The Welfare State and Life Transitions: A European Perspective

The Welfare State and Life Transitions

The Welfare State and Life Transitions A European Perspective

Edited by

Dominique Anxo Linnaeus University, Sweden

Gerhard Bosch University of Duisburg-Essen, Germany

Jill Rubery University of Manchester, UK

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Dominique Anxo, Gerhard Bosch and Jill Rubery 2010 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009942055

ISBN 978 1 84720 780 7 (cased)

02

Printed and bound by MPG Books Group, UK

Contents List of contributors Acknowledgements 1 2 3

4

5

6

7

8 9

10

vi x

Shaping the life course: a European perspective Dominique Anxo, Gerhard Bosch and Jill Rubery The UK welfare state: more than residual but still insufficient Jill Rubery Towards an active and integrated life course policy: the Swedish experience Dominique Anxo From the breadwinner model to ‘bricolage’: Germany in search of a new life course model Gerhard Bosch and Andreas Jansen Transitions in female and male life course: changes and continuities in Austria Ingrid Mairhuber Life course transitions in Hungary before and after the societal transformation Zsolt Spéder, Balázs Kapitány and László Neumann From selective exclusion towards activation: a life course perspective on the French social model Christine Erhel, Léa Lima and Chantal Nicole-Drancourt ‘La grande illusion’: how Italy’s ‘American dream’ turned sour Annamaria Simonazzi and Paola Villa Life stage transitions and the still-critical role of the family in Greece Maria Karamessini The uncertain path from the Mediterranean welfare model in Spain Fausto Miguélez and Albert Recio

Index

1 78

104

128

155

182

208 231

257

284

309

v

Contributors Dominique Anxo is Professor of Economics at the Department of Economics and Statistics, Linnaeus University and Director of the Centre for Labour Market Policy Research (CAFO). His research interests fall broadly into the areas of labour economics, industrial relations, gender economics, time allocation and evaluation of employment and labour market policy. Recent publications include Anxo, D., C. Erhel and J. Schippers (eds) (2008), Labour Market Transitions and Time Adjustment over the Life Course, Amsterdam: Dutch University Press; and Anxo, D. and J.-Y. Boulin (eds) (2006), Working Time Option over the Life Course: New Work Patterns and Company Strategies, Dublin: European Foundation for the Improvement of Working Life and Working Conditions. Gerhard Bosch is an economist and sociologist and is a Professor at the University Duisburg-Essen and Director of the Institut Arbeit und Qualifikation (institute for work, skills and training). He has published widely in the areas of comparative employment systems, low wages, industrial relations, and vocational education and training. Recent publications include Bosch, G., S. Lehndorff and J. Rubery (eds) (2009), European Employment Models in Flux, Hampshire: Palgrave Macmillan; Bosch, G. and C. Weinkopf (eds) (2008), Low-wage Work in Germany, New York: Russell Sage Foundation and Bosch, G. and S. Lehndorff (eds) (2005), Working in the Service Sector: a Tale from Different Worlds, London: Routledge. Christine Erhel is an Associate Professor at the University of Paris 1 Panthéon Sorbonne, Centre d’Economie de la Sorbonne. She is also an Associate Researcher at Centre d’Etudes de l’Emploi. She has been working on labour market policy comparisons, life course and job quality indicators. She was involved in the Transitional Labour Markets network and in several research contracts for DG Employment of the European Commission. Andreas Jansen is a sociologist and works as a Research Assistant at the University Duisburg-Essen. His research centres on the transition from employment to retirement, the reconstruction of the old-age, disabled and survivors’ social security system in Europe and most recently on age stereotypes and age cultures from a comparative perspective. vi

Contributors

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Balázs Kapitány is a demographer and sociologist and is a Researcher at the Demographic Research Institute (Budapest). His research focuses on the relationship between social structure and demographic behaviour. His recent publications deal with the effects of the labour market system on the realisation of fertility intentions. Maria Karamessini is Associate Professor in Labour Economics and the Economics of the Welfare State at Panteion University of Social and Political Sciences in Athens. She has published in the areas of labour market analysis and policy, gender inequalities in employment, youth labour markets, welfare state and social models. Recent publications include Karamessini, M. (2008), Labour Market Integration of University Graduates, Athens: Network of Careers Offices of the Greek Universities and Dionicos; and Karamessini, M. and G. Kouzis (eds) (2005), Employment Policy as Economic and Social Policy, Athens: Gutenberg. Léa Lima is Assistant Professor at the Conservatoire National des Arts et Métiers (Paris) and a permanent member of the research centre LISE. Her main research topics deal with employment and social policies, youth integration strategies and the sociology of social work. Ingrid Mairhuber is a political scientist and Senior Researcher at the Working Life Research Centre in Vienna and Austrian Expert in the EC network on Employment and Gender Equality Issues (EGGE). Her main research areas include labour market, social security and equal opportunity policies as well as gendered life course analyses. Recent publications include: Mairhuber, Ingrid (2009), ‘Übergänge im Lebenserwerbsverlauf von Frauen und Männern in Österreich. Entwicklung, Regulierung und Absicherung’, in Christoph Hermann and Roland Atzmüller (eds), Die Dynamik des ‘Österreichischen Modells’. Brüche und Kontinuitäten im Beschäftigungs- und Sozialsystem, FORBA-Forschung Bd. 4, edition sigma, Berlin: p. 45–72. Fausto Miguélez is Professor of Sociology and Director of the Sociological Studies Centre QUIT at the Universidad Autonoma de Barcelona. Recent publications include: Miguélez, F. (2009), ‘The transformation of the Employment System in Spain: towards a Mediterranean Liberalism?’, in G. Bosch, S. Lehndorff and J. Rubery (eds), European Employment Models in Flux, Hampshire: Palgrave Macmillan; Miguélez, F. and C. Prieto (2008): ‘L’autre côté de la crosissance de l’emploi en Espagne: une précarité qui se perpétue’, Travail et Emploi, No. 115, Paris; and Miguélez, F., R. Alós, A. Martin and F. Gibert (2007), Trabajar en Prisión, Barcelona: Icaria. László Neumann is a sociologist and Senior Research Fellow at the Research Institute for Social Policy and Labour and at the Institute for

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The welfare state and life transitions

