT skills. However, no ex post evaluation has been conducted yet to assess the effectiveness of the training.
Citations:
Central Statistical Bureau. 2023. “Statistics in Brief. Latvia 2023.” https://stat.gov.lv/en/statistics-themes/economy/national-accounts/publications-and-infographics/15176-latvia-statistics
Labklājības ministrija. 2021. Socialās aizsardzības un darba tirgus politikas pamatnostādnes 2021.-2027.gadam. http://polsis.mk.gov.lv/documents/7177
Valsts izglītības attīstības aģentūra. 2023. “Mācības pieaugušajiem.” https://www.macibaspieaugusajiem.lv/
Ministru kabineta noteikumi Nr. 474. 2016. “Darbības programmas ‘Izaugsme un nodarbinātība’ 8.4.1. specifiskā atbalsta mērķa ‘Pilnveidot nodarbināto personu profesionālo kompetenci’ īstenošanas noteikumi.” https://likumi.lv/ta/id/283669-darbibas-programmas-izaugsme-un-nodarbinatiba-8-4-1-specifiska-atbalsta-merka-pilnveidot-nodarbinato-personu-profesionalo
Ministry of Finance. 2014. “Operational Programme ‘Growth and Employment’.” https://www.esfondi.lv/en/regulatory-enactments-and-documents/2014-2020-planning-period/operational-programme-growth-and-employment
Central Statistical Bureau. 2023. “Statistics in Brief. Latvia 2023.” https://stat.gov.lv/en/statistics-themes/economy/national-accounts/publications-and-infographics/15176-latvia-statistics
Labklājības ministrija. 2021. Socialās aizsardzības un darba tirgus politikas pamatnostādnes 2021.-2027.gadam. http://polsis.mk.gov.lv/documents/7177
Valsts izglītības attīstības aģentūra. 2023. “Mācības pieaugušajiem.” https://www.macibaspieaugusajiem.lv/
Ministru kabineta noteikumi Nr. 474. 2016. “Darbības programmas ‘Izaugsme un nodarbinātība’ 8.4.1. specifiskā atbalsta mērķa ‘Pilnveidot nodarbināto personu profesionālo kompetenci’ īstenošanas noteikumi.” https://likumi.lv/ta/id/283669-darbibas-programmas-izaugsme-un-nodarbinatiba-8-4-1-specifiska-atbalsta-merka-pilnveidot-nodarbinato-personu-profesionalo
Ministry of Finance. 2014. “Operational Programme ‘Growth and Employment’.” https://www.esfondi.lv/en/regulatory-enactments-and-documents/2014-2020-planning-period/operational-programme-growth-and-employment
New Zealand
Labor market institutions generally support, rather than hinder, the transition to an adaptive labor market.
Most fundamentally, New Zealand’s employment laws include provisions that allow flexibility in work arrangements, such as part-time work, temporary contracts and flexible hours. New Zealand also offers social safety nets and unemployment support systems to assist individuals during job transitions.
New Zealand does not have a nationwide short-time work scheme like those seen in other OECD countries. However, during economic downturns or crises, governments have implemented various temporary measures to support employment and businesses, such as wage subsidy schemes or tax relief schemes.
Government agencies collect labor market data to assess trends, skills gaps and employment needs, aiding in informed policy decisions and targeted interventions. The government has also initiated programs to upskill and reskill the workforce to meet the evolving demands of industries. For example, the Labour-Green budget in 2023 committed $27 million to growing New Zealand’s digital workforce and increasing women’s participation in the technology sector.
Challenges persist in fully transitioning to an adaptive labor market. Despite efforts in education and training, many sectors of the New Zealand economy and public services suffer from a shortage of skilled workers. Examples include freight and logistics (New Zealand Herald 2023), manufacturing and engineering (Tilo 2022), and healthcare (Hewett 2023).
It is likely that the mismatch between available skills and industry needs will persist under the recently elected National-led government. While the coalition under Luxon has announced a new visa policy to attract skilled tech workers, it has been criticized for its plans to scrap workforce development councils and de-establish Te Pūkenga, New Zealand’s largest vocational education provider (Gerritsen 2023).
Most fundamentally, New Zealand’s employment laws include provisions that allow flexibility in work arrangements, such as part-time work, temporary contracts and flexible hours. New Zealand also offers social safety nets and unemployment support systems to assist individuals during job transitions.
New Zealand does not have a nationwide short-time work scheme like those seen in other OECD countries. However, during economic downturns or crises, governments have implemented various temporary measures to support employment and businesses, such as wage subsidy schemes or tax relief schemes.
Government agencies collect labor market data to assess trends, skills gaps and employment needs, aiding in informed policy decisions and targeted interventions. The government has also initiated programs to upskill and reskill the workforce to meet the evolving demands of industries. For example, the Labour-Green budget in 2023 committed $27 million to growing New Zealand’s digital workforce and increasing women’s participation in the technology sector.
Challenges persist in fully transitioning to an adaptive labor market. Despite efforts in education and training, many sectors of the New Zealand economy and public services suffer from a shortage of skilled workers. Examples include freight and logistics (New Zealand Herald 2023), manufacturing and engineering (Tilo 2022), and healthcare (Hewett 2023).
