sou · GYB393 · 2011-01-01 00:00:00 — In the higher part of the distribution (theoretical high school and higher) education is associated with a wage premium but employment is similar for different groups. In the lower part of the distribution, wage differentials are small, but education is associated with a big premium in terms of employment. Workers with only basic schooling have roughly the same wages as those with non-theoretical secondary school if they are employed, but their employment rate is much lower. This indicates substantial wage rigidity in the lower part of the distribution. In the higher part of the distribution, the wage premium for education has increased in the last ten years. In the lower part of the distribution, the wage structure has stayed roughly unchanged, but the employment premium for education has increased. The analysis across age groups shows that the big difference in employment is observed for workers over 55 years of age. Workers in age group 20-24 who are not studying have a similar employment rate as those in the age group 45-49. Those over 55, and especially those over 60, have substantially lower employment levels but essentially the same wage as workers of prime age. When we classify workers according to country of birth we see that the employment rate for individuals from countries with a lower level of development is substantially lower than that of natives. In the period 1996-2007 the employment situation has improved for this group, but from an extremely low level. Relative wages have changed but wages of immigrant women have decreased somewhat compared to those of native women. The wage rigidity in the lower part of the distribution is confirmed by a statistical analysis. Bilaga 5 till LU2011 Swedish wage formation -- does it work? The institutional framework for wage formation changes infrequently and the effects of changes take time to materialize. This makes it hard to evaluate the effects of institutional changes on wages and employment. Quasi-experimental studies on micro data may illuminate short-run partial effects but miss long run general equilibrium effects. Therefore, there is a lot of uncertainty about the role of institutional factors. The following is the author's interpretation of what has happened in the Swedish labour market. Unions act in the interest of their members, and they are strong in . Unions are controlled by insiders who have relatively safe jobs and they always have good arguments why their group should have a higher wage. In order to have a high level of employment in a country with strong unions, three conditions must be fulfilled: Individuals must have strong incentives to apply for, and take, the jobs which are available. If unemployed workers chose to apply for fewer jobs, this reduces the wage-dampening effects of unemployment, which means that higher unemployment is necessary in order to contain wage pressure. Wage formation has to be coordinated in some way. Without coordination, attempts by unions to raise their relative wages lead to high wage pressure which has to be counteracted by higher unemployment. Macroeconomic policy must not accommodate wage increases. If it is clear that higher wage increases immediately lead to lower employment, this helps to hold back wage increases in an economy with strong unions. These conditions were fulfilled in the 1960s: The replacement rate was lower than today. Labour market policy helped, and forced, unemployed workers to move where the jobs were available. Houses were built in expansionary areas. Wage negotiations were highly centralized. The exchange rate was fixed and balance in the current account was seen as a major goal of economic policy. Overheating, leading to high wage increases and deficits in the current account, lead to tighter policy in the form of credit constraints and restrictive fiscal policy. Swedish wage formation -- does it work? Bilaga 5 till LU2011 Although there was substantial structural change, employment was kept at a very high level in the 1960's. Employment continued to be high throughout the 1970s and the 1980s but wage formation functioned less well. Wage increases were continuously too high to be consistent with the fixed exchange rate, and this lead to repeated devaluations and the eventual demise of the fixed exchange rate. Some institutional changes may have contributed to increased wage pressure. Unemployment benefits were raised around 1970, job security legislation strengthened the position of insiders, fiscal and monetary policy accommodated wage increases, and after 1983, wage negotiations were less coordinated. Expansionary fiscal and monetary policy (devaluations) kept employment on a high level but high wage increases