Political Science, Hungarian Academy of Sciences. His research interests embrace several fields of labour market policy and industrial relations: decentralised collective bargaining, employment practices and labour relations at foreign-owned companies, and the labour market impacts of Hungary’s accession to the European Union. Chantal Nicole-Drancourt is a sociologist and a Researcher at the CNRS, in the Interdisciplinary Laboratory for Research in Socio-economics (LISE), Conservatoire National des Arts et Métiers (CNAM), Paris. Areas of interest include the analysis of employment trajectories in the face of current major changes in work organisation, family configurations and social protection systems, as well as the modification in time allocation across the life course in a gender perspective. Albert Recio is Professor at the Department of Applied Economics at the Autonomous University of Barcelona and a member of the Centre QUIT. His research interests fall broadly into the areas of labour economics, employment structure, unions and social movements and labour policies. He has also published numerous articles and book chapters on labour economics issues. He is also editor of Revista de Economia Critica. Jill Rubery is Professor of Comparative Employment Systems at Manchester Business School and founder and Co-Director of EWERC (European Work and Employment Research Centre). She has published widely in the areas of comparative employment systems, gender equality and labour market segmentation. She is joint author of The Organization of Employment: An International Perspective (with Damian Grimshaw, published by Palgrave Macmillan) and European Employment Models in Flux (with Gerhard Bosch and Steffen Lehndorff, published by Palgrave Macmillan). In 2006 she was elected a Fellow of the British Academy. Annamaria Simonazzi is Professor of Economics at La Sapienza University of Rome, President of the Scientific Committee of the Fondazione Brodolini and co-editor of Economia & Lavoro. A macroeconomist, with a strong focus on institutional and social aspects, she has published widely in the areas of macroeconomic theory and policy, the economics of the welfare state, employment and gender. Zsolt Spéder is a demographer and sociologist and is Director of the Demographic Research Institute Hungarian Statistical Office in Budapest. He has published widely on social inequalities, poverty dynamics and family formation. His more recent studies were published in Demographic Research, European Journal of Population and Population Studies.

Contributors

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Paola Villa is an economist and Professor at the University of Trento. She is the author of numerous studies on labour economics with particular reference to internal labour markets, the wage structure, the role of small firms, labour market regulations and deregulations, gender in the labour market, fertility, and labour force participation and unemployment. She is an expert on gender studies and equal opportunities policies from a comparative perspective.

Acknowledgements This book is based on the results of a research project entitled ‘Dynamics of national models of employment’ (Dynamo) which was conducted over the period 2004–07. The project was set up to investigate the external and internal pressures for change on national employment models in Europe and to consider the implications for the future of national models of this process of change and restructuring. A particular question was whether we would find a tendency for EU member states to develop new specific solutions or a process of convergence towards a European Social or a European Market Model. The project as a whole involved ten national teams and three interrelated themes and methodologies. The first theme covered the whole field of production and welfare systems and gave rise to the publication of a book European Employment Models in Flux (Palgrave) edited by Gerhard Bosch, Steffen Lehndorff and Jill Rubery. More detailed work on changes in production systems was undertaken as a second stage through studies of sector-specific changes, taking the examples of IT services, construction, elderly care, hotels and the motor industry. The results of this production are to be published in 2010 in a special issue of the journal Work Organisation, Labour and Globalisation, Vol. 3, No. 1 (www.analyticapublications.co.uk). The third theme, which is the topic of this book, takes a new look at changes and developments in social welfare systems, broadly defined, to consider how social welfare systems are providing support for the key life stage transitions that have defining impacts on European citizens’ future life course prospects. The editors would like to express their thanks to all the 45 researchers who contributed to the success of the project including the Irish team who unfortunately, due to illness, could not contribute to the present book. We have enjoyed the collective work process in the course of the project and the inspiring discussions at project meetings. We experienced a wonderfully supportive attitude from all co-authors during the production process of the present volume and we would like to thank all contributors for their efforts and patience. Above all we would like to thank Steffen Lehndorff who took overall responsibility for coordinating the project and without whose patience, good humour and commitment to the project and its objectives, the project would not have been brought to a successful conclusion.

x

Acknowledgements

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We thank the EU Commission, Directorate General Research, for financial support and particularly Heiko Prange and Ronan O’Brien who supported our project and helped in many ways. We would like also to thank Växjö University and Dominique Anxo who organised and hosted the 27th Conference of the International Working Party on Labour Market Segmentation (IWPLMS) on ‘National Patterns of Labour Market Integration and Social Exclusion over the Life Course’ (14–16 September, 2007, Växjö, Sweden) and gave us the opportunity to present earlier versions of some of the chapters of this volume. Many thanks also to Monika Spies from the Institut Arbeit und Qualifikation who provided excellent editing services and to Georgiana Applegate from Edward Elgar who, in managing the production of the book, proved to be extremely flexible, helpful and cooperative.

1.

Shaping the life course: a European perspective Dominique Anxo, Gerhard Bosch and Jill Rubery

This book investigates the changing patterns and levels of social welfare systems through the lens of key life stage transitions. This provides an insight into the adequacy of welfare systems’ response to the changing needs for support at these critical stages of life that shape future life course prospects. The focus on key life stages has three purposes. First it provides a lens through which to analyse a range of different dimensions of social welfare systems. It is at key life stages that social welfare systems are particularly needed to provide support in addition to or instead of employment or the family. These include the key life stages of preparing for and entering work, setting up independent households, surviving interruptions to work in prime age, whether for parenthood, sickness or unemployment, and withdrawing from work into retirement. The support systems in place at these stages have major impacts in empowering or preventing citizens from fulfilling their potential and their aspirations. These support mechanisms are critical for issues of equity and social inclusion. A focus on key life stages also facilitates an evaluation of how social welfare systems vary in the effectiveness of their support for different groups, defined, for example, by class, gender, age and generation. Second, the key life stage approach can help identify the impact of potentially conflicting pressures for change. These conflicts arise from the short-term pressures to reduce costs or to minimise open unemployment for political reasons, both of which, for different reasons, may jeopardise opportunities to engage in longer-term strategic change. This long-term change is required to keep social welfare systems in step with the major changes actually taking place in the life course, and in the associated behaviour and aspirations of European citizens. The European Employment Strategy (EES) espouses the need for long-term reform to ensure that welfare systems promote an active, and appropriately and

