A REVIEW of LABOUR MARKETS in the 1980S

Home , 1980s, 1988 in Italy

Chapter 2 A REVIEW OF LABOUR MARKETS IN THE 1980s

A. INTRODUCTION in Ireland and Turkey, the two OECD countries where birth rates had remained high into the 1970s [OECD ( 1990a, Chapter 1)I. Beginning and ending in recession, the 1980s were The peaking of the youth population warned that characterised, from 1983 to 1989, by a sustained future decades would see older working populations increase in employment and by wage moderation, and higher ald-age dependency rates. This long-term Huwever, this was accompanied by continuing high trend will normally only be be reversed when the num- levels of unemployment and record levels of long-term bers of young people rise again, which in turn can only unemployment, There was an increase in the preva- happen many years after a recovery in birth rates. lence of non-standard forms of employment and a slowing growth of government employment. During +..birth rules remained low, excepf in u Jew the decade, the number of young people reaching cuu n tries working age attained its peak and most OECD coun- Until recently, there seemed ta be no sign of recov- tries entered the 1990s with the prospect of diminish- ery in birth rates in OECD countries - rather the ing numbers of younger workers for years to some reverse. The formerly high-fertility countries of Italy come. and Spain became those with the lowest levels in The chapter treats the developments in OECD Europe (1.3 children per wornan in 1989). Even in labour markets in the 198Os, with the aim of highlight- Ireland the fertility level fell rapidly over the 1980s, to ing some of the implications for policy in the 1990s. It begins with population trends and proceeds to changes no more than replacement level (2.1) in 1989 [Monnier (‘ 19!9O)], in employment, unemployment and wages. Special However, since 1983 there have been new develop- emphasis is given to developments in migration, to ments in a number of Member countries, Sweden’s “non-standard’’ forms of employment and to trends in total fertility rate rose sharply from 1.6 children earnings. Policy implications are discussed in the con- per woman in 1983 to 2 in 1989, the fastest rise seen in cluding section. OECD countries for at least twenty years. It may have risen further in 1990, and similar though smaller rises have occurred in some of the other Nordic countries. Even in western Germany, the fertility rate climbed 3. MEDIUM-TERM POPULATION from a record low of 1.3 in 1985 tu 1.4 in 1989’. AND LABOUR FORCE Meanwhile, total fertility in the United States rose DEVELOPMENTS from 1.8, its level over much of the decade, to 2 in 1989. To some extent these rises are considered to be 1. Medium-term trends in population due to women “catching up” on births they had post- poned, a phenomenon which can be seen to a lesser The youth populution reached its peak daring the extent in some other countries. decade... Fureign p~pukti~mgrew a litlie faster, as numbers Almost all Member countries entered the 1980s with of refugees and asylum-seekem ruse record numbers of young people aged 15-24, newly- arrived into the warking-age range. The main excep- From the beginning of the 1980~~the growth rate af tions were Finland and Japan (and, less notably, the total foreign (non-national) population in Europe Switzerland and Sweden) where the peak in the youth began to increase, after two decades of general slow- population had come earlier. However, by the begin- ing, even of absolute decline. Zn 1989, the maximum ning of the 1990~~the upward trend was at or beyond proportion of foreigners in the total population was its peak almost everywhere. It continued upward only 27 per cent in Luxembourg and 15 per cent in

29 Table 2.1. Net migration rates Average rates of net migration (entries minus exits) per thousand population for the periods shown

1963-72 1973-78 1979-82 1983-87 1988 1989

Australia 7.8 3.3 6.7 5.6 9.3 9.1 Austria 2.2 0.2 0.1 0.9 1.7 4.1 Belgium 0.9 1.2 -0.4 0.0 2.2 2.2 Canada 3.1 4.2 ’ 2.7 0.8 4.5 5,3 Denmark 1.o 0.3 0.1 1.3 1.C 0.6” Finland -3.7 -1 .o 0.2 0.7 0.2 0.2 France 2.7 0.9 0.8 0.46 0.6 Germany 7,2 0.7 2.6 03 5.7 11.8 Greece -4.F 3.3 2.8 0.P 1.5’ 2.5 Tmland -2.9 -2.7 -0.3 -0.1 4.4 0.6 Ireland -0-4 4.5 -1,l -6.2 -10.0 -10.9 Italy -0.8 0.v 0.4 1.6 1.3 0.9 Japan -0.1 4.1 0.0 -0.1 4.2 4.1 Luxembourg 6.9 7.4 1.7 2.9 53 6.9 Netherlands 1.6 2.4 2.0 1.6 2.7 2.1 New Zealand 2.0 1 *!I -2.7 -0.2 -3.0 -3.9 Norway 0.7 1.1 1.1 1.7 2.7 0.8 Portugal -12.8 6.7 -2.7 2.3 1.1 1.0 Spain -0.7 0.4 0.4 -0.2 -0.6 Sweden 2.4 1.5 0.8 1.4 3.0 4.4 Switzerland 2.0 -3.5 2.6 2.5 4.6 5.1 Turkey 0.1 1.1 0.1 United Kingdom -0s -0.6 -0.4 0.6 0.3 4.1 United States 1.5, 1.8 3.0 2.7 2.7 2.6 a) Figures exclude 1988. b) Figures exclude 1987. c) Figures exclude 1972. dJ Figures exclude 1977. Smme I OECD Labour Force Statisth, I959-J989, Paris, 1991.

Switzerland, while remaining under 10 per cent else- theoretical analysis of the impact of migration trends where in Europe [OECD (1989)]+Over the last twenty on population ageing. The conclusion is that it is highly years, migrants have tended to come from higher fer- unlikely that migration could be used to prevent a tility countries. However, once settled in their new long-term decline in population, nor even its progres- countries, they are strongly influenced by indigenous sive ageing. Both would requite the admission of new national behavlour and fertility differentials tend to migrants at a very much higher rate than seen over decline? Indeed, the fertility of the foreign population recent decades. drapped under replacement level in several countries, Very broadly, while in the 1960s migration could be primarily chamterised as a search for empioyment and, in the 1970~~as, family reunion, in the 1980~~a 2. Medium-term trends in the labour farce and in continued increase in the flow attributable to family participation reunions was accompanied a rapid growth in the by Labour force gruwlh S~QW~X~in North America ,. numbers of refugees and asylum-seekers and, from the middle of the decade onwards, a significant spurt in the Labour force growth over the period 1980-88 was, at numbers of new immigrant workers. Remarkably, over 1.3 per cent, only slightly lower than the annual aver- the decade, virtually all QECD countries became age of 1-4 per cent recorded in the 1970s. The differ- countries of net immigration (Table 2.1). The southern ence was almost entirely due to the sharp decline in the European countries (notably Greece, Italy, Portugal growth rate in North America, from 2.6 to 1.6 per and Spain) received major flaws of migrants from cent. For the QECD region as a whole, at least three developing countries, from the middle of the decade quarters of the increase in the labour force could be on wards. attributed to the growth in the population of working While migration added to the total populations of age, the rest to changes in participation rates [UECD Member countries, it remained too low ts “rejuvenate” ( I. 990t.1, Table 1.1 )I. In some countries, migration them by lowering the average age, especially given the played an important role. The female labour force tendency for migrants’ fertility rates to approach the grew about 50 per cent faster than the total overall average? OECD (1991, Chapter V) gives a (Table 2.2).

30 . . :.a,> , i . . L. ,I _. ..., , 1

Table 2-2. hbur force grawth, 1960-1989” Annual average growth rates in percentages

Females 1950-70 1970-880 1980-89 1960-70 1970-80 1980-89

Nortb America 1.8 2.6 1.6 3.2 3.9 2.4 Canada 2.6 3.2 1.7 4.9 5.1 2.9 United States 1.7 2.5 1.6 3.1 3.7 2.3 1.3 0.9 1.2 1.0 0.8 1.7 Centrat and Western Europe 0.4 0.6 0.7 0.7 1.5 1.6 Austria -0.6 0.1 1.1 -0.7 0.1 1.7 &lgiurn 0.5 0.8 0.2 1.1 2.2 1.4 France 0.7 0.9 0.4 1.4 2.0 1.3 Germany 0.1 0.4 0,7 -0.3 0.9 1.2 Ireland 0.0 1.1 0.4 0..1 2.2 1*2 Luxemburg 0.6 1.3 z,5 0.8 2.6 3.0 Netherlands 1.1 1.1 2.4 2.0 3.8 5*1 Switzerland 1.5 0.1 1.2 1.4 0.7 1.7 United Kingdom a3 0,6 0.7 1.1 1.6 1.7 SoutBern Europe 0.2 0.8 1.3 -0.0 1.8 3.2 Gtm -1.o 0.5 1.6 -2.4 1.2 3.9 Italy -0.5 023 0.8 -1.2 2.3 1*9 Portugal 0.5 2.0 0.8 4.2 6.6 1.5 Spain 03 0.4 1.3 1.s 2.3 3.4 Turkey 1.0 0.8 1.9 0.4 0.2 1.7 0.7 13 0.7 1.9 2.7 1.3 1.3 1.1 0.9 3.6 2.5 1.3 0.2 1.2 0,s 0.2 1.8 0.7 2.0 2.5 3.3 3+6 4.0 4.8 0.7 2.2 1.2 1.3 5.4 2.1 0.7 1.Q 0.3 2.3 2.4 1.2 && 2.7 1*9 2*3 5.1 3.3 3.8 Australia 2.8 13 2.4 5.4 3.2 3.6 New Zealand 2.2 1.3 2.1 3.8 3.5 4.8 0.3 0.7 0.9 0.5 1.7 1.8 Q.3 0.7 0.8 0.5 1.9 1.8 1.0 1.4 1.3 1.5 2.3 2.0

among mothers with young children, For example, the Canadian participation rate of mothers with children under 3 rose from 32 per cent in 1976 to 56 per cent in 1986. For mothers with children between 3 and 5, it The general rise in female participation rates contin- went up from 41 to 62 per cent, and for those with ued over the 1980s, albeit at a lower rate than in the children between 6 and 11, from 50 to 68 per cent 1970~~.By the end of the decade the general pattern of [OECD (1990a, p.l25)]. The gap between the partici- the 1970s was still evident. The highest rates were pation rates of women with younger and older children found in the Nordic countries, followed by North thus declined in Canada, As shown in QECD (1990a, America and the United Kingdom. Japan, Australia Chart 5.1) this appears to have been a general and New Zealand were near the top of the remaining tendency. countries, Ireland and the southern European countries The spread of participation rates of young people (with the exception of Portugal) generally had the low- across the Member countries is wide, reflecting in part est rates (Chart 2.1 ). the different propensities to combine warking and edu- These rises in overall female participation rates were cation. Over the decade the rates for teenagers, espe- driven by gains in the middle age ranges, particularly cially male teenagers, fell in mast countries, though

31 Chart 2.1

Female labour farce participation rates a Percentage

90 Canada Australia 80 1y__P

66, Japan 50

40 New Zealand United States 3c 3.-.1,-*

G-4 __20 70 72 74 76 78 80 82 84 86 3883 70 72 74 76 73 80 82 34 86 8889

YO 5% 90 90 Austria Greece 8C 8Q Denmark 7G 70 Italy Finland - 60 60 Po ftugal Noway 50 50 ----I

Switzerland 40 40 ...I.llt.L.IL. Sweden 30 30

I2cr 70 72 74 76 78 30 82 84 86 8889 70 72 74 76 78 80 82 84 88 8889

0x3 90 90 Belgium United 8C 80 Kingdom

7Q 76 France Netherlands 60 60

Germany 50 Luxernbourg

4c. 45 Iceland Ireland 36 30

-7i3 -. 20__ 70 72 74 76 78 80 32 84 86 8889 70 72 74 76 78 80 82 84 86 8889

a) Ratio of female labour force of ail ages to popuiation aged 15-84. SOUPX OECD Labour Force Statistics, 1969-1989. Chart 2.2

Participation rates of older men a Percentage

Canada Australia

Japan

United States New Zealand

70 72 74 76 73 80 82 84 86 8889 70 72 74 76 78 80 32 84 86 8889

YO Yo

Finland

Noway Portugal

Sweden

70 72 74 76 78 80 82 84 86 8889 70 72 74 76 78 80 82 84 €36 8889

United -Kingdom----

Netherlands

Germany Ireland

-.. CV 70 72 74 76 78 80 82 84 86 3339 70 72 74 76 78 80 82 84 86 8889

a) Male labour force aged 55-64djvjded by male population aged 55-64. b) Ages 60-64. Table 2+3. Trend in the share of foreigners or immigrants in the total labour force of selected OECD countries

A. EUROPEAN CUlJIYTRIES Total labour force (thousands) 1980 1989 1980 1989

Austria 3 315 3 454 5.4 5.2 Belgium 4 155 4 217 8.0 9.8” France 23 374 24 274 6.2 6.5 Germany 27 217 29 774 7.8 6.6 Luxembourg 159 I. 72 326 283 Netherlands 5 406 6 714 3.5 2.9 Sweden 4 318 4 529 5.4 5.2 Switzerland 3 176 3 538 15.3 17.9 u) Data for 1987. Sowces : OECD Labour Force Slolissics, 1969-89, Paris, 1991; and “!3SOPEMI 1989”, OECD Directorate for Social Maim, Manpower and Education, Pa&, 1990,

Share of foreign-barn pcmm in: Total population (thousands) total population total labour €mix (percentages)

Australia 1971 12 756 20.0 24.5 1931 14 576 20.6 25.7 1936 15 602 20.8 26.W Canada 1971 21 568 15.3 20.2 1981 24 343 16.1 20.1 1986 25 353 15.6 21.9 United States 1970 205 052 4.7 5.3 1980 227 757 6.2 6.7 1990 249 632 8.3b a] 1989. b) F%Q*iOnal results. Suum : Censuses or labour force 8umy8, sec “SOPEMI 1989”, OECD, 1990.

