To what extent do existing labor market institutions support or hinder the transition to an inclusive labor market?
Labor market institutions are fully aligned with the goal of an inclusive labor market.
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Denmark
There is currently near-full employment in Denmark, and employment levels exceed those before the pandemic. The Ministry of Employment finds that more individuals who have previously experienced long-term unemployment are today able to find jobs. Consequently, groups that have traditionally had difficulties securing stable employment now have better chances of finding a job. A key driver behind the increase in employment is higher employment rates among those aged 60 – 65 and immigrant workers.
The issue of young individuals not being in employment or education remains a significant challenge. Despite policy initiatives aimed at addressing the problem, more than 6% of youth between 15 and 24 years old are neither in education nor employment.
Employment rates among immigrants have also increased. The Economic Council of the Labor Movement (2023) estimates that the labor market participation rate among omen with a non-Western background is now 7.4 percentage points higher than prior to the pandemic. The independent Economic Council also agrees that the Danish labor market is close to being at full capacity. The council has warned that the pressure on the labor market could have inflationary effects (Economic Council 2023). While labor market attachments have increased significantly in recent years, a gap of approximately 20 percentage points remains between ethnic Danes and immigrants with a non-Western background. This gap is partly explained by different levels of education between the two groups, but it might also be due to discrimination (Economic Council of the Labor Movement 2023).
The issue of young individuals not being in employment or education remains a significant challenge. Despite policy initiatives aimed at addressing the problem, more than 6% of youth between 15 and 24 years old are neither in education nor employment.
Employment rates among immigrants have also increased. The Economic Council of the Labor Movement (2023) estimates that the labor market participation rate among omen with a non-Western background is now 7.4 percentage points higher than prior to the pandemic. The independent Economic Council also agrees that the Danish labor market is close to being at full capacity. The council has warned that the pressure on the labor market could have inflationary effects (Economic Council 2023). While labor market attachments have increased significantly in recent years, a gap of approximately 20 percentage points remains between ethnic Danes and immigrants with a non-Western background. This gap is partly explained by different levels of education between the two groups, but it might also be due to discrimination (Economic Council of the Labor Movement 2023).
Citations:
Economic Council. 2023. “Dansk Økonomi, efterår 2023.” https://dors.dk/vismandsrapporter/dansk-oekonomi-efteraar-2023
The Economic Council of the Labor Movement. 2023. https://www.ae.dk/the-economic-council-of-the-labour-movement
Economic Council. 2023. “Dansk Økonomi, efterår 2023.” https://dors.dk/vismandsrapporter/dansk-oekonomi-efteraar-2023
The Economic Council of the Labor Movement. 2023. https://www.ae.dk/the-economic-council-of-the-labour-movement
Switzerland
Switzerland combines a generous system of unemployment benefits with various active labor market policy (ALMP) measures. The latter were introduced in 1997. They aim at the (re-)integration of workers into the labor market, for example, through improved employment agencies and various courses. There is a strong emphasis on job-search activities, and the system offers incentives for the acceptance of new jobs.
A recent meta-analysis of previous evaluations concluded: “Depending on the form, participants and time of availability, a specific offer can be more or less effective. The fact that both positive and negative evaluation results are available for all types of [active labor market policy], signal[ed] a great heterogeneity in the effect…. The analysis shows, for example, that employment programs, coaching offers and interim earnings score above average in evaluations. In the case of basic programs and specialist courses, on the other hand, every second evaluation shows a negative result” (SECO 2018: iii). Hence, it is more appropriate to distinguish between various ALMP elements rather than drawing a general conclusion about Swiss ALMP as a whole (see in general Kluve 2010).
Even with regard to a single policy element, effects vary by groups of workers. A recent study of ALMP in the Swiss hotel industry found that participation in ALMP measures sends signals to prospective employers. They tend to become skeptical about applications by stronger candidates (such as those seeking a job as receptionist) if they participated in ALMP measures, while low-skilled candidates (such as those applying to be a room cleaner) were evaluated more positively if they had previously taken part in ALMP courses (Liechti et al. 2017).
In its recent Economic Survey, the OECD praised the achievements of Swiss labor market policy, in particular the active labor market strategies and the coordination and evaluation of decentralized actors by federal institutions. It also suggested that active labor market policies be further expanded, in particular via hiring subsidies and job-insertion allowances (OECD 2022: 86 – 88).
Switzerland’s economy is close to full employment, and employers seek to attract new workers. Policymakers try to mobilize the working-age population to enter the labor market, thereby reducing reliance as much as possible on foreign labor recruitment. Arguably, the following elements are important in this regard:
a) Some married couples (especially those with children) pay higher taxes than unmarried couples, as they are taxed jointly. This provides incentives either not to marry, not to enter the labor market or to limit labor market participation (i.e., to engage in part-time work) if the partner’s income is sufficient. There are currently several political attempts underway to change this differential tax treatment (NZZ 6 May 2023).
b) Wage tax is comparatively low in Switzerland (but varies considerably between municipalities and cantons), so the low general tax burden does not reduce the incentive to enter the labor market.
c) Family policy in Switzerland lags behind the general development in rich European nations (Häusermann/Bürgisser 2022). Given the lack or high cost of childcare facilities, couples have to decide whether one partner (typically the woman) will stay at home looking after the children, or both will take up gainful employment with a large share of the additional income spent on childcare.
d) Swiss labor market regulations follow to a liberal model that offers comparatively little job security for workers, but also contains some flexible rules. Among these is a high level of flexibility regarding part-time employment. Swiss employment rates are very high, particularly for women, due to a comparatively high share of part-time employment.
Switzerland has a very low youth unemployment rate, which is on par with the general unemployment rate. This is due to the efficient system of vocational training and other aspects of public education, as well as generally excellent labor market conditions. A number of policies and institutions help integrate unemployed young people into the labor market (SECO 2020, SECO n.d.). However, some categories of worker face specific labor market issues: Elderly working immigrants, such as those recruited in the 1950 through 1970s from Southern and Eastern Europe for low-skill jobs, experience precarious socioeconomic situations more often than nationals, and are at higher risk of an early exit from the market due to health issues often related to tough working conditions (Bolzman 2012).
Given the liberal labor market policy, public policies aimed at facilitating a work-life balance (e.g., through remote work) are very limited. It is up to the social partners to find appropriate rules for achieving this balance. During the pandemic, remote work has been generally established, and it has become widely accepted that employees will to some extent work at home if they want to, and if the job allows for such remote work.
A recent meta-analysis of previous evaluations concluded: “Depending on the form, participants and time of availability, a specific offer can be more or less effective. The fact that both positive and negative evaluation results are available for all types of [active labor market policy], signal[ed] a great heterogeneity in the effect…. The analysis shows, for example, that employment programs, coaching offers and interim earnings score above average in evaluations. In the case of basic programs and specialist courses, on the other hand, every second evaluation shows a negative result” (SECO 2018: iii). Hence, it is more appropriate to distinguish between various ALMP elements rather than drawing a general conclusion about Swiss ALMP as a whole (see in general Kluve 2010).
Even with regard to a single policy element, effects vary by groups of workers. A recent study of ALMP in the Swiss hotel industry found that participation in ALMP measures sends signals to prospective employers. They tend to become skeptical about applications by stronger candidates (such as those seeking a job as receptionist) if they participated in ALMP measures, while low-skilled candidates (such as those applying to be a room cleaner) were evaluated more positively if they had previously taken part in ALMP courses (Liechti et al. 2017).
In its recent Economic Survey, the OECD praised the achievements of Swiss labor market policy, in particular the active labor market strategies and the coordination and evaluation of decentralized actors by federal institutions. It also suggested that active labor market policies be further expanded, in particular via hiring subsidies and job-insertion allowances (OECD 2022: 86 – 88).
Switzerland’s economy is close to full employment, and employers seek to attract new workers. Policymakers try to mobilize the working-age population to enter the labor market, thereby reducing reliance as much as possible on foreign labor recruitment. Arguably, the following elements are important in this regard:
a) Some married couples (especially those with children) pay higher taxes than unmarried couples, as they are taxed jointly. This provides incentives either not to marry, not to enter the labor market or to limit labor market participation (i.e., to engage in part-time work) if the partner’s income is sufficient. There are currently several political attempts underway to change this differential tax treatment (NZZ 6 May 2023).
b) Wage tax is comparatively low in Switzerland (but varies considerably between municipalities and cantons), so the low general tax burden does not reduce the incentive to enter the labor market.
c) Family policy in Switzerland lags behind the general development in rich European nations (Häusermann/Bürgisser 2022). Given the lack or high cost of childcare facilities, couples have to decide whether one partner (typically the woman) will stay at home looking after the children, or both will take up gainful employment with a large share of the additional income spent on childcare.
d) Swiss labor market regulations follow to a liberal model that offers comparatively little job security for workers, but also contains some flexible rules. Among these is a high level of flexibility regarding part-time employment. Swiss employment rates are very high, particularly for women, due to a comparatively high share of part-time employment.
Switzerland has a very low youth unemployment rate, which is on par with the general unemployment rate. This is due to the efficient system of vocational training and other aspects of public education, as well as generally excellent labor market conditions. A number of policies and institutions help integrate unemployed young people into the labor market (SECO 2020, SECO n.d.). However, some categories of worker face specific labor market issues: Elderly working immigrants, such as those recruited in the 1950 through 1970s from Southern and Eastern Europe for low-skill jobs, experience precarious socioeconomic situations more often than nationals, and are at higher risk of an early exit from the market due to health issues often related to tough working conditions (Bolzman 2012).
Given the liberal labor market policy, public policies aimed at facilitating a work-life balance (e.g., through remote work) are very limited. It is up to the social partners to find appropriate rules for achieving this balance. During the pandemic, remote work has been generally established, and it has become widely accepted that employees will to some extent work at home if they want to, and if the job allows for such remote work.
Citations:
Claudio Bolzman. 2012. “Democratization of Ageing: Also a Reality for Elderly Immigrants?” European Journal of Social Work 15 (1): 97-113. DOI: 10.1080/13691457.2011.562018
Häusermann, Silja, and Reto Bürgisser. 2022. “Familienpolitik.” In Handbuch der Schweizer Politik, eds. Yannis Papadopoulos, Pascal Sciarini, Adrian Vatter, Silja Häusermann, Patrick Emmenegger, and Flavia Fossati. 7th ed., 931-954.
Kluve, Jochen. 2010. “The Effectiveness of European Active Labor Market Programs.” Labour Economics 17 (6): 904-918.
Liechti, Fabienne, Flavia Fossati, Giuliano Bonoli, and Daniel Auer. 2017. “The Signalling Value of Labour Market Programmes.” European Sociological Review 33(2): 257-274.
NZZ (Neue Zürcher Zeitung). 2022. “Die Heiratsstrafe trifft vor allem Familien mit Kindern.” https://www.nzz.ch/nzzas/nzz-am-sonntag/die-heiratsstrafe-trifft-vor-allem-familien-mit-kindern
OECD. 2022. Economic Survey Switzerland. Paris: OECD.
SECO (State Secretariate for Economy). 2018. “Die Wirkung von.”
Arbeitsmarktlichen Massnahmen. 2018. Eine Analyse bisheriger Evaluationen. Bern: 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). 2020. Bericht. Arbeitslosigkeit 15- bis 24-Jährig. Bern: SECO. Accessed via https://www.seco.admin.ch/seco/de/home/Arbeit/Arbeitslosenversicherung/arbeitslosigkeit/Jugendarbeitslosigkeit.html, 2023 12 27.
SECO (State Secretariate for Economy). n.d. “Faktenblatt: Wie die Arbeitslosenver.”
sicherung junge Arbeitslose unterstützt, Bern: SEC, accessed via https://www.seco.admin.ch/seco/de/home/Arbeit/Arbeitslosenversicherung/arbeitslosigkeit/Jugendarbeitslosigkeit.html, 2023 12 27.
Claudio Bolzman. 2012. “Democratization of Ageing: Also a Reality for Elderly Immigrants?” European Journal of Social Work 15 (1): 97-113. DOI: 10.1080/13691457.2011.562018
Häusermann, Silja, and Reto Bürgisser. 2022. “Familienpolitik.” In Handbuch der Schweizer Politik, eds. Yannis Papadopoulos, Pascal Sciarini, Adrian Vatter, Silja Häusermann, Patrick Emmenegger, and Flavia Fossati. 7th ed., 931-954.
Kluve, Jochen. 2010. “The Effectiveness of European Active Labor Market Programs.” Labour Economics 17 (6): 904-918.
Liechti, Fabienne, Flavia Fossati, Giuliano Bonoli, and Daniel Auer. 2017. “The Signalling Value of Labour Market Programmes.” European Sociological Review 33(2): 257-274.
NZZ (Neue Zürcher Zeitung). 2022. “Die Heiratsstrafe trifft vor allem Familien mit Kindern.” https://www.nzz.ch/nzzas/nzz-am-sonntag/die-heiratsstrafe-trifft-vor-allem-familien-mit-kindern
OECD. 2022. Economic Survey Switzerland. Paris: OECD.
SECO (State Secretariate for Economy). 2018. “Die Wirkung von.”
Arbeitsmarktlichen Massnahmen. 2018. Eine Analyse bisheriger Evaluationen. Bern: 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). 2020. Bericht. Arbeitslosigkeit 15- bis 24-Jährig. Bern: SECO. Accessed via https://www.seco.admin.ch/seco/de/home/Arbeit/Arbeitslosenversicherung/arbeitslosigkeit/Jugendarbeitslosigkeit.html, 2023 12 27.
SECO (State Secretariate for Economy). n.d. “Faktenblatt: Wie die Arbeitslosenver.”
sicherung junge Arbeitslose unterstützt, Bern: SEC, accessed via https://www.seco.admin.ch/seco/de/home/Arbeit/Arbeitslosenversicherung/arbeitslosigkeit/Jugendarbeitslosigkeit.html, 2023 12 27.
Labor market institutions are largely aligned with the goal of an inclusive labor market.
8
Australia
Australia has a set of labor market policies in areas such as unemployment, training, and childcare designed to sustain an inclusive and dynamic labor market (Productivity Commission 2023). Means-testing and mutual obligation are important principles in this framework, informed by economic principles that emphasize calibrating incentives. While the overall performance of the labor market, especially low unemployment figures, suggests a high degree of success, policy settings in several areas may not be optimally aligned with the goal of creating an inclusive and dynamic labor market. The cost of childcare is an issue for many families, particularly impacting women. For many second-income earners in a family, there is little financial incentive to enter the labor force given the cost of childcare, additional taxation, and loss of benefits. The significant number of long-term unemployed suggests weaknesses in measures to integrate and support this cohort to re-enter the labor force (Hare 2023).
Despite these weaknesses, Australia is among the OECD countries with the highest employment-population rates, while earnings inequality is relatively low (OECD 2023). Together, these empirical features imply Australia has a policy environment conducive to an inclusive labor market.
Despite these weaknesses, Australia is among the OECD countries with the highest employment-population rates, while earnings inequality is relatively low (OECD 2023). Together, these empirical features imply Australia has a policy environment conducive to an inclusive labor market.