1

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The welfare state and life transitions

flexibly skilled, working-age population. However, the EES also takes as a starting point that European social models are ‘too rigid’ to cope with the rapid changes in production and employment associated with globalisation and the growth of the knowledge economy. Some of the problems of this ‘rigidity’ may be evident at key life stages, leading to too long transitions to work, too much discontinuity of women’s employment, too extended unemployment and too early exit from employment. In promoting reform towards more flexible systems, the EES may in practice also reinforce short-term cost-reducing agendas (Rubery et al. 2008). The adoption of a life stage analysis can in this context be used to illuminate the extent to which current reforms are strategic or ad hoc and to identify who is likely to benefit or lose from current reform agendas. Third, the life stage perspective enables us to bring together two approaches to our understanding and analysis of European social models and welfare systems that have somewhat different theoretical and political associations. The first is the ‘varieties of welfare’ systems approach, where complementarities between institutional arrangements in the welfare, family and labour market systems generate path-dependent and divergent outcomes with respect to employment and welfare for citizens. This approach emphasises the role of collective action and provision in shaping the specific societal form of the life course; the focus is on differences across societies in the standard life course rather than on varieties of life course patterns among individuals. The second is the emerging interests in the life course as a new paradigm for studying the interrelated trajectories of individuals, social groups and institutions over time. Although the latter is more individualised in approach, in contrast to the more collective and structured analysis of varieties of welfare states, developments of the life course approach (Mortimer and Shanahan 2003; Mayer 2004; Kohli 2007; Heinz et al. 2009) recognise that to provide opportunities for more individualised and variable life course approaches new forms of social support may be required. The variety of welfare systems can be expected to influence capacities to adjust to changing life courses. There is thus a need to bring these two approaches together and to identify the role that collective action and provision may need to play in facilitating changing and more varied life courses. To explore these issues we examine the changing support arrangements for making key life stage transitions in nine European countries. This exploration is done in two ways; in the main part of the book national researchers trace the evolution of support systems in each country and locate these changes in the social, economic and political context of the specific society. In this introductory chapter we address the issue through a more comparative lens. We draw here not only on the country chapters

Shaping the life course: a European perspective

3

and the evidence provided of the role of path dependency and specific constellations of state, labour market and family arrangements, but in addition on the wide range of available studies and statistics on both policy formation and actual employment and welfare outcomes. While the country-specific and the comparative approaches draw in part on different information and reference frames, in practice the two perspectives add to the richness of understanding, providing analyses of the directions of travel as well as of current outcomes and apparent performance. Before embarking on the empirical comparative analysis, we need first to explore in a little more detail both the life course approach and the varieties of welfare systems approach, including its application to the nine countries we consider here.

THE LIFE COURSE APPROACH The life course approach has developed in part in response to evidence of increasing change and greater individual diversity in the life courses of European citizens. Over recent decades, major changes in the frequency and timing of transitions over the life course have occurred in many advanced economies. Globally, modern societies have experienced a gradual postponement of entry into the labour market due to later exit from the educational system, combined with earlier exit from the labour market due to early retirement schemes and a lowering of the pension age. Simultaneously, the trends toward individualisation, the emergence of new life styles and changes in values and norms have greatly modified the traditional family life-cycle model of marriage, parenthood, followed by retirement within a stable marriage, which was still prevalent during the 1950s–1960s. These changes have had profound effects on the standard male biography but even more so on the female life cycle, such that women are now much more strongly integrated into employment, even if they still tend to have more employment breaks and more varied working time arrangements than men. The overall reduction in marriage rates, the increase in consensual unions and rates of divorce, the postponement of family formation, the decrease in family size, and the increase in life expectancy, coupled with the growing perceived instability in the labour market, have certainly modified individuals’ expectations and extended options over the life course. Hence, even if for men the traditional tripartite sequencing of work history (education–employment–retirement) remains predominant and the sequencing of critical phases in life (singlehood, consensual union/marriage, parenting, empty nest and so on) is still evident, most advanced economies have experienced a rescheduling of

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The welfare state and life transitions

traditional critical events, an increase in instability and risks (separation/ divorce, unemployment) and a growing heterogeneity of life trajectories. Changes in the life course need to be considered in a context of changes in life expectancy. For men changes in the transitions at the two ends of working life have shortened the period of active working life. These changes, together with policies in some countries to reduce annual working time, mean that for men there has been both an absolute reduction in the amount of time devoted to market work over the life course, as well as a proportionate reduction relative to life expectancy. Less time now also has to be devoted to housework due to the growing availability of goods and services offered in the market and/or provided by the public sector, technological progress in home-produced goods and services and reductions in family size. This decline in children per household has led to a fall in total time devoted to childraising even though the time-intensity per child is higher than in earlier historical periods. At an aggregate level within most EU countries there has been a large increase in potential ‘leisure time’ over the whole life course. These large changes are not, however, evenly distributed between gender and socio-economic groups. The growing feminisation of the labour force has de facto implied an increase of the time devoted to market work for women. At the household level, the reduction in men’s paid working time has been partly compensated for by the increase in female labour supply. The main alternatives to women’s domestic labour have proved to be either public services or private market services, with women still performing the bulk of unpaid housework and care activities even though in many countries the male share of household production has increased (see Anxo et al. 2002). The resilience of a traditional gender division of labour also has significant and dynamic implications for gender differences in earnings, career prospects and for welfare access over the life course. All these changes in individual biographies are potentially colliding with changes in labour market opportunities, including changes in job security and more rapid restructuring as a consequence of technological and sectoral change. It is these factors combined that may be both leading to more erratic employment paths over the life course and more variable life course stages, including, for example, postponements in transitions to independent family formation and parenthood in contexts where it is more difficult to make the transition to stable employment or to independent housing. To locate, analyse and evaluate the impact of these major social and economic changes, the life course approach has developed over recent years into a major research paradigm providing a heuristic conceptual device for studying the interrelated trajectories of individuals, social groups and institutions over time.1 Most of the research using this