It is likely that the mismatch between available skills and industry needs will persist under the recently elected National-led government. While the coalition under Luxon has announced a new visa policy to attract skilled tech workers, it has been criticized for its plans to scrap workforce development councils and de-establish Te Pūkenga, New Zealand’s largest vocational education provider (Gerritsen 2023).
Citations:
Gerritsen, J. 2023. “Industry leaders worried at National Party plan to scrap Workforce Development Councils.” RNZ, 8 September. https://www.rnz.co.nz/news/national/497541/industry-leaders-worried-at-national-party-plan-to-scrap-workforce-development-councils
Hewett, W. 2023. “Govt Unveils New Sustained Improvement Plan to Tackle Issues within NZ’s Health Workforce.” Newshub, July 4. https://www.newshub.co.nz/home/politics/2023/07/govt-unveils-new-sustained-improvement-plan-to-tackle-issues-within-nz-s-health-workforce.html
New Zealand Herald. 2023. “Skilled labour shortage: Freight, logistics sector needs 18,000 workers for jobs.” 25 May. https://www.nzherald.co.nz/kahu/18000-skilled-workers-urgently-needed-for-logistics-sector-new-study/BQFZIVX6RZB6XELIWNBBJ2263I/
Tilo, D. 2022. “Report Warns of 40K Staff Shortage in These Sectors.” Human Resources Director, November 12. https://www.hcamag.com/nz/specialisation/recruitment/report-warns-of-40k-staff-shortage-in-these-sectors/427274
Gerritsen, J. 2023. “Industry leaders worried at National Party plan to scrap Workforce Development Councils.” RNZ, 8 September. https://www.rnz.co.nz/news/national/497541/industry-leaders-worried-at-national-party-plan-to-scrap-workforce-development-councils
Hewett, W. 2023. “Govt Unveils New Sustained Improvement Plan to Tackle Issues within NZ’s Health Workforce.” Newshub, July 4. https://www.newshub.co.nz/home/politics/2023/07/govt-unveils-new-sustained-improvement-plan-to-tackle-issues-within-nz-s-health-workforce.html
New Zealand Herald. 2023. “Skilled labour shortage: Freight, logistics sector needs 18,000 workers for jobs.” 25 May. https://www.nzherald.co.nz/kahu/18000-skilled-workers-urgently-needed-for-logistics-sector-new-study/BQFZIVX6RZB6XELIWNBBJ2263I/
Tilo, D. 2022. “Report Warns of 40K Staff Shortage in These Sectors.” Human Resources Director, November 12. https://www.hcamag.com/nz/specialisation/recruitment/report-warns-of-40k-staff-shortage-in-these-sectors/427274
Poland
The Polish labor market shifted to being employee-centered despite the 2022 economic crisis, achieving a record-low unemployment rate of around 5% (Polish statistics) or approximately 3% (Eurostat). This figure is the third-lowest in the EU. Since 2018, Poland has exceeded the national employment rate target for the 20 – 64 age group, set in the Europe 2020 strategy at 71%. However, the employment rate for senior citizens in Poland (8.9%) remains lower than the EU average of 10% in 2022. The overall situation in the labor market has resulted in a shortage of skilled workers across sectors, and is indicative of positive economic development.
Since 2004, Poland’s law has promoted various aspects of employment as outlined in the annual National Action Plans. For 2023, the plan included vocational activation programs including internships, training, intervention work, public works, equipment reimbursement and one-time funding for startups.
The primary support mechanisms include intervention works and public works, which focus on unemployed manual workers. However, reports from regional employment centers indicate that fewer than 50 people participate in training programs each month. A significant challenge is the minimal involvement of occupationally inactive individuals. Additionally, the connection between health insurance and unemployment status diminishes interest in activation measures.
Employers must provide employee training, and training funds are employer-financed. Temporary employment agencies collaborate with large enterprises to meet short-term worker demand. Institutions involved in worker adaptation programs include public employment services, the Volunteer Labor Corps, employment agencies, counseling services, vocational guidance services and social dialogue institutions.
The war in Ukraine has caused an influx of over 2 million foreigners into the Polish labor market annually. Despite this, there is a lack of activities supporting their integration. The number of Ukrainian immigrants in Poland is decreasing, with less than 20% choosing to stay and work (under 700,000 in total) (Polska Agencja Rozwoju Przedsiębiorczości 2023).
Since 2004, Poland’s law has promoted various aspects of employment as outlined in the annual National Action Plans. For 2023, the plan included vocational activation programs including internships, training, intervention work, public works, equipment reimbursement and one-time funding for startups.
The primary support mechanisms include intervention works and public works, which focus on unemployed manual workers. However, reports from regional employment centers indicate that fewer than 50 people participate in training programs each month. A significant challenge is the minimal involvement of occupationally inactive individuals. Additionally, the connection between health insurance and unemployment status diminishes interest in activation measures.