Canada and Norway were cases where they rose signif- inflows of foreign workem, lower than in the 1970~~ icantly. By the end of the decade around 60 per cent of rose in the second hay of the 1980s Canadian teenagers were in the labour force. In France ‘In several OECD countries, inflows of foreign wark- the corresponding figures were under 10 per cent for nen. ers, while iawer overall than in the 1970~~ruse from young men and under 15 per cent for young wc the middle of the 1980~~coming both through regular channels (as temporary, permanent or seasonal workers) and illegally. In France, the United States, Spain m the purficipatian older men deched ... of and Italy, a substantial number of illegal immigrants Participation rates of older men (55-64) con inued were granted regularisation of their status their decline, dropping to levels of under 50 per cent in [OECD (1989)]. However, the share of legal immi- several countries, including Finland, France and the grants in the total labour force remained stable in the Netherlands. However, the level in Japan was still over European countries (with the exception of 80 per cent. In several countries there were signs of Luxembourg and Switzerland) while rising slightly in some recovery in the rates towards the end of the other countries (Table 2.3). Southern European coun- decade, perhaps reflecting moves away from policies to tries received substantially higher flows of immigrant encourage early retirement (Chart 2.2) and stronger workers from developing countries, employed mainly in labour demand. agriculture, small-scale manufacturing and services.

34 C. EMPLOYMENT AND cluster roughly around 1979 or just after as a peak PRODUCTIVITY GROWTH year, and 1983 as a trough, and, for the sake of sim- plicity af presentation, these are the years generally used for each country in this chapter. When appropri- Qverull output, empluyment and productivity growth ate, the decade is taken to be the period 1979-1989, ratesfQr the OECD area as a whole were similar tu considered as one complete cycle, and is compared thaw of the 1970~. with the previous cycle, 1973-1979. This ignores a cer- The level of employment and unemployment is tain number of peaks and troughs identified in the strongly influenced by the state of the economic cycle period 1983-1987. and comparisons over time are best made over similar Comparing the 1979-1989 cycle with the previous periods. For most countries, the 1980s may be roughly one, 1973- 1979, reveals rather similar patterns of real divided into two periods; a recession at the very begin- output and employment growth for the OECD area as ning of the decade, foilowed by a long recovery - the a whole, at around 2.8 per cent per annum on average longest of the post-war era - lasting almost until the far output, and 1.1 per cent for employment end. As part of its cyclical indicators programme, the (Tables 2.4 and 2.5). As a result, productivity, mea- QECD Secretariat establishes a chronology of the sured as real output per person employed, also grew at dates of peaks and troughs for gross national product a similar pace during both cycles, at around (see the Annex to this chapter). The dates for GDP 1.6 per cent per annum (Table 2.6). However, within

Table 2.4. Growth of real GDP Annual a.verage growth rates in percentages

1940-58 1968-73 1973-75 1975-79 1979-83 1983-89 1973-79 1979-89

North America 4.5 3.0 -0.9 4.3 0.7 3.9 2.6 2.6 Canada 5.5 5.4 3.5 4.7 1.1 4.3 4.3 3.0 United States 4s 3 .U -0.9 4.3 0.7 3.9 2.6 2.6 10.1 8.8 1.0 4.9 3.3 4.6 3.6 4.0 Central and Western Europe 4.1 4.7 -0.2 3.5 0.8 2.9 2.2 2.0 Austria 4.1 5.6 1.8 3s 1.4 2.5 2.9 2.0 Belgium 4.5 56 1+3 2.8 1.3 2.6 2.3 2.0 France 5.4 5.5 1.4 3.5 1.5 2.5 2.8 2.1 Germany 4.0 4.9 -0.6 3.9 0.6 2.8 2.3 1.9 Ireland 4.2 4,7 3.2 3.9 0.7 2.2 3.7 1.6 Luxembourg 3 .o 5.8 -1.3 2.6 1.1 4.7 1.3 3.3 Netherlands 5.0 4-7 1.9 3.0 0.1 2.7 2.6 1.3 Switzerland 4.4 4.6 -2.8 1.1 3.5 2.8 -0.2 2.3 United Kingdom 3.0 3.3 -1.1 2.9 0.5 3.4 I .5 2.2 Southern Europe 5.9 4.9 1.6 4.4 1.6 3.2 3.5 2.5 Greecj: 7.3 8.2 1.1 5,o 0.6 2.3 3.7 1.6 Italy 5.7 4.6 1.3 4.9 1.7 3,l 3.7 2.4 Portugal 6.6 7.4 -1.6 5.5 2.0 3.2 3,l 2.7 Spain 7.5 6.6 2.9 1.9 1 .o 3-8 2.2 2.7 Turkey 5.8 6.2 7.7 3.5 2.7 5.3 4.9 4.2 Nordic countries 4.3 4.2 2.4 22 1.6 28 2.3 2.3 Denmark 4.4 4.0 -0.8 3.3 1.o 2*1 1.9 1.7 Finland 33 6.5 2.1 2.4 3.4 3.8 2.3 3.7 Iceland 4.6 7.0 3.6 6.8 1.9 3.1 5.7 2.6 Norway 4*4 4.1 4.7 5 .o 2.5 3.1 4.9 2.8 SWedGn 4.4 3,8 3.0 1.2 1.1 2.6 1.8 2.0 Oceania 4.9 5*3 1.8 2.9 1.5 4.5 2.5 3.3 Australia 5.0 5*3 1.8 3.0 1.5 4.5 2.6 3.3 New Zealand 3.0 5.1 2.4 -0.9 2.0 1.8 0.2 t .9 4.3 47 0.0 3.6 0.9 2.9 2.4 2.1 4.3 4.7 0.0 3.6 0,9 2.9 2.4 2.1 5.2 4.2 4.4 4.4 1.3 3.9 2.8 2.9 - Aggresates were computed on the Wis of 1987 GNP/GDP weights expresswl. in 1987 US dollars. Swce : OECD Econwnic 6Wftwk. Na 48, aecemtrtF 1990.

35 Table 2.5. Growth a€ total employment Annual average growth rates in percentages

1960-68 1968-73 1973-75 1975-79 1979-83 1983-39 1973-79 1979-89

North America 19 2.4 0.7 3.5 0.5 26 2.6 1.7 Canada 3+1 2.9 2.9 2.9 0*7 2.6 2.9 1.8 United States 1-8 2.3 0.5 3.6 0.5 2.6 2.5 1.7 1.5 1.o -0.3 1.2 1.1 1.1 0*7 1.0 cmw d Wmmn Europe 0.3 0.6 -0.8 0-4 4.5 I*@ 0.0 0.4 Austria -0.6 0.2 -1.2 0.9 0.4 0.6 a2 0.5 kl@m 0.6 0.6 0,O 0.0 -1.1 0.7 0.0 0.0 Franm 0.4 1,l -0.1 0.5 -0.2 0.2 0,3 0.1 Germany 4.1 OS -2,l 0.4 0.1 03 4.4 0.5 Ireknd 0.1 0*1 0.3 1 +6 -0.5 -0.5 1.2 -0,5 Luxemburg 4.1 2.9 2,o -0.1 0.1 2.4 0.6 1.5 Netherlands 1.1 OS -0.3 0.5 -1.3 1.3 0.3 a1 Switzerland 1.4 1.5 -2.5 -0.1 1.3 0,3 -0,9 0.7 United Kingdom 0.3 0.2 -0.2 0.4 -1.6 2.0 0.2 0,6 0.1 0.5 1.2 0.4 0.3 1.2 0.6 0.8 -0.9 0.3 0-1 0.9 1.7 0.6 0.6 1.o -0s -0.3 1.3 0,7 0,4 0*4 0.9 0.4 -0.3 0.6 5.9 097 1,6 1.2 2.4 1.4 0.6 0.9 4.4 -1.3 -2. I 1.6 -1.a 0.1 0.8 1.2 1.6 1.1 1.3 2.3 1.3 1.9 0*4 1,0 1.1 1.a 0.5 0.9 1.1 0.8 0.7 1.3 -1.4 1.2 -0.3 1.2 0.3 0.6 -0.3 0.9 1.3 0.4 1.J 0.6 0.7 0.9 1*7 2.9 2.6 1.9 2.9 2.8 2.2 223 0.6 1,0 1.6 2.2 0.6 1 *o 2.0 0.8 0.4 0.7 2.3 0.7 0.3 0.9 1.3 0.7 ikxmia 2.4 2.6 1.2 03 0.6 29 1.0 2.0 Australia 2.5 2.7 0.8 0.8 0+8 3.4 0.8 2.4 New Zeaknd 2.1 2.2 3.0 I. .0 0.1 8.4 z -7 0.3 0.3 0,6 -o*o 0.4 4.2 1.1 0.3 0.6 0.1 0.5 -0.2 0.3 4.5 1.0 0.2 u.4 1.0 1.2 0.2 1.6 0.3 1.6 1.1 1.1

the OECD area, while the relatively rapid rate of pro- OECD Europe, Qver 1 979- 1989 these regional differ- ductivity growth in Japan continued at around 3 per ences were less pronounced (Chart 2.3). Employment cent, there were changes in both North America and growth slowed in North America but improved in OECD Europe, resulting in some convergence between Europe and the gap between the productivity growth them, rates fell to 0.7 per cent. In the 1983-1988 recovery, this gap was even smaller (Table 2.6). During the 1983- 1988 employment growth ... and the gap between OECD Eurupe and North recovery, Americu narmwed for the area as a whole was, once again, very similar to that seen in the 1975-1979 recovery, at 1.6 per cent in One of the striking features of the 1973-1979 cycle both cases. There was a significant deceleration of was that, while average output growth in OECD employment growth in North America, but the region Europe and in North America was similar, at around still pasted one of the fastest rates over the recent 2-5 per cent per annurn, North American employment recovery, at 2-6 per cent, a little behind Australia. growth was much faster, at 2.5 per cent as against OECD Europe recorded an employment growth rate of 0.3 per cent. Productivity growth was thus close to zero only 1.1 per cent, though this was considerably higher in North America, as opposed to just over 2 per cent in than the figure of 0.4 per cent recorded in 1975-1979.