indicated that the situation was not sustainable. Like many other countries, experienced a period of strict monetary policy, which aimed to bring down inflation. In the case of , it took the form of defence for an, as it turned out, overvalued exchange rate. As in many other countries, the result was a large and persistent increase in unemployment. Since the late 1990s the conditions for wage formation have changed in a way that should increase employment. The exchange rate is floating and the Riksbank has a clear inflation target. This implies a clear feedback from wage increases to employment. The industrial agreement in 1997 meant a return to a high degree of coordination of wage negotiations. In the last few years, the tax and transfer system has changed in a way that has increased the incentives to take available jobs. Employment has improved since the mid 1990s but in 2007, before the financial crisis, employment was still far below the level observed in the 1970s and 1980s. The factors causing the crisis in the 1990s were mainly temporary factors such as the end of a real estate bubble, a banking crisis, and tax reform. We can understand why such factors caused a fall in demand, but according to standard economic theory they should not have major effects on the equilibrium (natural) level of employment. After a while, employment should return to the equilibrium level. Theories of persistent unemployment can explain why this process takes time, but not a permanent change in the level of employment. Bilaga 5 till LU2011 Swedish wage formation -- does it work? So why has employment not returned to the level observed between 1970 and 1990? Some possible explanations are as follows: The situation in the late 1980s was not an equilibrium situation. Wage increases were too high to be consistent with the fixed exchange rate. Monetary policy has been unnecessarily restrictive. In the last decade, inflation has been half a percent below target on average. In view of the weak employment situation, wage increases have been high. An average wage increase of 4 percent is consistent with the inflation target of 2 percent when the productivity increase is around 2 percent, but it does not leave much room for an expansion of employment. In line with the insider- outsider theory, high unemployment seems to have a very weak effect on wage formation. There are signs that the structural imbalances in the labour market have increased. Technical change seems to benefit persons with higher education and at the same time there are indications of strong wage rigidity in the lower part of the distribution. Since the mid 1990s most groups have raised their employment level but workers with only basic schooling have the same low employment level as in the mid 1990s. The wage premium for education has increased in the higher part of the distribution while the employment premium has increased in the lower part of the distribution. A share of the population has left the labour force to early retirement etc. Probably, there is something in each of these explanations, but it is hard to quantify the importance of the different factors. So what conclusions can be drawn from the analysis? The main problem is not supply of labour, but lack of jobs. Some form of coordination of wage negotiations is necessary. Although we have a floating exchange rate there is still a case for the competitive sector being wage leader. Too high wage increases, which lead to a high interest rate and an appreciating currency, have more direct and immediate effects on the competitive sector. At the same time, it is hard to imagine wage coordination that does not also lead to wage equalization. No union leader will accept a coordination which gives his group lower wage increases than Swedish wage formation -- does it work? Bilaga 5 till LU2011 Agreements which try to lift the wages of low-wage groups will tend to increase the structural imbalances in the labour market in terms of employment. Business leaders often argue for wage flexibility in the sense that wages should reflect the ability to pay of the individual company, or sector. But equal pay for equal work leads to an efficient allocation of resources. Companies which cannot pay the going wage should be closed down. A rigid wage structure does lead to problems if it means equal pay for unequal work. In a market economy, companies employ workers only if it is profitable for them. If the productivity of an individual worker does not match the going wage, it will be impossible to find work. Larger wage dispersion, so that wages better reflect the productivity of individual workers, would reduce the structural unemployment problems, but also increase income differentials between employed