Employers must provide employee training, and training funds are employer-financed. Temporary employment agencies collaborate with large enterprises to meet short-term worker demand. Institutions involved in worker adaptation programs include public employment services, the Volunteer Labor Corps, employment agencies, counseling services, vocational guidance services and social dialogue institutions.
The war in Ukraine has caused an influx of over 2 million foreigners into the Polish labor market annually. Despite this, there is a lack of activities supporting their integration. The number of Ukrainian immigrants in Poland is decreasing, with less than 20% choosing to stay and work (under 700,000 in total) (Polska Agencja Rozwoju Przedsiębiorczości 2023).
Citations:
Polska Agencja Rozwoju Przedsiębiorczości. 2023. “Rynek pracy, edukacja, kompetencje. Aktualne trendy i wyniki badań (wrzesień 2023).” https://www.parp.gov.pl/component/publications/publication/rynek-pracy-edukacja-kompetencje-aktualne-trendy-i-wyniki-badan-wrzesien-2023
Polska Agencja Rozwoju Przedsiębiorczości. 2023. “Rynek pracy, edukacja, kompetencje. Aktualne trendy i wyniki badań (wrzesień 2023).” https://www.parp.gov.pl/component/publications/publication/rynek-pracy-edukacja-kompetencje-aktualne-trendy-i-wyniki-badan-wrzesien-2023
Portugal
Portugal has achieved a consistently low unemployment rate in recent years, remaining below 10% even during the pandemic, with a rate of 6.1% in 2022 (PORDATA, 2023). Policies such as the simplified layoff scheme have contributed to this stability by helping companies manage short-term economic impacts. Furthermore, recent initiatives have been introduced to address contemporary needs and modernize the economic landscape.
Notably, the 2023 launch of the Green Skills & Jobs program aims to foster job creation in the context of accelerating the transition to energy efficiency. Additionally, the “Check-Training + Digital” measure supports workers’ development in digital skills through a €750 grant (IEFP, 2023). These programs are designed to promote employment retention, career advancement, skill enhancement, and preparedness for the digital transition across various sectors.
However, there is growing concern about structural unemployment in the near future. A misalignment is evident between company offerings and job market demands, particularly in light of rapid technological advances, including artificial intelligence. The disparity between current educational curricula and the evolving requirements of the workforce is apparent, with the level of workforce training deemed insufficient (Fundação José Neves 2023). From a business perspective, 48% of companies exhibit low digitalization, with less qualified workers and women underrepresented in digitally focused professions.
Recognizing that digitalization can enhance workers’ wages and boost company and national productivity, a funding initiative was launched in 2023 to support the digitalization of manufacturing and extractive industries. This initiative is backed by €60 million from the Recovery and Resilience Plan (RRP) (ECO, 2023). Additionally, the “Digital Commerce Accelerators” project was introduced to facilitate the digital transition of micro, small, and medium-sized commercial enterprises, accompanied by financial incentives for digitalizing business models. These efforts aim to adapt the Portuguese economy to the digital age, enhancing competitiveness and employment prospects.
Overall, Portugal’s labor market institutions are making strides in adapting to a changing economy; however, they face challenges in aligning workforce skills with evolving market demands and technological advancements.
Notably, the 2023 launch of the Green Skills & Jobs program aims to foster job creation in the context of accelerating the transition to energy efficiency. Additionally, the “Check-Training + Digital” measure supports workers’ development in digital skills through a €750 grant (IEFP, 2023). These programs are designed to promote employment retention, career advancement, skill enhancement, and preparedness for the digital transition across various sectors.
However, there is growing concern about structural unemployment in the near future. A misalignment is evident between company offerings and job market demands, particularly in light of rapid technological advances, including artificial intelligence. The disparity between current educational curricula and the evolving requirements of the workforce is apparent, with the level of workforce training deemed insufficient (Fundação José Neves 2023). From a business perspective, 48% of companies exhibit low digitalization, with less qualified workers and women underrepresented in digitally focused professions.
Recognizing that digitalization can enhance workers’ wages and boost company and national productivity, a funding initiative was launched in 2023 to support the digitalization of manufacturing and extractive industries. This initiative is backed by €60 million from the Recovery and Resilience Plan (RRP) (ECO, 2023). Additionally, the “Digital Commerce Accelerators” project was introduced to facilitate the digital transition of micro, small, and medium-sized commercial enterprises, accompanied by financial incentives for digitalizing business models. These efforts aim to adapt the Portuguese economy to the digital age, enhancing competitiveness and employment prospects.
Overall, Portugal’s labor market institutions are making strides in adapting to a changing economy; however, they face challenges in aligning workforce skills with evolving market demands and technological advancements.