36 Table 2*6+ Growth of productivity (GIIP per person in employment) Annual average gmwtb rates in percentages

1960-68 1968-73 1973-75 1975-79 1979-83 1983-89 1973-79 1979-89

Nod America 2s 0.7 -1.5 0.8 02 1.3 0.0 0.8 Canada 2.3 2+4 0.5 1.8 0.4 1+6 1.4 1.1 United States 2.6 0.7 -1.3 0.7 0.2 1.3 0,o 0,9 8.5 7.7 1.4 3.6 2.1 3.4 2.9 2.9 Central and Wmtm Europe 33 4.0 0.6 3.1 1.3 1.8 2.2 1.6 Austria 4.7 5.4 2.9 2.5 1.o 1.9 2.7 1.ti hlgium 4.0 4.9 1.3 2.8 2.4 1.8 2+3 2.1 France 4.9 4.3 1.5 3.0 1.7 2.4 2.5 2.1 Germany 4.1 4.3 1.5 3.5 0.5 1.8 2.8 1.4 Ireland 4.1 4.6 2.9 2.2 1.2 2.3 2.4 2.1 Luxembourg 3.1 2.8 -3.3 2,7 1.o 2.3 0.7 1.7 Net herlands 3.8 4.1 2.2 2.4 1.4 1.4 2.3 1.4 Switzerland 2,9 3.1 4.4 1.2 0*2 2.4 0.7 1.5 United Kingdom 2.7 3.1 -0.9 2.5 2.2 1.3 1.3 1.7 soytbene Europe 5.9 4.4 0.4 4.1 1.3 1.9 2.8 P"7 Greece 8.3 7.9 1.o 4.1 -1.o 1.7 3.1 0.4 Italy 6.2 4.9 0.0 4.1 1.3 2.7 2.8 2.1 Portugal 6.9 6.7 -7,l 4.7 0,3 2.0 0.6 1.3 spain 6.9 5.7 3.3 3.2 3,2 2.2 3.2 2.6 Turkey 5 .o 5.0 6.0 2.4 1.3 2.9 3A 2.3

Nordic Couaajes 3.9 3.2 L3 1.2 1.2 1.9 1.2 1.6 Denmark 3.7 2.6 0.6 2.0 1.3 0.9 1.5 1.1 Finland 4.0 5.7 0.7 2.0 1.9 3.3 1.6 2.7 iceland 2.8 4.0 1.O 43 -1,Q 0*3 3.5 -0.2 N~rway 3.8 3.0 3.0 2.7 1.9 2. I 2.8 2,Q Sweden 4.0 3 .O 0.6 0.5 0.8 1.7 0.5 1.3 umda 2.5 2.7 03 2.1 1.5 1.6 1.2 Australia 2-4 2.6 03 2.2 0.7 1 .o 1.8 0.9 New Zealand 0.9 2.8 -0.6 -1.9 1.9 1.3 -1.5 1.5 3.9 dl 0.0 3.1 1.1 1.8 2.1 1.5 4.1 4.2 0.2 3.3 1.4 1.9 2.3 1.7 41 2.9 -0.6 2.8 1.0 2.3 1A I' 1.7 Aggmgataa computed on the Wi of 1987 GNP/GDP weightg expressed in 1987 US dollars. Sotrrm : OECD EecOudd, No. 48, December 1990.

The fa!/ in average llnnual hours wurked sluwed D. MEDIUM-TERM TRENDS UNEMPLOYMENT The long-term decline in annual average hours of I" work per person in employment slowed in several countries during the 1980s. In some countries, including The 1980s were u decode of high unemployment... Canada, Japan, Norway and the United States, the trend levelled off while in Sweden it even turned By historical, post-war standards, the 1980s were a upwards (Chart 2.4). decade of particularly high unemployment. For the Making an adjustment for the changing trend in OECD area as a whole, the average unemployment hours of work alters the relationship between the rate for the years 1980-1989 was 7.3 per cent, com- trends in productivity in the 1980s and 1970s. Because pared with just under 5 per cent during 1974-1979 the downward trend in hours was stronger in the (and a similar figure over the whole period since 1960). 197Os, it produces a larger upward adjustment in the Each Member country was affected by this rise in 1970s than in the 1980s. While the overall trend in average unemployment from cycle to cycle, with the productivity over the two decades was slightly faster in possible exception of Turkey, the 1980s on the output per person measurep it was Despite the long recovery, by 1989 the unemploy- slightly lower on the basis of output per work-hour. ment rate in the majority of OECD countries was still

37 Chart 2.3

Comparisons of cyckal changes in Europe and North America

1973-79 Growth of employment

Unemployment (reversed scale)

3 979-89 Growth of employment

.. . .. QECD Europe

,...... C < --+*<,-.,HH -,,,* r,..,....,...... ,c- North America Sources and nates: Unemployment (reversed scale) See Tables 2.4,2.5, 2.6 and 2.7. Chart 2.4

Average annual hours worked per person employed Index 1980=100

All employed persons All employed persons 120 f 20

118

114 114

112 112.

1 la 1 Ifr

108 108

1 08 106

104

102 1 02

10c 100

98 98

-France Emplayees only Italy 120 Spain

1 = - United States 1I@

1 I4

112 I10 108

104 -France 1oa Germany a .. 0 ...*.Netherlands a 1OQ -Spain 98 1m-m- United States 98

94 a) There was a change in the method of calculating contractual working hours in 1987. Estimates fat earlier years have been linked to the new estimates using the 92 ratio of new and previous estimates for 1987. Sorrrce: 9C Table L, Statistical Annex and for definitions. sea Annex 1.I3 in OECD €m&wnenf.* 70 72 74 76 78 80 82 84 86 88 90 UUt~O~il990. Unemployment rate. lncidmxe of long-term unemployment*

Average 188 1-8P 1989 1975-8Qs 19''

North America ti7 5.9 7.3 5.4 56 4.2 93 5-9 Canada 7.2 ?,4 9.3 7.5 2.9 3.2 3.3 6.3 United Statcs 6.7 5.8 7.2 5.2 5.9 4.3 9.1 5.7 1.9 2.1 as 23 36.0 16.4 16.4 18.7 cellllad wegtern Entrolp 4.4 4.8 8.5 7.3 32.6" 46.0 46.9 Austria 1-7 1.8 3.7 4.3 13.1 &!lgiUm 6.3 8.2 10.8 8.1 619 703 763 France 4,s 5.9 9.0 9.4 27.1 32.6 43.6 43.9 Germany 3.2 3.2 5.9 5.6 28.76 45.0 49.0 Iteland 8.4 "1.3 15.2 17.8 332 62.7 67.3 Luxembourg 1,6 1.4 Netherlands 4.9 5.4 9,7 8.3 3 5:sd 51,O 493 Switzerland 0.3 0.5 United Kingdom 5.0 5.0 10.0 7.1 29.56 44.4 40.8 slw4hm Eurrrple .. b. 12*9 31x4 I* .. 60.0 629 43- 23 3.1 43.0 52.4 Italy 6.6 7.6 9.5 10.9 $1.2$ 64.6 70.4 Portugal 7.3 5.0 53.7 43.3 Spain 5.2 8.4 17.5 16.9 28.4 32.8 55.4 58.5 Turkey 6.2 6.0 Ndecmntrb 2.6 3,1 3.2 2.8 .. 19.8 16.5 Denmark 5.8 53 8.9 9.4 36.26 31.6 25.9 Finland 4.4 5.9 4.9 3.4 27.0 183 5.9 NOrWaY 1.8 2.0 2.7 4.9 3.1 3.3 7,7 11.6 Sweden 1.9 2.1 2.5 1.4 6.0 5.5 9.1 6-5

mads *a .. 6.9 6.3 . .. 3. ** Australia 5,o 6.2 7.5 6.1 I 7.8 19.9 26.3 23.0 New Zealand 5.1 7.1

4.7 5.6 9.2 8.6 .I 31.56 52.0 52.8 4.8 5.7 9.6 9.0 .. 32.r 52.8 53.7 4.9 51 7.3 6.2 .. 26.e 33.3 33.7

a) Standard& unemployment rates, from labour farce surveys, except in the: case of Austria, Denmark, Greece, Luxembourg, Switzerland and Turkey, where m3bttration data haw been Used, b) Uncmploymmt for twlw months and wtr. Data am from household sumy sources, except in the case of Austria, whew registration data have been used. c) Or adjacent years. dJ 19'19. 8) Awmp of data for 1979 or 1980. Sowraf ; OKDQuurtcdy Labour FmeStaWks, No. 2,1991, for uncmploymcnt; Secretariat data bank for long-term unemplopont (see Statbtical Annex, Tabb M and PI.

higher than in 1979. Only Finland, Portugal, Sweden for long-term unemployment was "extremely bleak". and the United States recorded noticeably lower Since then, long-term unemployment has indeed risen, figures and, in many countries, the figures were strik- both absolutely and as a percentage of total unemploy- ingly higher (Table 2.7). ment. It was one af the main features of the labour market of the 1980s. In 1980 lang-term unemployment was around a quarter of total unemployment on average for QECD countries. By 1989, the corresponding figure was The first edition of the Employment Uuthok, in 34 per cent5 (Chart 2.5 and Table 2.7). For those 1983, observed that, at the time of writing, the outlook countries where data are available on a consistent,

40 internationally comparable basis for 1975- 1980 and sented a decline from an average of 2-2 in 1979. Youth 1.980-1989, there is evidence of a substantial rise in the unemployment rates actually fell over the period in proportion of long-term unemployment from one cycle some countries. The unemployment rates for women to the next. also tended towards the overall average, though The incidence of long-term unemployment remained remaining significantly higher than those of men in much lower in North America; 6.8 per cent in Canada most countries (Table 2.8). and 5J per cent in the United States, in 1989, respec- Partly owing to these changes in the structure of tively. In North America the rate of flows into and out total unemployment, and to other changes in the of unemployment is relatively high and most unem- labour force by age and sex, the composition of the ployment spells are short*Compared to many countries long-term unemployed altered. In many countries the of OECD Europe, in North America job search and proportion of young people dropped sharply, halving in hiring are relatively familiar activities for workers and several cases. employers, respectively [UECD ( 199011, p. 1 3) 1. Nev- ertheless, there are some European countries where ... but, in Europe, foreign workers were badly long-term unemployment remained low, In Sweden it uflected was under 7 per cent of total unemployment in 1989. Over the decade, the employment situation of for- In Finland, the proportion dropped sharply to eigners deteriorated in several European countries, 6.9 per cent in the same year. notably Belgium, France, Germany and the Netherlands. In these countries, Germany excepted, +.. youth und female umwipbyment rates, while still foreign workers were less able than nationals to benefit relatively high, moved cIOser to the uveml! told... from the increased employment opportunities towards The general increase in unemployment was accom- the end of the decade. However, in non-European panied by a convergence of the rates far youth and Member countries, such as Canada and Australia, women towards the overall average. In 1989 unem- immigrants recorded overall unemployment rates ployment rates of young people (1 5-24) were 1.9 times lower than the remainder of the labour force, though the rate for all ages, on average. This, however, repre- the rate varied considerably by country of origin.

Table 2.8. Changes in the structure of unemployment -- Youth* unemployment Ratio of youth to total Ratio of female to total rate R4 unemployment rates unemployment rates , 1939 (1979) 1989 ( 1979) 1989 (1979) 1939 (1979)

North Ada Canada 11-3 1.8 6.2 1.1 United States 10.5 2.0 5.3 1 -0 4.5 2.0 2.3 1.o Central d Western Europe Francr: 19.1 2.0 i 2.6 1.3 Germany 3.1b 1.14 8,8& 13 Ireland 24.8' 1.St 12.3' 0.7 Netherlands 11.4 1.2 11.6 1.2 United Kingdom 8.6 I. -4 4.2 0.7

33.5 2.8 18.7 1.6 11.4 2.3 7,l 1.4 32.0 1.9 25.4 1.5 Nordic cuuntrim Finland 6,l 1.8 3.4 1.0 Norway 11.5 2.3 4.7 I .o SWdt3Zl 3 .o 2.2 1.4 1 .o ol#anla Australia 10.4 I .8 6.2 1.1

41 Chart 2.5

Share of duration categories in total unemployment

100 100 9Q 90 80 80 70 70 60 68 50 5G 4G 40 30 30 2(2 20 10 10 0 0 79 80 81 82 83 84 85 86 83 88 89 90 79 80 81 82 83 84 85 86 87 38 89 30 79 80 81 82 83 84 85 86 87 88 89 90

Denmark Finland France 1 OQ 90 80 70 6# 50 40 3.3 20 1G

79 80 81 82 83 34 85 86 87 88 89 90 79 80 81 82 83 84 85 86 87 88 89 90 79 80 81 82 83 84 85 86 87 88 89 90

Germany Greece Ireland 100 100 90 90 aw 80 70 70 60 6Q 50 50 40 40 30 30 20 20 10 10 - 0 79 80 81 82 33 84 85 36 87 88 89 90 79 80 81 82 83 34 85 86 87 88 89 90 79 80 81 82 33 84 85 86 87 88 89 90

Under one month 6 to 12 months

SVUKIE See Statistical Annex, Table M. Chart 2.5 (cont.)