Citations:
Productivity Commission. 2023. “5-Year Productivity Inquiry: A More Productive Labour Market (Inquiry Report – Volume 7).” Australian Government Productivity Commission. https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.pc.gov.au%2Finquiries%2Fcompleted%2Fproductivity%2Freport%2Fproductivity-volume7-labour-market.docx&wdOrigin=BROWSELINK
Hare, J. 2023. “Why have 40,000 people been on JobSeeker for 10, BCA asks.” Financial Review May 10. https://www.afr.com/politics/federal/why-have-40-000-people-been-on-jobseeker-for-10-years-bca-asks-20230510-p5d78v
OECD. 2023. OECD Employment Outlook. OECD. https://data.oecd.org/emp/employment-rate.htm
Productivity Commission. 2023. “5-Year Productivity Inquiry: A More Productive Labour Market (Inquiry Report – Volume 7).” Australian Government Productivity Commission. https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.pc.gov.au%2Finquiries%2Fcompleted%2Fproductivity%2Freport%2Fproductivity-volume7-labour-market.docx&wdOrigin=BROWSELINK
Hare, J. 2023. “Why have 40,000 people been on JobSeeker for 10, BCA asks.” Financial Review May 10. https://www.afr.com/politics/federal/why-have-40-000-people-been-on-jobseeker-for-10-years-bca-asks-20230510-p5d78v
OECD. 2023. OECD Employment Outlook. OECD. https://data.oecd.org/emp/employment-rate.htm
Czechia
Cechia’s low unemployment rate (2.7% in the third quarter of 2023, according to the ILO, compared with 2.2% in the previous year) suggests a broadly inclusive labor market. While there are regional differences, they are not significant and have declined over time. The highest rates are in areas with a strong reliance on declining traditional industries, especially coal mining – notably Karlovy Vary (3.5%), Ústí nad Labem (4.8%), and the Moravian-Silesian Region (4.0%) – while the lowest were in Plzeň (1.5%) and Vysočina (1.3%). The rate for Prague was 2.4%. Additionally, there is a group that reported a desire to work but did not qualify for the ILO definition of unemployed. If included, this group would add only 1.6 percentage points to the overall unemployment rate.
Areas with high unemployment also had higher numbers of long-term unemployed. Those unemployed for one year or more accounted for 28% of all unemployed. Few of these, among either men or women, were under 30 years of age, suggesting that the causes lie in outdated skills or age-related health problems. The disincentive effect of benefits paid does not appear to be significant. Unemployment benefits provide reasonable protection, but in all cases, they expire before one year, leaving the long-term unemployed dependent on other benefits that provide only a subsistence minimum. They may face foreclosure conditions for unpaid debts, which lead to confiscation of earnings and logically reduce the incentive to find work.
Efforts have been made to provide specific help to the long-term unemployed. A project running from 2019 to 2023, co-financed by the EU, aimed to increase employment levels and limit illegal work. It provides counseling and access to training and short-term employment possibilities. A report on its success has yet to be produced.
Seniors are incentivized to remain employed through tax benefits. Old-age pensions are not taxed up to the volume of 36 times the minimum income, meaning their incomes can be quite high before being taxed. The tax-free allowance for pensioners is the same as for all other workers. Additionally, new legislation in 2023 raised the minimum for early retirement to 40 years of insurance contributions, up from 35 years. Retirement age will also be set annually for people turning 50, based on the development of national life expectancy.
Following an EU directive of August 2019 on work-life balance and transparent working conditions, a new Czech law will take effect on October 1, 2023, with certain provisions delayed until January 1, 2024. Key modifications include expanded employer information duties, electronic contracting options for labor transactions, rules for remote work, enhanced rights for parent employees, and relaxed formalities for the service of process. Notably, employees can request remote work, and refusal requires a specified reason. Remote work arrangements will require written agreements, with reimbursement rules for expenses incurred. Employers are advised to review and update their labor documentation to comply with the amended requirements.
Employers are required to provide appropriate working conditions for young people, ensuring tasks align with their physical and mental capabilities. Regulations prohibit juvenile workers from engaging in overtime, night work (except for brief educational purposes), or underground work in mining or tunneling. Individuals aged 15 and above who have completed compulsory schooling may be employed. Working hours for young people aged 15-18 are capped at 40 hours per week, with shifts not exceeding 8 hours. Regional branches of the Czech Labor Office oversee decisions regarding the employment of children, ensuring compliance with these regulations.
Areas with high unemployment also had higher numbers of long-term unemployed. Those unemployed for one year or more accounted for 28% of all unemployed. Few of these, among either men or women, were under 30 years of age, suggesting that the causes lie in outdated skills or age-related health problems. The disincentive effect of benefits paid does not appear to be significant. Unemployment benefits provide reasonable protection, but in all cases, they expire before one year, leaving the long-term unemployed dependent on other benefits that provide only a subsistence minimum. They may face foreclosure conditions for unpaid debts, which lead to confiscation of earnings and logically reduce the incentive to find work.
Efforts have been made to provide specific help to the long-term unemployed. A project running from 2019 to 2023, co-financed by the EU, aimed to increase employment levels and limit illegal work. It provides counseling and access to training and short-term employment possibilities. A report on its success has yet to be produced.
Seniors are incentivized to remain employed through tax benefits. Old-age pensions are not taxed up to the volume of 36 times the minimum income, meaning their incomes can be quite high before being taxed. The tax-free allowance for pensioners is the same as for all other workers. Additionally, new legislation in 2023 raised the minimum for early retirement to 40 years of insurance contributions, up from 35 years. Retirement age will also be set annually for people turning 50, based on the development of national life expectancy.
Following an EU directive of August 2019 on work-life balance and transparent working conditions, a new Czech law will take effect on October 1, 2023, with certain provisions delayed until January 1, 2024. Key modifications include expanded employer information duties, electronic contracting options for labor transactions, rules for remote work, enhanced rights for parent employees, and relaxed formalities for the service of process. Notably, employees can request remote work, and refusal requires a specified reason. Remote work arrangements will require written agreements, with reimbursement rules for expenses incurred. Employers are advised to review and update their labor documentation to comply with the amended requirements.
Employers are required to provide appropriate working conditions for young people, ensuring tasks align with their physical and mental capabilities. Regulations prohibit juvenile workers from engaging in overtime, night work (except for brief educational purposes), or underground work in mining or tunneling. Individuals aged 15 and above who have completed compulsory schooling may be employed. Working hours for young people aged 15-18 are capped at 40 hours per week, with shifts not exceeding 8 hours. Regional branches of the Czech Labor Office oversee decisions regarding the employment of children, ensuring compliance with these regulations.
Citations:
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-czechia_en
https://commission.europa.eu/system/files/2023-04/Czechia-CP-2023_EN.pdf
Act No. 281/2023 Coll., on the amendment of the Labor Code (Act No. 262/2006 Coll., as amended) and certain other laws
https://www.czso.cz/csu/czso/cri/zamestnanost-a-nezamestnanost-podle-vysledku-vsps-3-ctvrtleti-2023
https://www.uradprace.cz/web/cz/podpora-zamestnanosti-dlouhodobe-evidovanych-uchazecu-o-zamestnani
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-czechia_en
https://commission.europa.eu/system/files/2023-04/Czechia-CP-2023_EN.pdf
Act No. 281/2023 Coll., on the amendment of the Labor Code (Act No. 262/2006 Coll., as amended) and certain other laws
https://www.czso.cz/csu/czso/cri/zamestnanost-a-nezamestnanost-podle-vysledku-vsps-3-ctvrtleti-2023
https://www.uradprace.cz/web/cz/podpora-zamestnanosti-dlouhodobe-evidovanych-uchazecu-o-zamestnani
Estonia
Recent labor market reforms have focused on enhancing the employability of disabled individuals as a means of expanding the labor supply and controlling social security expenditures. Young people, particularly those not in education, employment or training (NEET), have also been a key focus of active labor market policies. Several measures are available for employers that hire people with reduced work abilities, including wage subsidies, reimbursement of training costs and social insurance contributions by the Unemployment Insurance Fund (UIF), hiring support personnel, and adapting workstations. A special “My First Job” support package is available for employers who hire young people with little or no work experience.
A balanced “stick and carrot” approach is used for job seekers, who are required to actively seek employment, participate in training and fulfill an individual employment plan to avoid losing their benefits (LMMA 2024). Registered unemployed individuals can take mini-jobs (up to 40% of the monthly minimum salary) without losing their unemployment benefits.
The UIF provides modest seed money and consultations to start businesses and coordinates the provision of labor market training. The quality and efficiency of training courses, however, have been subjects of criticism, prompting the government to revise labor market training provisions and set stricter rules regarding the quality and content of the courses.
The current government, which has been in power since March 2023, shifted responsibility for labor market policy from the Ministry of Social Affairs to the Ministry of Economic Affairs and Communications. This change has further increased the pro-work orientation of employment policy. The nudging approach formerly favored by the Ministry of Social Affairs is no longer on the agenda. The new Labor Market Measures Act (LMMA), passed in February 2023 and effective as of January 2024, clearly reflects this tougher orientation.
Work-life balance, such as through remote work arrangements, is regulated by the adoption of the EU Work-Life Balance Directive in 2021. The incidence of working from home significantly increased during the COVID-19 pandemic. In 2022, about one-third of employees aged 25 to 49 made use of such practices. Families with children, particularly mothers, are particularly prone to do so. Discussion of a possible Right to Disconnect Directive has not taken root in Estonia, but the Employers’ Union (ETKL) has called this unnecessary overregulation.
A balanced “stick and carrot” approach is used for job seekers, who are required to actively seek employment, participate in training and fulfill an individual employment plan to avoid losing their benefits (LMMA 2024). Registered unemployed individuals can take mini-jobs (up to 40% of the monthly minimum salary) without losing their unemployment benefits.
The UIF provides modest seed money and consultations to start businesses and coordinates the provision of labor market training. The quality and efficiency of training courses, however, have been subjects of criticism, prompting the government to revise labor market training provisions and set stricter rules regarding the quality and content of the courses.
The current government, which has been in power since March 2023, shifted responsibility for labor market policy from the Ministry of Social Affairs to the Ministry of Economic Affairs and Communications. This change has further increased the pro-work orientation of employment policy. The nudging approach formerly favored by the Ministry of Social Affairs is no longer on the agenda. The new Labor Market Measures Act (LMMA), passed in February 2023 and effective as of January 2024, clearly reflects this tougher orientation.
Work-life balance, such as through remote work arrangements, is regulated by the adoption of the EU Work-Life Balance Directive in 2021. The incidence of working from home significantly increased during the COVID-19 pandemic. In 2022, about one-third of employees aged 25 to 49 made use of such practices. Families with children, particularly mothers, are particularly prone to do so. Discussion of a possible Right to Disconnect Directive has not taken root in Estonia, but the Employers’ Union (ETKL) has called this unnecessary overregulation.
Citations:
Praxis. 2022. “Nudging the unemployment beneficiaries back to work (in Estonian)” https://www.praxis.ee/en/tood/nudging-unemployment-benefit/
Praxis. 2022. “Impact of Subsistence Benefits and Debts on Labour Market Activity and Socio-Economic Coping.” https://www.praxis.ee/en/tood/subsistence-benefit-debt/
Labor Market Measures Act. 2024. https://www.riigiteataja.ee/en/eli/515112023002/consolide
Praxis. 2022. “Nudging the unemployment beneficiaries back to work (in Estonian)” https://www.praxis.ee/en/tood/nudging-unemployment-benefit/
Praxis. 2022. “Impact of Subsistence Benefits and Debts on Labour Market Activity and Socio-Economic Coping.” https://www.praxis.ee/en/tood/subsistence-benefit-debt/
Labor Market Measures Act. 2024. https://www.riigiteataja.ee/en/eli/515112023002/consolide
Finland
A deep depression in the Finnish economy in the 1990s led to a rapid and dramatic increase in unemployment rates. While the employment situation gradually improved after this recession, unemployment again became a serious challenge following the global economic and financial crisis. Unemployment rates partially recovered after the COVID-19 era, but still remain higher than in the early 1990s.
Labor market disparities persist across demographic groups, with higher unemployment rates observed among youth, older individuals, men and those with lower education levels. While Finland allocates 0.86% of GDP to active labor market policies – nearly double the OECD average of 0.45% – challenges include underutilization of public employment services (PES), with only 44% of job seekers contacting PES in 2020.
Finland is known for its tradition of using active labor market policies to address the adverse impacts of economic crises on employment. The Finnish service repertoire for long-term unemployed individuals is geared toward individualized support and tailored to the needs of each claimant (Kangas and Kalliomaa-Puha 2015).
Immigrant claimants participating in activation measures or registered as jobseekers can be required to take a Swedish or Finnish language course. Young people below the age of 25 are obligated to apply for a secondary education study slot if they have not already completed this level of education. The policies and regulations in Finland combine accessible out-of-work benefits with active labor market programs to safeguard workers and improve the possibilities of finding a job.
These policies aim to incentivize groups to enter or reenter employment or increase working hours by addressing barriers to employment. Special policies target the proportion of young people not in employment, education or training. NEETs are not allowed to claim unemployment compensation if they have not completed a secondary degree or if they do not apply for a study place in an educational program leading to a secondary degree.
Policies and regulations that help workers achieve a work-life balance, such as remote work arrangements, are decided at the company level. Family reconciliation policies for families with children are set at the national level.
Labor market disparities persist across demographic groups, with higher unemployment rates observed among youth, older individuals, men and those with lower education levels. While Finland allocates 0.86% of GDP to active labor market policies – nearly double the OECD average of 0.45% – challenges include underutilization of public employment services (PES), with only 44% of job seekers contacting PES in 2020.
Finland is known for its tradition of using active labor market policies to address the adverse impacts of economic crises on employment. The Finnish service repertoire for long-term unemployed individuals is geared toward individualized support and tailored to the needs of each claimant (Kangas and Kalliomaa-Puha 2015).
Immigrant claimants participating in activation measures or registered as jobseekers can be required to take a Swedish or Finnish language course. Young people below the age of 25 are obligated to apply for a secondary education study slot if they have not already completed this level of education. The policies and regulations in Finland combine accessible out-of-work benefits with active labor market programs to safeguard workers and improve the possibilities of finding a job.
These policies aim to incentivize groups to enter or reenter employment or increase working hours by addressing barriers to employment. Special policies target the proportion of young people not in employment, education or training. NEETs are not allowed to claim unemployment compensation if they have not completed a secondary degree or if they do not apply for a study place in an educational program leading to a secondary degree.
Policies and regulations that help workers achieve a work-life balance, such as remote work arrangements, are decided at the company level. Family reconciliation policies for families with children are set at the national level.
Citations:
OECD. 2023. Evaluation of Active Labour Market Policies in Finland, Connecting People with Jobs. Paris: OECD Publishing.
OECD. 2023. Evaluation of Active Labour Market Policies in Finland, Connecting People with Jobs. Paris: OECD Publishing.
Norway
Since 2001, Norway’s social partners and public sector employers have maintained an Agreement on an Inclusive Labor Market, which is updated every three years. All parties have committed to reducing sickness absenteeism, increasing the participation of individuals with disabilities and/or low skills, and raising the average retirement age. The overall objective is to bolster the economic base for the welfare state by increasing labor force participation from all population segments and reducing dependencies on social security cash transfers.
Efforts to reduce temporary work absences have been largely successful in the private sector but not in the public sector. The average retirement age has increased from 64 to 66 years, while attempts to include more individuals with health or skills challenges have been less successful. The volume of active labor market measures, as an alternative to unemployment cash insurance, has remained relatively constant, providing training and supported employment to 70,000 – 80,000 people annually over the past decade.
