Labour Market and WelfareRef. No.: IST-2001-33356PARTNERS' COUNTRIES
|
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 37503 | 38021 | 38302 | 38083 | 1.55 |
| Germany | 55310 | 55452 | 55659 | 55313 | 0.01 |
| Italy | 38804** | 38910 | 38867 | 38765 | -0.95 |
| Poland*** | 24856*** | 248606 | 25869 | 26703 | 7.43 |
| European Union | 246230 | 248606 | 249982 | 252180 | 2.42 |
Source: Eurostat and Oecd.
* Variation % = [(value 2001-value 1991)/value 1991] x100
** Year 1993.
*** Estimated value
As tab.1 shows, there is a different demographic evolution across the countries: France shows a modest increase, Poland a significant increase, while Italy and Germany remain practically steady.
It is worth observing (Tab. 2), that independently from the total population evolution, the labour force grows, even though in different measure, in France, Germany and Italy, but remains practically stable in Poland.
Tab.2 - Labour Force.
(000's)
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 25010 | 25350 | 25769 | 25508 | 14.0 |
| Germany | 39599 | 39417 | 39869 | 42257 | 6.7 |
| Italy** | 22426 | 22327 | 22514 | 23428 | 4.4 |
| Poland | 17516*** | 17205 | 17225 | 17458 | -0.3 |
| European Union | 168516 | 167958 | 170490 | 189661 | 12.5 |
Source: Oecd - Labour Force Statistics 1979-99. Oecd - Employment Outlook July 2002
* Variation % = [(value 2001-value 1991)/value 1991] x100
** Italy. year 1993. age 15-64
*** Year 1992
Employment shows a remarkable increase at the end of the decade in France and in Italy, while it remains substantially stable in Germany and reveals a relevant reduction in Poland.
Explanation of the German behaviour must be found in the difficulties stemming from the process of reunification. It is worth noting that this framework is determined by the differences of the employment dynamics between western and eastern regions. In facts, the latter exhibit an unemployment rate that is about threefold the western Laender. Concerning France and Italy, it is important to remark the strong disparity between the first period of the decade and the second one. In both countries we witness a reduction of employment in the first part of the nineties. The fall is particularly consistent in Italy, where employment decreases by almost 450.000 units between 1993 and 1995. Therefore the growth recorded at the end of the decade stems from the positive dynamics of the labour market in coincidence with the economic growth upturn. It is also interesting to notice that in these two countries the acceleration of the employment growth has been particularly intense between 1997 and 2001 when we observe in absolute terms a growth of about 1.5 millions in France as well as in Italy.
Tab.3 - Employment 16-64
(000's)
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 21934 | 21982 | 22165 | 23678 | 7.95 |
| Germany | 36642 | 35433 | 35015 | 36528 | -0.31 |
| Italy | 20145** | 19697 | 19833 | 21373 | 6.01 |
| Poland | 15320 | 14792 | 15180 | 14207 | -7.27 |
| European Union | 48725 | 147168 | 149362 | 160125 | 7.67 |
Source: Oecd - Labour Force Statistics 1979-99. Oecd - Employment Outlook July 2002
* Variation % = [(value 2001-value 1991)/value 1991] x100
**Average of the 1993. due to the change of the Istat survey methodology
This figure is consistent with the overall evolution of employment in the European Union in the last years of the decade and the Lisbon strategy, which re-launched, as a concrete possibility, the objective of full employment within the EU by 2010. Instead, we have to note a relevant difference concerning Poland, a country where the labour market behaviour reflects a process of transition from a planned economy regime towards a market-led economy. From this standpoint, the Polish situation is common to the majority of the transitional economies of the central and eastern European countries. Indeed, the Polish labour market is shaped by an increase of the unemployment rate in the last years, reaching about 18 % in 2001.
Tab.4 - Unemployment rate
(000's)
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 9.5 | 11.7 | 12.3 | 8.8 | -7.4 |
| Germany | 5.6 | 8.2 | 9.9 | 7.9 | 41.1 |
| Italy | 11.0 | 11.6 | 11.7 | 9.6 | -12.7 |
| Poland | 13.6** | 14.9 | 10.3 | 17.4 | 27.9 |
| European Union | 8.6 | 10.8 | 10.7 | 7.4 | -14.0 |
Source: Eurostat and Oecd.