Shaping the life course: a European perspective

5

approach has stressed the importance of both social forces and individual factors in shaping the life course of individuals, and has provided evidence of the developmental consequences of alternative life trajectories. The notion of life course posits that life trajectories are constituted by a palette of sequences of events that are both individually and socially constructed. Events occurring at one point in time may affect events and transitions at a later time, such that almost any individual decision – such as investing in human capital, participating or not in the labour market, withdrawing temporarily or permanently from the labour market, choice of working time arrangements, allocation of time between competing activities, cohabitation/marriage or fertility decisions – has longer-term consequences for the life course. However, these individual decisions are affected in their timing and outcomes by both economic and societal factors, such as prevailing norms and values and institutional settings. Current decisions are influenced by choices made in the past and future decisions are affected by present and past decisions, but also by the duration of an event or the time spent in a specific state. Furthermore, the life course perspective makes it possible to identify the cumulative impact over the life cycle of decisions such as withdrawal from the labour market or investment in human capital at a particular point in time. This provides an important perspective to policy development and evaluation as it moves beyond the immediate costs and benefits for individuals and households to take into account life course impacts. Much life course analysis emphasises diversity of life course choices and patterns within individual societies, but even at this country level the role of social structure and institutions is evident in both shaping individual decisions and in producing differential paths and outcomes by age, gender, class and generation that are not to be mainly explained by life course preferences. Moreover, despite the commonality of global trends, large discrepancies still exist between countries. Several comparative studies (see for example Rubery et al. 1999, 2002; Anxo et al. 2002, 2006) have clearly shown that the timing and frequency of transitions as well as the patterns of household labour market integration and social inclusion vary considerably between the European countries. Considerably more insight can thus be provided into the role of institutions through comparative analysis. Chronological age is still frequently used to structure activity through legal rules (for example driving age) but equally important are social norms with respect to the appropriate ages at which events – for example progress up a promotion hierarchy – should take place. There are crossnational variations as well as inter-professional and inter-organisational differences in these social norms and regulations with respect to age or experience variables. These social variations are consistent with the life

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The welfare state and life transitions

course approach that has insisted on the inherently social dimension of age perception and age structuring. As emphasised by Settersten and Mayer (1997), age and gender act as a signal and a means by which social roles are assigned over the life course, and life trajectories are consequently age-graded according to prevailing age norms. This implies that actual life courses may be sensitive to cross-country societal differences in how the life course and transitions within trajectories are normatively structured, although such differences have not as yet been a major focus of life course analysis. Life course analysts also acknowledge the importance and consequences of early transitions for later experiences and events. This ‘path dependency’ at the individual level, where past experience matters and restricts an individual’s options in the future, can be combined with path dependency at the national level. Thus, the forms of social institutions available to support individuals are shaped by the historical development of the social welfare system and current adaptations of the institutional forms are in part restricted by prior arrangements, including embedded institutions and embedded norms. The social implications and consequences of early transitions and choices differ depending on the historical and societal context. For example, the availability of public lifelong training systems or active labour market policy programmes may reduce the individual and social costs of early drop-out from the educational system or job losses. Hence, although time is irreversible, choices and trajectories can be modified or reversed and might be conditioned by the set of institutional options available. It is thus vital to combine this life course approach with the analysis of changes taking place in social welfare systems, under the varieties of welfare systems approach. Varieties of Welfare Systems and the Life Course The importance of history and time in the life course approach has its parallels, as we have pointed out, in the focus on institutional complementarities and path dependency in the literature on comparative welfare states. A major characteristic of institutional systems is that they rely on complementarities between various institutional areas (see Hall and Soskice 2001; Amable 2003; Bosch et al. 2009). This property has two main consequences for the analysis of life transitions. First, from an empirical point of view, the variety of transitions actually observed is the outcome of a complex institutional system (national regime), which cannot be reduced to financial incentives or disincentives to work, as in a standard neoclassical labour supply approach. Second, the existence of such complementarities means that a change in a given institution will not necessarily lead to

Shaping the life course: a European perspective

7

similar patterns of change across countries, as the outcome will depend on the impact in other complementary institutions. In the varieties of welfare systems there is thus a stress on the likelihood of some form of resilience and path dependency in patterns of change and development. The notion that there are different varieties of welfare states, explained by conjunctures of political, social and economic conditions, has been a core feature of social policy analysis since the first typology provided by Esping Andersen’s (1990) three worlds of welfare capitalism. However, while there has been a multitude of typologies, the aim of much comparative work on welfare and employment systems has been to classify or typologise the welfare system as a whole. In practice the varieties of welfare regimes may perform differently at different stages of the life cycle and in relation to different groups or generations; by focusing on the life cycle stage it is more apparent where the strengths and weaknesses of the different systems lie and which groups/generations are most or least supported. One exception was the work by Anttonen and Sipilä (1996) who provided a more detailed account of care services for the elderly and children and revealed more diversity within and across types of welfare systems than might have been anticipated if a whole system approach had been used. It is in part to reflect the value of this type of more disaggregated approach that this book looks at and evaluates welfare states by life stages, using these to illuminate differences by class, gender, age and generation, rather than starting from a whole systems evaluation. We distinguish five main types of transitions: i) ii) iii) iv) v)

transitions from school to first employment and career; transitions from parental household to independent household formation; transitions in prime age associated with family formation; transitions in prime age associated with employment risks; transitions from employment towards inactivity at the end of the job career.

By focusing on these key life stages we also consider the long-term changes in the nature of those life stages: the extension of the school to work transition and associated prolongation of transitions to independent living, the reduction in labour market quits by women at childbirth and the change in women’s aspirations for continuous employment, the increased need to accept employer and career changes even in prime age, and the changing patterns of retirement and expectations of retirement. The focus is thus not only on comparative issues in the provision of support but also on the changes in institutional arrangements required to match the changing life

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The welfare state and life transitions

course. The aim is also to analyse the interplay between labour market systems, welfare and family systems (the three welfare pillars as labelled by Esping-Andersen (1990)) in particular conjunctures. Much of the work on comparative social models has focused either on labour markets and production systems or on welfare and family systems. By homing in on the different life stage transitions, in which different roles can be expected to be played by the three pillars of the labour market, the state and the family, it is more possible to achieve an integrated analytical approach through identifying particular features of the labour market, family and welfare systems that impact on each life stage and analysing their interactions. As emphasised in the life course approach, it is also important to focus on the interconnections and patterning across life transitions. The life stage analysis thus provides building blocks through which to assess whether the ‘life course design’ of the prevailing national regulatory and social protection systems is coherent and efficient. That is do they promote and support transitions that are life course oriented, that facilitate a better work–life balance of individuals and households and that strengthen the social cohesion of European societies? We need, therefore, to develop a framework for assessing the adequacy of the various national models which focuses on both life stage factors and the overall capacities of the national model to provide for coherence and integration over the life course. This framework must be based on the main social purposes of social welfare systems. These can be summarised as first, empowering individuals to pursue life goals and to make choices that may enable their fulfilment at key life stages and second, providing for more equity and social cohesion in outcomes than could be expected without social welfare systems. These two interconnected social dimensions to welfare systems can provide a basis for a normative assessment of support arrangements at each key life stage. However, that assessment must also address the coherence and sustainability of the life course model. Thus each set of life stage support arrangements needs to be considered not just in their own right but also with respect to their contribution to coherence and to the containment of both economic risks, such as fiscal costs or unrealised productivity, and of social risks, such as social exclusion. Table 1.1 provides a schematic normative framework for such an assessment. The capacity of models to move towards these objectives depends both on their starting points and the recent developments in labour market, public policy and social and family organisation. This evaluation grid can thus be used for assessment at each stage of the life cycle and for the system as a whole, taking into account equity, sustainability and indeed responsiveness to changing life courses. The