In July 2023, a national program was introduced targeting individuals aged 16 – 30 who are not in education or work. These individuals are given the right to counseling and effective assistance to complete their education and secure a stable position in the labor market.
Efforts to reduce temporary work absences have been largely successful in the private sector but not in the public sector. The average retirement age has increased from 64 to 66 years, while attempts to include more individuals with health or skills challenges have been less successful. The volume of active labor market measures, as an alternative to unemployment cash insurance, has remained relatively constant, providing training and supported employment to 70,000 – 80,000 people annually over the past decade.
In July 2023, a national program was introduced targeting individuals aged 16 – 30 who are not in education or work. These individuals are given the right to counseling and effective assistance to complete their education and secure a stable position in the labor market.
Citations:
Arbeids – og inkluderingsdepartementet. 2023. “Ny ungdomsgaranti i NAV fra 1. juli.” https://www.regjeringen.no/no/aktuelt/ny-ungdomsgaranti-i-nav-fra-1.-juli/id2988480
Minister of Labour and Social Affairs. 2019. “The IA Agreement 2019–2024.” https://www.regjeringen.no/en/topics/labour/the-working-environment-and-safety/inkluderende_arbeidsliv/ia-avtalen-20192022/the-ia-agreement-20192022/id2623741
NAV. 2024. “Alderspensjon.” https://www.nav.no/no/nav-og-samfunn/statistikk/pensjon-statistikk/alderspensjon
Arbeids – og inkluderingsdepartementet. 2023. “Ny ungdomsgaranti i NAV fra 1. juli.” https://www.regjeringen.no/no/aktuelt/ny-ungdomsgaranti-i-nav-fra-1.-juli/id2988480
Minister of Labour and Social Affairs. 2019. “The IA Agreement 2019–2024.” https://www.regjeringen.no/en/topics/labour/the-working-environment-and-safety/inkluderende_arbeidsliv/ia-avtalen-20192022/the-ia-agreement-20192022/id2623741
NAV. 2024. “Alderspensjon.” https://www.nav.no/no/nav-og-samfunn/statistikk/pensjon-statistikk/alderspensjon
Slovenia
In addition to active employment policy measures available to young people, several specific measures target unemployed youth. These measures range from the EU Youth Guarantee to various subsidies for employers who hire young or first-time jobseekers. Examples include employment subsidies, tax relief for employing these individuals, reimbursement of contributions for the first job (including for mothers with a child up to 3 years old), and subsidies for “green jobs” (this measure should be broader, as it is aimed at all people and not a single segment of the population).
Young people can also demonstrate their informally acquired knowledge, experience, or competences through formal assessment procedures to validate their qualifications for specific occupations. Upon completing the assessment, they receive a publicly valid certificate (National Vocational Qualification) or a certificate (Basic Qualification). The Employment Service offers to cover the assessment and certification costs as part of obtaining the National Vocational Qualification.
Young people can also demonstrate their informally acquired knowledge, experience, or competences through formal assessment procedures to validate their qualifications for specific occupations. Upon completing the assessment, they receive a publicly valid certificate (National Vocational Qualification) or a certificate (Basic Qualification). The Employment Service offers to cover the assessment and certification costs as part of obtaining the National Vocational Qualification.
Citations:
Mlad.si. 2023. “Intervju z Blanko Rihter o zaposlovanju mladih.” https://www.mlad.si/intervju-z-blanko-rihter-o-zaposlovanju-mladih/
Statistični urad Republike Slovenije. 2024. https://www.stat.si/StatWeb/News/Index/10717
Mlad.si. 2023. “Intervju z Blanko Rihter o zaposlovanju mladih.” https://www.mlad.si/intervju-z-blanko-rihter-o-zaposlovanju-mladih/
Statistični urad Republike Slovenije. 2024. https://www.stat.si/StatWeb/News/Index/10717
7
Belgium
Belgian workers enjoy favorable working conditions, with average annual earnings per full-time employee ranking among the top 10 in OECD countries, according to the OECD Better Life Index initiative (OECD n.d.). During the recent inflationary crisis, workers’ purchasing power was maintained through a system of automatic wage indexation, which helped avoid an inflationary spiral. Consequently, inflation in Belgium remained in line with the OECD average (OECD 2024).
Belgium is also the only remaining EU member state to offer potentially unlimited unemployment benefits. While previous governments have tightened these benefits and implemented mechanisms aligned with active labor market programs, these measures may not have been sufficiently tailored, as some adverse consequences have been noted (De Brouwer et al. 2023).
A significant weakness of the Belgian labor market is its poor performance in integrating non-native and second-generation migrants. One main issue is the need for extensive linguistic skills: Belgium has three official languages, and a good command of English is also a major requirement in and around Brussels due to the presence of international institutions.
According to Eurostat, Belgium exhibits lower income inequality, reflected in a Gini coefficient below 0.25, and a lower risk of poverty or social exclusion (18.7%) compared to the EU average (around 0.3 and 21.6%, respectively) in 2022. The extensive redistribution and social safety net in Belgium rank the country among the top five OECD performers in terms of the lowest poverty gap after taxes and transfers, redistribution strength, and cash minimum-income benefits (OECD 2023).
Despite these achievements, challenges persist in the labor market performance of women and immigrants. High implicit tax rates on low-wage earners pose barriers for low-skilled second earners, who are typically women. Additionally, the OECD highlights limited participation in lifelong learning among low-educated, low-income groups, and individuals with disabilities, contributing to low employment rates and labor mobility (OECD 2023).
Belgium is also the only remaining EU member state to offer potentially unlimited unemployment benefits. While previous governments have tightened these benefits and implemented mechanisms aligned with active labor market programs, these measures may not have been sufficiently tailored, as some adverse consequences have been noted (De Brouwer et al. 2023).
A significant weakness of the Belgian labor market is its poor performance in integrating non-native and second-generation migrants. One main issue is the need for extensive linguistic skills: Belgium has three official languages, and a good command of English is also a major requirement in and around Brussels due to the presence of international institutions.
According to Eurostat, Belgium exhibits lower income inequality, reflected in a Gini coefficient below 0.25, and a lower risk of poverty or social exclusion (18.7%) compared to the EU average (around 0.3 and 21.6%, respectively) in 2022. The extensive redistribution and social safety net in Belgium rank the country among the top five OECD performers in terms of the lowest poverty gap after taxes and transfers, redistribution strength, and cash minimum-income benefits (OECD 2023).
Despite these achievements, challenges persist in the labor market performance of women and immigrants. High implicit tax rates on low-wage earners pose barriers for low-skilled second earners, who are typically women. Additionally, the OECD highlights limited participation in lifelong learning among low-educated, low-income groups, and individuals with disabilities, contributing to low employment rates and labor mobility (OECD 2023).
Citations:
- OECD. n.d. “OECD Better Life Index: Belgium.” https://www.oecdbetterlifeindex.org/countries/belgium/
- OECD. 2024. “Inflation (CPI) (Indicator).” doi: 10.1787/eee82e6e-en
De Brouwer, O., E. Leduc, and I. Tojerow. 2023. “The Consequences of Job Search Monitoring for the Long-Term Unemployed: Disability Instead of Employment?” Journal of Public Economics 224: 104,929.
Gini coefficients : https://ec.europa.eu/eurostat/databrowser/view/ilc_di12/default/table?lang=en
Persons at risk of poverty or social exclusion by age and sex: https://ec.europa.eu/eurostat/databrowser/view/ILC_PEPS01N__custom_9025298/default/table?lang=en
OECD. 2023. “Belgium.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing.
DOI: https://doi.org/10.1787/b5f1297c-en
Graph on the public expenditure, as a percentage of GDP, on active and passive labor market policies in 2020: https://www.oecd.org/employment/activation.htm
- OECD. n.d. “OECD Better Life Index: Belgium.” https://www.oecdbetterlifeindex.org/countries/belgium/
- OECD. 2024. “Inflation (CPI) (Indicator).” doi: 10.1787/eee82e6e-en
De Brouwer, O., E. Leduc, and I. Tojerow. 2023. “The Consequences of Job Search Monitoring for the Long-Term Unemployed: Disability Instead of Employment?” Journal of Public Economics 224: 104,929.
Gini coefficients : https://ec.europa.eu/eurostat/databrowser/view/ilc_di12/default/table?lang=en
Persons at risk of poverty or social exclusion by age and sex: https://ec.europa.eu/eurostat/databrowser/view/ILC_PEPS01N__custom_9025298/default/table?lang=en
OECD. 2023. “Belgium.” In Economic Policy Reforms 2023: Going for Growth. Paris: OECD Publishing.
DOI: https://doi.org/10.1787/b5f1297c-en
Graph on the public expenditure, as a percentage of GDP, on active and passive labor market policies in 2020: https://www.oecd.org/employment/activation.htm
Canada
Canada has anti-discrimination laws and employment equity policies at all levels of government, which have helped reduce overt barriers and increase the representation of women, minorities, and other groups in the workplace. Accessibility legislation has improved workplace accommodations for people with disabilities, while immigration policies aim to facilitate the integration of new immigrants into the labor force.
Minorities and women, however, claim persistent hiring biases and wage gaps still exist against marginalized groups despite these anti-discrimination laws.
Lack of affordable childcare in most jurisdictions limits labor force participation, especially among lower-income women. Quebec is a clear exception, and recent new federal investments are likely to help improve access to affordable childcare in other provinces.
Finally, temporary foreign worker programs leave migrant workers vulnerable to abuse and workplace violations. The record number of temporary foreign workers who have moved to Canada since the end of the COVID-19 pandemic has become a major source of public debate.
Minorities and women, however, claim persistent hiring biases and wage gaps still exist against marginalized groups despite these anti-discrimination laws.
Lack of affordable childcare in most jurisdictions limits labor force participation, especially among lower-income women. Quebec is a clear exception, and recent new federal investments are likely to help improve access to affordable childcare in other provinces.
Finally, temporary foreign worker programs leave migrant workers vulnerable to abuse and workplace violations. The record number of temporary foreign workers who have moved to Canada since the end of the COVID-19 pandemic has become a major source of public debate.
Germany
The German welfare state provides a generous level of support through a guaranteed minimum-income citizens’ benefit for job-seekers (Bürgergeld). Bürgergeld and financial support for housing costs (Wohngeld) are also available for low-income workers. Income from work is offset against the Bürgergeld and Wohngeld, but not fully. In general, transfer recipients can increase their available income by taking up work. However, there is an ongoing debate about whether the often marginal increase in income is sufficient to create incentives to work. The debate has intensified after significant increases in the level of Bürgergeld due to the semi-automatic inflation indexation of the system. Low-skilled individuals are confronted with effective hourly wages (in terms of additional money compared to non-work) of just a few euros. This may effectively prevent the unemployed from sacrificing their leisure time for a very limited monetary return. Current studies propose reducing the margin by which work income reduces transfers to increase work incentives (ifo and zew, 2023). Other concepts suggest cutting back the generosity of transfers and/or increasing financial sanctions for transfer recipients refusing to take up a job offer (MDR, 2023).
The German labor market policies have always included a wide range of measures: activation and vocational integration, career choice and vocational training, special programs for taking up employment, participation of people with disabilities, and employment-creating measures (see for details GIB, 2020).
Young people receive special attention in all these measures and participate disproportionately in these programs. Moreover, some active labor market policies explicitly target young individuals, such as measures aimed at the beginning of occupational training. This may include special courses to prepare certain groups for their occupational training (GIB, 2020).
Germany has a developed welfare state with extensive regulations on regular and special-purpose unpaid holidays – such as for family tasks, illness, and care – working times, and work safety. Social partners also pay significant attention to continuously adjusting rules to match changing life realities and the possibilities of remote work. This creates a solid foundation for workers to achieve a work-life balance. The very low hours worked per capita – much lower than in most other OECD countries – also indicate that workers in Germany have ample opportunity to spend their time outside of work.
So far, employers are not legally obliged to accept remote work. However, in many sectors, remote work has become the norm, and competition among companies for qualified workers supports this development. In 2022, 24.2% of workers regularly worked from home, which is double the pre-pandemic level (Destatis, 2024).
The German labor market policies have always included a wide range of measures: activation and vocational integration, career choice and vocational training, special programs for taking up employment, participation of people with disabilities, and employment-creating measures (see for details GIB, 2020).
Young people receive special attention in all these measures and participate disproportionately in these programs. Moreover, some active labor market policies explicitly target young individuals, such as measures aimed at the beginning of occupational training. This may include special courses to prepare certain groups for their occupational training (GIB, 2020).
Germany has a developed welfare state with extensive regulations on regular and special-purpose unpaid holidays – such as for family tasks, illness, and care – working times, and work safety. Social partners also pay significant attention to continuously adjusting rules to match changing life realities and the possibilities of remote work. This creates a solid foundation for workers to achieve a work-life balance. The very low hours worked per capita – much lower than in most other OECD countries – also indicate that workers in Germany have ample opportunity to spend their time outside of work.
So far, employers are not legally obliged to accept remote work. However, in many sectors, remote work has become the norm, and competition among companies for qualified workers supports this development. In 2022, 24.2% of workers regularly worked from home, which is double the pre-pandemic level (Destatis, 2024).
Citations:
Destatis. 2024. “Erwerbstätige, die von zu Hause aus arbeiten.” www.destatis.de/DE/Themen/Arbeit/Arbeitsmarkt/Qualitaet-Arbeit/Dimension-3/home-office.html
GIB. 2020. “Arbeitsmarktpolitische Maßnahmen.” G.I.B. Kurzbericht 1/2020: Statistik zum Arbeits- und Ausbildungsmarkt.
Ifo and ZEW. 2023. “Bürgergeld: Mehr Netto vom Brutto erhöht Beschäftigung.” www.zew.de/das-zew/aktuelles/buergergeld-mehr-netto-vom-brutto-erhoeht-beschaeftigung
MDR. 2023. “Union und FDP wollen Bürgergeld-Erhöhung stoppen.” www.mdr.de/nachrichten/deutschland/politik/buergergeld-haushalt-debatte-finanzierung-100.html
Destatis. 2024. “Erwerbstätige, die von zu Hause aus arbeiten.” www.destatis.de/DE/Themen/Arbeit/Arbeitsmarkt/Qualitaet-Arbeit/Dimension-3/home-office.html
GIB. 2020. “Arbeitsmarktpolitische Maßnahmen.” G.I.B. Kurzbericht 1/2020: Statistik zum Arbeits- und Ausbildungsmarkt.
Ifo and ZEW. 2023. “Bürgergeld: Mehr Netto vom Brutto erhöht Beschäftigung.” www.zew.de/das-zew/aktuelles/buergergeld-mehr-netto-vom-brutto-erhoeht-beschaeftigung
MDR. 2023. “Union und FDP wollen Bürgergeld-Erhöhung stoppen.” www.mdr.de/nachrichten/deutschland/politik/buergergeld-haushalt-debatte-finanzierung-100.html
Ireland
The NESC (2023) highlights a cohesion challenge between the economy and society in Ireland, where some individuals face unemployment, poverty, weak labor-market attachment, low pay and job precarity, remaining only weakly connected to the enterprise economy. Ireland’s approach to ‘labor market activation’ pressures welfare claimants into sometimes low-paid employment. Despite near full employment, overall labor market participation is low, particularly among people with disabilities, migrants, ethnic minorities and women with children. The labor market is unequal and segregated, highly gendered and racialized, with significant intersectional inequalities affecting women of color, disabled women, migrant women, indigenous Traveller women and other ethnic minority women. Spatial and socioeconomic discrimination, coupled with class, increases the likelihood of experiencing poverty and inequality, even for those in employment. There is a commitment to raising the statutory minimum wage to a living wage, and family working payments are available, yet in-work poverty persists. The INOU (2023) notes young people’s vulnerability to low pay. Light-touch employment regulations combined with the lowest market wages in the OECD result in up to one-third of the workforce being low-paid, with many also facing precarious working conditions.