* Variation % = [(value 2001-value 1991)/value 1991] x100
**Year 1992
It has to be remarked that the female component is a crucial factor of the total employment growth, with the exception of Poland, where, as we have seen, there was a general decrease of the employment rate. Table 3 shows the evolution of employment related to the first years of the past decades (after the German re-unification) and the beginning of the current decade.
The increase of women employment in relation to the total growth is particularly relevant in the second part of the decade (1995 up to 2000-2001), in France, Germany and Italy. In the latter country the increment of women employment is about two third of the overall employment growth, showing a trend directed to reduce the gap of the female labour participation with respect to the European average. Given the task of the project, that is the analysis of factors which may determine the future evolution of the labour market in relation to the welfare systems, it is worth to point out: first, the link of the women employment growth with the general growth of the service sector; second, the relation with the increase of the part-time work.
2.2 The atypical work evolution
In order to define and identify the different kinds of atypical work, we have to bear in mind the definition of " typical " work as full time contracts with unlimited job duration. This definition obviously applies to dependent employment but not to self-employment. For non-dependent workers, the criteria for defining atypical employment might be the actual degree of independence of these workers. At this proposal, it is worth to remark the general growth of dependent employment, while self-employment has decreased.
The definition of atypical, as non standard, might also be referred to some forms of work, as the telework, which is not necessarily linked to an atypical form of employment. It is, in fact, connected to new features of the work organisation within the firms, potentially involving all kinds of workers, characterised by atypical as well as old standard contracts. (D3 - Definition of the indicators and standards).
Another kind of "atypical" employment is the shadow (informal or illegal) employment. This has, of course, a long history in all countries. But, during the phase of more acute difficulties of the employment, informal work has had tendency to increase. Unfortunately, its measurement is not possible trough the traditional surveying of the labour markets features. However, it is possible to indirectly observe the phenomenon, assuming the overall data of the national economic accounts. Under this profile, an increase of the illegal work has to be taken into account in all countries under investigation. The phenomenon is partly linked to the growth of immigration. This aspect of the labour market is relevant for its consequences on welfare systems, given that it generates a lack of social contributions, whereas it increases social expenses for assistance, as it is the case of some allowances (family, unemployment, social pensions) and health care provisions. Therefore this aspect, even though of hard measurement, has to be taken into consideration, analysing the prospects of welfare systems tensions. In Italy the estimates of the phenomenon shift from 16 to 26 percent or more of the GDP. This is a critical aspect either of the analysis or the prediction of the relationship between labour market evolution and the financial and social sustainability of welfare systems.
Another critical aspect of the analysis concerns the disguised self-employed work that actually is dependent work, but characterised by lack or insufficient degree of social contribution. This is the case of the "Parasubordinati" in Italy as well as a portion of the work that in Poland was ruled till 2002 by the Civil Code. It is clear that some forms of non-standard employment are not new, but the shift of the labour market towards an increasing flexibility has emphasised some aspects that are within or on the threshold of the irregular forms of employment with significant consequences on the welfare systems.
On these bases and with these limitations, data about atypical work have been divided in the following four categories:
· fixed-term contracts;
· part-time;
· special programmes;
· specific forms of independent work
2.2.1 Fixed-term contracts
This category contains different features of contingent or temporary jobs, alternative to the traditional standard permanent and full time work. This typology is particularly relevant within the trend of labour market flexibilisation. The contracts with a limited duration are generally linked to a specific temporally defined project. However, with the growing flexibilisation of the work organisation due to the rapid changes of the technologies and to the variability of the increasingly globalised markets, the scope of temporary contracts has been enlarged by legislation. The implementation of the European Directive 99/70 has also been the occasion in the Member States to precise and, sometimes, to enlarge, as in Italy, the clauses allowing the hiring on fixed term contract basis.
This is a relevant issue of the new configuration of the labour market, from the point of view of the Law project, considering that this kind of contracts reflects at the highest degree the risks connected to the discontinuity of work. This discontinuity could become a critical factor in the welfare perspective and, particularly, in the retirement benefits.