Shaping the life course: a European perspective

Table 1.1

9

An evaluation framework for social welfare systems and life stages

Key life stage transitions

Equity

Empowerment

Coherence, sustainability and responsiveness to new needs

School to work

Opportunities for less academically able/for both young women and young men

Education/training opportunities independent of family support

Independent living

Access to independent living not dependent on family income/ wealth

Parenthood

Minimise costs of active parenthood for all parents to promote gender equality; access to affordable childcare especially for low income households

Employment risks in prime age

Minimise long-term scarring effects of unemployment

Able to form independent households – not constrained by housing market (cost or supply of houses/rents) or social norms Provide options for parents – flexible working, participation options for fathers etc. Enable men and women to fulfil employment and reproductive goals Opportunities for lifelong learning, career development and career changes

Investments in education/training well utilised. Avoidance of creation of long-term disadvantaged groups (NEETS etc.) Delayed family formation not leading to lower long-term fertility than desired

Retirement

Pension systems that promote class, gender and intergenerational equity

Source:

Own presentation.

Opportunities to work or to not work according to preferences/ capacities etc.

Promotion of high female employment rate/utilisation of female educational investments. Reduction in risk of female poverty (inactivity and low pensions) Avoidance of longterm unemployment/ inactivity. Promotion of career changes through retraining, reintegration Promotion of active ageing and intergenerational cost sharing while still providing opportunities for good retirements

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The welfare state and life transitions

capacities of different welfare states will vary according to their starting position and the severity and cause of the challenges that they face in both maintaining and reforming welfare support systems. This variety is illustrated by the nine countries selected for detailed analysis according to this life stage approach. Introducing the Nine Country Case Studies The nine European countries on which this book’s analysis is based cover the whole range of both varieties of capitalism (coordinated market economies versus liberal market economies; see Hall and Soskice 2001) and traditional typologies of welfare state systems (social democratic, conservative and residual; see Esping Andersen 1990, Table 1.2). In addition the inclusion of Hungary expands the range to include post-transition economies with their own distinctive legacy or path-dependent evolution. While these typologies were initially based on a limited number of ideal types, subsequent work has refined and developed categories as a wider variety of countries have been subjected to detailed analysis. Two particular refinements are helpful in the classification of our nine cases: Coates (2000) unpacked the coordinated/liberal market economy dichotomies to develop a three-way classification between market-led, state-led and negotiated economies. Under this three-way triangle countries can be placed between the three points of the triangle, according to the degree to which they were market, state or negotiated in character, thereby moving away from dichotomies. This refinement allows for a distinction to be made between, for example, France as state-led and Sweden as a negotiated economy within the otherwise very broad category of coordinated economies. Among welfare classifications the first major development was to include gender arrangements as a key important dimension of welfare systems (Lewis 1992; Orloff 1993). This focused attention on the household and on the complexities of intergenerational and gender relations, thereby widening the analysis from that of the commodification/ decommodification of individuals by the welfare state. A second associated development has been the identification of familial welfare systems, particularly associated with southern European countries and sometimes called a Mediterranean model based on strong family and weak state systems of support (Rhodes 2005). With these refinements to the classifications in mind, Table 1.2 outlines where the nine countries may be located, drawing on a variety of whole country classification systems. Among the nine EU member states considered in this volume, the UK is the sole representative of the liberal market economy/residual welfare state category, although, as we will see in the

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Sweden

Coordinated: negotiated Coordinated: state led Mixed market/state economies

Source:

Austria Germany

Conservative/ strong male breadwinner

France

Conservative/ modified male breadwinner

Italy Greece Spain

Familial model/ Mediterranean

Hungary

Transition welfare state

Own classification based on typologies derived from Esping–Andersen (1990), Lewis (1992), Coates (2000), Rhodes (2005).

Transition economy Liberal market economy

Social democratic/ weak male breadwinner

Varieties of welfare states

Nine welfare regimes in traditional typologies

Varieties of capitalism

Table 1.2

UK

Residual welfare state

12

The welfare state and life transitions

analysis, the terminology of residual welfare state may not be applicable when we look across the whole variety of welfare state support functions. Hungary is the only post-socialist country and we will explore how the legacy of the socialist system is intersecting with the change to the market system. Its welfare state may be regarded as hovering between a residual or liberal model and a more developed model with both conservative and social democratic elements. Lelkes (2000) has argued that the Hungarian welfare state cannot be classified using conventional categories – and it is described as ‘faceless’ and in transition. On this basis we also classify it as a transitional welfare system. Among the remaining seven countries, Sweden also stands out from the crowd with a social democratic welfare state and a negotiated economy model. Germany and Austria are also regarded as sharing the characteristics of a conservative welfare system, but Austria is more strongly located at the negotiated end of coordinated capitalism through its strong corporatist systems than Germany. France is a coordinated market economy that has exemplified the state-led approach but it also has a welfare system more oriented to women as workers than other conservative welfare systems with which it has been associated in some typologies. Spain, Greece and Italy are more usefully considered as Mediterranean countries with traditionally at least more familialistic production and welfare systems than in other CME countries, and also a tradition of state-led capitalism in the core formal sector (regarded as mixed market economies by Rhodes 2005). The range of countries within the sample, using these conventional typologies of difference, is thus likely to provide a wide variety of different social welfare arrangements supporting the different key life stages. These characteristics of the overall models are broadly correlated with overall employment performance (see Appendix Table 1A.1); that is we find the now common result that it is Sweden as a social democratic welfare state/ negotiated economy that has the best performance. It is now anticipated that social democratic and liberal market economies will show the strongest employment performance and the UK is third in our group of countries and well above the EU27 average. However, Austria has a somewhat higher employment rate and comes in at rank two, with Germany close behind at rank four. Spain is slightly above and France slightly below the EU27 average but Greece and in particular Italy and Hungary fall well below, with the latter two countries being well over ten percentage points adrift from the Lisbon target. Comparisons of employment rates for four main demographic groups where strong variations are found across societies – young people, women, older workers, migrants – reveal variable factors accounting for differences in overall employment performance. While four countries have an older worker employment rate below 40