Italy Japan Netherlands 1

79 30 81 82 83 84 35 88 87 88 89 90 73 80 81 82 83 84 85 86 87 88 89 90 73 80 81 82 83 84 85 86 87 8% 89 90

Norway

79 80 81 82 83 84 85 86 87 88 89 90 79 80 81 $2 83 84 85 86 87 88 89 90 79 80 81 82 83 84 85 88 87 88 89 90

Sweden United Kingdom United States 1oc 90 80 70 60 50 40 30 20 10 0’; n:‘ 79 80 81 82 83 84 85 86 8’7 88 89 30 79 80 81 82 83 84 85 86 SS 88 89 90 79 80 81 82 83 84 85 86 87 88 89 90

Under one month 6 to 12 months

SOiiTCe: 1 to 6 months One year and over See Statistical Annex, Table M. = E, CHANGES IN THE INDUSTRIAL contracts, self-employment, “concealed employment”, STRUCTURE OF EMPLOYMENT home-working, seasonal employment and casual employment. A further sub-category is represented by Services took a higher prupurtion uf ~tai temporary work designed by governments to aid entry working empluyment.., into life. The wide variety of such schemes is listed in OECD (1990a). And all these categories tend The broad pattern of industrial change continued in to overlap to a greater or lesser extent. the 1980s. The overall proportion of employment rep- At the international level, data are rarely available resented by the services sector ruse from 57 per cent in on a consistent basis for a wide range of countries. 1980 to 62 per cent in 1988. While in 1470, only the Even for the major categories, such as part-time wsrk- North American countries had recorded levels of over ing and self-employment, where coverage is relatively 60 per cent, eight countries reached this range by 1930 good, the data are Far from comparable, Nevertheless, and twelve by 1988. The United States proportion was it is possible to build up a partial picture of develop- then over 70 per cent, while in western Germany and ments in the 1980s in three broad types of non-stan- Japan it remained under 60 per cent (Chart 2.6). To dard employment: part-time working, temporary work- ’ some extent, this growth reflected the practice of con- ing and self-employment. tracting out service-type activity from firms in the manufacturing sector to firms in business services, which saw a particularly rapid expansion over the period. 3, Trends in part-time working ... while the growth in guvernmmt employment Part-time working increased in ahmr ull slackmed cuuntries... On the other band, the trend in government employ- The proportion of part-time workers in total employment over the 1980s marked a clear break with the ment increased virtually everywhere over the 1980s. past. Figures published in OECD (1990b) indicate a This applies to the two sexes taken together and to fall in the average growth rate from 2 per cent over the men, though the proportion of part-timers among 1973- 1979 period to I, 1 per cent over 1979-1 988. The emptuyed men remained under 10 per cent in all but a overall OECD average far the proportion of the few cases (see Table 2.9, which, it should be noted, employed population working directly for the govern- contains data relating to a mixture of definitions and is ment was slightly higher in 1988 than in 1979 not suitable for making comparisons between COW- (15.1 per cent as opposed ta 14-8 per cent) but the tries), Part of the reason for the increase in part-time figure had dropped since 1983, when it was 15.4 per working among young men was the spread of training cent. These figures should be treated with some cau- programmes offering part-time employment, tion, since part of the reduction in the pace uf growth For most countries, the proportion of part-timers of government employment may be more a question of among employed wurnen also rose, but there were definition than of real changes in activity. declines in the Nordic countries, the United States and the United Kingdom (Table 2.9 and Chart 23,In the Nordic countries, where the proportion of part-time working is the highest, the figures may have reached their peak around the beginning of the 1980s. F. NON-STANDARD FORMS OF Part-time employment is by no means homogeneous. EMPLOYMENT Biichtemann and Quack (1989), in particular, have drawn attention to the different employment patterns of workers assessing themselves as “regularyyor “mar- The numbem and diversity of nm-stundard jobs increused ginal” part-timers. “Regular” part-time workers in western Germany appear to have quite similar employ- Over the decade there was debate about whether the ment patterns to full-time workers, while “marginal” incidence and diversity of non-standard forms of part-timers are less stable, show less confidence in their employment was growing, whether this might be due to job stability and are more often found in low-income high rates of unemployment and whether it might indi- families. cate an increase in the general insecurity, or “precari- A related distinction is between part-timers who ousness” of employment or, to use a term rnure com- work hours close to full-time workers and those work- mon in the United States, in the numbers of ing relatively few hours. Part-time employment for a “contingent workers” [Rodgers and Rodgers (1989); few hours per week may not be subject to tax or social 3elous (1989); Palivka and Nardone (1989)& security contributions and oEer littk or no security of There has always been a wide variety of *‘non-stan- employment [Rodgers and Rodgers (1989, p. 411. It dard” jobs. They include part-time working, work represents an extreme form of flexibility for both involving a temporary employment agency, fixed-term employer and employee,

44 Chart 2.6

Employment by sector

1 I I I 1 1 United States

Canada ;::: Netherlands i!:

Belgium 1989lg80 Australia 980 1989’ Norway ii:i

United Kingdom

Sweden lg8* 1989 Denmark i::: Luxembourg 1:z: New Zealand izi:

France lg80 1989 Finland :z:: Switzerland 980 1989’ Italy igg: Japan iigt Iceland iiE: Germany ;:& Ireland ::i: Austria izg: Spain ii!z Greece i:::

Portugal

Turkey ;:::

Services: public sector a Services: other a) Ilata on national accounts basis...... ~.~.~.1.~.~.1.~.~.-.-.1.-3...... Agriculture sources: Industry %.-A ...... UECD Labour Force Statistics,1369-1989 and O€CD Economic Qufi4uk: Histor/- i

Table 2.9, Size and cornpsitiom of part-time emplaymmt, 1979-1990" Percentages

Part-time employment as B proportion of Women's share in part-time Male employment 1 Female employment emphyrnent ___ 1979 1983 1990 1979 1983 1990 1 1979 1983 1990 1979 1983 1990

AWtXdiil 15.9 173 21.3 5.2 6.2 3.0 352 36.4 40.1 78.7 78,O 78.1 Austria 7.6 8.4 8.8b 1.5 1s 1 ,@ 18.0 20-0 20.v 87.8 88.4 88.06 ~elgium 6.0 8.1 10.2 1 .o 2.0 1.76 16.5 19.7 25.0" 83.9 84.0 89.6* Canada 12.5 15.4 15.4 5.7 7.6 3.1 23.3 26.1 24.4 72.1 71.3 71.0 Denmark 22.7 23.8 23.7' 5-2 6.6 9.W 46.3 44.7 41.5" 86.4 84.7 79.4' Finlandc 6.7 8.3 7.2 3.2 4.5 4.4 30.6 129 10.2 74.7 71.7 673 Franc@ 8.2 9.7 12.0 2,4 2.6 3.5 16.9 20.0 23.8 82.2 84.4 83.1 Germany 11.4 12.6 13,2f 1+5 1.7 2.1c 27.6 30.0 30.P 91.6 91.9 903 Greece 5.5 5.5' 3.7 2.9 12.1 10.3C 61-2 6S.TC Ireland 5.1 6.6 8.1' 2.1 2.7 33 13.1 15.5 17.1" 71.2 71.6 58.2' wy 5.3 4.6 5.78 3.0 2.4 3.1b 10.6 9.4 10.P 61.4 64.8 64.78 Japan 15.4 16.2 17Ab 7.5 7.3 8.P 27.8 29-13 31.96 70.1 72.9 73.W Luxembourg 5.8 6.3 63 1.0 1.0 2.e 17.1 17.0 15.1" 37.5 88.9 80.0" Netherland# 16.6 21+4 33,2 5.5 7.2 15.8 44.0 50.1 61.7 764 77.3 70.4 New Zealand 13.9 15.3 20.1 4.9 5.0 8.5 29.1 31.4 35.2 77.7 79.8 76.1 NOnVay 25.3 29.0 25.6 7.3 7.7 8.8 503 63.3 48+2 33.0 83.7 $1.8 Portugal 7.8 5.P 2.5 3.1b 16.5 10,Ob 80.4 69.gb Spain 4.8b 1 .ti& 11,9b 77.2b Sweden 23A 24+$ 23.2 5.4 6.3 7.3 46.0 4;,9 40.5 87.5 86.6 33.7 United Kingdom 16.4 19A 21.8* 1.9 3.3 5.P 39.0 42.4 43.P 92.8 89-3 87.P United States 16.4 18.4 15.9 9.0 10.3 10.0 26.7 28.1 25.2 68.0 66.8 67.6

Table 2.10 shows the change in the distribution of porary employment agencies, seasonal employment, female part-timers in the services sector, according to casual employment, and certain types of government their usual hours of work. There were considerable employment schemes, Precise information about tem- differences between the distributions for different porary work contracts is difficult to obtain. In addition, countries. For example, the proportion of part-timers as argued for example by Casey (1988), it may be working mare than half-time is significantly higher in misleading. In some countries, custom plays an impor- western Germany than in the United Kingdom. tant part in determining the length of employment Despite the general rise in the numbers of part-time actually offered, The identical employment contract workers, the proportions in the various hours categories may cover one case where the employment is under- remained fairly stable over the recowrp, stood, by both sides, to be permanent, another where both sides expect the relationship to be severed in the 2, Temporary working near future, and a third where the length of the employment relationship will. depend on economic con- Temporary wurking increased rapidly in Some ditions. Contracts which had been expected to be per- cuantries, while remainivzg low in other$.. . manent may be broken due to a change in employer Temporary working comprises many subcategories, policy, In the 198Os, this sometimes occurred in the including fixed-term contracts, employment with tem- public service,

46 Chart 2.7

Proportion of women employees working part-time

% 65 Canada 60 Australia 5D 50 48 46 38 Japan 30

Jnited States .I.....**....* .I.....**....* fi

v70 72 7'4 76 78 80 82 84 86 88 90 '70 72 74 76 78 80 82 84 86 88 90

Austria Greece

Denmark a

Portugal Norway ...".**.**....

Sweden Spain ....*...*..*.* "70 72 74 76 78 80 82 84 86 88 90 u770 72 74 76 78 80 82 84 86 88 90

% YQ

8elgium Ireland

Luxembourg

Wherfands

United Germany -Kingdom------

u70 72 74 76 78 80 82 84 86 88 90 u70 72 74 76 78 80 82 84 86 88 90

a) Break in series in 1084. b) Break in series in 1387. ' Sources and dsfjnifions:See Table 2.9. ,4 ,.,. . . ~ ...... ~ 1 , , . I-..”. 8’ L . : ._ ...... -.:. _.__i__

Table 2,lO. Mstributian of wual hours a€ work of felnslb part-timers in services industriw 1988 (and 19-83) Percentages - All hours 1-10 hours 11-20 horn 21-24 hours 25-30 3% hours grow

9.9 (10.0) 61.5 (58,8) 9.8 (13-2) 11.3 (11.5) 7,s (5.5) loo (100) 15.7 (8.6) 30.0 (41-6) 8.4 (10.0) 34.1 (31.3) 11.9 (7.9) loo (100) 11.9 (16,4) 43.5 (43.4) 9.6 (10.7) 20.5 (20.3) 14.4 (9+2) 100 (loo) 10.1 (12.1) 51.0 (,.) 11.0 (..) 23.1 (32.4) 4.6 (5.3) loo (100) 9.3 (12.9) 39.5 (19.3) 7.4 (18.5) 30.9 (34.0) 12.3 (15.3) 100 (loo) 21.8 (22,7) 54.5 (43.8) 10.3 (10.2) 9+9 (13.1) 3.5 (10.0) loo (la?) 12.3 (10.9) 46*2 (47.4) 15.3 (15.3) 16.6 (22.2) 9.5 (4.3) loo (loo) 31.7 (284 4QA (443) 8,7 (7.9) 11.6 (13.0) 7.5 (59) loo (loo) 22.9 (..I 51.5 (..) 11.0 (.,I 10.0 (..) 4.6 (..) loo (100) 21.0 (*.I 51.6 (..) 10-2 (.*) 166 (..) 0.6 I..) loo (loo) 23.3 (23.4) 44-1 (44.9) 123 (11.8) 14.8 (14.7) 5.9 (5.2) loo (100) Sowkc : Data from the EURQSTAT publications of the E~ropcanCommunities Lukw Forae Survey, 1933 and 1983. %hitions of part-time work are as used in tht sumy. Set Annex 1.B of OECD (19894 and Annex 1.C of OWD (1999). For the Netherlands, &€-a;psessment ki tbe criterion used.

