The Future of Work in Europe

Research in this area includes work by Chris Pissarides

Employment in the European Union is still falling short of the objectives set by the continent’s leaders more than 10 years ago. In a recent lecture at the Fourth Lindau Meeting on Economic Sciences, CEP member and Nobel laureate Chris Pissarides explains why Europe remains behind the US in job creation, particularly in business services and the health and education sectors.

In the year 2000 the EU’s leaders set targets for employment at the Lisbon summit. These targets have not been met by all states. In particular the Mediterranean countries have failed to achieve the objective of getting at least 70% of the working age population into employment, and the EU continues to lag behind the US in jobs performance as a whole.

To answer this question, Chris goes behind the aggregate statistics and looks at individual sectors of the economy, comparing these sectors across the US and EU. This is an interesting comparison, he argues, because if the EU had kept up with the US on the jobs front the objectives of the Lisbon summit would have been met. Instead, sometime around the early to mid 1970s the employment performances of the US and EU diverged.

Indeed, just before the Great Recession of 2008, more than three quarters of US citizens between 15 and 64 were in employment, whilst only two thirds were in Europe. But peering behind the headline figures, three broad sectors account for virtually all the differences between the US and EU: Firstly, services that are provided directly to the public, such as retailing. Secondly, services that are mainly business to business, such as finance. Thirdly, services related to health and education.

Chris goes on to analyse each of these sectors, and offers Europe a stark warning about the future of European healthcare. The lecture is summarised in the Autumn 2011 edition of the CEP’s CentrePiece magazine, and can be accessed here