The duration of the fixed-term contracts may be limited to several months up to some years, sometimes correspondent to the duration of a certain project. The entitlement to social security benefits does not differ from those gained by regular employment. The problem of contracts with limited duration lies in the protection against wrongful dismissal. Sometimes follow-up contracts of the same kind are chosen to avoid the stipulation of a regular permanent contract. The European Directive related to temporally limited contracts and statutory provisions at national level has been aimed to avoid or limit an incorrect use of work contracts with limited duration. Legal rules are bound to contribute to a higher flexibility of work organisation with regard to the requirements of both, employer and employee. With this purpose, labour laws stipulate an objective reason for the renewal of fixed term contracts, a maximum limit for the restricted duration and a limitation for the number of follow-up contracts.
Tab. 5 - Fixed term contracts
(% of the total Dependent Employment)
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 13.9 | 15.3 | 16.2 | 16.7 | 22.6 |
| Germany | 11.1 | 11.5 | 12.5 | 13.3 | 18.5 |
| Italy | 4.4** | 5.2 | 5.6 | 7.0 | 72.1 |
| Poland*** | 3.8 | 5.3 | 5.6 | 11.7 | 254.8 |
| European Union | 9.2 | 11.4 | 12.6 | 13.4 | 44.6 |
Source: Eurostat and Oecd.
* Variation % = [(value 2001-value 1991)/value 1991] x100
** Year 1992.
*** All data for Poland concern only fixed-term contracts concluded for less than 12 months
Within the typology of fixed term contracts, country studies distinguish three aspects:
· contracts with a proper term
· contracts with training clauses
· agency temporary contracts
As we have seen, contracts with a proper term must respond to defined requirements. A specific distinction must be given to a kind of fixed-term contracts that contain training clauses - the so-called mixed contracts -, such as specific "working and training contracts" and apprenticeship: these contracts include, in conjunction with the work, a commitment to training. This kind of contracts, legally temporary, generally concerns, for its own nature, young people. From the standpoint of enterprises, this typology is consistent with a claim of flexibility. It allows, in addition to a long period of trial, the possibility to vary over time the size of the personnel, confirming or dismissing the workers at the end of the contract. At the same time, with its profile of training, this sort of contract can represent for young people a step toward a more stable employment.
In Italy there are two different kinds of contracts with a training clause: apprenticeship and "Contratto di Formazione e Lavoro - CFL" (work and training contract). Both of them represent an initial and temporary hiring condition for the young people. And together they have been operating for a longer period of time (apprenticeships always existed and CFLs were introduced in 1984) although clauses and incentives to employers varied from time to time, depending on legislation amendments.
In Poland, fixed-term contracts include a contract for a definite period, a contract for the completion of a specified job and a contract for a trial period. Whit the exception of the former, fixed-term contracts serve the purpose of flexible adjustment of employment to the changing need of the enterprise.
A third type of the fixed-term contract concerns the temporary work by agencies or "on lease work". This feature entails different regulations across the countries, with more or less attachment to labour market, and different consequences on the welfare, as it is linked to the contribution system.
Between 1991 and 2001, there has been a huge increase in the number of workers in temporary agencies. In France, the portion of these contracts in salaried employment has more than doubled.
In Italy, the private intermediation of workforce has been introduced only recently (1997). Therefore it is very hard in Italy to give exact figures of temporary agency workers, because agencies involved are not forced to transmit their information to a specific public agency, as it happens in other countries, and so a collecting information system is missing. The only reliable data are those estimated by the Labour Ministry. These estimations say that in 2001 the temporary agency workers involved a number of workers corresponding, in full-time equivalent, to about 73.000 units. In any case, we can notice a very sensitive increase from 1998 to 2001, especially due to recent introduction of this working typology.
In Germany, temporary agency work has been recently strengthened by the legislation stemming from the Hartz Commission. The temporary agency assumes all the usual duties of employers (i.e. payment of taxes and social security contributions, granting of paid leave, benefits in case of sickness and, of course, payment of remuneration). The particularity of a working contract with a temporary agency is that the employee does not work at his employer's but at the hiring enterprise's and has to follow the instructions of the latter. In case the hiring enterprise does not assume the employer's risk or in case the duration of hiring-out exceeds 24 successive months, the service of the temporary agency is no longer regarded as hiring-out but as arranging employment.
Concluding on this kind of atypical employment, it is worth to remark that social protection is, generally, complete but a large part of interim workers careers are low wage earners and are often hit by unemployment periods. For these two reasons, interim workers are particularly vulnerable for acquiring enough pension rights.