No complete, systematic, international data on tem- In Belgium, the number of workers employed on porary ernployment exists over the whole of the 1980s. temporary work contracts rose from the equivalent of However, there is some aggregate data from the co- 14 200 full-timers in 1985 to 25 000 in 1988 (0.6 per ordinated Eurostat surveys for the period after 1983 cent of total working days) [IRS (199O)I. In Canada, (Chart 2.8). These figures should be interpreted with 57 000 workers were employed on temporary work Some caution, as the underlying national questions dif- contracts in 1983, 73 000 in 1985 and 63 QOO in 1987 fer significantly. For example, in Belgium and (0.6 per cent of total non-agricultural employment) Luxembourg, people are simply asked if their current [Akyeampong tl989)j. In France, there was a strong situation is permanent or if they have a contract of increase in the activities of temporary work agencies limited duration. The Irish survey ash people whether over the 1980s. The annual number of contracts con- they would describe their job as permanent or tempo- cluded with user establishments. doubled (from two rary [OECD(1986a)j. In France, a series of questions million to four million) between 1979 and 1987. How- is posed, including whether people have a fixed-dura- ever, the average duration of the contracts fell, so that tion or seasonal contract or are apprentices under the equivalent number of permanent full-time jobs felj con tract from 240 000 in 1980 onwards, recovering only from The general picture is of an increase since 1983 1987 to reach 280 000 in 1989, around 1.5 per cent of - especially in France, Ireland and the Netherlands full-time equivalent jobs [Caire ( 1989); and TRS (Table 2.1 1 ). For Spain, there was a particularly rapid (I 990)17. increase from 16 per cent of total employment in 1987 In western Germany, temporary work contracts to 27 per cent in 1989, following a change in legisla- expanded significantly from the mid- 1970s and espe- tion. Apart from the southern European countries, the cially at the end of the 1980s, from the equivalent of figure for the European Community lay generally 41. 000 full-time workers in 1985 to 79 500 in 1987, between 5 and 10 per cent, For Sweden, the proportion representing 0.3 per cent of full-time equivalent jobs of temporary employment in 1990 was 9.7 per cent, [Btichtemann and Quack (1989, p. 111); and IRS The incidence of temporary employment in public ( 1S90)] + administration, which varies considerably from country to country, generally folbwed the overall trend for the In Ireland, the number of workers on temporary country concerned. In Greece and Spain, the propor- work contracts in the state sector rose from 6 500 in tion of temporary workers in agriculture and corrstruc- 1978 to 15 800 in 1983, before falling to 10 000 in tion had risen to around $0 per cent or over by the end 1986 [ElRR (1989a)l. In the Netherlands, the number of the decade. of workers on temporary work contracts rose steadily Some national sources give information separately from 25 000 in 1982 to 91 300 in 1988, 1.7 per cent of for two of the major components of temporary work- total full-time equivalent jobs [IRS (I 990)] I ing: temporary work contracts where the worker is In many other countries, including Denmark, employed by an agency, and fixed-term contracts con- Greece, Italy, Luxembourg, Portugal, Spain and cluded between employer and employee far a definite Sweden, the volume of work represented by temporary period of time. work contracts, involving an employment agency, was

48 Chart 2.8

Temporary jobs as a propar [ion of total dependent employment, 19l 9 and 1989

10 20 30 ...... 1 Spain

Portugal

Greece

Germany

Japan ......

Denmark

Ireland

Netherlands

France

Italy

...... United Kingdom ...... ' i .. 4,...... Belgium ... ..

Luxembourg

% 20 3r 3

1983 1989 Notes and sources: SeeTabla2.11. I Table 2.1 1. Temporary jobs as a proportion of total wage and salary emplqmenf by industry, 1983" Perantages

Belgium 1983 5.4 7.7 1.9 2.2 2.8 2,6 6.9 2.7 4.1 3.3 8.2 1987 5.6 7.0 1.8 2.8 2-54 3,7 5.4 2.1 4.4 9.4 8,ci 1989 5.1 6.4 1.8 2.2 2-7 3.0 4.9 2.3 3.8 8.5 8.6 Denmark 1985 12.3 19.8 3.6 7.1 9s 15.6 15.6 7.1 7.2 13.7 14,4 1987 11.2 15.0 7.9 2.2 8.7 14.6 15.2 5.7 7.6 12.3 11.7 1989 9.9 13.9 3,€ 3.5 6.8 14.0 13.1 5.1 6.2 11.7 11.9 France 1983 3.3 5.1 2.4 2,i 3.7 52 6.0 1.1 3.8 2.4 0.7 1987 7.1 10.1 2.3 3.2 6.0 8.4 8.9 2.9 6.5 9.1 6.3 1989 8,s 11.5 2.6 7 ,O 8.9 9.9 10.9 3.9 7.5 9.5 5.9 Germany 1985 1Q.O 21.6 4.7 6.2 7.7 10.4 I. 2.0 5.5 9.0 13.9 12.4 1987 11.6 24-4 6,O 6.9 8.3 11.2 13.9 6.7 10.0 15.8 16.2 1939 13.0 17.4 6.6 5.8 8.2 9.1 13.6 6.4 10.1 15.4 15.9 Greece 1933 16.3 51.1 5.3 9.5 12.2 47.8 19.2 10.2 10.2 10.8 3.0 1937 16.6 60s 5.2 6.3 10.4 58.3 21.2 13.6 7.7 13.0 2.0 1939 17.2 57*2 s.l 7.9 14.0 63.2 19,3 12.6 9.9 12.3 3.0 Ireland 1983 6.2 7.6 3.2 2.3 3.4 8.0 7.2 4.1 6.4 10.2 3.1 1987 8.6 9.3 3.9 3.7 5.2 10.7 9.6 4.3 1QA 13.4 4.8 1989 8.6 11.8 4.2 4.7 5.2 12.7 10.3 3.5 6.0 14.7 1.9 Italy 1933 6.6 353 2.3 0.9 2.2 11.9 7.0 1.5 1.9 6.5 2.3 1987 54 27 .O 1.3 2.0 2.6 8.3 5.9 1.5 3.8 5.8 1.9 1989 5-3 28.1 1.5 2.0 3.7 9.8 3.1 1.4 4.3 7.0 2.3 Japanb 1983 10.3 24.5 2.8 0.0 8.9 17S 13.4 4.2 3.6 9.9 6,7 1987 10.5 25.0 3,2 0.0 9.0 15.1 13.9 4.9 4.6 10.7 5.6 1989 10.8 26.7 3,s 0.0 8.8 14.2 14.6 6-1 4.9 11.0 5.3 Luxembourg 1983 3.3 8.5 1.7 1.0 1.6 3.5 5.1 2.7 I. .2 5.3 2,7 1987 3.5 8.6 1.1 1.2 2.9 23 5.8 1.4 2.6 5.2 233 1989 3.4 9.3 0.8 1.7 1.6 3.6 5.2 I .3 2.2 5.4 2.7 Netherlands 1933 5.7 10,s 3.4 1.8 3.1 3.9 5.0 3.6 3.6 10.1 5.1 1937 9.2 20.3 4.4 5.9 8.3 4.9 10.6 6.2 8.0 12.0 6.2 1939 8.5 13.0 3.7 5,2 7.3 4.7 3.6 5.9 7.8 10.9 7.4 Portugal 1987 17.0 37,2 7.3 11.7 15.6 31.1 19.1 6.3 10.6 14.8 9.1 1989 18.7 31.6 10.3 15.7 18.5 29.0 23.3 3.9 11.2 17.3 9-8 Spain 1987 15.6 39.4 4+3 8.2 12.3 29.5 18.3 7.8 8.5 13.3 7.7 1989 26.6 49.6 8,2 16.6 24,O 49.4 31.7 15.9 19,3 22+8 10.3 United Kingdom 1983 5s 11.8 2.0 2.3 2.7 6.9 9.0 2.2 3.7 7.9 4.0 1987 6.3 10.2 2.8 3.0 3.1 6.9 7.8 2.7 4.8 93 7.4 1989 5.4 7.1 3.1 3.3 2.7 4.4 7.6 2.7 4. I 8.8 3.2 rr) Data refer only to wag4 and ashy wwkm. All calculations exclude persons with a non-declad status. With tbe'cxoeption o€ the Unitcd Kingdom, the number with non-dcclarcd status was quite small, b) The data are annual averages of tb monthly labur Emsurvey. Templrary employment is the sum of temporary employees (persons employed for a s ydd of a montb or more but not mom than a ycar) and day Lbourcrs @cnsons employed on a dail basis or far a specific perioa of lam than a monthyg a ncst industry nomenclature is sli@t€y dierent from tht NACE systm ugcd in the Eurdpean dmmunity. Spe~ifically,business services art included in o&r services, and public administraton refers to oycmmcnt, not elsewhere classified. Swuces ; Data far all countries exwpt Japan supplh! by EUROSTAT on the basis of the EC Laboav Fmm Swwp.