Citations:
PORDATA. 2023. “Taxa de desemprego: total e por sexo (%).”
https://www.pordata.pt/portugal/taxa+de+desemprego+total+e+por+sexo+(percentagem)-550
Fundação José Neves. 2023. “Estado da Nação: Educação, Emprego e Competências em Portugal.” https://www.joseneves.org/estado-da-nacao-2023
IEFP. 2023. “Formação.” https://www.iefp.pt/formacao
ECO. 2023. “Concurso para apoiar digitalização da indústria com 60 milhões do PRR abre nos próximos dias.” ECO, November 15. https://eco.sapo.pt/2023/11/15/concurso-para-apoiar-digitalizacao-da-industria-com-60-milhoes-do-prr-abre-nos-proximos-dias/
PORDATA. 2023. “Taxa de desemprego: total e por sexo (%).”
https://www.pordata.pt/portugal/taxa+de+desemprego+total+e+por+sexo+(percentagem)-550
Fundação José Neves. 2023. “Estado da Nação: Educação, Emprego e Competências em Portugal.” https://www.joseneves.org/estado-da-nacao-2023
IEFP. 2023. “Formação.” https://www.iefp.pt/formacao
ECO. 2023. “Concurso para apoiar digitalização da indústria com 60 milhões do PRR abre nos próximos dias.” ECO, November 15. https://eco.sapo.pt/2023/11/15/concurso-para-apoiar-digitalizacao-da-industria-com-60-milhoes-do-prr-abre-nos-proximos-dias/
Netherlands
By conventional standards, the Dutch labor market is doing fine. In late 2023, 73.1% of the 15- to 75-year-old population had a paid job; 5.4 million (56.7%) people were working on the basis of fixed contracts, 2.7 million (27.8%) had a flexible contract, and 1.2 million (12.4%) were self-employed. These data show that the Dutch labor market is two-tiered, in that it separates (typically relatively older) “insiders” with significant job security and (older and younger) “outsiders” who are often “independent workers” lacking unemployment protections and having little to no job security. The OECD considers the Netherlands to be an outlier in Europe in terms of work flexibilization. The overall unemployment rate stood at 3.7%, while the youth unemployment rate was 8.8%. Both figures ranked easily in the top 10 among the OECD countries. In 2022 – 2023, 38% of companies indicated that labor shortages were the main obstacle to more production or operations. According to the Central Bureau of Statistics, growing labor shortages are due to the aging of the workforce; a preference for part-time work, especially among women; fast economic growth since COVID-19 crisis due to the sustainability transition and a severe housing shortage; a disconnect between labor supply and demand in terms of occupation, education and skills; and increased work pressure resulting in more sick leave (at 5.6%, of workers taking leave the highest level ever measured).
In 2022, half a million part-timers indicated they would like to work more hours, and would be readily available to do so. Enabling part-timers to work more hours is therefore often considered an obvious way to reduce staff shortages. The Flexible Working Act (formerly the Working Hours Adjustment Act) already allows employees to ask the employer to allow them to work more or fewer hours. This act stipulates that the employer must grant the employee’s request unless compelling business or service interests oppose it.
Ever since the 2018 advice of the Borstlap Commission, the government has paid lip service to the importance of lifelong development. The Rutte III coalition agreement included the goal of achieving a breakthrough in the field of lifelong learning. The government launched some programs in addition to the instruments developed by the business community. A personal lifelong learning budget (PLLB) became part of all collective bargaining agreements. The Rutte IV cabinet continued this policy, creating a budget for training subsidies along with a scheme aimed at strengthening the learning culture in small and medium-sized enterprises. Unfortunately, monitoring and evaluation results of all these schemes show disappointing results.
Private employment agencies are not very helpful in realizing public goals like the shift from flexible to fixed-contract jobs, or from lower-skilled to the higher-skilled jobs needed for the sustainability transition. A 2020 Graydon study found that private employment agencies will facilitate job seekers’ preference for employability over job security. Job placement organizations are increasingly shifting toward segmentation, which allows them to specialize in specific markets or job groups. This impedes rather than facilitates worker mobility across firms, industries or economic sectors. An important manifestation of such segmentation in private employment agencies is the way they specialize in different types of labor immigration to help fight labor shortages. In 2019, job placement agencies handled almost 260,000 labor migrants from EU/EFTA countries (mostly Poles, Romanians and Bulgarians) for low-skilled jobs in logistics, horticulture and the food industry (like meat-packaging, etc.). The number of highly skilled expats has grown from 7,760 in 2014 to 26,000 in 2023. Partially attracted by significant tax benefits, these workers have come from India, China and the United States to make up for the lack of technically and scientifically trained workers in the microchip industry (ASML) and the pharmaceutical sector and at universities.
In mid-February 2023, the Dutch Labor Inspectorate published an investigation into the functioning of the work and income system. The main conclusion: Vulnerable job seekers receive insufficient support; priority is given mainly to those already within the labor market. Unfortunately, the conclusions drawn by the Labor Inspectorate are not at all new. The same conclusions were drawn in 2008.
In 2022, half a million part-timers indicated they would like to work more hours, and would be readily available to do so. Enabling part-timers to work more hours is therefore often considered an obvious way to reduce staff shortages. The Flexible Working Act (formerly the Working Hours Adjustment Act) already allows employees to ask the employer to allow them to work more or fewer hours. This act stipulates that the employer must grant the employee’s request unless compelling business or service interests oppose it.