2.2.2 Part-time employment
This typology, as indicated in D3, can be linked both to a permanent or a fixed term contract. However, given its growing relevance in the labour market, it deserves a specific field of investigation. It can be also considered on the edge of distinction between typical and atypical work, if we consider its growing extension. The most important difference can be put between voluntary and involuntary part-time.
A well-known feature of these jobs is that they are heavily concentrated on women.
In France, there has been a very rapid increase in part-time work since 1991: the increase in part-time jobs accounts for more than 60 % of the increase in total salaried employment during the decade, with a large increase of the female component. In Germany, nearly one out of three women work on a part-time job, whereas the proportion is just above 5 % for men.
Instead, differences by age are, generally, very small in 2000 and they have decreased over the past ten years: the proportion of middle-age people working on part-time is now very close to that of young and old people.
Involuntary part-time is defined as people who work part-time and who would like to work more, whether on full time or on part-time. This definition does not mean that people who do not want to work more work part-time on a "voluntary" basis. Many surveys have showed that family work and other constraints do reduce the ability of some individuals- mainly women - to work full time.
Young people are hit at most by involuntary part-time. The incidence of involuntary part-time is also higher for men than for women. Therefore, the probability (or the risk) for men working part-time to be on involuntary part-time is higher for men.
In France, since 2000, the legal definition of part-time work has changed. Workers are now considered working part-time if they work less than the legal working time (35 hours a week). If the working time agreed in the sector of activity or the working time that applies in the working place are lower than the legal working time, part-time is defined according to these benchmarks.
In Germany, according to the new legislation following the EU Directive, vacancies have to be advertised as part-time jobs if no reasons within the enterprise are against it. Further, the employee - in case he/she wishes to return to his/ her previous working hours - has to be treated with priority when vacant full-time positions are to be filled.
As far as welfare system is concerned, family benefits, social assistance, health and long term care are social protection domains where rights are not directly affected by the working position. Instead, it is worth to remark that part-time work is often synonymous of low earnings, and this has consequently a direct impact on old-age pensions and unemployment insurance benefits.
In Italy, part-time has had an increase of about 60 percent between 1993 and 2001, but the figure (8.4 in 2001) remains significantly less than the European average (17.9).
In Poland, workers employed part-time amount to 11% of total employment and women are the majority. It is also worth noting that the medium-age population (aged 35-54 years) is the most numerous group of part-time workers.
Tab. 6 - Part-time employment
(% of the total Dependent Employment)
| 1991 | 1995 | 1997 | 2001 | Var % | |
| France | 11.9 | 15.5 | 16.6 | 16.3 | 43.9 |
| Germany | 14.1 | 17.6 | 17.7 | 20.8 | 43.8 |
| Italy | 5.5** | 6.3 | 6.8 | 7.0 | 58.7 |
| Poland*** | 11.0*** | 10.6 | 10.5 | 10.3 | -8.6 |
| European Union | 13.9 | 16.7 | 16.9 | 17.9 | 30.4 |
Source: Eurostat and Oecd.
* Variation % = [(value 2001-value 1991)/value 1991] x100
** Year 1993.
*** Year 1992.
2.2.3 Special programmes
Within this category we should consider what is normally referred to as "workfare" policies that is providing subsidies to young or long-term unemployed and, contemporarily, offering a temporary engagement in activities in the "non-market" sectors.
In France, the number of jobs under special programs has increased from 585 000 to 861 000 between 1990 and 2000, and more than 70 % of these jobs are occupied by people under 30 years. The programs targeted towards long term unemployed or young people account for 6 % of total employment in 2000, whereas the figure was just above 3 % in 1990. An increasing part of these jobs are to be found in the public sector (39 % in 2000 and 22 % in 1990).
In Germany, subsidised work in the second labour market is based on "Job-creation measures" as means of active labour market policy. Subsidies in the second labour market are limited to additional, not regular work, that furthermore must be in public interest. The salaries of this kind of work are mostly paid on a level of low skilled workers' salaries. Taxes as well as social security contributions are paid regularly; entitlements to social security benefits are also regular. As a rule, full-time jobs are subsidised in this way. The amount of the subsidy reaches from 75% (regular) up to 90% or 100% (in certain cases) of total labour costs. The duration of these contracts extends normally over a period of one year, but prolongation (up to two or three years) is possible in specific cases. Besides the job-creation measures in order to establish jobs in the second labour market there is an increase of means to foster job integration directly in the regular "first" labour market by wage subsidies.