Shaping the life course: a European perspective

13

per cent, this includes two low overall employment performers, Italy and Hungary, but also a middle ranking country, France, and Austria, the country in our sample with the second highest employment rate. The relationship of overall employment rates to the employment rates of the foreign born is in fact perverse – from a narrow economics perspective – with their employment rates standing above those of the native population in countries where overall employment is low but below that of the native population where employment rates are high. Young people’s employment rates are more straightforwardly linked to overall employment rates, with the top four countries by overall employment also having higher than the EU average employment rates for young people, along with Spain, while all other countries are below the EU average. Interpretation of these data is, however, problematic as a high youth employment rate might imply an underdeveloped educational system. For women’s employment, measured by standard headcounts, there is a close correlation with overall employment rates. For women it is Sweden, together with the UK, Germany, Austria and France, that have above average employment rates, but if the employment rates are considered on an FTE basis (full-time equivalent – one part-time job taken as equal to 50 per cent of a full-time job) then Germany falls below the EU average and Hungary now exceeds rates found in Austria and the UK. Furthermore, when we look at mothers of young children (at least one child under six) on a full-time equivalent basis there is a major reordering of the countries by employment levels. It is now Austria, Germany and the UK that fall below the EU average – along with Hungary and Italy – while those above are Spain, Greece and France (also Sweden based on national data – see below, Table 1.6a). These findings suggest the very different life cycle patterns of women’s employment across the nine countries and the potential for presenting countries as high and low performers, depending upon choice of indicators. Introducing a more systematic life stage approach can help in some ways to make sense of variations by recognising the importance of age as embedded in institutional arrangements and custom and practice. Figure 1.1 shows the median entry age into the labour market and median exit age for the nine countries and immediately demonstrates that the two countries with the highest overall employment rates have very different entry and exit ages; Austria starts early and ends young while Sweden starts late and ends employment at a much later age. Table 1.3 also plots for all the nine countries the median or legal age at which certain key points in the transition to adulthood apply; differences are apparent in the organisation of this life stage, with significant variations in, for example, median age of entry into higher education, median

14

The welfare state and life transitions

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65

Austria France Germany Greece Hungary Italy Spain Sweden UK Age

Source:

Own calculations based on Eurostat (2008a).

Figure 1.1

Timing of transitions: median age of entry and exit from the labour market

age of entry into employment, the time it takes for the median young person to have achieved a permanent contract and above all the median age at which young people (here men) leave the parental home. Perhaps surprisingly, given the major changes in this behaviour, there is less variation around the median age of first birth, with seven of the nine clustered around age 28/29. For Hungary the age is younger but the 31 median age for Sweden is consistent with a delayed or slow entry to employment, although combined with a rather fast exit from the parental home. This brief overview provides insights into the diverse life cycle patterns and life stage transitions experienced in the nine countries explored in this book. It is to a more detailed exploration of these life stages that we now turn.

FROM EDUCATION TO THE FIRST JOB Over the last 50 years the employment rate of young people has been falling in all nine countries because of extensions in both mandatory and voluntary education. Indeed too high employment goals for young people may conflict with the ambition of developing highly competitive knowledge societies based on broad skills for the whole workforce and not only for a small elite. Furthermore, a high employment rate may reflect a lack of capacity of some families to fund extended education or training. It is thus hardly surprising that the EU has set goals for the overall employment rate and those of women and older workers but not for young people. Most countries indeed encourage further expansion of upper secondary and tertiary education and in some cases formulate ambitious goals.2 Educational expansion in all countries has increased the share of young

15

S

S S

S

15

S S S

S

16

17

S

18

Source:

T

20

L

T

T

TEP

21

E T E

22

P

L E

23

E L

E

L EL E

24

P P E

25

B

P P

26

P

P

27

B

B B L B

B

28

Own calculations based on Eurostat (2008a) and Eurostat (2008b) for median at which young men leave home.

T

T

T

T

19

Age

Timing of transitions: from school leaving to childbirth

Notes: S = school leaving age T = median entry age to tertiary education E = median entry age to the labour market P = median entry age to permanent employment L = median age at which young men leave home B = median age of women at first birth

Austria France Germany Greece Hungary Italy Spain Sweden UK

Country

Table 1.3

LPB

B

29

L

L

30

B

31

16

Table 1.4

The welfare state and life transitions

Population that has attained upper secondary and tertiary education, 2006; public subsidies to private households for tertiary education, 2005

Country

Upper secondary education Age

Tertiary education Age

Subsidies to private households for tertiary education in % of GDP

25–34

55–64

25–34

55–64

OECD average EU19 average Austria France Germany Greece Hungary Italy Spain Sweden UK

78 80 87 82 84 75 86 67 64 91 76

55 55 71 52 79 34 66 32 27 72 61

33 30 19 39 22 27 21 17 39 39 37

19 18 14 16 23 13 15 9 15 25 24

0.25

Range

24

42

22

14

0.50

0.28 0.09 0.22 0.02 0.16 0.13 0.08 0.52 0.31

Source: OECD (2008b): Tables A1.2a; Table C1.1; Table A1.3a; Table B5.2.

people leaving school with at least upper secondary certificates. In 2006, the differences between the countries in the graduation rates of 25–34 year olds amounted to only 24 percentage points, much less than the 42 percentage points for 55–64 year olds (Table 1.4). A third of young people in Italy and Spain and a quarter in the UK and Greece still enter the labour market with less than upper secondary certificates. Moreover the lower performance of young people from migrant or ethnic groups is a cause for concern in all societies. An upper secondary certificate has increasingly become the minimum requirement for access to a good job. Since unskilled young people lose out in the competition with the better skilled for jobs, the long-term costs of early exits from the educational system have increased. Indeed low educational attainment has been found not only to impede initial insertion into the labour market but also to provide an enduring barrier to employment (OECD 2008a, pp. 41–2). An increasing number of young people now pursue their education and training at the tertiary level, especially in countries where vocational reputation has a low reputation. The share of tertiary education graduates has