50 either negligible 01“non -existent, often reflecting pre- ber 1989 issue of the EIRR reports that 70 per cent of vailing legislation [IRS (1990); and Table 7.1 1 of this fixed-term contracts related to the recruitment of sea- publication]. sonal workers. Regarding fixed-term contracts, concluded directly between the employer and the employee, the infarma- ... and the ntimber of foreign workers in temporary tion available shows quite sharp increases for France, jobs incremed Portugal and, especially, Spain, In France, the number Over the decade, the number of foreigners employed of employees on fixed-term contracts rose from in seasonal work rose in QECD Europe, notably in 3 15 000 in 1985 to 61 1 QOO in 1989, 3.4 per cent of all Austria, Luxembourg, Switzerland and the Scandina- employees. In Portugal, there was a rise from 403 000 vian countries. In the non-European countries, workers on short-term contracts in the fourth quarter Australia and Canada in particular, the inflow of such af 1983 to 5 17 000 in the first quarter of 1988, 12,O per foreign workers was almost equal.to that of permanent cent of all employees. In Spain, the increase was from immigrants. In certain industriaf sectors (for example 95 000 fixed-term contracts registered with the author- agriculture, construction and services) , seasonal. or ities in 198 1, to 2 070 000 in 1985, and to 3 750 000 in temporary work by foreigners played an important part 1988, 32 per cent of total employment. [See IRS in labour market adjustment. (1990); and EIRR (1989b)J. On the other band, in western Germany and Italy, the proportion o€ fixed-term contracts in total employment seems to have been relatively stable in recent 3- Se Wemploy went years, at around 5-5 per cent (in western Germany, 5A per cent in both 1985 and 1988; in Italy, 5,2 per cent in 1986 and 5+8 per cent in 1488), following a period of expansion in the early 1980s [IRS (199O)j. In In just over half of Member countries for which Finland, the figure appears to have been stable at consistent data are available (10 out of 161, non-agri- around 11 per cent [Lilja el a/. (1990, Table 43)]. cultural self-employment (employers and own-account Over the decade, fixed-term contracts were increas- workers together) took a bigger share of total employ- ingly used in recruitment. For France, Caire (1989, ment at the end of the 1980s than a decade earlier. In p. 79) reports that they accounted for 13.5 per cent of Finland, Sweden and the United Kingdom the rise was all recruitment in 1985 (20 per cent in commerce and substantial (Table 2.12), services). For Luxembourg, a recent study quoted by It appears that, at least up to the middle of the EXRR (19894 refers to a figure of 15.7 per cent of decade, any expansion of self-employment is largely to total recruitment. Biichtemann and Quack (1 989) be explained by an increase in the number of own- report that in western Germany one in four of fixed- account workers [OECD (1986a)j; the proportion of term workers were given a permanent contract at the employers among the self-employed appears to have end of their employment term. However, in general fallen. Rubery (1989), in a more recent analysis, has their employment history was clearly less stable than argued that this applied to the United Kingdom over that of permanent employees. Over a two-year period, the 1980s as a whole, It remains to be seen how many under 60 per cent of initially fixed-term workers were of these own-account workers will stay in business and found to remain continuously with the same employer, how many will become employers. while the figure was 73 per cent for those with a permanent employment contract at the beginning of the ... and womw swelled the ranks uf the self- period. For the Netherlands, according to OSA employed ( 1987), there was a “considerable movement from For many countries the number of self-employed temporary into permanent employment, though a sig- women grew faster than the number of women nificant minority retained their temporary status”. employees. In several, including Finland, Italy, On the other hand, in Some countries fixed-term Norway, Spain, Sweden, the United Kingdom and the contracts were increasingly implicated in flows into United States, the gap was substantial. In these coun- unemployment. For western Germany, Buchtemann tries, the number of self-employed women (employers and Quack (1989) report that the proportion of people and own-account workers in the non-agricultural sec- entering unemployment after expiration of a fixed-term tor) rose at an annual rate of around 4 per cent or contract rose steadily to reach 18.4 per cent in 1987. more during the recovery. The rise in the proportion of For France, Caire (1989, p-88) indicates that fixed- women within self-employment was one of the more term and temporary work con tracts together accounted widespread changes of the 1980s (Table 2.12). The for 47 per cent of all new cases of unemployment in proportion of the under-25s in total self-employment 1987, compared with 31 per cent in 1979, the increase has also generally tended to increase slightly over the being due entirely to the rise in the number of fixed- past decade, or at least to have declined less than the term contracts. Fixed-term contracts are also associ- proportion of youths in paid employment [OECD ated with seasonal employment. For Italy, the Decem- (1936a)]. Table 2.12. Size and composition of self-employment?, 1979-1989 Percent ages

Self-employment as a proportion: Women's share in seelf-emplo)tme~~ Total employment Male employment Female employment 1979 1983 1989 1979 1983 1989 1979 1983 1989 1979 1983 1989

North Adra Canada 5.7 7.1 7.2 7.2 7.8 7.9 6.0 6.2 6.2 35.4 37.5 39.0 United States 7.1 7*7 7.5 8.7 9.5 9.0 4.9 5.5 5.3 29.3 32.3 35.5 Japan 14.0 13.3 12.0 14.6 13.7 12.3 12.9 12.6 lo,$ 34.5 36.5 35.8 -Central and Western Europe Austria 8.9 i 8.1 6.6 Belgium 11.2 123 12.9 12.6 14.1 15.5 8.3 9.2 9.0 28,O 28*4 23.5 France 10.6 10.5 10.5 Germany 7.7 8.4 9.4 4.8 23.1 Irelandb 10,4 10*7 13.0 Luxembourg 9.4 3.8 7.4 Netherlands 8.8 I 8.6 7.3 Switzerland United Kingdom 6.6 8.6 11.5 9.0 11.1 15.7 3+2 5.1 6.3 19.4 249 24.6 SmithernEurope t3 Gteeceb 32.0 I 27,3 27.4 34.0 I 32.3 33.1 25.7 1 15.2 15.1 19.9 1 15.3 * f 7.2 Italy 18.9 20.7 22.4 21.7 24. I 26.3 12.8 13.5 15.1 20.8 21.2 23.3 Portugal 12.1 17.0 17.2 Spain 15.7 17.0 ! f 7.6 17.1 18.2 I 19.2 12.5 14.1 14.1 23s 24.9 25.8 Turkey Nordic countries lhnmark 9.2 8.5 6.9 Finland 6.1 7.0 1 8.7 7.9 9.1 I 11.4 4.2 4.9 5.9 33.1 34.2 33.5 Norway 6.6 6.8 6.4 8.9 9.6 8.8 3.4 3.2 3.5 21.4 21.0 25.8 Sweden 4.5 43 I 7.1 6.2 6.5 I 10.1 2.5 2.9 3.9 25.4 28.9 27.0 ucm& Australia 12.4 12,l 12.3 13.9 13.6 14.5 10.0 9.7 9.2 29.3 30.8 31.1. New Zealand 9.5 14.6 a) Non-agricultural, excluding unpaid family workers. b) 1988 in phce of 1989, Source : UECD labour Farce Siatistics, 1959-89, Paris, 1991. The rise in the proportion’ af women in self-ernploy- For temporary employment, where there is no per- ment has been much discussed, for example in OECD manent employment contract, the pimufucie supposi- (199Oc)+ It reflects an increasing use of women’s tion of precariousness is stronger. There appears to be entrepreneurial capabifities; high incomes for women evidence of a rapid rate of increase in some furms of are considerably more frequent in self-employment temporary working in a few countries. However, the than in dependent employment. However, many self- overall number of temporary workers remains a small employed women have low relative earnings proportion of total employment in many others. [OECD (1988, Table 5-4and p. 157)3, Self-employ- Finally, the evidence for assessing a possible growth in ment is very diverse, and it is likely that some women other forms of non-standard working, such as con- took up self-employment jobs which were both ill- cealed employment or home-based employment, is remunerated and far from independent. The barriers clearly lacking. against women becoming established in small busi- Of course, conclusions about precariousness cannot nesses are higher than for men, due to their compara- be settled simply by reference to non-standard forms of tive lack of training and relevant job experience and working, since it is quite possible that an increase in their greater difficulty in obtaining capital [Carter and precariousness might occur without any overt changes Cannon (1988, p.2)]. Public assistance for women in forms of working, simply as a result af changes in seeking to develop their businesses is generally directed employer policy. at own-account working, as opposed to the develop- ment of businesses employing several people. .+. but job-mobility and internal migrutim rates A correlation analysis reported in OECD (1986a) were not high suggested little association between increases in self- International studies of labour market flexibility, for employment and in unemployment: the level of non- example OECD (1986b), have referred to two types of agricultural self-employment was found to be gener- mobility data: internal migration and job-mobility ally insensitive to the business cycle. This is no doubt (external to the: firm). Occupational migration and partly due to the concentration of self-employment in mobility within enterprises are also of clear impor- the services sector and to the fact that a self-employed tance, but cannot yet be treated statistically at the person can often reduce his or her rate of working international level. rather than give up the job entirely. In addition, in The 2980s do not seem to have been a period of high some countries it may be common for employees to job mobility. On average, workers stayed longer in enter family businesses on losing their jobs. their jobs. The increase in average job tenure observed in the 1970s continued into at least the beginning of the 1980s [OECD (1986b, p. 551. At the same time, G. “PRECARIOUSNESS” AND there was less movement between companies. Labour “FLEXIBILITY” turnover rates tended to decrease at the beginning of the 198Qs, as they had done in the recessionary period The evidence an nun-standard wurking after the first oil shock. In the following years, as the mggest8 sowe increme in ‘yexibiiity * and recovery began, mobility rates appeared to increase. ‘@recuriuusness” ,, , However, by 1985 they had still not regained the levels Qver the decade there was a sustained debate of the early 1970s. The impression is thus one of a around two inter-related themes; “precariousness”, or continuing long-term decline (Table 2.13). A more the possible decrease in the security of employment, detailed analysis [OBCD (1986l1, Table 11-41] shows and the “flexibility” uf the labour market, or its ability that quit rates, the voluntary component of separa- to adapt to change. tions, tended to decline in several countries, The type of evidence on non-standard forms of work- Gross internal migration flows, measured by the pra- ing presented above is clearly relevant to the first ques- partion of the resident population changing residence tion. For many countries there is good evidence of an over the year, were also generally slightly lower over increase in the two most common forms of non-stan- the 1980s than during the previous cycle (Table 2.14). dard working: part-time employment and self-employ- This fits with a general pattern whereby, over time, ment. Neither can be necessarily assumed to be preca- high levels of unemployment are associated with lower rious, However, in parallel with the total increase, internal migration levels [OECD (1 990q Chapter 3)]? there does seem to have been an increase in the absolute numbers of part-timers usually working 20 hours or less. These part-timers are more likely to be without job security, Again, over the decade the composition of H. EARNINGS TRENDS IN THE 1980s the self-employed population has changed and the proportion of women and young people has increased. Qver the 198Os, most QECD countries experienced a Since these groups are relatively vulnerable on the prolonged period of disinflation in both labour costs labour market, this might also indicate increased and prices, In fact, the share of labour income in out- precariousness. put fell to the lowest levels recorded over the past two 53 Table 2.13. hbur turnover rates Annual number of accessions (A) and separations (S) per 100 employees

United United Japan Japan* Kingdoma State? ___ ASASASASASASASASASAS

1971 21 20 22 19 29 28. 29 20 20 18 19 28 32 47 50 1972 4i 36 29 29 26 19 19 17 18 25 26 54 52 1973 44 40 34 33 33 26 20 19 19 18 32 31 58 56 1974 47 43 26 31 18 17 17 11 14 17 2i 22 31 33 so 59 1975 40 39 25 28 11 14 14 16 11 15 22 21 23 30 44 50 1976 34 34 27 28 15 15 15 15 14 14 19 19 24 25 47 46 1977 29 32 20 19 18 17 28 28 12 14 14 15 12 14 14 17 25 24 48 46 1978 28 29 19 19 15 18 28 28 11 12 13 14 11 13 15 15 23 24 49 47 1973 35 31 19 18 16 16 30 29 14 13 is 14 13 13 21 19 22 24 48 48 1980 38 35 18 17 15 14 29 30 12 15 15 14 14 13 21 20 16 25 42 48 1981 36 36 16 11 13 16 28 29 9 15 15 14 13 12 13 18 12 22 39 41 1982 34 34 25 25 8 14 14 14 13 13 14 17 14 21 1983 36 35 14 13 13 12 IS 16 16 21 1984 40 37 17 18 13 14 15 14 14 12 20 17 19 21 u] Manufacturing only, Nots that th$ figures gcncnlXy mfcr to turnover at establishment Lwl, including moves between establishments within the same enterprise. For at least Finhnd and Germany, howcvar, some moves within enterprises are not included, For all countries except France for the years 1971 and 1977-84, the rates refer to employees. Swm : Ste Annex A, OECD (198641.