The general objective of these measures is, in the long run, to facilitate a transition into regular employment in the first labour market.
In Italy, this kind of "special programs" has not get a relevant development. In 2000 134.000 young people were involved in this kind of employment.
In Poland, the special programmes are addressed to the so-called risk groups, i.e. threatened by the long-term unemployment and its effects. Their number, as well as the number of the participants, decreased in 2001 compared to 2000 (4740 participants in 2001 compared to 12537 in 2000).
Conclusively, we can observe that this category entails aspects of the previous atypical features: the jobs related to these programmes are temporary, and in most cases part-time. Nevertheless, they are linked to specific public policies and depend on the political choice aimed to tackle unemployment of specific groups, such as young people and long term unemployed. Generally, jobs linked to these programmes are centred on works of social interest, and are limited to a period relatively brief. In other cases they are linked to the entitlements of unemployment benefits. In different ways these special programmes can disguise an effective status of unemployment, even though reducing the relative in the national statistics.
2.2.4 Specific form of independent work
So-called "pseudo self-employed" are independent workers with a hidden dependence. Usually this kind of work stems from outsourcing parts of work, aiming to avoid mandatory social security contributions. These jobs are problematical because they usually stand for insecure employment, no or too low life / risk insurance, and deliberate avoidance of social security contributions.
In Italy this category encompasses a very large number of workers, named "parasubordinati". That is formally independent workers, working under a collaboration contract and generally concerning a project or merely occasional, so that they represent a half way between dependent and independent workers. The phenomenon of "pseudo-self-employed" work has probably always been present in Italy: its coming to light at statistical level and at debates on labour market policy, is linked to the 1995 National Insurance System reform. With it, a special register and Fund for these workers was constituted, forcing employers to pay contributions, even though reduced.
This typology has a different relevance across countries. The phenomenon of pseudo self-employment, as we have seen, is much more sizeable in Italy and, during the last years, in Poland until 2002. The analysis of this typology is clearly relevant to explore the reflex on the contribution and benefits regimes. In Germany recent legislation aims at reducing this work type: self-employed have to proof that they work for more than one client, because otherwise this would mean a high degree of dependency rather than independence.
The comparative analysis of the labour markets in the past decade is important to look at the trends for the future. Thus it is worth to point out some relevant features.
The first finding is the substantial stagnation of working age population (15-64 years old) in France, Germany, Poland (following the European trend) and a slight reduction in Italy (Tab.1). We know that this trend will continue in the next decades, so every projection must take into account this demographic evolution.
The second finding is that this decline has not hit the labour force, which has been increasing in the second phase of the period under consideration, in France, Italy and Poland, and also in Germany (but remaining at the level of 1991). These differences are linked to the evolution of total employment. In effect, when employment grows a growing number of people enter the labour market. And this is an important feature, since it indicates that, continuing this tendency, there will not be constraints on the supply side.
The third finding concerns the dynamics of employment over the last decade. The results show no uniform trends. We find out very different performances across the four countries under investigation. We may observe a growth of total employment in France and Italy during the ninety's, with a strong decline during the first half and a significant recovery in the second one. Germany and Poland show a different trend, with a substantial stagnation in Germany and a retrenchment in Poland. It is worth to go forward with the analysis of the causes of these differences, and its possible impact on the future of welfare systems.
This low dynamics on the side of employment implies a persistent high rate of unemployment. This is the case of Germany, where average unemployment rate is accentuated by the high unemployment in the new Laender. Meanwhile the increasing rate of unemployment in Poland reflects the complex transition from a planned to a market-led economy, as well as the lower economic growth of last years.
In this context, it is also necessary to analyse the specific articulation of the new forms of employment. As we have seen, the mere relationship between employment and unemployment does not allows a realistic and meaningful image of the labour market.
A fourth finding concerns the growing participation of women to the labour market. In fact, if we consider the period 1993-2001, we observe across the countries and within the European Union that the active male population is steady; meanwhile the active female component registers a remarkable increase. It means that the growth of the active population will be largely, if not uniquely, dependent on the conditions, which might favour the growth of the women's employment. This aspect is essential for defining new rules in the fields of work organisation, labour market and welfare policies. This is the case of the instruments able to reconcile working time and leisure time, as well as the leaves for care, and the possibility to vary the typology of work in relation to the changing needs along the working life.
