Athens University of Economics and Business 31 May 2012

Transcription

1 Labour Market Flexibility & Pension Reforms: Flexible Td Today, Secure Tomorrow? Athens University of Economics and Business 31 May 2012 Matteo Jessoula Department of Social and Political Sciences University of Milan i it 1

2 K. Hinrichs & M. Jessoula Labour Market Flexibility & Pension Reforms. Flexible Today, Secure Tomorrow? Pl Palgrave, 2012 Download sample chapter

3 Structure of the presentation The empirical background Focus of the book, research questions, case selection Italy in comparative perspective framing the analysis main findings 3

4 After Flora s diagnosis (1986) In his analysis of the welfare state growth to limits, Peter Flora (1986) identified three major challenges to social protection systems: a) population ageing and need of a new intergenerational b) changes in the gender division of work new gender contract c) a shift in values calling for a new relationship btw the State/citizens/market All this required long and complex processes of institutional adaptation to preserve the capacity of welfare states to ensure socio economic security as well as equality in order to prevent system and social disintegration Within this framework, labour market flexibility was perceived as a potentially effective adaptive response to changed circumstances 4

5 Labour market flexibility, temporary and part time employment in Europe, % Temporary Part time Years 5 Source: OECD

6 Pension reforms Parametric reforms for cost containment and harmonization pensionable age reduced benefits strengthened contributions benefits link more explicit redistribution Structural reforms development ofsupplementary funded pillars spread of DC schemes 6

7 Focus of the book & research questions The volume analyzes the flexibility security nexus by focusing on the post retirement phase Does the interplay between pension reforms and the spread of atypical employment patterns negatively influences economic security in old age? Do reforms of public and private pension schemes compensate or aggravate the risks of increasingly flexible labor markets and atypical employment careers after retirement? The same analytical framework is employed to analyze developments in 7 European countries with ihdiverse pension systems, as well as different lb labor market arrangements and various degree of flexibility. 7

8 Case selection Traditional single pillar New multipillar Traditional multipillar countries countries countries Germany Poland Netherlands Italy Switzerland UK 8

9 What do we mean by ATYPICAL? JOBS non full time permanent contracts fixed term, part time, economically dependent workers (project workers) (self employed) EMPLOYMENT interrupted fragmented careers with several spells of unemployment and/or nonemployment (e.g. for child/elderly care) 9

10 A critical encounter (?) Coverage (gaps) Pension reforms & atypical employment First pillar Supplementary pillars Contributions rates... & benefits level Equivalence principle & actuarial neutrality Coverage of spells of unemployment and non employment 10

11 Framing the analysis Slow moving, macro transformations ti Low economic growth, post industrial economy, ageing, female mobilization L a b. M k t Flexibility/Job security ECONOMIC SECURITY in OLD AGE Income security 1. Poverty First pillar prevention Unemployment Non employment Employment security 2. Income maintenance Second pillar Thirdpillar P e n s i o n 11

12 The policy trajectories in Italy Labour market flexibility, EPL Overall ,0 3,5 3,0 2,5 2,0 1, ,0 0,5 00 0,0 Denmark Germany Italy Netherlands Poland Switzerland United Kingdom 12 Source: OECD

13 Incidence of fixed term employment (% of dependent employment), Time Denmark Germany Italy Netherlands Poland Switzerland UK EU Source: OECD

14 Incidence of part time employment (% of total employment), Denmark Germany Italy Netherlands Poland Switzerland UK EU Source: OECD

15 LABOUR MARKET FLEXIBILIZATION at the margin targeted to new entrants in the labor market % of total em mploymen nt ,3 6,1 3,2 The policy trajectories in Italy: Selective flexibility 13,3 8,6 47 4,7 16,2 9,9 63 6,3 19, Year 15 Permanent, part-time Temporary TOTAL 11,9 8

16 LABOUR MARKET FLEXIBILIZATION at the margin targeted to new entrants in the labor market WITHOUT (SOCIAL) SECURITY Exclusive UB system Weak ALMPs (Low employment rates) Policy trajectories: Selective flexibility 16