Table 2.14. Internal migration in selected OECD countries: persons who changed region of residence in percentage of total populatiop

Germany Sweden United Australia Canada Finland Italy Japan Norway States

1970 1.7 13 2.5 1.8 1.1 4.1 3.8 3.6 3971 1.9 13 1 .l 1.8 1.1 4.0 3.1 3.4 1972 1.8 1.8 2.1 1.7 1*1 3.9 3.0 1913 1.9 1-3 2+3 1.7 1.0 3.9 3.0 4.3 1974 1,6 2.0 2s 1.5 0.9 3.6 3 .o 4.9 1975 1.8 1.3 0.8 3*3 2.9 4.3 1.2 1976 1.6 1.8 1.3 0.8 3.2 2,7 4.5 3.0 1977 1.7 1.7 1.5 1.3 0.7 3+1 4.0 1.u 1978 1.9 1.7 1.4 1.3 0.7 3-0 2.7 3-7 1979 1.7 1.7 1.5 1.3 0.7 3 .o 2.6 3.9 1.2 1930 1.8 1,7 1.ii 1.3 0.7 2.9 2.7 4.0 1981 1.8 1.8 1.5 1.3 0.7 2.6 3.5 1.1 2.8 1982 1.9 1.8 1.5 1.2 0.7 2.8 2.5 3.4 3 .o 1983 1S 1.5 1.5 1.1 0.6 2.7 2.5 3.4 0.9 2.7 1984 1.5 1.6 1,.4 1 .o 0.6 2.6 2.4 3-7 1.1 2-8 1985 1.6 1.5 1.6 1.2 1 .a 0,6 2.6 2.4 3.9 1.2 3,0 1985 I .6 1.5 1.5 I .3 1.1 0.6 2.5 2.5 40 1,l 3.0 1987 1.d 1.3 i .6 1.3 1.1 0.5 2.6 2.6 3.9 2.8 a) Population 15 ytars old and over far Australia and the United Kingdam. Data exclude persons who changed country of residenw. Sauces .' Awtdia: Australian Bureau of Statistics, InWd Mipth,Awtdlu, various hues. Migration across 8 states and territories. Cumdu: Data provided by Statistics Canada, Demography Division, Migration across 12 provinces and territories, Rtdad; Centrat Statistical OfROe, Statssricai Yewhook of Finid. Migration acms 12 provinces. Fratwe; JNSEE, data based on the yearly labour fur= surveys. Migration across 22 regions, Germany.- Statistisches 3undwmt, Wkm~gund Enuerbslrrrigkei, Reihe 2.3, various issues. Migration across 11 Lander. !tidy: ISTAT, Cmpttdio Stutisrico Itdium, various issues. Japax Bureau of Statistics, Sfati&uf Ywhkvarious issues. Migration across 47 prefectures. Data derived from the Basic Resident Register. No~uay,. Central Bureau of Statistics, SfatWcal Ymrbk, Migration acrm 20 caunties. Swdm Statistics Sweden, Statisrical Abstrwi of Sueden, various issues, and Stutistiska maidelanden, BE 1984:4. Migration across 24 counties. Lldfed Khgdm Labour Force Survey data supplied by Jonathan Wadsworth of the Centre for Labour Economics. Migration across 10 regions, excluding Northern Ireland. United States: US,Department of Commerce, Bureau of the Census, GeograpMcul M&iIity: March 1986 to March 1987. Migration across 50 states,

54 decades in many countries, although this was not uni- change in wage behaviour in the 1980s compared to form across all industries. At the same time there was the 1970~~although the first study did find some ten- a levelling-off in longer-run trends in male/ female pay dency for observed wage growth in the 1980s to be differentials and in the growth of the non-wage compo- more moderate than was predicted by the wage nent of total labour costs, equations.

Overall, there was a subslunbial siowduw in ... with a particularly strong decline in real unit earnings growth,.. costs in mantcfaczuring... After the initial boost to inflation as a result of the The decline in real unit labour costs in the 1980s second oil shock in 1979, there was a prolonged period occurred both in the manufacturing and service sectors of disinflation in both nominal wages and prices for (Table 2.15), The divergence from trend in the manu- most QECD countries (Chart 2.9). While in the 1970s facturing sector was particularly marked in Australia, there were several periods when nominal wage growth Denmark, Finland, the Netherlands, Portugal and exceeded price increases by a considerable amount, the Sweden. In the service sector, large falls were recorded 1980s saw a narrowing of #he gap between wage and in western Germany, the Netherlands and Sweden. price inflation, This moderation in wage growth cam- However, in most countries, the fall in real unit labour bined with some pick-up in productivity growth costs from their peak in the early 1980s was greater in resulted in real unit labour costsg in the business sector manufacturing than both in services and in the busi- falling to the lowest levels recorded over the past two ness sectors overall. (These comparisons need to be decades in many OECD countries (Table 2-15). treated with caution as productivity measurement in The severity of the recession in the early 198Qs,with the service sector is particularly open to a large degree its very high unemployment rates, had an initial damp- of error.) In the manufacturing sector, strong increases ening influence on wage and price inflation. Real wages in labour productivity in the 1980s were partly respon- (wages deflated by the private consumption deflator), sible for the deciines in real labour unit costs exper- which rose in the aftermath of the first oil shock in ienced in Canada, Finland, Norway, Sweden, the 1974, fell initially following the second oil shock in United Kingdom and the United States. 1979 in a number of countries (most notably Australia, Austria, Canada, Greece, Japan and Sweden), With a kwliing-off ifi the rute at which the resumption of growth, unemployment began to fall ... fernole in many countries, Nevertheless, wage and price in&- earnings caught up with those of merr... tion remained subdued throughout the second half of Over time, changes in simple average earnings data the 1980s. There was some pick-up in wage growth in are affected not just by changes in earnings but by the late 1980s in Australia, Finland, Greece, Italy and changes in the composition of the male and female the United Kingdom, but this was partly fuelled by workforces and the kinds of jobs they do. One widely- food and energy price increases. It has been suggested available measure which avoids some, but not all3 of that the moderation which occurred in wage growth these compositional changes is the ratio of female to throughout the 1980s marked a fundamental change in male hourfy earnings of manual workers in manufac- wage behaviour which cannot be explained simply by turing industries” (Table 2.16). For most OECD coun- reference to external factors such as the collapse of oil tries there was a significant rise in this ratio over the prices in 1986 and depressed commodity prices in gen- 1970s which partly coincided with the introduction of eral or to demand pressure, For instance, it is possible equal pay legistation in a number of countries, How- that price expectations which are incorporated into ever, by the late 1970s this trend had slowed or come wage claims may have changed in response to greater to a halt in a number o€ countries (including Australia, credence in the anti-inflationary policies pursued dur- Denmark, Finland, Ireland, the Netherlands and the ing the 1980s. In addition, workers’ wage claims may United Kingdom) and by the late 1980s earnings dif- have become more responsive to prevailing rates of ferentials were still considerable. In the two countries unemployment. The 1980s were also a period of with the highest ratio of female to male hourly earn- reduced union militancy in must OECD countries with ings, women were still receiving 15 per cent less than a strong decline in both union coverage of the men in Denmark and 10 per cent less in Sweden, At workforce (see Chapter 4) and in the number of the other end of the spectrum, in Japan earnings for strikes, and this may have affected wage behaviour, women in manual occupations in manufacturing were The empirical evidence for a fundamental change in only 50 per cent of those for men and, moreover, the wage formation remains, however, inconclusive. One ratio of female to male earnings appears to have fallen common method of testing for such a change is to over both the 1970s and 1980s. Of course, these differ- model the short-run Phillips curve relationship entials reflect, to a great extent, the kind of composi- between nominal wage growth, price inflation and tional differences mentioned above. Detailed surveys unemployment’0.Various tests of structural breaks can show that, at a given age, length of service and educa- then be made, Studies by Chan-Lee et nI. (1987) and tional level, female earnings are between 70 and Poret (1990) give little support far the claim of a 90 per cent of male earnings [OECD (1988, Note C)]. Chart 2.9

Wage gruwth, inflation and unemployment a

% North America 25

71 73 75 77 79 81 a3 85 87 39

Yo Nordic countries Yu Central and Western Europe 25

71 73 75 77 79 81 83 85 87 89 71 73 75 77 79 81 83 85 87 89

0% Southern Europe % Australia and New Zealand 25

71 73 75 77 79 81 83 85 87 89 71 73 75 77 79 81 83 85 87 89

a) Wage growth refers to business sector earnings and inflation to the ptivate consumption deflator. b) Denmark, Finland, Norway and Sweden. Wage growth cl Austria, Belgium, Fmncs, Germany, Ireland, the Netherlands, Switmdand and the United Kingdom. nernployrnent rate d) Greece, Italy and Spain. Inflation Source: OECD Ecanomic Ouflook,No. 49,June 1991. Table 2.15. Real unit labour costs in business (El, manufacturing (M) and services (S)sectorsu Average for period = 100

1970 1975 1930 1931 1982 1983 1984 1985 1986 1987 1988 1989

Australia B 93.1 103.2 102.5 105-9 108.0 100.7 100.2 99.5 100.0 97.0 95.2 M 98.9 1 10.4 97.4 100,7 102.5 94.7 93.4 91.8 93.1 90.7 87.6 s 91.2 101.7 102.8 105.9 107.0 102.4 101.8 101.4 101,9 98.7 96.4 Canada I3 104S 100.8 97.6 100.0 101.9 97.3 95.2 96.2 97.6 97.4 M 106.1 100.3 99+3 101.2 108.9 101.5 95.7 95.5 95.6 93.6 s 98.2 100.1 100.6 101.9 103.1 98.6 99.0 lO0,O 93.5 99.8 Denmark €3 105.1 104.3 105.2 102.9 99.3 97.6 94.3 93.8 93.7 97.7 94.9 89.9 M 101.8 103.0 100.8 10 1.3 98.1 94.4 92.2 93.3 94.9 982 94,9 95,3 S 103.1 103.5 105.7 103.5 103.6 100.0 97.0 95.7 94.7 100.1 97.1 90.3 Finland 3 103.1 106.5 98.9 99.8 98.6 96-6 95.I 961 96.3 34.7 93.2 91.5 M 95.4 10&7 98.2 101.8 102.5 99.3 96.5 98.3 99.5 34.0 91.3 92.0 s 97.5 106.7 102.9 101.6 99.5 98.2 97-0 97-7 96.9 96.5 96.4 95.4 France B 102.7 1013 102.1 102.4 102.1 101.2 99.5 98-0 93.6 M 102.3 103 -0 102.4 104.5 104-2 101.7 101.4 99.1 93.6 S 103-6 99.7 100.8 100.4 101.7 102.0 99s 99.5 95.0 Germany 3 104.5 105.3 102.9 102.4 99.8 96.3 95.1 94.4 93.6 93.8 92.3 91.3 M 95.1 101 m 1 105.4 106,X 104.7 100.5 100.1 98.7 96.9 99.5 98.3 s 108.1 106.3 100.7 98.8 96.3 92.9 91.7 92.0 92.3 91.3 90.0 Iceland B 103.2 102.5 102.8 101.2 874 86.5 93.9 943 102.0 101.0 M 109.3 103.2 100.7 105.8 97.8 90.0 99.2 88.6 98.4 39.2 s 96.8 101,l 100.9 97.6 81,7 86.6 97.2 103.4 109.9 101.9 Italy €3 99.2 105.3 98,6 99.8 99.7 100.9 98.2 97.6 95.3 95.9 96,O 962 M 98.7 109.8 37.3 99.0 99.6 101,3 97.8 96.9 95.5 95.2 93.9 95.9 S 100.4 105.1 99-1 98.9 100.1 101.5 99.0 98.6 ?4*8 96.5 97.4 97.8 Japan B 89.6 104.1 101.1 102.9 102.6 102.7 101.6 99,7 99.9 100.2 99.6 M 81.9 105.7 102.6 105.5 105.1 106.4 104.1 103.3 104.3 103.4 101.7 s 85.5 103.0 101.8 104.6 103.3 102.4 102.6 99.8 100.8 102.4 103,O Netherlands B 103.7 108S 104.4 300.7 98,2 95.6 90.8 89.8 91.7 94.8 93.3 90.3 M 95.2 108.9 111.0 115.1 108.8 104.5 96.7 96.4 90.1 93.2 88.0 85.9 s 101.1 107.0 103.5 102.2 100.4 97.5 94.0 93.4 93.6 93.4 92.3 90.1 New Zealand B 102.6 308.9 107.7 104.7 95.8 93.0 94.1 98.3 99.5 95.9 M 103.3 109.8 104.5 104.0 95.6 91.2 97.3 96.4 100.5 97.2 § 99.8 108.2 1065 103.5 95.5 98.5 98.7 95.7 98.3 94.6 Norway B 106.8 112.0 91,3 83+5 88.7 86.3 84.0 85.7 96.3 98.5 99.5 91.2 M 98.0 98.6 99.2 103.9 104.9 99.9 96.2 97.5 99,6 100.2 97.4 94.7 S 91.4 107.7 9-73 95.6 95.3 96.2 97.2 99.3 98.8 100.8 49.6 94.8 Portugal B 100,8 102.8 100.5 97.5 95.4 82.7 89.6 M 101 -0 102.1 103.9 100.6 91.1 87.2 84.0 S 100.2 100.0 99.2 97.7 99.5 35.7 98.2 Spain B i04,3 104.6 1013 101.7 94.9 92-8 M 104.6 104.8 103.0 99,2 95.1 93,3 S 102.1 102.8 101.5 102.6 95.7 954 Sweden B 105.1 102.7 102.7 101.9 95.9 92.7 91.5 93.3 91.9 93.1 93.0 94.6 M 99.3 98.2 103.8 107.1 100.2 94.9 91.8 93.3 90.8 92.5 93.3 94.5 s 102.8 105.8 102.9 99.2 93.0 91.1 92+0 94.1 93,6 94.4 93.9 97.1 United Kingdom B 104.3 108.9 101-4 101.5 98.4 95.8 95.8 94.8 95.8 94.3 M 96.6 107.5 105.2 107.1 102-6 99.9 99.3 96.4 94.9 93.2 S 104.3 102.6 101.4 104.3 102.7 101.7 103.9 100.8 98.1 377.1 United States B 1023 99.8 101.3 100.3 101.4 100.5 98.9 98,4 97,9 98.0 M 102.4 99.1 103.9 102.1 103.3 1Q0.6 97.9 99.4 98.6 97.5 5 99.5 100.3 100.9 100.6 102.3 101.4 101.2 99.5 98.3 99.4 aj The business sector refers to ali activities excluding “Producers of Government. Services and Other Non-Profit Producers” which are also excluded from the services sector. Sources : OECD National Accounts far GDP,compensation of employees and employment series, For Canada and New Zealand, the employment series are taken from OECD hhur Force Sraflsfics and are adjusted by excluding general government employment using estimates from the OECD Business Sector Data Base [(Ketse er a]. (1991)].