Ever since the 2018 advice of the Borstlap Commission, the government has paid lip service to the importance of lifelong development. The Rutte III coalition agreement included the goal of achieving a breakthrough in the field of lifelong learning. The government launched some programs in addition to the instruments developed by the business community. A personal lifelong learning budget (PLLB) became part of all collective bargaining agreements. The Rutte IV cabinet continued this policy, creating a budget for training subsidies along with a scheme aimed at strengthening the learning culture in small and medium-sized enterprises. Unfortunately, monitoring and evaluation results of all these schemes show disappointing results.
Private employment agencies are not very helpful in realizing public goals like the shift from flexible to fixed-contract jobs, or from lower-skilled to the higher-skilled jobs needed for the sustainability transition. A 2020 Graydon study found that private employment agencies will facilitate job seekers’ preference for employability over job security. Job placement organizations are increasingly shifting toward segmentation, which allows them to specialize in specific markets or job groups. This impedes rather than facilitates worker mobility across firms, industries or economic sectors. An important manifestation of such segmentation in private employment agencies is the way they specialize in different types of labor immigration to help fight labor shortages. In 2019, job placement agencies handled almost 260,000 labor migrants from EU/EFTA countries (mostly Poles, Romanians and Bulgarians) for low-skilled jobs in logistics, horticulture and the food industry (like meat-packaging, etc.). The number of highly skilled expats has grown from 7,760 in 2014 to 26,000 in 2023. Partially attracted by significant tax benefits, these workers have come from India, China and the United States to make up for the lack of technically and scientifically trained workers in the microchip industry (ASML) and the pharmaceutical sector and at universities.
In mid-February 2023, the Dutch Labor Inspectorate published an investigation into the functioning of the work and income system. The main conclusion: Vulnerable job seekers receive insufficient support; priority is given mainly to those already within the labor market. Unfortunately, the conclusions drawn by the Labor Inspectorate are not at all new. The same conclusions were drawn in 2008.
Citations:
Algemene Bond Uitzendondernemingen. 2021. Arbeidsmigranten in Nederland: De Cijfers.
NRC. 2023. “1 op 3 expats na 7 jaar nog steeds in Nederland.” November 13.
CBS. 2022. “Arbeidsmarkt in cijfers 2022.” https://www.cbs.nl/nl-nl/visualisaties/dashboard-arbeidsmarkt/arbeidsmarkt-in-cijfers
CBS. 2023. “Werkloosheid in oktober iets gedaald.” 16 November.
Ecorys. 2022. Benutting individuele leer- en ontwikkelbudgetten. Eindrapport. Rotterdam: Ministerie van SZW.
Algemene Werkgeversvereniging NL. 2023. “STAP-budget in huidige vorm leidt onvoldoende op.” Brul, February 13.
Rekenkamer: Subsidie om de arbeidsmarkt te stimuleren werkt niet
BRON: REKENKAMER23 MEI 2023
Graydon Data Insights. 2020. “Arbeidsbemiddeling.”
Algemene Bond Uitzendondernemingen. “Zet werkzoekende meer centraal bij arbeidsbemiddeling.”
Artikel 06 maart 2023
Algemene Bond Uitzendondernemingen. 2021. Arbeidsmigranten in Nederland: De Cijfers.
NRC. 2023. “1 op 3 expats na 7 jaar nog steeds in Nederland.” November 13.
CBS. 2022. “Arbeidsmarkt in cijfers 2022.” https://www.cbs.nl/nl-nl/visualisaties/dashboard-arbeidsmarkt/arbeidsmarkt-in-cijfers
CBS. 2023. “Werkloosheid in oktober iets gedaald.” 16 November.
Ecorys. 2022. Benutting individuele leer- en ontwikkelbudgetten. Eindrapport. Rotterdam: Ministerie van SZW.
Algemene Werkgeversvereniging NL. 2023. “STAP-budget in huidige vorm leidt onvoldoende op.” Brul, February 13.
Rekenkamer: Subsidie om de arbeidsmarkt te stimuleren werkt niet
BRON: REKENKAMER23 MEI 2023
Graydon Data Insights. 2020. “Arbeidsbemiddeling.”
Algemene Bond Uitzendondernemingen. “Zet werkzoekende meer centraal bij arbeidsbemiddeling.”
Artikel 06 maart 2023
Labor market institutions are only somewhat aligned with the goal of an adaptable labor market.
5
Israel
The main body responsible for vocational training is the Ministry of Labor. One of the ministry’s official goals is to provide training for people over the age of 18 to reduce socioeconomic inequalities and improve productivity. Until recently, the budget for and scope of vocational training, which had always low by international standards, was declining over time. However, following the COVID-19 pandemic, it has increased significantly (Adva 2024). Nevertheless, over the years, vocational training has become a policy targeted at the lower classes rather than a tool to develop human capital.
Employees are not expected or encouraged to develop their skills during their careers. This is problematic due to the growing shortage of industrial workers in general and high-tech workers in particular. In addition to the Ministry of Labor, other ministries promoting vocational training include the Ministry of Education and the Ministry of Defense, which provides much of the practical training for prospective tech sector workers.