17 A segmented labor market and employment policy model Italy Poland Germany Netherlands Switzerland UK Denmark SEGMENTED LABOUR MARKET Stable EPL for regular workers Selective flexibility UB (more or less) exclusive Limited activation/almps Below average employment rates HOMOGENEOUS LABOUR MARKET Stable flexibility (but part time) UB inclusive/homogeneous + activation/almps High lab mkt attachment and employment rates 17

18 Policy trajectories: selective flexibility & defined contribution pensions LABOUR MARKET FLEXIBILIZATION at the margin targeted to new entrants in the labor market WITHOUT (SOCIAL) SECURITY Exclusive UB system Weak ALMPs (Low employment rates) PENSIONS 1 st PILLAR: shift to NDC for the new entrants in the labor market (after 1995) VOLUNTARY MULTI PILLARIZATION DC schemes only Possibility to convert pre existent severance pay TFR (to expand coverage) 18

19 Incisive pension reforms in Italy Public pensions projected replacement rates % Percentage point change Denmark Germany Italy Netherlands Poland UK Source: European Commission

20 Gross s Replace ement ra ate % AUEB Multipillar NDC +DC pensions and income maintenance Private employee retiring at 65 / 40 seniority Public + supplementary pension Public pension Elaboration on Ministry i of Wlf Welfare (2002) 20

21 (Pre)conditions for economic security in old age Coverage: both 1 st and supplementary pillars Contributions: full contributions (33% gw) g.w.) in the 1st pillar full contribution (9.3% including the transfer of the severance pay TFR) Long, uninterrupted careers Exit age : 65 years // seniority: 40 years BUT Exit age: 60.8 in 2009 // seniority: 32.1 in 2004 (Medium High income from work) 21

22 Coverage gaps AUEB The risky Italian combination Selective flexibility & defined contribution pensions First pillar NO, FULL COVERAGE Supplementary pillars LIMITED COVERAGE 30% ATYPICAL GENERALLY NOT COVERED Contribution rates and benefits level: REGULATORY DIFFERENCES 1 ST PILLAR some atypical workers disadvantaged: Pay less, get less Actuarial neutrality: Labour market performance Coverage of spells unemployment and non employment STRONG, DC + NDC MODEST, intermittent attachment of ATYPICAL w. ATYPICAL jobs NOT stepping stones LIMITED, atypical w. mostly excluded 22

23 1 pillar public 2 / 3 pillar TFR pensions supplementary pensions Private employees Medium high Yes No big firms/unionized sectors (r.r. 50% 55%) Public employees Medium high Generally Not Yes Private empoyees in small firms/ non unionized sectors (r.r.50% 55%) Medium high (r.r. 50% 55%) 55%) Generally Not Fixed term workers Low Generally not Yes, but Yes Project workers Very low (r.r. r below 30%) No No

24 INSIDERS Private employees in medium big firms Public employees Pension prospects, expected outcomes MID SIDERS Private employees smes Part timers Fixed term False self employed OUTSIDERS Not employed 24

25 Institutional (mal)adjustment Integratedversus dis integratingsystems integrating systems Germany Italy Poland UK Switzerland Denmark Netherlands Dis integrating systems Integrating systems Integrated systems 25

26 Basic (resource tested and minimum) retirement benefits as % of average earnings Denmark 36 Germany 19 Italy 22 Netherlands 31 The importance of preventing old age poverty? Poland 24 Switzerland 24 United Kingdom 28 26

27 Pensions and unemployment: critical challenge, major issue of concern, but Major issues of concern for Europeans (Eurobarometer)* Germany Poland Italy UK Denmark Netherlands Pensions 43% 39% 29% 25% 10% 10% Unempl. 47% 53% 34% 13% 3% 5% * Multiple responses allowed, total is not 100% 27

28 The Dutch way to integration flexicurity also in old age Coverage gaps First pillar NO, UNIVERSALISTIC Supplementarypillars pillars HIGH COVERAGE 90% REGULATORY CHANGES TO INCLUDE ATYPICAL WORKERS (PT/FT) Contributions rates and benefits level SOME VARIATION IN 2 ND PILLAR Equivalence principle/actuarial neutrality LOW, GENEROUS FLAT RATE 1 ST PILLAR DB SUPPLEMENTARY SCHEMES Coverage of spells of unemployment and non employment Labour market performance STRONG 28