workers. Reductions in employers taxes or income taxes for low wages mean that the costs for employers are reduced without larger income differentials after tax. In the last few years, reduced taxes on earned incomes and reduced benefit levels have increased the incentives for unemployed workers to take the jobs which are available. This should lead to increased employment but the mechanism by which this happens differs between labour market theories. According to search and matching theory there should be a direct and immediate effect on employment as unemployed workers search more intensely and accept more job offers. The efficiency wage theory says that employment is determined by demand, so the effect is more indirect, and slower. As unemployed workers apply for more jobs, this does not in itself create more jobs, but wage pressure is reduced and this creates scope for an increase in employment when aggregate demand increases. According to this view, supply side reforms have created conditions for increased employment, but this growth has been stalled by the financial crisis. Once demand picks up, there should be an increase in employment with inflationary pressure. To the extent that wages are set in union contracts, the effects of supply side reforms depend on how wage negotiations are affected. When unemployed workers are more anxious to get jobs, the queues to available jobs increase, but this will increase employment only if wage pressure is reduced by the longer queues. Bilaga 5 till LU2011 Swedish wage formation -- does it work? If we see employment as being demand-determined, in line with the efficiency wage and bargaining theories, the effects of supply side reforms will come gradually. Theory and empirical evidence shows that wage adjustment may be very slow. Increased wage flexibility on the individual level should make it easier for individuals with less good qualifications to find jobs. Agreements which specify a lump, sum but where individual wages are set locally, may provide such flexibility on the individual level. Whether it does so in practice depends on the attitudes of the local unions. Another way to increase wage flexibility on the individual level is to write contracts specifying a minimum wage increase and let wage increases above that level be bargained individually. Another way to increase the opportunities for persons with weak attachment to the labour market is to allow them to pay their own training cost in the form of a relatively low starting wage. This would make it possible for persons with relatively experience to compete for the jobs. Also, it makes firms less worried about losing workers because the replacements pay their own training costs. One problem with this type of contract is that insiders may fear being replaced by cheap new hires, but this could potentially be monitored by unions. If we look at employment across age groups, the main potential to increase employment seems to be in the age group above 55. The wages of older workers are roughly equal to those of workers in prime age. Increased wage flexibility in this dimension would increase the incentives for firms to retain, and to hire, older workers. From the empirical analysis of employment and wages across educational groups, one may get the impression that higher education is the key to higher employment. This is an incorrect conclusion. Those who have high education have higher wages and employment on average, but they differ from those with lower education in many ways, including unobserved characteristics. A long education is not the right way to employment for all individuals and all types of educations do not lead to good employment opportunities and high wages. What is important is that the composition of workers in terms of education is such that the supply of labour matches demand, so that the unemployed workers can compete for the jobs. Shortage of workers in specific sectors leads to wage pressure in those sectors and demand for compensation by other groups. To better balance demand and Swedish wage formation -- does it work? Bilaga 5 till LU2011 supply, better information is needed about the job for those who complete specific types of education. Individuals with only basic schooling and immigrants from countries with a lower education level have much lower employment rates than other groups. It is tempting to conclude that unemployment is a structural problem which has to do with the macroeconomic situation. One should be cautious drawing such a conclusion, however. In general, persons with secondary school are more attractive to employ than persons with lower level of schooling. Since the wage differentials are small, employers generally prefer to hire the former. Those