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The Future of the European Job Market

By Paul Lirette, Senior Economist, CASE

In the last panel session of CASE’s 25th Anniversary Conference, CASE Vice President, Dr. Izabela Styczyńska, and a panel of distinguished guests discussed a range of challenges prevalent in the EU job market and how they relate to the European policy agenda. To set the stage, Dr. Styczyńska illustrated how the EU labor market has improved over the past year, with slight drops in both youth and overall unemployment in many Member States. However, despite these improvements, and the launch of programs such as the European Commission’s Youth Guarantee program, significant labor market challenges remain.

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Dr. Izabela Styczyńska

Professor Sue Maguire, Honorary Professor at the Institute for Policy Research at the University of Bath, built on this point by indicating that while youth unemployment has declined, it remains stubbornly high. Further, youth populations face increasing levels of precarious employment, which is particularly challenging for younger women, creating a tendency towards becoming discouraged workers. Professor Maguire stressed that while the Youth Guarantee program, introduced in 2013 at a cost of around 9 billion euro, is a welcome step in addressing this problem, less than three-quarters of these funds have been spent to date. Further, the program tends to address those that are ready to take a job and not necessarily those that are the most vulnerable, meaning there is a necessity to be more robust in the program’s outreach to all groups, especially the most vulnerable.

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Prof. Sue Maguire and Dr. Jaan Maso

Youth programs aside, labor mobility can also play a vital role in European job creation, as indicated by Professor Martin Kahanec, Professor at the Central European University in Budapest. With an EU that is characterized by lagging innovation and an ageing population, as well as job vacancies and unemployment, it is clear that promoting more fluid dynamics in matching job supply with job demand is required. Professor Kahanec argues that labor mobility, across sectors and countries, may be a key solution in bridging these job market gaps. His research shows that, in general, migrants are relatively more fluid than natives when it comes to labor movement, and, hence, could help address labor market skill shortages. In this respect, initiatives such as the Commission’s Erasmus programs can play a key supporting role.

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Prof. Martin Kahanec and Dr. Izabela Styczyńska

In discussing the effectiveness of the European Commission’s Entrepreneurship 2020 Action Plan, Dr. Jaan Masso, Senior Research Fellow at the University of Tartu, Estonia, discussed a recent study, in which he participated, that conducted interviews with self-employed Europeans. One result of the study showed that working conditions can be difficult for the self-employed, and particularly for the youth self-employed, but that they are relatively optimistic about future opportunities. In the study, financial issues (such as labor costs) were reported as the biggest hindrance for younger entrepreneurs in employing new people and growing their businesses. Dr. Masso underlined that there is significant potential for job creation in this segment of the labor force; one that remains largely untapped, and where targeted entrepreneurship education could be a potential solution.

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Dr. Jaan Masso and Prof. Sue Maguire

CASE Vice President, Dr. Izabela Styczyńska then put forward the question of whether or not Europe is on the right path to becoming a leader in job creation, relative to other major advanced economies. Professor Maguire admitted that this was a rather difficult question, but stated that competitiveness in the sense of labor exploitation would not be the right path for Europe. Instead, Europe should focus on competitiveness in its education system in order to create a better high-skilled labor force. Dr. Kahanec agreed with this assessment and added that welfare states in these types of comparisons should also be taken into consideration. A category in which the EU is doing relatively well, as demonstrated by the number of people wanting to live in Europe, is voting with their feet.

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CASE — Center for Social and Economic Research is an independent, non-profit economic and public policy research institution, established in 1991 in Warsaw.

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