Shaping the life course: a European perspective

17

grown faster in Spain, Greece, Sweden, France and the UK than in Germany or Austria (Table 1.4) where an apprenticeship still offers good job perspectives. The country differences in shares of graduates are now much larger among the young than among the older age cohorts. High shares of graduates coincide with high shares of young people without upper secondary in the UK, Spain and Greece, indicating strong polarisation. In countries with strong apprenticeship systems (Germany and Austria) and in Sweden, with its non-stratified education system and its remarkable low rate of drop-out from upper secondary education, the skill structure is less polarised. With the massification of tertiary education, the labour market outcomes for graduates are becoming more diverse. The job structure has not been upgraded sufficiently to allow all graduates to secure a job appropriate to their qualification. Tendencies towards the under-utilisation of skills are reported especially in the Spanish, Greek, French, Hungarian and UK chapters. In 2006 in Greece, Italy and Spain the unemployment rate of graduates from tertiary education (age 25–29) was even higher than for graduates from upper secondary education (OECD 2008b, Table C4.3). An expansion of tertiary education is not without risks for equity in a society as children from poorer families may face, in addition to the well known class barriers, also substantial difficulties in financing their higher education. More diverse labour market returns to education increase the risks of such investment. The costs of higher education have been raised in some countries by the introduction of, or increases in, tuition fees (for example the UK) and also by the expansion of private providers. To open up access to higher education for young people from median- and lowincome families and to increase financial independence of young adults from their parents, Sweden has introduced a universal grant and loan system which is individualised and not means-tested. The UK has replaced an earlier generous grant system with a general loan system and targeted grants. Germany has means-tested grant and loan systems and Austria means-tested grants. In both countries grants are also paid to vocational school students and apprentices when they do not live at home, underlining the high political attention paid to guaranteeing all school leavers not only an apprenticeship but also equal treatment in public support systems. All parents also get tax reliefs or so-called ‘child allowances’ up to the mid-20s if the young adult is in education including vocational training (Bosch and Jansen, this volume).3 In all countries except Sweden, the UK, Hungary and, surprisingly, the family-oriented Spain, parents receive some tax benefits (tax allowances, exemptions or credits) (Eurydice 2007, p. 125). With the loan system young British and German citizens enter the labour market with often high debts which they may find more difficult to pay back the more wages are declining.

18

The welfare state and life transitions

Principle of financial independence with respect to parents

SE

Universal financial support for students

UK

ES, HU

EL

DE, FR IT, AT

Targeted support according to parental income

Principle of financial dependence with respect to parents Source:

Own diagram based on Eurydice (2007, p. 17).

Figure 1.2

System of support for higher education students in the nine countries: relative dependence on parents and/or provision of universal financial support (ISCED level 5 2005/6)

In most countries public support for tertiary education is low, despite increasing graduation rates (Figure 1.2). Families have to bear most of the costs which increases not only social inequality but also prolongs the financial dependence of young people on their parents. Since many families cannot afford these costs, increasing numbers of students work during their study and live at home. Although the age of transition from education to the first job has increased in the long term in all countries, the age points of the transition into the labour market differ substantially by country. The median age of entry into the first job ranges from 21 in Austria, 22 in the UK and Spain, 24 in Germany, France, Sweden and Hungary to 25 in Italy and Greece (Table 1.3). Furthermore, within countries there are also important differences in the average age of entry into the first job by educational tracks, gender, nationality and ethnic background. Except for some well-educated young people from middle- or upper-

Shaping the life course: a European perspective

19

class families who take a gap year between education and work, most young people who become a NEET (someone not in employment, education or training) do so on an involuntary basis. High rates of medium- and long-term NEET status provide strong indicators of open and hidden unemployment. The OECD analysed the employment and education status of young people for five years after completion of initial education for ten OECD countries, including six countries from our sample.4 One year after the end of initial education the NEET rate for men ranged from 41 per cent in Germany to 70 per cent in Greece (women 33 per cent in the UK to 66 per cent in Greece). After five years it ranged from 18 per cent in Austria to 33.6 per cent in Greece (women 21 per cent in Austria to 48 per cent in Greece). NEET rates are generally higher in southern Europe and for the lower skilled and women. They all decline but also vary over the first five years after the end of education, providing further insight into the ‘fluidity of the youth labour market, as reflected in transitions between employment and non-employment’ (OECD 2008a, p. 59). Youth employment has increasingly become the playground for companies using contingent work arrangements. Many young people, including the highly skilled, looking for their first job often have no choice other than to accept such forms of work since they are outsiders, lacking the bargaining position of insiders supported by firm-specific skills and the labour rights that a permanent work contract confers. Therefore, access to stable jobs is often only possible through precarious employment such as temporary or agency work. The share of young people working in temporary jobs is disproportionately high in all nine countries and has increased over the last decade (OECD 2008a, p. 31). This seems to be true for young people of all skill levels. However, for the low skilled these jobs are mostly a trap while for the better qualified they may be either an interlude (while studying) or a stepping stone (OECD 2008c: 32–35). The highest rates of temporary contracts can be found in Spain, but also in Sweden and Italy (especially for women). Since young people are less protected in the labour market through their above average share of temporary contracts and lower seniority rights, they have higher job separation rates and multiple spells of unemployment, especially in Spain, France, Italy and Greece (Quintini et al. 2007, p. 32). It takes the longest time to move from the first to a permanent job in Spain (average six years, Table 1.3). The distribution of labour market risks is strongly determined by the education system. Shavit and Müller (2000) argue that two characteristics of education and training systems have significant effects on the transition into the labour market: (i) the degree of stratification, that is the extent and form of tracking in the educational system with clearly distinct forms of learning and training, and (ii) the extent of occupational specificity, that

20

The welfare state and life transitions

is the extent to which training develops broad occupational competencies for a range of different activities rather than job-specific or general competencies. The more training is stratified in different institutions and the higher the occupational specificity, the easier it is for employers to recognize competencies and the lower therefore the costs to employers of hiring young people (Müller 2005, p. 464). The southern European countries, France, Hungary and the UK have mainly expanded general education. In these countries vocational tracks and certificates do not have high esteem. They signal that the holder is a low achiever in the school system and possesses only narrowly-based skills for specific jobs. VET certainly enjoys higher esteem in countries in which it can open up access to well-paid jobs with complex tasks and good career opportunities than in countries with polarised job structures and high shares of low-skill, low-paid jobs offering few career opportunities. In Austria and Germany, with their developed dual apprenticeship systems, vocational training takes place in generally recognised occupations. Training is closely linked to occupational labour markets, employers participate in the design of the vocational training system and the actual training facilitates the school to work transition (Bosch and Jansen; Mairhuber, this volume). Employers also save recruiting costs since they already know the young people.5 In all the other countries there are only loose links between education and training and the labour market. Some countries have tried to improve the transition into intermediate jobs by expanding school-based training (France, Italy) or supporting a Modern Apprenticeship System (UK) with modest success (Bosch and Charest 2008). Myriad studies have shown that occupational competencies acquired in apprenticeships systems with generally recognized standards make transitions into the labour market easier than competencies learned in school-based systems (Müller and Gangl 2003). The downside of stratified and occupational specific systems is that, due to early tracking, there is a danger of many dead ends in the system which may hinder further study and career. Vocational education and training in all countries is designed for immediate entry into the labour market (Shavit and Müller 2000, p. 30). Certificates of vocational training do not usually confer entitlement to further education. Early tracking in combination with high status differentiation between tracks has also tended to undermine one of the principal objectives of education systems in democracies, namely to provide equal opportunities for all students. To avoid the negative consequences of early tracking and abolish dead ends Sweden has created an integrated school system with general and vocational tracks in the same school. Furthermore, the Swedish educational system makes it possible to follow additional general courses after completion of vocational training in order