57 2,. . 1 . ...,._ , -I .. , -.. -

Table 2.16. Ratios of fernah to male hourly earnings for manual workers in manufacturing Percentages

1970 1975 1980 1981 1982 1983 1984 1985 1986 1987 1988 €989

Australia 63.7 78.5 78.7 77.4 78.2 76.1 79.6 79.4 80.0 79.8 79.6 Belgium 67.7 71.3 69.7 72.5 73.5 74.4 74.5 74.3 74.1 74.7 74.5 Bnrnark 74.4 34.3 36.1 85.8 85,l 85.5 85.8 85.6 84.9 84.2 84.4 84.6 Finland 70.4 72.6 75,4 76.3 77.1 75.6 77.2 76.8 77.4 77-3 77.2 76.8 France 76.4 77.0 73.1 77.7 78.4 78.4 79.1 79.5 79.5 Germany 69.6 72.1 72.7 73-1 73-0 72.6 72.7 72.7 72.9 73.0 73.0 72.8 Gram 68,O 69.5 673 67.2 73.1 74.6 76.2 77.6 76.9 77.5 78.0 Ireland 56.2 60.9 68.7 67.6 58.5 68.5 68.3 67.6 67.8 67.4 63.9 Japan 52.9 51.2 49.5 49.1 48.8 48.8 483 43.6 48.5 49.0 48.9 Luxembourg 55.4 50.9 61.2 60.1 60.1 61.5 59.6 62.6 60.7 51.6 58.4 Netherlands 71.8 79,2 80.2 79.3 79.2 79.2 79.0 77.7 78.7 77.6 78.0 Ncw-2dand 71.4 71.6 70.8 70.4 7Q,8 70.2 71.3 72.5 74.6 75.3 Norway 75.1 78,0 81.9 82,6 83.2 84.0 83.9 83.5 83.8 83.7 84.3 85.5 Sweden 30.0 35.2 89.9 90.1 90.3 89,2 90.0 39-8 90.4 90.1 90.0 89.5 Switzerland 64,7 56.0 65.4 66.9 67.0 66.8 66.9 67.1 67.4 57.3 67.5 United Kingdom 57,6 66.5 68-8 68.8 683 69.0 68.8 68.2 67.9 68.0 68.0 63.4 Sources : Japw Y'whk sf Lrrbotrr Smisties. &her mmtdes: ILO, Year Wkof hhuw Stais#&s. See also Table C.1 in QECD (1988) for details of definitions and breaks in Series.

1970 1975 1980 1981 1982 1983 1984 1985 1986 1987 I. 988

Australia 3.4 4.9 5.9 6.0 6.4 7.1 7.6 7.9 3.1 8.2 8.3 Austria 14.4 14.8 16.9 17.2 17.4 17.3 18.3 13.4 18.2 18.3 18S Belgium 13.9 14,8 14.2 13-9 13.4 13.9 151 16.2 15+4 17.3 17.5 Canada 6.1 1.4 8.5 9.0 9.2 9.6 9.7 9.8 9.7 9.3 9.9 Finland 13.9 16.8 18.5 18.3 18.1 17.6 17.6 18.4 18.6 18.5 18.3 France 23.9 24.7 26.1 26.1 26.5 27.1 27.4 27.9 27.4 28.1 28.2 Italy 28.3 23.9 26.6 25.8 26.4 27.0 26.5 26.8 27.6 27.1 27.1 Japan 8.3 9.0 11.0 12.2 12,4 12.6 1x9 13.3 13.6 14.0 14.1 Germany 14.6 17.3 18.3 18.5 18.6 19.0 19.3 19.4 19.5 19.5 19.5 Netherlands 19.7 22.3 23.2 23.1 22.3 23.8 23.5 23.4 23.2 23.0 22.6 Norway 10.9 14.9 14,6 14.8 14.7 14.6 14.4 14.3 14.4 14.6 15.1 Spain 16.8 19.0 22.7 23.3 23.5 23.9 23.6 24.5 24.9 23.4 23.2 Sweden 13-1 19.7 27.0 27.8 27.6 27.8 27.4 27.1 27.1 26.6 27.2 Switzerland 10,9 12.1 12.8 12.8 12.6 12.8 13.0 13.1 13.0 13.0 13.0 United Kingdom 9.1 11.9 13.5 14.5 14.1 14.3 14.0 13.5 13.1 12.7 12.4 United States 10.8 14-1 16.2 16.4 16.8 17.0 17.0 16.6 16.6 16.3 16.3 Sources : OECD Natidnal Accounts and, for Australia, AS, Ausrralim National Accounts

of the 1980s (Table 2.17). Thus, during this period, these non-wage costs provided an upward boost to earnings growth. However, in the second half of the So far, only developments in total earnings have 1980~~the share of these non-wage costs in total labour been considered, However, these can be broken down costs stabilized for a number of countries such as west- into a wage and nan-wage component. Contributions ern Germany, Canada, Sweden and Switzerland, and by employers to social security and pension schemes actually fell in the Netherlands, the United Kingdom are an important component of non-wage costsI2 and, and the United States, at least up to 1987. This has as a share of total labour costs, rose almost continu- tended to offset wage growth to some extent in these ously in most countries during the 1970s and first half countries.

58 ._ . 4- 1“

I. CONCLUSIONS Mobility levels were comparatively low, despite record numbers of young people and high levels of non-standard working, both of which might have suggested the The period of the 198Qs, the decade just behind us, opposite, was more than a simple chronological interval. It cur- At the beginning of the 19903, there are warnings of responded to a full cycle of economic activity, emerging labour supply constraints, and the certainty characterised first by a deep recession and then by the of a major change in the composition of new entrants longest period of continuous economic expansion in the into the labour farce, as the numbers of young people post-war period. It saw wide-ranging transformations, begin to decline. High levels of prolonged unempioy- many of which, such as the increased prominence of ment have led to under-investment in and loss of non-standard forms of working, na doubt increased the human capital. To some exent, the increase in non- capacity of QECD labour markets to adjust to struc- standard forms of working may also imply lower tural change, Indeed, the 1980s were marked by many investment in skills for the longer term. Without policy positive features, notably the continuing rise in action, all this may result in labour bottlenecks and employment and the substantial wage moderation. skill shortages, and prevent labour markets from work- Some countries made significant inroads into unem- ing satisfactorily. ployment and long-term unemployment. A preliminary poky conclusion is thus the need for However, the legacy of the 1980s includes several, intensified efforts to achieve structural reforms - to apparently contradictory features which may indicate enhance the quantity and quality of the labour force, that, within the labour market, some structural imbal- improve the efficiency of the labour market and com- ances have bcorne more severe. At the end of a partic- bat exclusion. In particular it is clear that more train- ularly long period of recovery, when the proportion of ing and retraining will be required and that the “vin- people in employment rose to new heights, long-term tage” approach to renewing human capital - relying on unemployment remained a grave problem. Unemploy- equipping young people alone with the skills required ment remained concentrated on vulnerable groups with for the new jabs and the new technologies - is no signs of deepening social malaise in some urban areas. longer appropriate.

NOTES

1 + See, for example, Business Week, February 1 I, 1991. 7. Williams (1989) provides data on the pay and benefits 2. The fertility of the same national group of foreigners offered to workers on the payroll of US temporary help tends to vary from one host country to another. Even organisations. where the fertility of foreigners is relatively high, socio- 8. Of CQU~SC, regional migration is influenced by many economic factors may be shown to explain the major factors other than unemployment rates. part of the differences [OECD (1991, Chapter IIl)]. 3. The actual impact an the total population depends 9, Real unit labour costs are defined as real wages divided partly on the naturalisation rate, which varies conside- by productivity where wages have been deflated by the rably from one country to another. The proportion of (business sector) output deflator. This measure can be the foreign population granted naturalisation in f488 shown to be more or less equivalent to the wage share was over 4 per cent in Sweden, and between 2 and in (business sector) output where the wage share has 3 per cent in Austria, Norway and Spain. been adjusted to make an allowance for the labour 4. The Netherlands, which has traditionally had a lower income of employers and the self-employed which is female participation rate than its neighbours, recarded assumed to be equal to the average wage received by a faster rate of increase in the 1930s. all employees. 5. Figures are unweighted averages. Since the proportion 10. In fact, in the standard Phillips curve relationship, of long-term unemployment tends to peak some time nominal wage growth is assumed to be a function of after unemployment itself, it is logical to use 1975, expected price inflation and the gap between the “natu- 1980 and 1990 as the basis for cyclical comparisons, ral” or “full-employment” rate of unemployment and whenever data are available. For 1980 the average is the actual rate, According to this relationship, a rise in calculated for the fifteen countries for which data for expected price inflation or a fall in the rate of unem- 1980 or, alternatively, 1979 are shown in Table 2.7. ployment relative to the natural rate will lead to a rise The figure for 1989 is calculated from the eighteen in nominal wage inflation and vice versa, countries for which 1989 data are shown. It would be very similar (one percentage point kss) were the calcu- 11. See OECD (1988, pp. 151-163) for a more detailed lation restricted to the fifteen countries covered in analysis of male/ female earnings differentials. 1980. 12. For example, in European countries, employers’ contri- 6, The changes that can be observed are generally bet- butions typically account for more than half of total ween adjacent bands. non-wage labour costs [OECD (1986q Table 33)],

59 Annex tu Chapter 2 PROVISIONAL PEAKS AND TROUGHS IN GROSS DOMESTIC PRODUCTu

Quarter and year

Peak Trough Peak Trough Fear

Australia - 2/83 3/85 3/88 Austria 1/80 - 1/37 klgium i /SO I 1/37 Canada 1/19 4/82 Denmark 2/79 3/8 1 - Finland 3/80 - 3/87 France 3 f79 - 1/85 Germany 1/30 4/32 Greece 2/79 2/83 Ialand 4/80 3/33 Ireland 4/79 2/83 Italy 1180 2/83 Japan I /so 4/33 Luxembourg 4/78 2/82 Netherlands 4/79 1/83 New Zealand - - Norway I. /SO 3/82 Portugal 1/80 2/84 Spain 1/80 2/85 Sweden 1/SO 1/X3 Switzerland 3/43 1 4/82 .”.. Turkey - 1/S8 United Kingdom 2/79 3/82 4/88 United States 4/78 4/82 1 /89 Big Four Europe 1/SO 2/ 84 Major Seven 1/80 4/82 EEC 1/80 2/84 OECD Europe 1/so 2/34 North America 4/78 4/82 QECD total 1/80 4/82 aj Thaw dates may vary from those established by national authorities. They are derived from a wmmon methodology based on the “~3mwth-cycle~’approach, explained in OECD (1987). b) Provisional iden tifiation. Source : OECD Cyclical Indicators data bank,

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