Policies and regulations in place include comprehensive out-of-work benefits and active labor market programs designed to safeguard workers and improve job prospects. The Commission on Tax and Welfare does not find considerable discouragement of employment; replacement rates are average and not problematic for single entrants. While measures can enhance incentives, issues often pertain more to specific groups (e.g., adults with large families, lone parents unable to access childcare, Travellers facing discrimination) rather than tax-benefit reforms and targeted in-work benefits. There have been policy changes in Apprentice and Trainee programs, and the youth work experience program (internship) YESS targets NEETs. A range of work-life balance programs exist, and remote work is popular but unevenly facilitated and somewhat controversial with employees.
The livelihoods assessment in Ireland’s Climate Change Assessment has noted a weak national understanding of livelihood opportunities, emphasizing the need for a long-term vision and strategic long-term policy (O’Mahony and Torney 2023). The assessment identified various knowledge and policy gaps affecting inclusiveness, including opportunities and capabilities, resilience, decent work, identity, income, equity, just transition and carer roles. It also stressed the need for enabling measures such as education, training, social protection and frontier innovations like universal basic services (UBS), universal basic income (UBI) and a shorter working week, as highlighted by Murphy (2023).
Policies and regulations in place include comprehensive out-of-work benefits and active labor market programs designed to safeguard workers and improve job prospects. The Commission on Tax and Welfare does not find considerable discouragement of employment; replacement rates are average and not problematic for single entrants. While measures can enhance incentives, issues often pertain more to specific groups (e.g., adults with large families, lone parents unable to access childcare, Travellers facing discrimination) rather than tax-benefit reforms and targeted in-work benefits. There have been policy changes in Apprentice and Trainee programs, and the youth work experience program (internship) YESS targets NEETs. A range of work-life balance programs exist, and remote work is popular but unevenly facilitated and somewhat controversial with employees.
The livelihoods assessment in Ireland’s Climate Change Assessment has noted a weak national understanding of livelihood opportunities, emphasizing the need for a long-term vision and strategic long-term policy (O’Mahony and Torney 2023). The assessment identified various knowledge and policy gaps affecting inclusiveness, including opportunities and capabilities, resilience, decent work, identity, income, equity, just transition and carer roles. It also stressed the need for enabling measures such as education, training, social protection and frontier innovations like universal basic services (UBS), universal basic income (UBI) and a shorter working week, as highlighted by Murphy (2023).
Citations:
NESC. 2023. Is Ireland Thriving? Answers from International Assessments. Report number 32.
INOU. 2023. INOU Submission to Low Pay Commission: Subminimum Youth Rates of National Minimum Wage. Dublin: INOU. https://www.inou.ie/assets/files/pdf/inou_lpc_submission_july_2023.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Livelihoods.” Ireland’s Climate Change Assessment 4 (6).
Murphy, M. P. 2023. Creating an Ecosocial Welfare Future: Making It Happen. Bristol: Policy Press.
NESC. 2023. Is Ireland Thriving? Answers from International Assessments. Report number 32.
INOU. 2023. INOU Submission to Low Pay Commission: Subminimum Youth Rates of National Minimum Wage. Dublin: INOU. https://www.inou.ie/assets/files/pdf/inou_lpc_submission_july_2023.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Livelihoods.” Ireland’s Climate Change Assessment 4 (6).
Murphy, M. P. 2023. Creating an Ecosocial Welfare Future: Making It Happen. Bristol: Policy Press.
Latvia
Using a structured policy development approach, Latvia has created white papers for medium-term planning purposes. “The White Paper of Social Protection and Labor Market 2021–2027” addresses social protection for all employees, regardless of their labor status. Since 2021, the government has implemented changes to tax laws, including the introduction of a minimum amount of social contributions for employees, applicable regardless of their wages or the number of hours worked. This change negatively affected part-time employees, such as students, mothers with small children, retirees seeking additional earnings, and skilled employees in part-time employment.
Additionally, the tax burden on micro-enterprises has been substantially increased, the patent payment regime for self-employed persons has been abolished, and the tax regime for creative industries (royalty fees) has been revised to include increased social tax contributions. These tax-related amendments limit the inclusive potential of the labor market.
Social enterprises continue to develop and spread across various industries, including health, education, food processing, and technology, reaching 215 enterprises by early 2023. According to the Social Enterprise Law, established social enterprises play a crucial role in integrating labor markets.
The prevalence of remote work has accelerated following the COVID-19 pandemic. Maintaining a work-life balance largely depends on employees’ time management skills and company-level policies, as no national policies govern this area. According to national statistics, 10.5% of employees still work remotely in 2023, with remote work remaining popular in the IT, financial services, and research industries.
Additionally, the tax burden on micro-enterprises has been substantially increased, the patent payment regime for self-employed persons has been abolished, and the tax regime for creative industries (royalty fees) has been revised to include increased social tax contributions. These tax-related amendments limit the inclusive potential of the labor market.
Social enterprises continue to develop and spread across various industries, including health, education, food processing, and technology, reaching 215 enterprises by early 2023. According to the Social Enterprise Law, established social enterprises play a crucial role in integrating labor markets.
The prevalence of remote work has accelerated following the COVID-19 pandemic. Maintaining a work-life balance largely depends on employees’ time management skills and company-level policies, as no national policies govern this area. According to national statistics, 10.5% of employees still work remotely in 2023, with remote work remaining popular in the IT, financial services, and research industries.
Citations:
Labklājības ministrija. 2021. “Socialās aizsardzības un darba tirgus politikas pamatnostādnes 2021.-2027.gadam.” http://polsis.mk.gov.lv/documents/7177
Kesnere, R. 2021. “Atvieglojumu būs mazāk.” https://www.diena.lv/raksts/latvija/zinas/atvieglojumu-bus-mazak-14254534
Asere, A. 2023. “Interesting Social Enterprises in Latvia.” https://labsoflatvia.com/en/news/interesting-social-enterprises-in-latvia
LSM. 2023. “Attālinātais darbs arvien populārs; visvairāk ārpus biroja strādā vecākie speciālisti un vadītāji” https://www.lsm.lv/raksts/zinas/ekonomika/15.08.2023-attalinatais-darbs-arvien-populars-visvairak-arpus-biroja-strada-vecakie-specialisti-un-vaditaji.a520207/?utm_source=lsm&utm_medium=theme&utm_campaign=theme
Labklājības ministrija. 2021. “Socialās aizsardzības un darba tirgus politikas pamatnostādnes 2021.-2027.gadam.” http://polsis.mk.gov.lv/documents/7177
Kesnere, R. 2021. “Atvieglojumu būs mazāk.” https://www.diena.lv/raksts/latvija/zinas/atvieglojumu-bus-mazak-14254534
Asere, A. 2023. “Interesting Social Enterprises in Latvia.” https://labsoflatvia.com/en/news/interesting-social-enterprises-in-latvia
LSM. 2023. “Attālinātais darbs arvien populārs; visvairāk ārpus biroja strādā vecākie speciālisti un vadītāji” https://www.lsm.lv/raksts/zinas/ekonomika/15.08.2023-attalinatais-darbs-arvien-populars-visvairak-arpus-biroja-strada-vecakie-specialisti-un-vaditaji.a520207/?utm_source=lsm&utm_medium=theme&utm_campaign=theme
Lithuania
Labor market institutions are largely aligned with the goal of an inclusive labor market. According to the Law on Unemployment Social Insurance, anyone who has paid social insurance contributions for at least one year out of the last two and a half years can register at the Lithuanian Public Employment Service to receive unemployment benefits if they were not offered a suitable job or active labor market policy measures. Unemployment benefits are paid once a month over a period of nine months. The amount is calculated by including a fixed sum, which amounts to 23.27% of the minimum monthly wage, and a variable component, which is calculated as a share of the average monthly insured income. This share starts at 38.79% during the first three months, then declines to 31.03% during the fourth to sixth months, and further decreases to 23.27% during the seventh to ninth months (Lithuanian Ministry of Social Security and Labor, 2024).
Such a method of calculating unemployment benefits is intended to encourage an active search for employment opportunities. However, according to the OECD (2024), financial disincentives to returning to work in Lithuania have been higher than the OECD average. These disincentives are calculated as the percentage of earnings lost to either higher taxes or lower benefits when a job-seeker returns to work after two months of unemployment.
Additionally, the Lithuanian Public Employment Service aims to offer training and jobs for unemployed individuals to facilitate their return to the labor market. Despite these efforts, most labor market participants find jobs on their own, often during their studies. Since most young people who graduate from secondary school seek to enter universities and colleges, the proportion of young people who are not in education, employment or training has been lower than the OECD average.
There are also rules allowing for part-time jobs. Flexible work arrangements, including remote work, are often negotiated between employees and employers.
Such a method of calculating unemployment benefits is intended to encourage an active search for employment opportunities. However, according to the OECD (2024), financial disincentives to returning to work in Lithuania have been higher than the OECD average. These disincentives are calculated as the percentage of earnings lost to either higher taxes or lower benefits when a job-seeker returns to work after two months of unemployment.
Additionally, the Lithuanian Public Employment Service aims to offer training and jobs for unemployed individuals to facilitate their return to the labor market. Despite these efforts, most labor market participants find jobs on their own, often during their studies. Since most young people who graduate from secondary school seek to enter universities and colleges, the proportion of young people who are not in education, employment or training has been lower than the OECD average.
There are also rules allowing for part-time jobs. Flexible work arrangements, including remote work, are often negotiated between employees and employers.
Citations:
Lithuanian Ministry of Social Security and Labor. “Unemployment social insurance” (in Lithuanian). https://socmin.lrv.lt/lt/veiklos-sritys/socialinis-draudimas/socialinio-draudimo-ismokos/nedarbo-socialinis-draudimas?lang=lt
OECD. “Dataset: PTR for Families Claiming Unemployment Benefit.” https://stats.oecd.org/viewhtml.aspx?datasetcode=PTRUB&lang=en
Lithuanian Ministry of Social Security and Labor. “Unemployment social insurance” (in Lithuanian). https://socmin.lrv.lt/lt/veiklos-sritys/socialinis-draudimas/socialinio-draudimo-ismokos/nedarbo-socialinis-draudimas?lang=lt
OECD. “Dataset: PTR for Families Claiming Unemployment Benefit.” https://stats.oecd.org/viewhtml.aspx?datasetcode=PTRUB&lang=en
New Zealand
New Zealand’s labor market institutions strive to facilitate the transition to an inclusive labor market.
There are legal frameworks in place to prevent workplace discrimination based on factors such as gender, ethnicity, age and disability. The government also invests in training and education programs focused on upskilling and reskilling to enhance employability. More specifically, targeted programs support groups facing employment barriers, such as Māori, Pasifika, people with disabilities and youth.
Despite these efforts, certain challenges persist in achieving full labor market inclusivity. Areas needing further attention include income inequality, disparities in access to quality education and higher unemployment rates among specific demographics. In particular, the labor market is not entirely inclusive for Māori and Pasifika. One indicator is that – compared to the average hourly pay rate of Pākehā (European NZer) men – Māori men earn 16.7% less, Pasifika men 22.9% less, Māori women 23.0% less and Pasifika women 24.0% less (RNZ 2022). One important reason for these pay gaps is that Māori and Pasifika workers are at least 10% less likely than other ethnicities to complete training or find work following the completion of their training (New Zealand Herald 2022).
There are legal frameworks in place to prevent workplace discrimination based on factors such as gender, ethnicity, age and disability. The government also invests in training and education programs focused on upskilling and reskilling to enhance employability. More specifically, targeted programs support groups facing employment barriers, such as Māori, Pasifika, people with disabilities and youth.
Despite these efforts, certain challenges persist in achieving full labor market inclusivity. Areas needing further attention include income inequality, disparities in access to quality education and higher unemployment rates among specific demographics. In particular, the labor market is not entirely inclusive for Māori and Pasifika. One indicator is that – compared to the average hourly pay rate of Pākehā (European NZer) men – Māori men earn 16.7% less, Pasifika men 22.9% less, Māori women 23.0% less and Pasifika women 24.0% less (RNZ 2022). One important reason for these pay gaps is that Māori and Pasifika workers are at least 10% less likely than other ethnicities to complete training or find work following the completion of their training (New Zealand Herald 2022).
Citations:
New Zealand Herald. 2022. “Thousands of Māori and Pacific Workers Needed to Fill Skills Gap – Report.” November 10. https://www.nzherald.co.nz/kahu/thousands-of-maori-and-pacific-workers-needed-to-fill-skills-gap-report/IDAJDSHTPREOVFJWQZGR4VKOCI
RNZ. 2022. “Pay gap: report reveals gender, ethnic disparities.” 6 October. https://www.rnz.co.nz/news/business/476170/pay-gap-report-reveals-gender-ethnic-disparties
New Zealand Herald. 2022. “Thousands of Māori and Pacific Workers Needed to Fill Skills Gap – Report.” November 10. https://www.nzherald.co.nz/kahu/thousands-of-maori-and-pacific-workers-needed-to-fill-skills-gap-report/IDAJDSHTPREOVFJWQZGR4VKOCI
RNZ. 2022. “Pay gap: report reveals gender, ethnic disparities.” 6 October. https://www.rnz.co.nz/news/business/476170/pay-gap-report-reveals-gender-ethnic-disparties
Portugal
The IEFP (Instituto do Emprego e Formação Profissional), Portugal’s national public employment agency, offers various employment support programs for citizens and businesses. Its mission is to improve job creation and quality while reducing unemployment through active employment policies and professional training. These programs cater to diverse groups, including young individuals, those seeking to enhance their professional skills, and those at higher risk of labor market exclusion. To maintain eligibility for certain social benefits, beneficiaries must actively seek employment or engage in training sessions in collaboration with the IEFP.
A key objective of Portugal’s employment policy is to facilitate the entry of young people into the workforce, particularly those with adequate education and professional qualifications. To this end, specific programs like “ATIVAR.PT Internships” and “Active Youth Employment” have been developed, offering distinct approaches to youth employment (IEFP, 2023).
The actual results of these measures are mixed. Portugal has a comparatively low proportion of young people who are not in employment, education, or training (NEET), below the EU average and the EU target of 10% to be achieved by 2030 (Eurostat, 2023). Yet, youth unemployment remains very high – 19% in 2022 – and well above the EU average , unlike general unemployment. Moreover, this high youth unemployment would be even higher if not for elevated levels of emigration. A recent study found Portugal to have one of the highest emigration rates in Europe, particularly among the young, with over a quarter of people born in Portugal and aged between 15 – 39 residing abroad.