with lower education are last in line to available jobs. But if the overall demand for workers was higher, those at the back of the job queue would also have a chance to get a job. One should not jump to the conclusion that unemployment is only a structural problem. The overall state of the labour market has a particularly strong effect on workers who have difficulties competing for the jobs. What ultimately determines the aggregate labour market outcome is the level of aggregate demand, which is controlled by the Riksbank via monetary policy. A period of low wage increases, in the order of 2-3 percent, would lead to low inflation, low real interest rates, and rising employment. The overall employment situation should play a more important role in discussions about the appropriate norm for wage increases. Bilaga 6 till LU2011 Det svenska anställningsskyddet* * Jag tackar , , Per Skedinger och för värdefulla kommentarer och förslag. Alla synpunkter härrör från författaren. Texten är översatt från engelska av . Bilaga 6 till LU2011 Det svenska anställningsskyddet........................................ Det svenska regelverket i ett internationellt perspektiv..... Fördelarna med anställningsskydd........................................ Skyddande av anställda mot godtyckliga Finns det behov av att reformera det svenska Faran med att reformera på marginalen .................... An overview of the Swedish system and an The Swedish system............................................................... 2.2International comparisons: the strong duality of the Swedish labor market............................................................. The benefits of job protection.................................... The protection of workers from arbitrary dismissals.......... Bilaga 6 till LU2011 The internalization of social costs of labor turnover The costs of job protection ........................................ Labor market segmentation................................................... Does the current Swedish employment protection legislation warrant reforms? The dangers of reforms at the ................................... Bilagan innehåller även en längre fördjupad text på engelska i vilken det finns referenser till internationell forskning. Ungefär en tredjedel av alla anställda får under ett givet år antingen ett nytt arbete eller lämnar sitt tidigare arbete enligt data över arbetskraftens rörlighet i olika länder. Denna omflyttning av anställda och arbetstillfällen tycks bidra till en ökad produktivitet. Sysselsättningen växer snabbare i yngre och mer effektiva företag än i äldre och mindre effektiva företag. En ständig omstrukturering med uppsägningar och öppnande av nya arbetstillfällen skapar värden för samhället i stort, men det är inte självklart att fördelarna fördelas på ett rättvist sätt. En fabriksarbetare som förlorar sitt arbete på grund av konkurrens från låglöneländer drabbas oförskylt. Det ligger i sakens natur att strukturomvandlingen leder till denna typ av närmast slumpmässiga utfall vilket gör att vi behöver ett socialt skyddsnät. Anställnings- skyddet, som reglerar både uppsägningar av tillsvidareanställd personal och användandet av tillfälliga anställningar, kan ses som ett verktyg för att minska risken för att bli uppsagd på grund av dåliga ekonomiska förhållanden, men det kan också ses som ett skydd mot godtyckliga uppsägningar från arbetsgivarens sida. Genom att personalomsättningen begränsas minskar dock också arbetsgivarnas möjlighet att välja ut och leda sin personal som det blir svårare att ställa om produktionen efter teknologiska förändringar eller när efterfrågan på företagens produkter förändras. Därför kan regelverket ha negativa effekter på såväl sysselsättning som produktivitet och teknologisk utveckling. Reglerna kan också skapa ojämlikheter mellan de tillsvidare- Bilaga 6 till LU2011 anställda som skyddas av anställningsskyddet och de tillfälligt anställda som inte skyddas i samma utsträckning. I slutändan är valet av regelverk därmed en fråga om avvägningar mellan dessa för- och nackdelar. Denna rapport inleds med en översikt av huvuddragen i anställningsskyddet i och andra (avsnitt 1). Avsnittet belyser särdragen i det svenska regelverket, vilket tycks kännetecknas av en exceptionell skillnad mellan ett starkt skydd för tillsvidareanställda och mycket begränsade restriktioner vad gäller användandet av tillfälliga anställningar. Därefter beskriver avsnitt 2 och 3 för- respektive nackdelar med ett anställningsskydd. Analysen visar att det svenska anställningsskyddet skapar en tudelad arbetsmarknad med stora skillnader i jobbtillgång mellan unga och äldre. Avsnitt 4 diskuterar därefter reformer av det svenska anställningsskyddet som skulle kunna öka effektiviteten på den svenska arbetsmarknaden. 