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Conference Board's Maselli on European Labor Markets (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh, Brio to Washington,
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  Speaker 1: taking stock, will take stock of labor and its implications
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  Speaker 1: for the European Union. For example, in early June, and
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  Speaker 1: we're protests in Paris over French labor reform bills. They
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  Speaker 1: turned violent. Forty people were injured, seventy five thousand demonstrators
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  Speaker 1: We've got details, but right now we'll go to Charlie
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  Speaker 1: Dennis Gartman is the editor of the Garment Letter. He
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  Speaker 1: So I tend to be a buyer of gold in
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  Speaker 1: and we thank you, and again we capping S and
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  Speaker 1: P five hundred index up sixteen points to three, a
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  Speaker 1: That's a Bloomberg business flash. You're listening to taking stock
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  Speaker 1: with bim Box at Kathleen Hayes on Bloomberg Radio. Labor
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  Speaker 1: reform labor reform in the European Union. In early June,
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  Speaker 1: European Central Bank Executive board member ben Wa Korree issued
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  Speaker 1: a lee for quick adoption of economic reforms throughout Europe. Indeed,
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  Speaker 1: he said that the Eurozone risks suffering a lost generation
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  Speaker 1: because of high youth unemployment. Here to tell us more
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  Speaker 1: about labor markets in Europe is Elaria Masselli, senior economists
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  Speaker 1: for Europe for the Conference Sports. He's based in Brussels,
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  Speaker 1: but joins us here in our studio in New York. Hilaria,
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  Speaker 1: thank you very much for being with us. Thank you
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  Speaker 1: for inviting me. So set the stage if you can
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  Speaker 1: describe for people that may not be following what's going
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  Speaker 1: on in labor reform in the European Union, what is
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  Speaker 1: or isn't happening, and maybe compare it to some of
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  Speaker 1: the issues that we face in the United States. Okay, well,
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  Speaker 1: and he's a question to start here there, you go right,
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  Speaker 1: just to do it all once, Okay, well, I will
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  Speaker 1: start perhaps on what I see as the biggest problem
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  Speaker 1: in the European labor markets. UM, not all of them,
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  Speaker 1: because let's remember I mean Europe. You know, you can
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  Speaker 1: show statistics with every for the urala European Union, but
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  Speaker 1: it's made of very diverse economies within. But notwithstanding the differences,
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  Speaker 1: I would say that a big problem is the dualization
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  Speaker 1: of the labor market. I'll explain what I mean. It
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  Speaker 1: means that there is a generation of works, a portion
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  Speaker 1: of the workers that enjoy let's say, the full package
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  Speaker 1: of all the benefits that were negotiated some fifty sixty
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  Speaker 1: years ago, and then there is UH. And then there
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  Speaker 1: were a series of labor market reforms that started in
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  Speaker 1: the nighties in in a lot of European economies, and
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  Speaker 1: these reforms were called well, we're liberalizing in the labor market,
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  Speaker 1: but on the margin. And on the margin it means
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  Speaker 1: that we're introducing all forms of flexible contracts, temporary work
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  Speaker 1: arrangements and UM, without touching what was there already. So
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  Speaker 1: you have right now in France, in Italy, in Spain,
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  Speaker 1: to some extent in Germany, you have a lot of
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  Speaker 1: workers which enjoy it let's say two thirds or four
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  Speaker 1: fifths of the workers that enjoy the full package UM,
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  Speaker 1: and then you have a portion of workers, most likely
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  Speaker 1: young workers that's uh, that a much weaker position in
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  Speaker 1: the labor market. So I think all the attempts to
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  Speaker 1: do reforms should aim at rebalancing this situation. So is
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  Speaker 1: that similar for example to let's say the US airline
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  Speaker 1: industry that negotiates contracts and has the pilots that are
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  Speaker 1: veterans who have been in those positions for many years.
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  Speaker 1: They enjoy the pay and the benefits of those and
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  Speaker 1: that new pilots perhaps coming into the company they work
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  Speaker 1: under a different contract. Yes, and they have the longer
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  Speaker 1: hours for example of work and UM, much more limitations
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  Speaker 1: on sickness for example, or maternity leaves UM. So there
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  Speaker 1: is an unfair distribution of rights, and to some extent
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  Speaker 1: this distribution is also generational. And this is why UM
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  Speaker 1: young workers feel really affected by this by the crisis.
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  Speaker 1: In your analysis, tell us countries in Europe that you
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  Speaker 1: feel are doing the right thing when it comes to
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  Speaker 1: labor reform and those that are dragging their feet, Well,
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  Speaker 1: the model, I would say is the Scandinavian model. UM.
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  Speaker 1: It's a very interesting equilibrium because um, everyone enjoys UM
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  Speaker 1: a lot of a lot of benefits. I mean, the
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  Speaker 1: Scandinavian welfare system is perhaps the best system in the world.
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  Speaker 1: At the same time, it's very convenient for companies. There
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  Speaker 1: are a lot of profitable companies that operate in Copenhagen
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  Speaker 1: or in Stockholm and UM well, if if there is
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  Speaker 1: a problem within a labor relationship, they can easily higher
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  Speaker 1: fire people. And at the same time this is not
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  Speaker 1: a drama because the system is there to help you.
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  Speaker 1: And also you're sure that you will find another job
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  Speaker 1: easily because if you're, for example, your skills are outdated,
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  Speaker 1: there is a whole system of ACTI labor market policies
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  Speaker 1: that would really help you to to be trained again
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  Speaker 1: and then be employable the relatively easily. So in this
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  Speaker 1: system you have very low unemployment rates, very high employment rates,
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  Speaker 1: everyone works UM and everyone is happy. It's called flex security.
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  Speaker 1: Is that something that could have been adopted by the
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  Speaker 1: United Kingdom. Why didn't David Cameron, the former Prime Minister,
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  Speaker 1: push for that kind of system. Oh, that's the one
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  Speaker 1: billion dollar question. Because UM, of course, how generous systems
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  Speaker 1: are welfare systems are depends on depend on um preferences
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  Speaker 1: of the people, because a system like the Danish one
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  Speaker 1: is also an expensive system, which means that people pay
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  Speaker 1: quite high taxes UM and maybe you know, the same
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  Speaker 1: system could not be applied in the United States, where
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  Speaker 1: there is a different preferences. There are different preferences compared
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  Speaker 1: on this on this domain also there is another challenge.
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  Speaker 1: So actually one my my my TASiS when I wasn't
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  Speaker 1: Universe City was on, exported this model to Italy, which
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  Speaker 1: is my home country, and the bitter conclusion of that
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  Speaker 1: was that it's not possible because it requires a lot
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  Speaker 1: of management. You know, every single unemployed worker needs assistance,
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  Speaker 1: and every single UM employee of a of a local
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  Speaker 1: local office so that manages active level market policies, needs
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  Speaker 1: to be trained in order to provide the type of assistance.
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  Speaker 1: So it's really working on each single person, and not
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  Speaker 1: every system has that capacity. I want to thank you
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  Speaker 1: very much for coming and spending time and look forward
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  Speaker 1: to having you again on the program in the future.
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  Speaker 1: Larry Maseli is Senior Economist for Europe the Conference Board
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  Speaker 1: based in Brussels, speaking about labor market reform in Europe.
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