Also on a less positive note, Portugal ranks ninth out of 29 OECD countries in terms of financial disincentives for the unemployed to return to work at the national minimum wage. In some cases, accepting a job at the minimum wage could result in a loss of income exceeding 80% due to increased taxes or reduced benefits (OECD, 2023). Additionally, the OECD’s Going for Growth report from 2023 points out that resources allocated to active labor market policies and public employment services in Portugal are relatively low, suggesting a need for enhanced support in these areas.
Finally, in light of the changing work environment, especially post-pandemic, Portugal has updated regulations and rights for workers in hybrid work arrangements – a mix of in-person and remote work. This effort is part of the Decent Work Agenda, which aims to enhance working conditions and balance personal, family, and professional life for workers (Law 13/2023, DR 66/2023).
A key objective of Portugal’s employment policy is to facilitate the entry of young people into the workforce, particularly those with adequate education and professional qualifications. To this end, specific programs like “ATIVAR.PT Internships” and “Active Youth Employment” have been developed, offering distinct approaches to youth employment (IEFP, 2023).
The actual results of these measures are mixed. Portugal has a comparatively low proportion of young people who are not in employment, education, or training (NEET), below the EU average and the EU target of 10% to be achieved by 2030 (Eurostat, 2023). Yet, youth unemployment remains very high – 19% in 2022 – and well above the EU average , unlike general unemployment. Moreover, this high youth unemployment would be even higher if not for elevated levels of emigration. A recent study found Portugal to have one of the highest emigration rates in Europe, particularly among the young, with over a quarter of people born in Portugal and aged between 15 – 39 residing abroad.
Also on a less positive note, Portugal ranks ninth out of 29 OECD countries in terms of financial disincentives for the unemployed to return to work at the national minimum wage. In some cases, accepting a job at the minimum wage could result in a loss of income exceeding 80% due to increased taxes or reduced benefits (OECD, 2023). Additionally, the OECD’s Going for Growth report from 2023 points out that resources allocated to active labor market policies and public employment services in Portugal are relatively low, suggesting a need for enhanced support in these areas.
Finally, in light of the changing work environment, especially post-pandemic, Portugal has updated regulations and rights for workers in hybrid work arrangements – a mix of in-person and remote work. This effort is part of the Decent Work Agenda, which aims to enhance working conditions and balance personal, family, and professional life for workers (Law 13/2023, DR 66/2023).
Citations:
IEFP. 2023. “Apoios.” https://www.iefp.pt/apoios
Eurostat. 2023. “Young people neither in employment nor in education or training.” https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Vis2-young-people-neither-in-employment-nor-in-education-or-training_260523.png
Law n.º 13/2023. 2023. Diário da República n.º 66/2023, Série I de 2023-04-03.
https://diariodarepublica.pt/dr/legislacao-consolidada/lei/2023-211366691
Observatório da Emigração. 2023. Atlas da Emigração Portuguesa. Editora Mundos Sociais. Retrieved from https://observatorioemigracao.pt/np4/file/9573/Atlas_Emig_Port_EBOOK.pdf
OECD. 2023. “Economic Policy Reforms 2023 – Going for Growth.” https://www.oecd.org/publication/going-for-growth/2023
IEFP. 2023. “Apoios.” https://www.iefp.pt/apoios
Eurostat. 2023. “Young people neither in employment nor in education or training.” https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Vis2-young-people-neither-in-employment-nor-in-education-or-training_260523.png
Law n.º 13/2023. 2023. Diário da República n.º 66/2023, Série I de 2023-04-03.
https://diariodarepublica.pt/dr/legislacao-consolidada/lei/2023-211366691
Observatório da Emigração. 2023. Atlas da Emigração Portuguesa. Editora Mundos Sociais. Retrieved from https://observatorioemigracao.pt/np4/file/9573/Atlas_Emig_Port_EBOOK.pdf
OECD. 2023. “Economic Policy Reforms 2023 – Going for Growth.” https://www.oecd.org/publication/going-for-growth/2023
Spain
According to the OECD, the activation requirements for the unemployed are lower than in most other OECD countries. In December 2023, the government agreed to increase unemployment benefits for the first six months and make them compatible with employment. After the first six months, the subsidies are reduced to incentivize the unemployed to return to the labor market. However, the law was not passed by parliament on January 10, 2024, due to the planned cuts in unemployment benefits for those over 50. It will probably be resubmitted (Royal Decree Law 7/2023 of December 19).
To encourage and empower people to combine accessible out-of-work benefits with active labor market programs, unemployment benefits are compatible with grants and subsidies for attending vocational or on-the-job training or for training placements. In 2022 the Council of Ministers regulated the Minimum Basic Income (IMV) as compatible with income from work or self-employment, as well as grants and subsidies for attending vocational training, to improve the opportunities for social and employment inclusion for those who receive this benefit.
The OECD suggests that Spain’s low female labor force participation rate may be attributed to existing tax disincentives for second earners. Unlike many OECD countries that employ individual-based income taxation, Spain offers joint declaration with reductions based on household income composition, which benefits single-income households but creates disincentives for second income earners.
The 2021 labor market law fostered the promotion of training for young people through financial incentives. Law 3/2022 creates an integrated system for vocational education, while the Law 3/2023 of February 28 on Employment implements instruments for active employment policies and a strategic plan for vocational training. Although participation in vocational training remains limited, it is increasing rapidly. Law 3/2023 also aims to promote equality between women and men in access, permanence, and promotion in employment, as well as the reconciliation of personal, family, and working life. It includes measures aimed at facilitating geographical mobility and promoting recruitment in sectors of activity other than those in which individuals would normally have worked.
Law 10/2021 established a legal framework and guarantees for the extension and standardization of remote work.
To encourage and empower people to combine accessible out-of-work benefits with active labor market programs, unemployment benefits are compatible with grants and subsidies for attending vocational or on-the-job training or for training placements. In 2022 the Council of Ministers regulated the Minimum Basic Income (IMV) as compatible with income from work or self-employment, as well as grants and subsidies for attending vocational training, to improve the opportunities for social and employment inclusion for those who receive this benefit.
The OECD suggests that Spain’s low female labor force participation rate may be attributed to existing tax disincentives for second earners. Unlike many OECD countries that employ individual-based income taxation, Spain offers joint declaration with reductions based on household income composition, which benefits single-income households but creates disincentives for second income earners.
The 2021 labor market law fostered the promotion of training for young people through financial incentives. Law 3/2022 creates an integrated system for vocational education, while the Law 3/2023 of February 28 on Employment implements instruments for active employment policies and a strategic plan for vocational training. Although participation in vocational training remains limited, it is increasing rapidly. Law 3/2023 also aims to promote equality between women and men in access, permanence, and promotion in employment, as well as the reconciliation of personal, family, and working life. It includes measures aimed at facilitating geographical mobility and promoting recruitment in sectors of activity other than those in which individuals would normally have worked.
Law 10/2021 established a legal framework and guarantees for the extension and standardization of remote work.
Citations:
OECD. 2023. “Financial Disincentive to Return to Work (Indicator).” doi: 10.1787/3ef6e9d7-en
OECD. 2023. “Economic Surveys: Spain 2023.” https://read.oecd-ilibrary.org/economics/oecd-economic-surveys-spain-2023_5b50cc51-en#page4
OECD. 2023. “Financial Disincentive to Return to Work (Indicator).” doi: 10.1787/3ef6e9d7-en
OECD. 2023. “Economic Surveys: Spain 2023.” https://read.oecd-ilibrary.org/economics/oecd-economic-surveys-spain-2023_5b50cc51-en#page4
Sweden
Despite slightly decreasing inflation from more than 10% at the end of 2022 to 3.5% in November 2023, Sweden experienced a mild recession in 2023, which is expected to end in 2024. The labor market withstood economic pressures, as unemployment rose slightly in 2023; a further modest increase is estimated for 2024 (Konjunkturinstitutet, 2023a).
In the first part of 2023, for the first time in many years, employment rates among people born outside Sweden have significantly increased, although the trend began just before the pandemic. While some of this increase can be attributed to data generation methods, the long-term trend is explained by a stronger labor market (Konjunkturinstitutet, 2023a). The employment rate for people born outside Sweden rose by four percentage points in 2022 alone (Konjunkturinstitutet, 2023b).
Strong incentives for education and comprehensive lifelong learning schemes contribute to a low NEET rate (6.8% in 2022, the second lowest rate in the EU) (Ekonomifakta, 2023). Finally, there is a debate to re-evaluate rules and regulations for working from home, which may further increase integration into the labor market.
In the first part of 2023, for the first time in many years, employment rates among people born outside Sweden have significantly increased, although the trend began just before the pandemic. While some of this increase can be attributed to data generation methods, the long-term trend is explained by a stronger labor market (Konjunkturinstitutet, 2023a). The employment rate for people born outside Sweden rose by four percentage points in 2022 alone (Konjunkturinstitutet, 2023b).
Strong incentives for education and comprehensive lifelong learning schemes contribute to a low NEET rate (6.8% in 2022, the second lowest rate in the EU) (Ekonomifakta, 2023). Finally, there is a debate to re-evaluate rules and regulations for working from home, which may further increase integration into the labor market.
Citations:
Ekonomifakta. 2023. “NEET – Utanförskap bland unga.” https://www.ekonomifakta.se/Fakta/Arbetsmarknad/Arbetsloshet/neet-utanforskap-bland-unga/
Konjunkturinstitutet. 2023a. “Konjunkturläget.” https://www.konj.se/download/18.e8ef5d618c8082c058119f2/1706692715038/Konjunkturlaget-December-2023.pdf
Konjunkturinstitutet. 2023b. “Utrikes föddas uppåtgående sysselsättning: Hur mycket förklaras av demografi?” https://www.konj.se/download/18.5bab959718c38c02b1e6ddbe/1702382843572/2023-12-13%20Sysselsättning%20utrikes%20födda.pdf
Ekonomifakta. 2023. “NEET – Utanförskap bland unga.” https://www.ekonomifakta.se/Fakta/Arbetsmarknad/Arbetsloshet/neet-utanforskap-bland-unga/
Konjunkturinstitutet. 2023a. “Konjunkturläget.” https://www.konj.se/download/18.e8ef5d618c8082c058119f2/1706692715038/Konjunkturlaget-December-2023.pdf
Konjunkturinstitutet. 2023b. “Utrikes föddas uppåtgående sysselsättning: Hur mycket förklaras av demografi?” https://www.konj.se/download/18.5bab959718c38c02b1e6ddbe/1702382843572/2023-12-13%20Sysselsättning%20utrikes%20födda.pdf
Netherlands
In a context of very low overall unemployment rates (between 3.5% and 3.8%) and significant labor shortages, the urgency of boosting inclusivity in the labor market is relatively less pronounced. As of 2021, 77.1% of women aged 15 to 65 not in school were employed, compared to 86.8% of in this category men. Both Dutch men and women ranked third in the EU in terms of net employment rates. While the average number of hours worked among women increased from nearly 27 hours per week in 2013 to 29.2 hours in 2021, the Netherlands continues to lead Europe with regard to part-time work. Nearly two in 10 employed men and almost seven out of 10 employed women had part-time jobs in 2021. Following the birth of a first child, many women opt to reduce their working hours, influenced partly by personal choice and partly by complex tax policies that make additional work less financially rewarding.
Over the past decade, the employment rate among young workers with a non-Western migration background (aged 15 to 25) has notably risen from 44% in 2011 to 59.5% in 2021, surpassing the growth among young people with a Dutch background. Notably, labor market participation rates increased significantly among young individuals with Turkish (58.9%) and Moroccan (76.7%) backgrounds. However, unemployment rates among young people with a migrant background remained higher in 2021 (15.4%) than was true among this group’s native Dutch counterparts (7.5%).
More generally, the labor market for people of all ages with a non-Western migration background is notably noninclusive. Recent research, based on sending 20,000 fictitious cover letters to existing job openings, suggests that labor market discrimination is structurally ingrained and increasing. Efforts to tackle such discriminatory practices through policy or legislation have been largely unsuccessful.
Regarding incentives and policies to encourage labor market entry or increased working hours, particularly for young people not in employment, education or training, the Dutch government has only weak measures in place. The government’s Early School Leave policy aims to: 1) reduce the annual number of school dropouts from 26,000 to a maximum of 18,000 by 2026; 2) assist early school leavers in returning to education; and 3) help young people in vulnerable positions transition to further education or find employment.
Currently, the government is developing new legislation to combat youth unemployment, focusing on providing adequate guidance and support to young people who have not successfully entered the labor market to achieve economic independence. This includes extending the Regional Notification and Coordination (RMC) function to young people aged 23 to 27 without initial qualifications, and enhancing career guidance in secondary vocational education (MBO levels 1 and 2) both during and after training.
Over the past decade, the employment rate among young workers with a non-Western migration background (aged 15 to 25) has notably risen from 44% in 2011 to 59.5% in 2021, surpassing the growth among young people with a Dutch background. Notably, labor market participation rates increased significantly among young individuals with Turkish (58.9%) and Moroccan (76.7%) backgrounds. However, unemployment rates among young people with a migrant background remained higher in 2021 (15.4%) than was true among this group’s native Dutch counterparts (7.5%).
More generally, the labor market for people of all ages with a non-Western migration background is notably noninclusive. Recent research, based on sending 20,000 fictitious cover letters to existing job openings, suggests that labor market discrimination is structurally ingrained and increasing. Efforts to tackle such discriminatory practices through policy or legislation have been largely unsuccessful.
Regarding incentives and policies to encourage labor market entry or increased working hours, particularly for young people not in employment, education or training, the Dutch government has only weak measures in place. The government’s Early School Leave policy aims to: 1) reduce the annual number of school dropouts from 26,000 to a maximum of 18,000 by 2026; 2) assist early school leavers in returning to education; and 3) help young people in vulnerable positions transition to further education or find employment.
Currently, the government is developing new legislation to combat youth unemployment, focusing on providing adequate guidance and support to young people who have not successfully entered the labor market to achieve economic independence. This includes extending the Regional Notification and Coordination (RMC) function to young people aged 23 to 27 without initial qualifications, and enhancing career guidance in secondary vocational education (MBO levels 1 and 2) both during and after training.
Citations:
CBS. 2022. “Emancipatiemonitor 2022.” November 29.
Ministerie van OC&W. 2023. Voortgangsrapportage Emancipatie 2022-2023.
Rijksoverheid. n.d. “Aanpak voortijdig schoolverlaten.”
De Beleidsonderzoekers. 2021. “Evaluatie Wet flexibel werken.”
Onderzoek voor het Ministerie van SZW.
Kennisplatform Inclusief samenleven, De Winter-Koçak et al. January 2023. “De arbeidsmarktpositie van werkenden met een migratieachtergrond: wat is er tot nu toe bekend?”
Nederlands Jeugdinstituut. 2023. “Cijfers over jeugd met een migratieachtergrond.”
Lancee, B. 2021. “Ethnic Discrimination in Hiring: Comparing Groups Across Contexts. Results from a Cross-National Field Experiment.” Journal of Ethnic and Migration Studies 47 (6): 1181-1200.
CBS. 2022. “Emancipatiemonitor 2022.” November 29.
Ministerie van OC&W. 2023. Voortgangsrapportage Emancipatie 2022-2023.
Rijksoverheid. n.d. “Aanpak voortijdig schoolverlaten.”
De Beleidsonderzoekers. 2021. “Evaluatie Wet flexibel werken.”
Onderzoek voor het Ministerie van SZW.
