Publication - Low-wage jobs an efficient tool to cambat unemployment
Low-wage jobs have been a focus of debate in six countries across Europe during 2016. However, the issues discussed have reflected differing national concerns. For some countries, the key issue is the integration of migrants into the labour market; for others, how to stimulate job creation and reduce unemployment.
Introduction
This topical update examines the debate around low-wage jobs during 2016 in six European countries (Germany, Hungary, Norway, Romania, Spain and Sweden), illustrating a variety of objectives, measures, debates and responses. While there are some similarities, each country’s discussion has followed a different path.
In Norway and Sweden, the context is mainly the labour inclusion of migrants and refugees. In Spain, the key issue is unemployment and other domestic labour market difficulties such as the recent salary devaluation associated with the economic crisis and, to some extent, the 2012 Labour Reform. In Romania, there has been controversy about recent increases in the minimum wage. In Hungary, a prominent topic of discussion is the public works programme initiative, which has been a major contributing factor to the significant increase in the number of low-wage jobs. The experience of Germany sets a precedent that has attracted much attention. Its labour market has been characterised by the flexibilisation of employment options introduced at the beginning of the 2000s, which favours low-wage jobs, such as the so-called mini-jobs. Germany’s introduction of a statutory national minimum wage in 2015 has also been presented as a way to contain low wages.
Low-wage jobs on the European agenda
Low-wage jobs have been recently put on the agenda in several countries across Europe as a means to combat unemployment. Some commentators have also suggested that they allow smoother integration of migrants – especially refugees.
The rationale behind these discussions is the principle that the most vulnerable members of the labour market need help to find employment. Because most countries have a shortage of jobs and a surplus of labour, employers have little incentive to invest in helping the most vulnerable workers (including the long-term unemployed and migrants) get a foothold in the labour market.
The refugee issue, as illustrated by the most recent crisis in Europe, has also sparked debate. For instance, in January 2016, the International Monetary Fund published a report, The refugee surge in Europe: Economic challenges (PDF) recommending that European countries introduce ‘temporary and limited derogations of the minimum wage for refugees’, as a ‘short-term differentiation between them and EU citizens’ to help them enter the labour market. It also suggested wage subsidies for companies that employed migrants. Some critics said such measures would create a group of 'second-class' workers.
A number of questions have been raised by recent discussions.
- Does the creation of low-wage jobs address both unemployment and the difficulties faced by vulnerable workers in entering the labour market?
- How can the risks linked to low-wage jobs, such as an increase in the numbers of the working poor and the creation of so-called second-class jobs, be avoided?
- Is it possible to make sure that workers can progress from low-wage jobs to better-paid work?
In many countries, the least-educated workers and those with less work experience face the greatest risk of being in low-paid jobs. An evidence review funded by the European Commission (PDF) found that workers in low-wage jobs are often young and/or female, have low levels of educational attainment and are more likely to be members of a disadvantaged ethnic minority or immigrant group. Part-time jobs and temporary jobs are also more likely than full-time or permanent jobs to be low paid.
Various policies and approaches could help low-paid workers progress to better-paid jobs. Particularly interesting is the possibility of a coordinated approach that takes into account the effects of and the relationship between education and skills policies, active labour market programmes, minimum wages, in-work benefits and bonuses/discounts for employers.
Overall, the low-wage jobs discussion interlinks with broader issues such as minimum wage policies and wage-setting processes, minimum income and workforce shortages.
page source http://www.eurofound.europa.eu/