Concerning the whole working population the supply amount will also depend on the retirement age. This aspect of the labour market is conditioned by multiple factors, such as the characteristics of the pension regimes, its flexibility, the firm's attitude towards older workers, and the re-training possibilities for adult workers.
Concluding on this point, the comparative analysis shows that the future of the welfare is crucially linked to the amount of employment. That means that the demand side will result the most relevant factor of the labour market evolution. In this framework, it is important to observe the significant difference between the two periods we have closely analysed (1993-1997 and 1997-2001). In fact, as we have indicated:
· employment decreases in the first half of the period in coincidence with a substantial stagnation of the economy;
· employment remarkably grows in the last four years in all European Union Member States in coincidence with a general upturn of the business cycle (there was instead a decrease of employment in Poland).
Thus, the forecast model has to take into account not only the demographic transition to an ageing society: economic growth rate will be a crucial factor of the employment evolution and therefore of the welfare financial sustainability and of its social adequacy and fairness.
A close analysis of the last decade has provided not only information on the dynamics of labour forces and employment. The most relevant findings concern the configuration of the labour market from the point of view of the employment typologies. In other words, the gross figures of employment tell only a part of the story. The new forms of employment, or the relevant increase of some old ones, are the major characteristics of the "new" labour market.
Whereas the "fordist" era was characterised by permanent full time work - conventionally defined "typical" or standard employment - the new labour market is shaped by a growing amount of "atypical" work. If we observe the increase of the dependent work, we can remark that, during the considered period (1991-2001) the majority of new employees has entered the labour market trough an atypical work: that is a fixed term or part-time contract, in addition to the pseudo-independent workers and the work dependent on special programmes.
With regard to the temporary employment, it is worth pointing out that temporary employment encompasses a variable degree of instability, enhancing on one hand the risk of more or less long period of unemployment and reduction or lack of income; on the other hand, periods of no social security contribution that will reduce the replacement rate of the pension in the old age.
With regard to the part-time, we must remark that this feature is increasingly becoming a new typical form of work for most women, a number of young people, some elderly workers close to retirement age. This kind of new typical feature of work can be also highlighted by the relevant size of "voluntary part-time", partly due to a changing attitude toward full-time, partly to other reasons. In any case, both main different ways of "atypical" employment (fixed-term contracts and part-time work) involve crucial consequences for the well being of working people and for the welfare regimes.(Tab. 7 shows the total social expenses in the European Union countries during the 90s).
The pension systems are a crucial issue in the debate on the future of the welfare systems. All the countries we are examining have witnessed a wide and socially engaging debate on the pension systems. In Germany, different interventions have been implemented in the effort to contain the costs, through the delay of the retirement age. In France, the reform is under discussion with proposals directed to make flexible the retirement age. In Italy and Poland, where a radical reform has been implemented during the last decade through the transition from the retributive regime, based on a replacement rate earnings-related, towards a "contributory" one, based on the contributions actually paid during the whole employment career. Given that the former regime takes into account the entire working life, not only the last period, atypical work acquires a decisive influence on the amount and dimension of the accumulated contributions. Discontinuous employment reduces that amount and part-time reduces the dimension of the contributions.
In these circumstances, two aspects become relevant. The financial sustainability of the regimes depends not only on the employment dimension but also on the composition of the employment. In parallel, the social sustainability, in other words, the level of benefits that avoid the individual risk of falling in the poverty, depends on the quality of the labour market attachment during the working life. In the countries, which have adopted this kind of reform, a great importance is attributed to the complementary regime based on the capitalisation. This second tier might be voluntary (Italy) or mandatory (Poland). In any case, it does not solve the problem of the more fragmented careers, dominated by a higher level of atypical work. The exploration of these multiple aspects of the relations between labour market and this essential aspect of the welfare will be the focus of the new steps of the LAW project, according to the forecasting model (D7).
Beyond pensions and health care, which are the main items of the social protection expense (Tab.8), the challenge that welfare systems have to cope with is the unemployment insurance in relation to the new behaviour of the labour market. The traditional insurance system is, in fact, expression of an epoch characterised by a substantially stable employment in an economy with a dominant share of the manufacture, and a relative stable growth of the national economy. With the deep changes in the technologies and the growing globalisation of the markets the economic cycles have become highly volatile. This has accrued the instability of the employment and the scope of atypical works.