Kennisplatform Inclusief samenleven, De Winter-Koçak et al. January 2023. “De arbeidsmarktpositie van werkenden met een migratieachtergrond: wat is er tot nu toe bekend?”
Nederlands Jeugdinstituut. 2023. “Cijfers over jeugd met een migratieachtergrond.”
Lancee, B. 2021. “Ethnic Discrimination in Hiring: Comparing Groups Across Contexts. Results from a Cross-National Field Experiment.” Journal of Ethnic and Migration Studies 47 (6): 1181-1200.
UK
Following a review by the Commission on Race and Ethnic Disparities, published in 2021, the government launched its “Inclusive Britain” strategy, which outlines three priorities:
“To ensure that prejudice and discrimination have no place in our society,” with the added emphasis, “No exceptions. No excuses.”
To encourage equality of opportunity and ensure aspiration from all groups.
“Actively foster a sense of inclusion and belonging to the UK and our country’s rich and complex history.”
This rhetoric indicates the UK’s commitment to promoting the inclusion of marginalized groups and ethnic minorities. Policy initiatives across several governments have contributed to a social climate where discrimination, whether in the workplace or elsewhere, is increasingly seen as unacceptable. Most employers now adopt and regularly update diversity and inclusion strategies. There are also equivalent statements on fostering gender equality. However, ethnicity and gender pay gaps persist. Additionally, since the pandemic, the proportion of NEETs (people aged 15-24 neither in education nor employment or training) has edged upward.
A promise to “level up” disadvantaged parts of the United Kingdom was a cornerstone of the Conservative manifesto in 2019. A white paper in 2022 noted that while “talent is spread equally across our country, opportunity is not.” This was followed by an act of Parliament at the end of 2023. Proposals include actions and funding to boost skills, a reduction in the taper rate for Universal Credit from 63% to 55% (improving the incentive to work more, though it remains steep), and a “Lifetime Skills Guarantee” for England, given devolved competences. The act also proposes extending city deals to devolve power and provide substantial funding for Scotland, Wales, and Northern Ireland, although it is unclear how much of this funding is “new” money.
Critics, such as the Institute for Government, fear that the leveling-up agenda is too broad and lacks prioritization, while the National Audit Office doubts that projects will be completed on time.
“To ensure that prejudice and discrimination have no place in our society,” with the added emphasis, “No exceptions. No excuses.”
To encourage equality of opportunity and ensure aspiration from all groups.
“Actively foster a sense of inclusion and belonging to the UK and our country’s rich and complex history.”
This rhetoric indicates the UK’s commitment to promoting the inclusion of marginalized groups and ethnic minorities. Policy initiatives across several governments have contributed to a social climate where discrimination, whether in the workplace or elsewhere, is increasingly seen as unacceptable. Most employers now adopt and regularly update diversity and inclusion strategies. There are also equivalent statements on fostering gender equality. However, ethnicity and gender pay gaps persist. Additionally, since the pandemic, the proportion of NEETs (people aged 15-24 neither in education nor employment or training) has edged upward.
A promise to “level up” disadvantaged parts of the United Kingdom was a cornerstone of the Conservative manifesto in 2019. A white paper in 2022 noted that while “talent is spread equally across our country, opportunity is not.” This was followed by an act of Parliament at the end of 2023. Proposals include actions and funding to boost skills, a reduction in the taper rate for Universal Credit from 63% to 55% (improving the incentive to work more, though it remains steep), and a “Lifetime Skills Guarantee” for England, given devolved competences. The act also proposes extending city deals to devolve power and provide substantial funding for Scotland, Wales, and Northern Ireland, although it is unclear how much of this funding is “new” money.
Critics, such as the Institute for Government, fear that the leveling-up agenda is too broad and lacks prioritization, while the National Audit Office doubts that projects will be completed on time.
Citations:
https://www.gov.uk/government/publications/inclusive-britain-action-plan-government-response-to-the-commission-on-race-and-ethnic-disparities/inclusive-britain-government-response-to-the-commission-on-race-and-ethnic-disparities
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/ethnicitypaygapsingreatbritain/2012to2022
https://www.gov.uk/government/publications/inclusive-britain-action-plan-government-response-to-the-commission-on-race-and-ethnic-disparities/inclusive-britain-government-response-to-the-commission-on-race-and-ethnic-disparities
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/ethnicitypaygapsingreatbritain/2012to2022
USA
Several key federal statutes foster an inclusive labor market. These include the Civil Rights Act of 1964 (and its successor acts) and the Americans with Disabilities Act of 1990. These laws prohibit discrimination against workers based on race, religion, sex, or disability. The Supreme Court has recently interpreted the Civil Rights Act to extend protections to gay and transgender Americans as well. The Equal Pay Act of 1963 and the Fair Pay Act of 2009 provide women with protection against pay discrimination in the workplace.
The federal government also funds active labor market programs (Bradley 2015). The Workforce Innovation and Opportunity Act of 2014 finances job training, education, and support services (Spaulding 2015). The U.S. Employment Service (USES), a federal agency created in 1933 by Franklin Roosevelt during the New Deal, provides counseling services, job search and placement assistance, and information about job opportunities to the unemployed (Guzda 1983). The aim of the USES is to match prospective employers with prospective employees (Balducchi et al. 1997).
The federal government’s tax credit system aims to encourage labor market mobility (Liebman 1998). The Earned Income Tax Credit (EITC) offers increased benefits alongside earned income up to a certain level, rather than immediately diminishing (Hotz and Scholz 2001). The idea behind the EITC is to encourage unemployed individuals to seek employment, even in low-wage jobs, rather than rely on unemployment benefits (Meyer 2010). The child tax credit (CTC) is a federal benefit designed to alleviate some of the pressures of raising children and potentially encourage parents to remain in or enter the workforce (Goldin and Michelmore 2022). The CTC has been shown to reduce injuries and behavioral problems, especially for children of low-income parents (Rostad et al. 2020).
However, most employment law originates from state governments, and there is wide variation in these protections from state to state. Each state administers its own unemployment insurance program, although the federal government provides substantial funding to state governments for baseline provision (Chang 2019). Nonetheless, there is significant variation. In states like Massachusetts, Washington and Minnesota, an unemployed person could receive over $1,000 per week in unemployment insurance. In Mississippi, Arizona and Louisiana, support could be less than $300 per week (Hammermesh 2019). States have differing eligibility requirements in addition to the federal government’s baseline eligibility requirements (Isaacs 2018).
The federal government also funds active labor market programs (Bradley 2015). The Workforce Innovation and Opportunity Act of 2014 finances job training, education, and support services (Spaulding 2015). The U.S. Employment Service (USES), a federal agency created in 1933 by Franklin Roosevelt during the New Deal, provides counseling services, job search and placement assistance, and information about job opportunities to the unemployed (Guzda 1983). The aim of the USES is to match prospective employers with prospective employees (Balducchi et al. 1997).
The federal government’s tax credit system aims to encourage labor market mobility (Liebman 1998). The Earned Income Tax Credit (EITC) offers increased benefits alongside earned income up to a certain level, rather than immediately diminishing (Hotz and Scholz 2001). The idea behind the EITC is to encourage unemployed individuals to seek employment, even in low-wage jobs, rather than rely on unemployment benefits (Meyer 2010). The child tax credit (CTC) is a federal benefit designed to alleviate some of the pressures of raising children and potentially encourage parents to remain in or enter the workforce (Goldin and Michelmore 2022). The CTC has been shown to reduce injuries and behavioral problems, especially for children of low-income parents (Rostad et al. 2020).
However, most employment law originates from state governments, and there is wide variation in these protections from state to state. Each state administers its own unemployment insurance program, although the federal government provides substantial funding to state governments for baseline provision (Chang 2019). Nonetheless, there is significant variation. In states like Massachusetts, Washington and Minnesota, an unemployed person could receive over $1,000 per week in unemployment insurance. In Mississippi, Arizona and Louisiana, support could be less than $300 per week (Hammermesh 2019). States have differing eligibility requirements in addition to the federal government’s baseline eligibility requirements (Isaacs 2018).
Citations:
David Bradley. 2015. “The Workforce Innovation and Opportunity Act and the One-Stop Delivery System.” Congressional Research Service.
Shayne Spaulding. 2015. “The Workforce Innovation and Opportunity Act and Child Care for Low-Income Parents.” Urban Institute.
Henry Guzda. 1983. “The U.S. Employment Service at 50: It Too Had to Wait Its Turn.” Monthly Labor Review.
David Balducchi, Terry Johnson, and R. Mark Gritz. 1997. “The Role of the Employment Service.” In Unemployment Insurance in the United States, eds. C. O’Leary and S. Wadner. Kalamazoo, MI: Upjohn Institute for Employment Research.
Jeffrey Liebman. 1998. “The Impact of the Earned Income Tax Credit on Incentives and Income Distribution.” Tax Policy and Economy.
Bruce Meyer. 2010. “The Effects of the Earned Income Tax Credit and Recent Reforms.” Tax Policy and the Economy.
VJ Holtz and JK Scholz. 2001. “The Earned Income Tax Credit.” Working Paper 8078. National Bureau of Economic Research.
Whitney Rostad, Joanne Klevens, Katie Ports, and Derek Ford. 2020. “Impact of the United States Federal Child Tax Credit on Childhood Injuries and Behavior Problems.” Children and Youth Services Review.
Jacob Goldin and Katherine Michelmore. 2022. “Who Benefits from the Child Tax Credit?” National Tax Journal.
Daniel Hammermesh. 1979. “Unemployment Insurance and Unemployment in the United States.” Policy Studies.
Kateline Isaacs. 2018. “Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws.” Congressional Research Service.
Yu-Ling Chang. 2015. “Unequal Social Protection under the Federalist System.” Journal of Social Policy.
David Bradley. 2015. “The Workforce Innovation and Opportunity Act and the One-Stop Delivery System.” Congressional Research Service.
Shayne Spaulding. 2015. “The Workforce Innovation and Opportunity Act and Child Care for Low-Income Parents.” Urban Institute.
Henry Guzda. 1983. “The U.S. Employment Service at 50: It Too Had to Wait Its Turn.” Monthly Labor Review.
David Balducchi, Terry Johnson, and R. Mark Gritz. 1997. “The Role of the Employment Service.” In Unemployment Insurance in the United States, eds. C. O’Leary and S. Wadner. Kalamazoo, MI: Upjohn Institute for Employment Research.
Jeffrey Liebman. 1998. “The Impact of the Earned Income Tax Credit on Incentives and Income Distribution.” Tax Policy and Economy.
Bruce Meyer. 2010. “The Effects of the Earned Income Tax Credit and Recent Reforms.” Tax Policy and the Economy.
VJ Holtz and JK Scholz. 2001. “The Earned Income Tax Credit.” Working Paper 8078. National Bureau of Economic Research.
Whitney Rostad, Joanne Klevens, Katie Ports, and Derek Ford. 2020. “Impact of the United States Federal Child Tax Credit on Childhood Injuries and Behavior Problems.” Children and Youth Services Review.
Jacob Goldin and Katherine Michelmore. 2022. “Who Benefits from the Child Tax Credit?” National Tax Journal.
Daniel Hammermesh. 1979. “Unemployment Insurance and Unemployment in the United States.” Policy Studies.
Kateline Isaacs. 2018. “Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws.” Congressional Research Service.
Yu-Ling Chang. 2015. “Unequal Social Protection under the Federalist System.” Journal of Social Policy.
6
Austria
Out-of-work benefits are easily accessible, and there is an established system designed to allow people to acquire new qualifications and skills and find a job. However, the high share of long-term unemployed people – nearly one-third of all unemployed – points to the limits of this regime.
Critics have further pointed out that a lack of infrastructure in some regions makes it extremely difficult to maintain or re-enter the labor market while also managing family-related responsibilities, which particularly affects women.
Youth unemployment has been a persistent issue. In Austria, approximately 140,000 young people aged 15 – 29 fall into the category of NEETs – those not in education, employment, or training. About half of this group is actively seeking employment rather than simply being inactive. However, by international standards, the proportion of Neets in Austria is quite low (see the 2023 OECD “Education at a Glance” report). Additionally, the percentage of unemployed individuals with disabilities has continuously increased, reaching the highest level on record.
Overall, the ÖVP-led governments since 2017 have been criticized by trade unions for putting increasing pressure on various types of unemployed individuals rather than investing in supportive measures.
Regional imbalances in labor supply and demand play a role. Jobs in the tourism industry in the west often cannot be filled by the unemployed in the east (Vienna). This issue particularly affects young people and individuals with a migration background or refugees, who predominantly settle in Vienna.
Critics have further pointed out that a lack of infrastructure in some regions makes it extremely difficult to maintain or re-enter the labor market while also managing family-related responsibilities, which particularly affects women.
Youth unemployment has been a persistent issue. In Austria, approximately 140,000 young people aged 15 – 29 fall into the category of NEETs – those not in education, employment, or training. About half of this group is actively seeking employment rather than simply being inactive. However, by international standards, the proportion of Neets in Austria is quite low (see the 2023 OECD “Education at a Glance” report). Additionally, the percentage of unemployed individuals with disabilities has continuously increased, reaching the highest level on record.
Overall, the ÖVP-led governments since 2017 have been criticized by trade unions for putting increasing pressure on various types of unemployed individuals rather than investing in supportive measures.
Regional imbalances in labor supply and demand play a role. Jobs in the tourism industry in the west often cannot be filled by the unemployed in the east (Vienna). This issue particularly affects young people and individuals with a migration background or refugees, who predominantly settle in Vienna.
Citations:
https://www.behindertenrat.at/arbeitsmarkt/
https://fm4.orf.at/stories/3037633/
https://www.ots.at/presseaussendung/OTS_20230629_OTS0134/langzeitarbeitslose-menschen-gezielt-unterstuetzen-statt-mehr-druck-ausueben
https://kurier.at/politik/inland/behinderung-ams-rauch-kocher-arbeitsunfaehigkeit-schulungen/402495039
https://kurier.at/wirtschaft/warum-viele-jugendliche-weder-arbeiten-noch-eine-ausbildung-machen/402609971
https://www.oecdbetterlifeindex.org/topics/work-life-balance/
https://doi.org/10.1787/e13bef63-en
https://www.behindertenrat.at/arbeitsmarkt/
https://fm4.orf.at/stories/3037633/
https://www.ots.at/presseaussendung/OTS_20230629_OTS0134/langzeitarbeitslose-menschen-gezielt-unterstuetzen-statt-mehr-druck-ausueben
https://kurier.at/politik/inland/behinderung-ams-rauch-kocher-arbeitsunfaehigkeit-schulungen/402495039
https://kurier.at/wirtschaft/warum-viele-jugendliche-weder-arbeiten-noch-eine-ausbildung-machen/402609971
https://www.oecdbetterlifeindex.org/topics/work-life-balance/
https://doi.org/10.1787/e13bef63-en
France
Unemployment benefit policies have generally been seen as relatively generous. This issue has often been drawn into the political sphere, with people accusing institutions of providing assistance rather than insurance. Various programs have been set up to facilitate job transitions. President Macron has sought to simplify rules in order to increase flexibility and mobility in the labor market.