There is no comprehensive policy with specific roadmaps and goals for different sectors, resulting in loose coordination among organizations (State Comptroller 2021). Moreover, no single coordinating body is responsible for overseeing vocational training and ensuring it meets its goals. Most training is conducted by private organizations and, until recently, no entity matched existing training programs to industry needs. Many training programs are financed by vouchers provided to trainees. Furthermore, there is little oversight of the types of training these vouchers support and their usefulness for the economy or individuals. The main stakeholders are not involved in the vocational training process (State Comptroller 2021).
The existing situation does not facilitate mobility nor does it provide tools for employees to handle economic shocks. This was evident during the COVID-19 crisis. The vocational training policy also does not facilitate worker mobilization.
There are no short-time work schemes to mitigate economic shocks. During the COVID-19 pandemic and the current war with Hamas, the government allowed employers to furlough employees, who were then able to claim unemployment benefits (Debowy et al. 2022). As a result, it appears that more working hours were lost and more employees were detached from their current workplaces.
Employees are not expected or encouraged to develop their skills during their careers. This is problematic due to the growing shortage of industrial workers in general and high-tech workers in particular. In addition to the Ministry of Labor, other ministries promoting vocational training include the Ministry of Education and the Ministry of Defense, which provides much of the practical training for prospective tech sector workers.
There is no comprehensive policy with specific roadmaps and goals for different sectors, resulting in loose coordination among organizations (State Comptroller 2021). Moreover, no single coordinating body is responsible for overseeing vocational training and ensuring it meets its goals. Most training is conducted by private organizations and, until recently, no entity matched existing training programs to industry needs. Many training programs are financed by vouchers provided to trainees. Furthermore, there is little oversight of the types of training these vouchers support and their usefulness for the economy or individuals. The main stakeholders are not involved in the vocational training process (State Comptroller 2021).
The existing situation does not facilitate mobility nor does it provide tools for employees to handle economic shocks. This was evident during the COVID-19 crisis. The vocational training policy also does not facilitate worker mobilization.
There are no short-time work schemes to mitigate economic shocks. During the COVID-19 pandemic and the current war with Hamas, the government allowed employers to furlough employees, who were then able to claim unemployment benefits (Debowy et al. 2022). As a result, it appears that more working hours were lost and more employees were detached from their current workplaces.
Citations:
Adva Center. 2024. “Government investment in professional training (Hebrew).” https://adva.org/he/vocational-training-budget/
Debowy, M., Epstein, G., and Weiss, A. 2022. “The Israeli Labor Market in the Wake of Covid-19: An Overview.” In State of the Nation Report: Society, Economy and Policy 2021, eds. Taub Center.
Regev, Eitan, Yarden Keidar, and Naor Porat. 2020. Vocational Training in Israel. Jerusalem: The Israeli Democracy Institute. https://www.idi.org.il/media/14752/vocational-training-in-israel-barriers-shortcomings-and-challenges-in-an-international-comparison.pdf
State Comptroller. 2021. “Lifelong Learning and Professional Training for Adults – Adapting to the Changing Labor Market.” https://www.mevaker.gov.il/sites/DigitalLibrary/Documents/2021/71B/2021-71b-105-Labor-Market-Adults.pdf
Adva Center. 2024. “Government investment in professional training (Hebrew).” https://adva.org/he/vocational-training-budget/
Debowy, M., Epstein, G., and Weiss, A. 2022. “The Israeli Labor Market in the Wake of Covid-19: An Overview.” In State of the Nation Report: Society, Economy and Policy 2021, eds. Taub Center.
Regev, Eitan, Yarden Keidar, and Naor Porat. 2020. Vocational Training in Israel. Jerusalem: The Israeli Democracy Institute. https://www.idi.org.il/media/14752/vocational-training-in-israel-barriers-shortcomings-and-challenges-in-an-international-comparison.pdf
State Comptroller. 2021. “Lifelong Learning and Professional Training for Adults – Adapting to the Changing Labor Market.” https://www.mevaker.gov.il/sites/DigitalLibrary/Documents/2021/71B/2021-71b-105-Labor-Market-Adults.pdf
Italy
The first Conte government approved the Reddito di Cittadinanza law, guaranteeing a basic income to approximately two million people and providing procedures to help these individuals find jobs. The Draghi government slightly redesigned the minimum requirements for receiving this basic income, reducing the number of beneficiaries. However, the law’s effectiveness in retraining the unemployed and helping them find jobs has been minimal.
The new Meloni government has drastically changed the Basic Income Law, making a key distinction between employable and unemployable individuals for entitlement to what is now called “income for inclusion.” The law also provides for retraining programs and imposes more restrictive rules regarding job offers. Additionally, Meloni’s reform offers financial incentives for those who employ recipients of the income for inclusion as well as NEETs (Not in Education, Employment, or Training). The effects of this reform can only be assessed in the coming years, but many observers doubt it will have the expected positive impact on worker activation.
The system of employment agencies in Italy, both public and private, remains inefficient in facilitating worker mobility.
