Labour market and social issues in the CR 2018 Federico LUCIDI DG Employment, Social Affairs and Inclusion
1. Labour market developments & assessment of CSR2
Q3-2000 Q3-2001 Q3-2002 Q3-2003 Q3-2004 Q3-2005 Q3-2006 Q3-2007 Q3-2008 Q3-2009 Q3-2010 Q3-2011 Q3-2012 Q3-2013 Q3-2014 Q3-2015 Q3-2016 Q3-2017 Strong labour market recovery in a context of continuing economic growth UR down from 11.2% in 2016 to 9.0% in 2017 (7.9% in Jan 2018) 85 80 75 % of population % of labour force 20 18 16 14 70 12 YUR (15-24) down to 22.8% in Q4-2017, from >40% in 2013 Employment growth by 3.3% in 2017, stronger than GDP 65 60 55 50 45 10 08 06 04 02 00 ER (20-64) at 73.7% in Q3-2017, back to pre-crisis levels Unemployment rate 15-74 (rhs) Activity rate 20-64 Employment rate 20-64
but some labour market slack remains 30 25 20 15 % of active population This contributes to explain moderate wage growth (estimated at 1.7% and 1.8% in 2017 and 2018, in line with inflation) 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Unemployed persons Persons available to work but not seeking Persons seeking work but not immediately available Underemployed part-time workers
Q3-2000 Q3-2001 Q3-2002 Q3-2003 Q3-2004 Q3-2005 Q3-2006 Q3-2007 Q3-2008 Q3-2009 Q3-2010 Q3-2011 Q3-2012 Q3-2013 Q3-2014 Q3-2015 Q3-2016 Q3-2017 More permanent contracts, though LM segmentation remains a key challenge Employment growth almost exclusively consisted of permanent jobs in the first three quarters of 2017 250 200 150 100 50 0 thousand persons y-o-y change However this was not sufficient to bring the share of temporary employees down (it remains stable at around 22%) -50-100 -150-200 -250 Around 85 % of temporary employees would prefer a permanent job Permanent employees Temporary employees Self employment Overall
Assessment of CSR2 Promote hiring on open-ended contracts, including by reviewing the legal framework. Ensure the effective activation of the long-term unemployed. Together with social partners, ensure that minimum wage developments do not harm employment of the low-skilled.
Assessment of CSR2 Promote hiring on open-ended contracts, including by reviewing the legal framework. Ensure the effective activation of the long-term unemployed. Together with social partners, ensure that minimum wage developments do not harm employment of the low-skilled. Limited progress: measures are discussed (e.g. Contrato-Geração, the revision of labour law to restrict the use of fixed-term contracts, and tax incentives for the use of permanent contracts) but not implemented yet. Commission assesses positively the involvement of social partners in tripartite negotiations, following up the publication of the Green book on Labour Relations.
Assessment of CSR2 Promote hiring on open-ended contracts, including by reviewing the legal framework. Ensure the effective activation of the long-term unemployed. Together with social partners, ensure that minimum wage developments do not harm employment of the low-skilled. Some progress: Almost all registered long-term unemployed people had a job integration agreement in 2016. One-stop shops for employment were introduced in the Budget for 2018 (implementation planned in April 2018). New ALMPs in 2017 (Contrato-Emprego and Prémio-Emprego) though coverage is limited. LTU rate is actually falling (now at EA average).
Assessment of CSR2 Promote hiring on open-ended contracts, including by reviewing the legal framework. Ensure the effective activation of the long-term unemployed. Together with social partners, ensure that minimum wage developments do not harm employment of the low-skilled. Some progress: The employment rate of low-skilled workers is comparatively high in Portugal and MW increases have not prevented their employment rate from rebounding. The Portuguese government publishes quarterly reports to monitor MW developments, which are discussed with social partners. Still, continuous increases in MW have increased the compression of the wage structure and this may reduce the skills wage premium.
High-skilled Medium-skilled Low-skilled Total Minimum wage developments Since 2014, the employment rate of low-skilled workers has increased by 5.9 pps (more than for medium-skilled) Employment by educational attainment, changes between Q3-2014 and Q3-2017, age group 20-64 300 250 200 150 8 6 4 Expansion in labour-intensive sectors such as tourism and construction helped 100 50 0-50 -100 2 0-2 -4 In a longer term perspective, the employability of low-skilled workers remains at risk Employment change (thousand) Change in employment rate (percentage points, right scale)
Reversing emigration trends? Net emigration continues to fall but remains negative from around 37 300 in 2012 to 8 300 in 2016 the crude net emigration rate has decreased over the same period from 3.6 % to 0.8 %. 40.5 % of permanent emigrants in 2016 were highly qualified Shortages in labour supply for low and high skilled workers? In the health sector a significant number of professionals are already recruited from EU and non-eu countries
The skills' level of the labour force remains very low In 2016 only 52% of those employed were mid-or high-skilled (EU average 82%) In particular among the over 40 (44% against 80% in the EU) Adult participation in training was 9.6% in 2016 (EU average 10.8 %) Only 50 % of citizens possess basic or above basic digital skills Recent Qualifica and Incode 2030 programmes Ambitious, but impact still to be assessed Effectiveness will depend on coverage and quality of training component
2. Social developments
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Continuing improvement in poverty and social exclusion indicators AROPE down from 26.6% in 2015 to 25.1% in 2016 (EU average 23.5%) According to national statistics, further down to 23.7% in 2017 30 25 20 15 10 % of population Labour market recovery is key driver of improvement 5 0 Monetary poverty also reducing, but at slower pace At-risk-of-poverty-or-social-exclusion rate At-risk-of-poverty rate Severe material deprivation People living in low work intensity households
but challenges remain Income inequality is reducing, but remains high S80/S20 at 5.9 in 2016 (EU average 5.1) National statistics point to a further reduction to 5.7 in 2017 In-work poverty remains stable and high 10.9% in 2016 (EU average 9.5%); 10.8% in 2017 according to nat. stats Issue in particular for temporary workers and families with children Tax and benefits system has a strong redistributive power, but its poverty-reducing impact is low and has decreased over recent years Housing affordability at risk, in view of increasing prices?
Recent measures could help increasing the impact of social transfers Updates in minimum income (RSI), solidarity supplement for the elderly, low pensions, family benefits and the IAS Still, minimum income coverage and adequacy are comparatively low New subsidy and scheme to improve the inclusion of disabled people Aims to improve their independence New rules for better access to social protection of economically dependent self-employed people In line with Social Pillar and recent COM Recommendation
3. PT and the social scoreboard
Equal opportunities and access to the labour market Dynamic labour markets and fair working conditions Social protection and inclusion PORTUGAL Early leavers from education and training (% of population aged 18-24) Gender employment gap Income quintile ratio (S80/S20) At risk of poverty or social exclusion (in %) Youth NEET (% of total population aged 15-24) Employment rate (% population aged 20-64) Unemployment rate (% population aged 15-74) GDHI per capita growth Impact of social transfers (other than pensions) on poverty reduction Children aged less than 3 years in formal childcare Self-reported unmet need for medical care Individuals' level of digital skills Critical Situation On average To watch On average On average On average To watch To watch To watch Best performers On average To watch MS are classified according to a methodology agreed with the EMCO and SPC Committees. Seven categories (from "best performers" to "critical situations") The methodology looks jointly at levels and changes of the indicators
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