On the one hand, the government has enhanced regulations at the company level and given small and medium-sized firms more flexibility in adjusting their workforces. On the other hand, measures have removed barriers to employment, for instance by creating enhanced and strengthened job training schemes, lowering benefit levels for unemployed people, and instituting stricter conditions for out-of-work benefits to encourage quicker returns to employment. These efforts align with reforms to the French Employment Agency (renamed France Travail as of January 2024), which aim to enhance employment placement by improving coordination between various local, state and private actors. Various regulations aim to incentivize employment and increase the number of hours worked. This approach is exemplified by the “employment bonus,” which targets individuals with low salaries and is received as a complement to income. Working hours beyond contracted hours are also de-fiscalized, and firms have the option to distribute specific yearly bonuses subject to low tax rates (Leite 2020).
Two groups face disproportunate barriers to employment. Among younger people (Berthet et al. 2021), barriers to employment for school leavers are particularly high because of the deep mismatch between the public general schooling and vocational training systems. This is a key contributor to the high unemployment rate among young people. For this reason, the Macron administration has invested substantially in the generalization of vocational training at all levels of education. The number of apprenticeship contracts has risen significantly in recent years, to more than 1 million (October 2023). Yet this policy has mostly benefited individuals with relatively high education levels – for instance, who hold upper secondary qualifications. For young students and workers with lower-level qualifications, apprenticeships are much more difficult to access. The unemployment rate among young people aged 15 to 24 has dropped from more than 25% (2016) to 17.3% (2022), but this is still one of the highest such unemployment rates within the OECD. Specific policies also seek to reduce school dropout rates, with limited success.
Another group experiencing barriers to saving and to getting back to work is elderly people. Even though the share of people aged 55 to 64 in employment has risen steadily in recent years (56.9% in 2022), it is still below the EU average (62.4%). In November 2023, President Macron set the objective of reaching 65% by 2030. Most of the problems are linked to working conditions and workforce policies within companies. The government has invited labor unions and employers’ associations to discuss and agree on measures in line with this objective. He has promised that the agreement struck via this process could be transformed into law. Negotiations were expected to begin in 2024.
The COVID-19 pandemic also presented an opportunity to significantly change the work-life balance for white-collar workers. While the 35-hour workweek institutionalized such change for blue-collar workers, COVID-19 has generalized remote work for many professionals. However, debates are ongoing as to whether this can continue in various firms, as deserted workplaces seem to trigger various issues with regard to labor organization.
On the one hand, the government has enhanced regulations at the company level and given small and medium-sized firms more flexibility in adjusting their workforces. On the other hand, measures have removed barriers to employment, for instance by creating enhanced and strengthened job training schemes, lowering benefit levels for unemployed people, and instituting stricter conditions for out-of-work benefits to encourage quicker returns to employment. These efforts align with reforms to the French Employment Agency (renamed France Travail as of January 2024), which aim to enhance employment placement by improving coordination between various local, state and private actors. Various regulations aim to incentivize employment and increase the number of hours worked. This approach is exemplified by the “employment bonus,” which targets individuals with low salaries and is received as a complement to income. Working hours beyond contracted hours are also de-fiscalized, and firms have the option to distribute specific yearly bonuses subject to low tax rates (Leite 2020).
Two groups face disproportunate barriers to employment. Among younger people (Berthet et al. 2021), barriers to employment for school leavers are particularly high because of the deep mismatch between the public general schooling and vocational training systems. This is a key contributor to the high unemployment rate among young people. For this reason, the Macron administration has invested substantially in the generalization of vocational training at all levels of education. The number of apprenticeship contracts has risen significantly in recent years, to more than 1 million (October 2023). Yet this policy has mostly benefited individuals with relatively high education levels – for instance, who hold upper secondary qualifications. For young students and workers with lower-level qualifications, apprenticeships are much more difficult to access. The unemployment rate among young people aged 15 to 24 has dropped from more than 25% (2016) to 17.3% (2022), but this is still one of the highest such unemployment rates within the OECD. Specific policies also seek to reduce school dropout rates, with limited success.
Another group experiencing barriers to saving and to getting back to work is elderly people. Even though the share of people aged 55 to 64 in employment has risen steadily in recent years (56.9% in 2022), it is still below the EU average (62.4%). In November 2023, President Macron set the objective of reaching 65% by 2030. Most of the problems are linked to working conditions and workforce policies within companies. The government has invited labor unions and employers’ associations to discuss and agree on measures in line with this objective. He has promised that the agreement struck via this process could be transformed into law. Negotiations were expected to begin in 2024.
The COVID-19 pandemic also presented an opportunity to significantly change the work-life balance for white-collar workers. While the 35-hour workweek institutionalized such change for blue-collar workers, COVID-19 has generalized remote work for many professionals. However, debates are ongoing as to whether this can continue in various firms, as deserted workplaces seem to trigger various issues with regard to labor organization.
Citations:
Berthet, T., Longo, M. E., Bidart, C., Alfonsi, J., and Noël, M. 2021. “Les rapports au travail des jeunes en situation de vulnérabilité.” Rapport de l’INJEP. https://injep.fr/wp-content/uploads/2021/03/rapport-2021-04-Travail_Jeunes_vulnerables.pdf
Cour des comptes. 2021. “L’insertion des jeunes sur le marché du travail. Les enjeux structurels pour la France.” https://www.ccomptes.fr/fr/documents/58116
DGAS. 2022. “L’insertion par l’activité économique.”
état des lieux et perspectives. Décembre 2022. Retrieved from https://www.igas.gouv.fr/IMG/pdf/2022-048r_iae.pdf
Leite, MD. 2020. “Les réformes récentes du code du travail au Brésil et en France : une analyse comparée.” Sciences humaines et sociales 18.
Berthet, T., Longo, M. E., Bidart, C., Alfonsi, J., and Noël, M. 2021. “Les rapports au travail des jeunes en situation de vulnérabilité.” Rapport de l’INJEP. https://injep.fr/wp-content/uploads/2021/03/rapport-2021-04-Travail_Jeunes_vulnerables.pdf
Cour des comptes. 2021. “L’insertion des jeunes sur le marché du travail. Les enjeux structurels pour la France.” https://www.ccomptes.fr/fr/documents/58116
DGAS. 2022. “L’insertion par l’activité économique.”
état des lieux et perspectives. Décembre 2022. Retrieved from https://www.igas.gouv.fr/IMG/pdf/2022-048r_iae.pdf
Leite, MD. 2020. “Les réformes récentes du code du travail au Brésil et en France : une analyse comparée.” Sciences humaines et sociales 18.
Poland
The cost of living in Poland is increasing, forcing workers to seek full-time employment in order to earn the minimum wage. In 2020, only 12% of employed individuals worked part-time. However, recent measures such as a minimum wage increase and the introduction of tax relief have helped boost workers’ incomes. Starting January 1, 2023, the minimum wage was PLN 3,490.00 gross, rising to PLN 3,600.00 as of July 1, 2023. As of January 1, 2024, the minimum wage reached PLN 4,240.00 gross. Additionally, eligibility for social insurance provides workers with the opportunity to benefit from social security benefits.
The government has also introduced various incentives for young people. Through the so-called Polish Deal, the state implemented tax relief for young individuals, exempting those under 26 from income tax on earnings from work or commissions. The Young People on Start program was also directed toward this group. Given the demographic shift, with a rising share of the population reaching retirement age, the state is seeking to encourage young individuals to work. This is a crucial goal as the number of individuals contributing to social security decreases. While young people could benefit from subsidies for training or studies, this often involves an employment contract with a specific company, which can prove burdensome for those unwilling to commit to additional agreements.
Currently, only one in 10 Poles (10.9%) aged 15 – 29 is neither working nor studying. This is the best result in the country’s recent history and surpasses the EU average. In 2021, at the onset of the pandemic, this percentage increased to 13.4%, but 2022 brought a significant improvement (Eurostat 2023). The shift was influenced by changes caused by the pandemic, particularly remote learning and work opportunities. Young people were thus able to benefit from education and training without incurring additional costs such as accommodation or commuting.
The work-life balance directive in Poland was introduced through an amendment to the Labor Code in July 2023. The directive includes extended parental leave, with a focus on the child’s father, who is now entitled to nine weeks. Additional caregiving leave allowances and regulated remote work opportunities are also intended to help maintain a balance between work and private life.
The government has also introduced various incentives for young people. Through the so-called Polish Deal, the state implemented tax relief for young individuals, exempting those under 26 from income tax on earnings from work or commissions. The Young People on Start program was also directed toward this group. Given the demographic shift, with a rising share of the population reaching retirement age, the state is seeking to encourage young individuals to work. This is a crucial goal as the number of individuals contributing to social security decreases. While young people could benefit from subsidies for training or studies, this often involves an employment contract with a specific company, which can prove burdensome for those unwilling to commit to additional agreements.
Currently, only one in 10 Poles (10.9%) aged 15 – 29 is neither working nor studying. This is the best result in the country’s recent history and surpasses the EU average. In 2021, at the onset of the pandemic, this percentage increased to 13.4%, but 2022 brought a significant improvement (Eurostat 2023). The shift was influenced by changes caused by the pandemic, particularly remote learning and work opportunities. Young people were thus able to benefit from education and training without incurring additional costs such as accommodation or commuting.
The work-life balance directive in Poland was introduced through an amendment to the Labor Code in July 2023. The directive includes extended parental leave, with a focus on the child’s father, who is now entitled to nine weeks. Additional caregiving leave allowances and regulated remote work opportunities are also intended to help maintain a balance between work and private life.
Citations:
Eurostat. 2023. “Statistics on Young People Neither in Employment Nor in Education or Training.” https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Vis2-young-people-neither-in-employment-nor-in-education-or-training_260523.png
Eurostat. 2023. “Statistics on Young People Neither in Employment Nor in Education or Training.” https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Vis2-young-people-neither-in-employment-nor-in-education-or-training_260523.png
Slovakia
There is an ongoing discussion in Slovakia about how effectively policies and regulations combine accessible out-of-work benefits with active labor market programs to safeguard workers and improve job prospects. No final consensus has been reached. Few policies and regulations exist to incentivize people to enter employment or increase working hours; most target women with children (the National Action Plan for Employment of Women for the Years 2022–2030 was recently adopted). The proportion of young people not employed, educated, or trained is marginal and is addressed especially by the ongoing educational reform.
The legal system provides sufficient space for employers to help workers achieve a work-life balance. The main instrument is collective contracts signed between the employer and the representatives of employees. These contracts define a concrete set of benefits, including the rules for remote work arrangements. The scope and scale of such benefits differ case by case.
A specific problem in Slovakia is the long-term unemployment of marginalized groups, which governmental policies insufficiently address. According to Kahanec et al. (2020), almost half of the Roma households in Slovakia declare themselves unemployed (the highest number in the region). Kahanec et al. (2020) state: “The most important ALMP program in relation to Roma integration appears to be public works schemes (Activation Work Programs), since almost half of the unemployed Roma participate in these programs. They focus on jobs in the public sector to help the unemployed maintain basic work-related skills and last between 6 to 18 months, during which a lump-sum benefit is received. Benefits from public works schemes are often the only available income of Roma. However, studies show that these programs do not provide relevant skills for the participants who are unable to escape the unemployment trap and find a job on the open labor market.”
The legal system provides sufficient space for employers to help workers achieve a work-life balance. The main instrument is collective contracts signed between the employer and the representatives of employees. These contracts define a concrete set of benefits, including the rules for remote work arrangements. The scope and scale of such benefits differ case by case.
A specific problem in Slovakia is the long-term unemployment of marginalized groups, which governmental policies insufficiently address. According to Kahanec et al. (2020), almost half of the Roma households in Slovakia declare themselves unemployed (the highest number in the region). Kahanec et al. (2020) state: “The most important ALMP program in relation to Roma integration appears to be public works schemes (Activation Work Programs), since almost half of the unemployed Roma participate in these programs. They focus on jobs in the public sector to help the unemployed maintain basic work-related skills and last between 6 to 18 months, during which a lump-sum benefit is received. Benefits from public works schemes are often the only available income of Roma. However, studies show that these programs do not provide relevant skills for the participants who are unable to escape the unemployment trap and find a job on the open labor market.”
Citations:
Kahanec, M., Kováčová, L., Poláčková, Z., and Sedláková, M. 2020. The Social and Employment Situation of Roma Communities in Slovakia. Brussels: European Parliament.
NÁRODNÝ AKČNÝ PLÁN ZAMESTNANOSTI ŽIEN NA ROKY 2022 – 2030. https://www.employment.gov.sk/files/sk/ministerstvo/spolocny-sekretariat-vyborov/vybor-rodovu-rovnost/dokumenty-udalosti/nap_zamestnanosti_zien_22-30.pdf
Kahanec, M., Kováčová, L., Poláčková, Z., and Sedláková, M. 2020. The Social and Employment Situation of Roma Communities in Slovakia. Brussels: European Parliament.
NÁRODNÝ AKČNÝ PLÁN ZAMESTNANOSTI ŽIEN NA ROKY 2022 – 2030. https://www.employment.gov.sk/files/sk/ministerstvo/spolocny-sekretariat-vyborov/vybor-rodovu-rovnost/dokumenty-udalosti/nap_zamestnanosti_zien_22-30.pdf
Labor market institutions are only somewhat aligned with the goal of an inclusive labor market.
5
Greece
Policies in Greece do not effectively integrate out-of-work benefits with active labor market programs to protect workers and enhance job prospects. Labor market policies remain largely passive, with education and training inadequately aligned with labor market shifts.
However, there has been a policy shift in this area. In January 2024, the parliament passed a new law on vocational education and training. This law restructures the previously fragmented vocational education landscape. Post-secondary vocational training and education schools (IEK) will be more closely aligned with local and sectoral labor market needs. Within secondary education, vocational high schools and training centers are being integrated into new units called “Centers for Vocational Training and Education” (KEEK). These centers will be equipped with laboratories and career offices, and their curricula will better integrate practical work experience with firms. Additional state funding will also support vocational education and training.
There are relatively few disincentives for the unemployed to return to work. Although returning to work may result in higher taxes or lower benefits, these levels are below the OECD average (OECD 2021).
Greece has reformed its public employment service, DYPA, which was established in 2022 as the successor to the outdated OAED agency. DYPA is better organized than its predecessor, providing services that facilitate worker mobility across firms and industries. However, it is still too early to fully assess its efficiency.
Greece has a higher-than-average percentage of youth not in employment, education, or training (NEET) compared to other OECD countries (OECD 2023). This is largely due to the underdeveloped vocational education and training system, which is associated with lower earnings and social status, making it unpopular.
During the COVID-19 crisis, policies and regulations helped workers achieve a better work-life balance through remote work arrangements. However, after the pandemic subsided, work-life balance efficiency declined due to factors such as long commutes in major cities, frequent traffic congestion, and a culture of mistrust between employers and employees regarding commitment to work and actual working hours.
However, there has been a policy shift in this area. In January 2024, the parliament passed a new law on vocational education and training. This law restructures the previously fragmented vocational education landscape. Post-secondary vocational training and education schools (IEK) will be more closely aligned with local and sectoral labor market needs. Within secondary education, vocational high schools and training centers are being integrated into new units called “Centers for Vocational Training and Education” (KEEK). These centers will be equipped with laboratories and career offices, and their curricula will better integrate practical work experience with firms. Additional state funding will also support vocational education and training.
There are relatively few disincentives for the unemployed to return to work. Although returning to work may result in higher taxes or lower benefits, these levels are below the OECD average (OECD 2021).
Greece has reformed its public employment service, DYPA, which was established in 2022 as the successor to the outdated OAED agency. DYPA is better organized than its predecessor, providing services that facilitate worker mobility across firms and industries. However, it is still too early to fully assess its efficiency.