The new Meloni government has drastically changed the Basic Income Law, making a key distinction between employable and unemployable individuals for entitlement to what is now called “income for inclusion.” The law also provides for retraining programs and imposes more restrictive rules regarding job offers. Additionally, Meloni’s reform offers financial incentives for those who employ recipients of the income for inclusion as well as NEETs (Not in Education, Employment, or Training). The effects of this reform can only be assessed in the coming years, but many observers doubt it will have the expected positive impact on worker activation.
The system of employment agencies in Italy, both public and private, remains inefficient in facilitating worker mobility.
Citations:
- https://lavoce.info/archives/102081/boom-degli-occupati-ma-non-e-tutto-oro-quel-che-luccica/
-https://lavoce.info/archives/98492/politiche-attive-del-lavoro-il-punto-sul-programma-gol/
- https://lavoce.info/archives/100807/politiche-attive-per-gli-occupabili-lezione-inglese-sugli-errori-da-evitare/
- https://lavoce.info/archives/102081/boom-degli-occupati-ma-non-e-tutto-oro-quel-che-luccica/
-https://lavoce.info/archives/98492/politiche-attive-del-lavoro-il-punto-sul-programma-gol/
- https://lavoce.info/archives/100807/politiche-attive-per-gli-occupabili-lezione-inglese-sugli-errori-da-evitare/
Slovakia
Several reports have investigated the effectiveness of labor market policies and regulations in Slovakia. The most recent is the Value for Money Unit report, approved by the government in 2020 (Ministry of Finance, 2020: 30-32). The report states: “Slovakia’s spending on active labor market policies (ALMP) is relatively lower than in most EU countries, and the effectiveness and efficiency of certain tools are lower compared to experience from other EU countries. Slovakia spends considerably less on demand-side (education and training) programs than the EU average of over 40%. Better targeting of ALMPs could increase the number of unemployed candidates successfully placed in the labor market by nearly one-half.”
A recent academic study (Pisár and Mertinková, 2022: 96) offers a similar perspective: “Slovakia is the country with the 6th lowest funding of policy instruments (0.22% of GDP for active instruments; 0.55% of GDP in total). The funding structure of the instruments is 40.14% for active instruments and 59.86% for passive instruments, which does not meet European guidelines. Slovakia should direct its public spending from employment incentives to education support, as the effectiveness of employment support tools is highly debatable.”
Policies and regulations do not sufficiently incentivize employers to anticipate sustainability challenges in the labor market and invest in upskilling or reskilling their workforce. This was especially true during the pre-pandemic period when the labor market was not stressed by a lack of vacancies, and many companies had problems finding the needed workforce. Worker mobility across firms, industries, regions, and countries is supported by government schemes and employers, with the mobility benefit provided under the employment services law 5/2004 being the most visible tool.
The period following the publication of this report coincided with the COVID-19 crisis. During this time, the government focused on short-term measures to mitigate the economic shocks caused by the pandemic. Direct state instruments to support employment, particularly the compensation for part of employees’ salaries and short-time work schemes, increased the probability of employment retention.
A recent academic study (Pisár and Mertinková, 2022: 96) offers a similar perspective: “Slovakia is the country with the 6th lowest funding of policy instruments (0.22% of GDP for active instruments; 0.55% of GDP in total). The funding structure of the instruments is 40.14% for active instruments and 59.86% for passive instruments, which does not meet European guidelines. Slovakia should direct its public spending from employment incentives to education support, as the effectiveness of employment support tools is highly debatable.”
Policies and regulations do not sufficiently incentivize employers to anticipate sustainability challenges in the labor market and invest in upskilling or reskilling their workforce. This was especially true during the pre-pandemic period when the labor market was not stressed by a lack of vacancies, and many companies had problems finding the needed workforce. Worker mobility across firms, industries, regions, and countries is supported by government schemes and employers, with the mobility benefit provided under the employment services law 5/2004 being the most visible tool.
The period following the publication of this report coincided with the COVID-19 crisis. During this time, the government focused on short-term measures to mitigate the economic shocks caused by the pandemic. Direct state instruments to support employment, particularly the compensation for part of employees’ salaries and short-time work schemes, increased the probability of employment retention.
Citations:
Pisár, P., and Mertinková, A. 2022. “Are Employment Policies Set Up Effectively? Case Study of Selected EU Countries and Slovakia.” Transylvanian Review of Administrative Sciences Special issue: 87-105.
Kišš, Š., Hronček, P., Mach, J., Nežinský, E., Sivák, T., Slobodníková, S., and Štefánik, M. 2017. Spending Review of Labour Market and Social Policies: Final Report. Bratislava: Ministry of Finance.
Zákon 5/2004 o službách zamestnanosti. https://www.zakonypreludi.sk/zz/2004-5
Pisár, P., and Mertinková, A. 2022. “Are Employment Policies Set Up Effectively? Case Study of Selected EU Countries and Slovakia.” Transylvanian Review of Administrative Sciences Special issue: 87-105.
Kišš, Š., Hronček, P., Mach, J., Nežinský, E., Sivák, T., Slobodníková, S., and Štefánik, M. 2017. Spending Review of Labour Market and Social Policies: Final Report. Bratislava: Ministry of Finance.