2Det svenska regelverket i ett internationellt perspektiv Den nuvarande svenska lagstiftningen om anställningsskydd finns i Lagen om anställningsskydd , vilken bygger på den ursprungliga Lagen om anställningsskydd . I det svenska anställningsskyddet får de tillsvidareanställda ett starkt skydd. Möjligheterna till flexibilitet från företagens sida bygger istället i stor utsträckning på generösa möjligheter att använda tillfälliga anställningar. Dessa egenheter i det svenska regelverket blir tydliga vid internationella jämförelser. Jämförelserna visar att de restriktioner som omgärdar användandet av bemanningsföretag och tillfälliga anställningar är relativt svaga vilket står i kontrast till ett skydd för tillsvidareanställda som istället är striktare än i de flesta andra länder. är det land inom som har den största skillnaden mellan hur strikta regelverken är för tillfälliga anställningar och tillsvidareanställningar. Med andra ord är den svenska arbetsmarknaden extremt tudelad. Å ena sidan måste företagen följa relativt strikta regler som skyddar anställda med tillsvidarekontrakt. Å andra sidan har de stora möjligheter att använda sig av tillfälliga anställningar. Bilaga 6 till LU2011 3 Fördelarna med anställningsskydd Anställningsskyddet kan både motiveras utifrån ett behov av att skydda de anställda från godtyckliga uppsägningar och utifrån en vilja att få företag att beakta åtminstone en del av personal- omsättningens samhällsekonomiska kostnader. 3.1Skyddande av anställda mot godtyckliga uppsägningar Behovet av att skydda anställda mot godtyckliga uppsägningar tillgodoses av regelverket kring uppsägningar av personliga skäl, enligt vilket uppsägningar av skäl kopplade till en enskild anställd endast är motiverade om den anställde brutit mot eller inte följt villkoren i anställningsavtalet. Detta är doktrinen om sakliga skäl (just cause), som implementerats i de flesta europeiska länder, vilken dikterar att företag inte kan säga upp anställda utan att kunna belägga sakliga skäl. Ett sådant skydd finns dock inte i alla länder. I råder istället Employment-at-will- doktrinen som innebär att båda parter är fria att säga upp anställningen utan skadeståndsskyldighet så länge det inte finns ett uttalat kontrakt som reglerar anställnings- tiden och så länge den anställde inte täcks av ett kollektivavtal med annan innebörd. Under denna doktrin antas alla anställningar vara at will, vilket innebär att arbetsgivaren är fri att säga upp individer av goda skäl, dåliga skäl eller av ingen anledning alls. Den anställde är lika fri att sluta, strejka, eller lägga ner arbetet av andra skäl. Det finns goda argument för den Europeiska doktrinen om sakliga skäl. Inte minst kan anställningsskyddet vara ett bra sätt att skydda de anställda från godtyckliga beslut från arbetsgivarens sida. Exempelvis kan en arbetsgivare som inte följer arbetsmiljöreglerna säga upp anställda som klagar. Arbetsgivaren kan tjäna på detta så länge hon har möjlighet att ersätta de uppsagda till en låg kostnad. Genom att skydda anställda mot denna typ av uppsägningar kan effektiviteten i ekonomin förbättras. Det bör dock noteras att anställningsskyddets positiva effekter i allmänhet fördelas ojämnt och att skyddet kan leda till att välfärden försämras för vissa grupper. Mer specifikt så missgynnas ofta de tillfälligt anställda av ett stark skydd för de tillsvidareanställda eftersom arbetsgivarna kan bli ovilliga att omvandla tillfälliga Bilaga 6 till LU2011 anställningar till tillsvidareanställningar om det är dyrt eller besvärligt att säga upp tillsvidareanställd personal. Därför kan ett starkare skydd för de tillsvidareanställda gynna grupper som får större möjligheter att behålla sina jobb, och vara till nackdel för de arbetslösa och de tillfälligt anställda vilka istället får försämrade möjligheter att få ett stabilt arbete. Denna mekanism förklarar varför de på insidan, s.k. insiders, som har tillsvidare- anställningar kan försvara ett strikt anställningsskydd även om det medför en kostnad för dem som står utanför, s k outsiders, som inte har ett fast arbete. De som är unga, lågkvalificerade eller har invandrarbakgrund är överrepresenterade i gruppen outsiders, medan högkvalificerade medelålders män vanligen tillhör gruppen insiders. Doktrinen om sakliga skäl som syftar till att skydda anställda mot godtyckliga uppsägningar är ett rimligt motiv bakom delar av det svenska anställningsskyddet, exempelvis arbetsdomstolens existens och lagstadgade varseltider som ger de anställda en möjlighet att förbereda sitt försvar. Däremot kan turordnings- reglerna, som definierar den ordning utifrån vilken de anställda blir uppsagda, knappast motiveras som ett skydd mot godtyckliga uppsägningar.