Greece has a higher-than-average percentage of youth not in employment, education, or training (NEET) compared to other OECD countries (OECD 2023). This is largely due to the underdeveloped vocational education and training system, which is associated with lower earnings and social status, making it unpopular.
During the COVID-19 crisis, policies and regulations helped workers achieve a better work-life balance through remote work arrangements. However, after the pandemic subsided, work-life balance efficiency declined due to factors such as long commutes in major cities, frequent traffic congestion, and a culture of mistrust between employers and employees regarding commitment to work and actual working hours.
Citations:
OECD. 2021. “Financial disincentives to return to work.” https://stats.oecd.org/viewhtml.aspx?datasetcode=PTRUB&lang=en
OECD. 2023. “Youth Not in Employment, Education, or Training (NEET).” https://data.oecd.org/youthinac/youth-not-in-employment-education-or-training-neet.htm
The new law on vocational education and training, adopted in January 2024, is Law 5082/2024.
The website of DYPA is https://www.dypa.gov.gr/.
Law 4921/2022. 2022. Vol. 4921, sec. 2022.
OECD. 2021. “Financial disincentives to return to work.” https://stats.oecd.org/viewhtml.aspx?datasetcode=PTRUB&lang=en
OECD. 2023. “Youth Not in Employment, Education, or Training (NEET).” https://data.oecd.org/youthinac/youth-not-in-employment-education-or-training-neet.htm
The new law on vocational education and training, adopted in January 2024, is Law 5082/2024.
The website of DYPA is https://www.dypa.gov.gr/.
Law 4921/2022. 2022. Vol. 4921, sec. 2022.
Israel
Israel’s earned income tax credit program aims to encourage unemployed individuals to participate in the labor market. The program provides benefits to low-paid employees who participate more in the labor market. The National Insurance Institution and the Bank of Israel (the central bank) monitor the utilization of the program and its effects on labor market participation. Over the years, the process for receiving income tax credits has been improved and the benefits received have increased, enhancing the program’s effectiveness.
Labor market participation is particularly low among Arab women and ultraorthodox men. For Arab women, various programs, including vocational training, are promoted by non-governmental and governmental agencies. Although the employment rate of Arab women increased to 41% in 2023, it remains low compared to Jewish women. The current programs are insufficient to address gaps in human capital and do not tackle infrastructural barriers, such as the need in Arab villages for effective public transport (Knesset Research Center, 2023).
The government implements various programs, including vocational training, to increase the employment rate of ultraorthodox men. However, despite significant investment in this area, progress remains limited. One of the main reasons for this lack of progress is that ultraorthodox men can avoid being drafted into the army if they remain in the Yeshiva until age 26. This policy disincentives ultraorthodox men from participating in the labor market. Moreover, the government does not mandate the teaching of basic skills, such as mathematics and English, in ultraorthodox schools for boys. Consequently, students in the ultraorthodox school system often lack essential workplace skills (Knesset Research Center, 2022).
Women working in the civil service are eligible to work one hour less if they have children under age five and are employed full time.
In addition, following the COVID-19 pandemic, the civil service issued a directive that allows employees to work remotely several times a week and complete extra hours remotely. While this directive should improve work-life balance, it applies only to workers directly employed by governmental bodies, as a result its effect is limited.
Labor market participation is particularly low among Arab women and ultraorthodox men. For Arab women, various programs, including vocational training, are promoted by non-governmental and governmental agencies. Although the employment rate of Arab women increased to 41% in 2023, it remains low compared to Jewish women. The current programs are insufficient to address gaps in human capital and do not tackle infrastructural barriers, such as the need in Arab villages for effective public transport (Knesset Research Center, 2023).
The government implements various programs, including vocational training, to increase the employment rate of ultraorthodox men. However, despite significant investment in this area, progress remains limited. One of the main reasons for this lack of progress is that ultraorthodox men can avoid being drafted into the army if they remain in the Yeshiva until age 26. This policy disincentives ultraorthodox men from participating in the labor market. Moreover, the government does not mandate the teaching of basic skills, such as mathematics and English, in ultraorthodox schools for boys. Consequently, students in the ultraorthodox school system often lack essential workplace skills (Knesset Research Center, 2022).
Women working in the civil service are eligible to work one hour less if they have children under age five and are employed full time.
In addition, following the COVID-19 pandemic, the civil service issued a directive that allows employees to work remotely several times a week and complete extra hours remotely. While this directive should improve work-life balance, it applies only to workers directly employed by governmental bodies, as a result its effect is limited.
Citations:
Knesset Research Center. 2023. “Information on the implementation of programs to promote the employment of Arab women.” https://fs.knesset.gov.il/globaldocs/MMM/cb8b7263-3a99-ec11-8148-00155d082403/2_cb8b7263-3a99-ec11-8148-00155d082403_11_20137.pdf
Knesset Research Center. 2022. “Employment of Ultraorthodox Men.” https://fs.knesset.gov.il/globaldocs/MMM/08a5e3e2-3cd1-ec11-8147-005056aac6c3/2_08a5e3e2-3cd1-ec11-8147-005056aac6c3_11_19536.pdf
Knesset Research Center. 2023. “Information on the implementation of programs to promote the employment of Arab women.” https://fs.knesset.gov.il/globaldocs/MMM/cb8b7263-3a99-ec11-8148-00155d082403/2_cb8b7263-3a99-ec11-8148-00155d082403_11_20137.pdf
Knesset Research Center. 2022. “Employment of Ultraorthodox Men.” https://fs.knesset.gov.il/globaldocs/MMM/08a5e3e2-3cd1-ec11-8147-005056aac6c3/2_08a5e3e2-3cd1-ec11-8147-005056aac6c3_11_19536.pdf
Italy
Italian active labor market policies are weak. Despite having the highest number of NEETs among young people in the EU, second only to Romania, the policies to address this issue remain ineffective. National policies to incentivize hiring appear only partially effective, hindered by a structural mismatch between labor supply and demand that current government policies cannot address.
The NRRP aims to tackle this problem with approximately 124,000 projects expected to contribute to the social and economic development of younger generations. However, the impact of these projects is not yet measurable. As noted in the previous section, institutional arrangements in the labor market in Italy remain weak in improving job-finding opportunities.
The NRRP aims to tackle this problem with approximately 124,000 projects expected to contribute to the social and economic development of younger generations. However, the impact of these projects is not yet measurable. As noted in the previous section, institutional arrangements in the labor market in Italy remain weak in improving job-finding opportunities.
Citations:
Ministero del Lavoro. 2023. “Guida agli incentivi.” https://www.lavoro.gov.it/documenti/incentivi-assunzione-set2023.pdf
iNAPP. 2023. “Rapporto annuale 2023.” https://oa.inapp.org/xmlui/bitstream/handle/20.500.12916/4117/INAPP_Rapporto_2023.pdf?sequence=1&isAllowed=y
Ministero del Lavoro. 2023. “Guida agli incentivi.” https://www.lavoro.gov.it/documenti/incentivi-assunzione-set2023.pdf
iNAPP. 2023. “Rapporto annuale 2023.” https://oa.inapp.org/xmlui/bitstream/handle/20.500.12916/4117/INAPP_Rapporto_2023.pdf?sequence=1&isAllowed=y
Japan
The gap between regular and non-regular workers in Japan has been a great concern for many years. After a phase of labor market deregulation until about 2007, various governments have taken steps to narrow the gap between both groups, such as by increasing social security coverage and strengthening legal provisions on the principle of “equal pay for equal work.” Whereas previously legal rules often only asked employers “to make a credible effort” to ensure equal treatment, Japanese labor law now entails provisions that make employers partially liable for non-compliance.
This has led to some improvements, but wage gaps remain entrenched, and Japan still has a considerable gender wage gap. Japan has the lowest youth unemployment rate among the OECD countries (10.84% in 2022). Still, the Japanese labor market poses considerable challenges to young people. The practice of simultaneously hiring fresh university graduates discriminates against those who do not attend university or graduate from a foreign university. Working times for regular male employees are still among the world’s highest – which makes it difficult for many men to undertake a share of domestic tasks in households where both the husband and wife work (which is the norm in Japan). This limits the ability of many women to increase their working hours and seek better-paid jobs. Ninety percent of all part-time workers, who rarely move up the career ladder, are women. Prime Minister Abe Shinzô (2012 – 2020) promoted the active labor market participation of women by increasing the number of childcare centers. The current government under Prime Minister Kishida has announced a further expansion, which is supposed to put Japan ahead of Sweden. At the time of writing, legislation entailing JPY 3.6 billion for this purpose was due to be introduced into the Diet.
In recent years, several Japanese governments have also tried to improve the inclusiveness of the labor market by reducing working hours. The 2018 Act on the Arrangement of Related Acts to Promote Work Style Reform limited allowed overtime work to 45 hours per month and 360 hours per year, and introduced penalties for violating the new rules. In 2020, JPY 65 billion was devoted to a three-year plan to promote the advancement of the “employment ice age generation” (people who entered the labor market during the economic stagnation from the early 1990s to the mid-2000s) to regular jobs.
This has led to some improvements, but wage gaps remain entrenched, and Japan still has a considerable gender wage gap. Japan has the lowest youth unemployment rate among the OECD countries (10.84% in 2022). Still, the Japanese labor market poses considerable challenges to young people. The practice of simultaneously hiring fresh university graduates discriminates against those who do not attend university or graduate from a foreign university. Working times for regular male employees are still among the world’s highest – which makes it difficult for many men to undertake a share of domestic tasks in households where both the husband and wife work (which is the norm in Japan). This limits the ability of many women to increase their working hours and seek better-paid jobs. Ninety percent of all part-time workers, who rarely move up the career ladder, are women. Prime Minister Abe Shinzô (2012 – 2020) promoted the active labor market participation of women by increasing the number of childcare centers. The current government under Prime Minister Kishida has announced a further expansion, which is supposed to put Japan ahead of Sweden. At the time of writing, legislation entailing JPY 3.6 billion for this purpose was due to be introduced into the Diet.
In recent years, several Japanese governments have also tried to improve the inclusiveness of the labor market by reducing working hours. The 2018 Act on the Arrangement of Related Acts to Promote Work Style Reform limited allowed overtime work to 45 hours per month and 360 hours per year, and introduced penalties for violating the new rules. In 2020, JPY 65 billion was devoted to a three-year plan to promote the advancement of the “employment ice age generation” (people who entered the labor market during the economic stagnation from the early 1990s to the mid-2000s) to regular jobs.
Citations:
OECD. 2021. “Creating Responsive Adult Learning Opportunities in Japan, Getting Skills Right.” https://www.oecd-ilibrary.org/sites/0ea11b94-en/index.html?itemId=/content/component/0ea11b94-en
“Japan to boost child care spending to match Sweden.” Kyodo News, June 1. https://english.kyodonews.net/news/2023/06/527c2e8ba284-japan-to-boost-child-care-spending-to-match-sweden.html
Otsuki, Kensuke, and Shota Asao. 2018. “Act on the Arrangement of Related Acts to Promote Work Style Reform.” Labor and Employment Law Bulletin 40, July. https://www.amt-law.com/asset/pdf/bulletins9_pdf/LELB40.pdf
Sim, Walter. 2020. “Japan Takes Steps to Help Those Trapped in ‘Employment Ice Age’.” The Straits Times January 1. https://www.straitstimes.com/asia/east-asia/japan-takes-steps-to-help-those-trapped-in-employment-ice-age
OECD. 2021. “Creating Responsive Adult Learning Opportunities in Japan, Getting Skills Right.” https://www.oecd-ilibrary.org/sites/0ea11b94-en/index.html?itemId=/content/component/0ea11b94-en
“Japan to boost child care spending to match Sweden.” Kyodo News, June 1. https://english.kyodonews.net/news/2023/06/527c2e8ba284-japan-to-boost-child-care-spending-to-match-sweden.html
Otsuki, Kensuke, and Shota Asao. 2018. “Act on the Arrangement of Related Acts to Promote Work Style Reform.” Labor and Employment Law Bulletin 40, July. https://www.amt-law.com/asset/pdf/bulletins9_pdf/LELB40.pdf
Sim, Walter. 2020. “Japan Takes Steps to Help Those Trapped in ‘Employment Ice Age’.” The Straits Times January 1. https://www.straitstimes.com/asia/east-asia/japan-takes-steps-to-help-those-trapped-in-employment-ice-age
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Hungary
Ideologically rooted policies pushed by the government hinder the development of an inclusive labor market. This has included a reluctance to address the gender pay gap, anti-migration policies and a lukewarm commitment to integrating Roma more fully into the labor market. Against the background of an aging society, a new program launched in January 2024, the Workplace Generational Transition Program, aims to facilitate the transfer of knowledge and skills from experienced pre-retirement employees to young people beginning their careers. Moreover, since 2021, personal income tax (PIT) for those under 25 has been waived if their salary does not exceed the gross national average income of the preceding year (PwC 2024). In 2023, Hungary adapted its legislation to open the labor market to non-asylum-seeking “guest workers” who can stay and work in Hungary for up to three years, with the chance to resubmit their applications afterward. The gender pay gap in Hungary is severe, and despite improvements in women’s employment rates in the 2010s, the COVID-19 pandemic induced a backlash. With regard to the Roma population, average educational attainments that are lower than the national average and a very low rate of white-collar employment make qualification a central issue. As the labor market modernizes and more demanding jobs arise, qualification becomes crucial. Since 2014, the numbers have improved, but the pandemic also induced a backlash here. Still, employment rates among Roma in Hungary are Europe’s highest within this population, and the gap with respect to the national average is much lower than in neighboring Slovakia or Romania. This may be rooted in the emphasis on Hungary’s state-initiated work programs. However, the problems affecting women in the labor force in the country disproportionately affect female Roma, leading to a high unemployment rate in this population. Discrimination against Roma seeking employment also seems to be growing (FRA 2023: 46). In 2022, Hungary adopted its Social Integration Strategy 2020 – 2030, a follow-up to the EU Roma Strategic Framework 2020 – 2030. It declares that equal access to public services for Roma women is a horizontal concern, but there appears to be no clear interministerial dialogue or stakeholder involvement. Harsh criticism comes from the Roma self-government environment, which accuses political parties in Hungary of serving their own agendas rather than solving the problems (Roma Civil Monitoring 2024).
Citations:
European Union Agency for Fundamental Rights, FRA. 2022. “Roma in 10 European Countries. Main results.” https://fra.europa.eu/sites/default/files/fra_uploads/fra-2022-roma-survey-2021-main-results2_en.pdf
Roma Civil Monitoring. 2024. “Hungary.” https://romacivilmonitoring.eu/countries/hungary/
PwC. 2024. “Hungary - Individual - Deductions.” https://taxsummaries.pwc.com/hungary/individual/deductions
European Union Agency for Fundamental Rights, FRA. 2022. “Roma in 10 European Countries. Main results.” https://fra.europa.eu/sites/default/files/fra_uploads/fra-2022-roma-survey-2021-main-results2_en.pdf
Roma Civil Monitoring. 2024. “Hungary.” https://romacivilmonitoring.eu/countries/hungary/
PwC. 2024. “Hungary - Individual - Deductions.” https://taxsummaries.pwc.com/hungary/individual/deductions
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Labor market institutions are not at all aligned with the goal of an inclusive labor market.
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