Zákon 5/2004 o službách zamestnanosti. https://www.zakonypreludi.sk/zz/2004-5
4
Greece
In 2022, Greece’s unemployment rate fell to 7.5%, a significant improvement from 16.4% in 2013. Despite this progress, Greece still has the second-highest unemployment rate in the EU, after Spain. However, the country’s promising economic growth prospects provide hope for further reductions in unemployment.
There are, however, troubling aspects of the unemployment profile. Greece ranks the worst among OECD countries for long-term unemployment (OECD 2022). The highest unemployment rates are observed among women, young people aged 15 to 24, individuals in the Thessaly region, and those with only a few years of elementary education (Eures 2023).
Youth unemployment is particularly alarming, with 31% of individuals aged 15-24 out of work – the highest rate in the OECD (2022). The gender employment gap is also the worst in the OECD, with only 56% of women aged 20-64 participating in the labor force, compared to the EU average of 69% (Eurostat 2023).
Greece’s overall employment rate is relatively low, with only 66% of the population participating in the labor market, compared to the EU average of 75% (Eurostat 2022a). Part-time work is rare and often involuntary, while temporary work is uncommon. Policies promoting short-term employment to help firms adapt to temporary shocks are underdeveloped and likely unpopular, given that around 11% of workers are at risk of poverty or social exclusion, compared to the EU average of 9% (Eurostat 2022b).
The largest occupational groups in Greece are professionals (22.4% of the workforce) and service providers and salespersons (20.9%) (Eures 2023). Despite high unemployment, there is a skills mismatch, with unskilled and low-skilled labor in industry and the service sector, as well as highly skilled workers in ICT, in high demand. The education system has yet to align with labor market needs, and only 12% of people participate in job-related non-formal education and training programs, far below the EU average of 38% (Eurostat 2016). As a result, policies do not sufficiently encourage skill development in response to changing labor market demands.
There are, however, troubling aspects of the unemployment profile. Greece ranks the worst among OECD countries for long-term unemployment (OECD 2022). The highest unemployment rates are observed among women, young people aged 15 to 24, individuals in the Thessaly region, and those with only a few years of elementary education (Eures 2023).
Youth unemployment is particularly alarming, with 31% of individuals aged 15-24 out of work – the highest rate in the OECD (2022). The gender employment gap is also the worst in the OECD, with only 56% of women aged 20-64 participating in the labor force, compared to the EU average of 69% (Eurostat 2023).
Greece’s overall employment rate is relatively low, with only 66% of the population participating in the labor market, compared to the EU average of 75% (Eurostat 2022a). Part-time work is rare and often involuntary, while temporary work is uncommon. Policies promoting short-term employment to help firms adapt to temporary shocks are underdeveloped and likely unpopular, given that around 11% of workers are at risk of poverty or social exclusion, compared to the EU average of 9% (Eurostat 2022b).
The largest occupational groups in Greece are professionals (22.4% of the workforce) and service providers and salespersons (20.9%) (Eures 2023). Despite high unemployment, there is a skills mismatch, with unskilled and low-skilled labor in industry and the service sector, as well as highly skilled workers in ICT, in high demand. The education system has yet to align with labor market needs, and only 12% of people participate in job-related non-formal education and training programs, far below the EU average of 38% (Eurostat 2016). As a result, policies do not sufficiently encourage skill development in response to changing labor market demands.
Citations:
Eures. 2023. “Labor market information: Greece.” https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-greece_en#:~:text=The%20region%20ranks%20first%20in,to%2013.2%25%20in%20December%202021.
Eurostat. 2016. “Employed persons participating in job-related non-formal education and training in the past 12 months by sex and age.” https://ec.europa.eu/eurostat/databrowser/view/qoe_ewcs_6_1/default/table?lang=en
Eurostat. 2022. “Total unemployment rate.” https://ec.europa.eu/eurostat/databrowser/view/tps00203/default/table
Eurostat. 2022b. “In-work at-risk-of-poverty rate by age.”
and sex – EU-SILC survey,” https://ec.europa.eu/eurostat/databrowser/view/ILC_IW01__custom_6420639/default/table?lang=en
Eures. 2023. “Labor market information: Greece.” https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-greece_en#:~:text=The%20region%20ranks%20first%20in,to%2013.2%25%20in%20December%202021.
Eurostat. 2016. “Employed persons participating in job-related non-formal education and training in the past 12 months by sex and age.” https://ec.europa.eu/eurostat/databrowser/view/qoe_ewcs_6_1/default/table?lang=en
Eurostat. 2022. “Total unemployment rate.” https://ec.europa.eu/eurostat/databrowser/view/tps00203/default/table
Eurostat. 2022b. “In-work at-risk-of-poverty rate by age.”
and sex – EU-SILC survey,” https://ec.europa.eu/eurostat/databrowser/view/ILC_IW01__custom_6420639/default/table?lang=en
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Labor market institutions are not at all aligned with the goal of an adaptable labor market.
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