In this new framework the unemployment insurance shows is inability to protect an important portion of workers, who, given the discontinuity of some forms of employment, are not eligible to the unemployment benefits. This is the first aspect of the unemployment condition linked to the atypical works. There is also a second one related to the long-term unemployment. This issue is dealt with in different ways. In Germany, depending on the prior period of employment and on the age, an assistance scheme provides a substitute of the insurance, accompanying the older worker to the age of retirement and pension. In Italy, where the unemployment benefits are very low, the long-term unemployment of older workers has been generally tackled through an anticipated pension.
In any case, these different measures are not adequate to protect young and adult workers involved in different kinds of discontinuous work. This is a problematic issue of the welfare systems also from a different point of view. In fact, two schools of thought have to be taken into account. The first, inspired by the Jobs study of OECD (1994), blames unemployment insurance and assistance benefits for weakening the recipient's incentive to actively look for a job, and therefore for affecting the duration of unemployment state. The second one, instead, deems the guarantee of the income as an indispensable complement of the flexibility of the work, which is considered a condition of the new economic context. Indeed, the new configuration of the labour market will increasingly affect this side of the welfare systems. It is a matter of fact, that the discontinuity of the employment for atypical workers, the risk of long-term unemployment and, particularly, the difficulties of finding a new job for individuals in their fifties, when dismissed in relation to the technological restructuring of the firms or for redundancies stemming from the product cycle, is increasingly considered a problematic aspect of the national welfare systems. Also in this case, the analysis of the labour market evolution, either under the profile of the total employment or under that of the specific characteristics of the employment (stocks and flows), is an essential means to predict the relations between labour market, its changes and the welfare perspectives.
As far as health care is concerned, we know that it results in a relevant amount of the total social expenses. On average the expense is, within the European Union, 7.1 percent of the GDP, corresponding to a quarter of the whole social protection cost. This issue is central in the debate of social policies, given the trend towards an ageing society. But this aspect of the welfare system is not related to the composition of the labour market for two reasons: first, the cost is not backed by social contributions, but to the general taxation; second, the benefits are not conditioned by the working status.
In this case the difference between typical and atypical employment is not relevant. What does relieve is the dynamics of the costs and the related public budget problems. Here, it is worth noting that there are consistent differences across countries we are analysing. As the table 8 shows for the European Union, Germany presents a budgetary cost that is higher than the average, with less expense in France and Italy.
With regard to this aspect, the debate is centred on the available means to contain the costs in a perspective of new needs due to the growing needs of an ageing population. The debate concerns also the integration of the public systems through the combination with private insurance. In any case, the care system is bound to provide a universal entitlement. This tendency is strengthened by the problems raised by the US experience, where the total health expense are much higher than the European average, hitting 14 per cent (2002), and leaving without any assistance 41 millions citizens.
Given these premises and taking into account the complex and increasingly fragmented scenario of the labour market, it is clear that the debate on the welfare future cannot be limited to the demographic tendencies. The growth of atypical work has changed the configuration of the labour market. It means that the financial sustainability of the welfare and in particular of the pension's regimes will be a great deal influenced by the actual dynamics of the labour market and its institutional context.
On these bases, the implementation of the LAW project should take into account, on one hand, the demographic trends, assuming the forecasts from international bodies, such as U.N. and European Union. On the other hand, the demographic trends, as we have seen, are not sufficient to analyse the possible development of welfare sustainability. Even more relevant are the actual trends of labour market and, in particular, the possible relationships among labour participation, total employment (and its specific composition with regard to atypical work), unemployment and underemployment.
From this point of view, the analysis of atypical work is crucial to take into account the grey zone of underemployment. That is the intermittent jobs that characterise the temporary work in its different features; or the involuntary part-time; or that work that is apparently autonomous, but actually economically dependent, often characterised by low wages and no, or reduced, social contributions. Jobs linked to special programmes, on one side, and "short part-time", on the other, are other examples of individuals statistically employed, but characterised by social hardship and critical welfare prospects.
The national papers, elaborated by the partners on the basis of a common ground, analyse these different aspects and pave the way for the next steps of the research, aimed to explore the possible trends of the labour market in its complex articulation and try to reach acceptable and well based assumptions on the future of the welfare systems, which is the final object of the LAW project.