Shaping the life course: a European perspective

21

to acquire a certificate that provides access to tertiary education. Germany and Austria are currently trying to reduce the stratification of their system by improving the links between vocational training and tertiary education to make the rigid border between vocational and general training more permeable, without endangering the advantages of its apprenticeship system for integrating youths into the labour market. The difficulties of the transition into the first job also depend on the structure of the labour market. Most of the literature on the transitions of youth into the labour market has differentiated between occupational and internal labour markets where labour market allocation predominantly relies on seniority and experience (Marsden 1990). As outsiders young people have difficulties entering internal labour markets while occupational labour markets are open to them as soon as they acquire the necessary certificates. Gangl (2003) has found important cross-national differences within both groups and found that southern European countries do not fit this typology. Garonna and Ryan (1991) added a third dimension to the bipolar typology, namely employment protection. They proposed three different ideal types of regulation of youth transitions into the labour market. The first type is regulated inclusion, where vocational training is linked to occupational labour markets. Selective inclusion, the second type, applies in countries with strong internal labour markets which are closed by high employment protection. The third type of competitive regulation – Sengenberger (1987) calls this type ‘unstructured labour markets’ – is found in less regulated labour markets. If selective inclusion is combined with competitive regulation young people may find themselves facing a long transition period in insecure jobs before they succeed in entering an internal labour market. Germany and Austria are usually taken as examples of the first type, France as an example of the second, the USA and UK of the third and the southern European countries of the mix between the second and the third types. With the breakdown of their vocational training systems, the majority of the CEE countries, including Hungary, have moved from regulated inclusion with occupational labour markets to the model of competitive regulation (Saar et al. 2008). The country chapters support these typologies with the exception of Sweden. The Swedish labour market has weak occupational systems, but quite open internal labour markets. Mobility is supported by active labour market policy and lifelong learning arrangements which aim at reducing skill deficits. Assessment of Transition from Education to Work Using our criteria for assessment, Sweden ranks high in safeguarding equity and empowerment in the transition from education to the first job

22

The welfare state and life transitions

through a non-stratified education system which avoids both early tracking and high numbers of drop-outs. In Sweden the expansion of tertiary education has not led to increased inequality in access since no tuition fees have to be paid, the state provides grants to all students assessed independently from the income of parents and wage compression remains high. The weak point in the Swedish system is the lack of occupational labour markets which prolongs the transition period and may contribute to high rates of youth unemployment. There seems to be a trade-off between providing the same level of general skills up to upper secondary level to all pupils and early tracking in vocational pathways which are closely linked to labour market opportunities. Austria and Germany are making use of this trade-off in a different way. The fast transition of the majority of young people is facilitated by their apprenticeship systems which are closely linked to the labour market. The price is early tracking and often dead ends for apprentices in the education system and further careers. A unique feature within Europe is the extension of the grant system to cover apprentices and pupils who no longer live at home. The virtuous circle between vocational and the upgrading of the job structure supports the fast integration of young people. Because of the general job shortage it is taking, however, longer than in the past, often only after several spells of unemployment, to find a permanent job. In the other countries skill structures are more polarised through the combination of stratified systems and the negative attitudes towards vocational training for intermediate jobs not only on the part of employers but also young people and their parents. The risks of investment in tertiary education are increasing because the job structure has not been upgraded to the same degree and returns are lower for the less successful. In addition, in southern Europe closed internal labour markets concentrate labour market risks on young people who face not only many years of unstable employment but also of open or hidden unemployment. The polarisation of the skill structure contributes to increasing social inequalities. The increasing costs of tertiary education and the lack of loan and grant systems means that families have to bear most of the costs of educational expansion, thereby creating new barriers to participation even at a time of educational expansion.

TRANSITIONS TO INDEPENDENT LIVING AND ADULTHOOD Barriers to or delays in transitions to independent living have significance for the life course; they extend dependence into adulthood and constrain

Shaping the life course: a European perspective

Table 1.5

Median age of young people leaving home, 1995 and 2005 1995

Austria France Germany Greece Hungary Italy Spain Sweden* UK Note:

23

2005

Men

Women

Men

Women

25 24 24 29 26 29 29 na 23

23 21 22 25 24 26 27 na 20

24 24 23 30 28 30 29 21 24

23 22 21 27 25 27 27 20 20

*2004.

Source: Own calculations based on Eurostat (2008b) except for Sweden (Ungdomsstyrelsen 2005).

the realisation of life aspirations, including those of family formation. Differences in cultural norms and institutional arrangements are always likely to lead to inter-country variations in the age of transitions. However, evidence of increasing divergence among our nine case study countries raises concerns over whether there may be growing tensions in this transition phase. Aspirations may be more difficult to realise if there are rising inequalities in access to resources, including access to both employment and housing. The nine-country sample covers a wide share of the spectrum of transition patterns; it includes members of the so-called latest-late transition economies (Billari 2004), the southern European economies, as well as of the earliest-early group, mainly Nordic countries including Sweden (see Table 1.5). The recent pattern of change has, on average, increased the range of variation. Over the decade 1995–2005 the three countries with the most delayed transitions in 1995 experienced either no change (Spain) or further delays of one or two years (Greece, Italy), such that by 2005 the median age at which men leave the family home reached 30 in Greece and Italy and 29 in Spain. Hungary also moved towards the latest-late group as the median age of leaving home rose from 26 for men in 1995 to 28 in 2005. Germany and Austria, from lower median ages of departure in 1995, experienced changes in the opposite direction, thereby increasing the divergence between Northern and Southern Europe, although France and the UK experienced slight increases from again a relatively low base.

24

The welfare state and life transitions

We do not have information for 1995 for Sweden but Sweden stands out in 2005 for having the youngest age of transitions for both men and women – at 21 and 20 respectively. The current transition patterns reflect both long established variations among European and dynamic processes of change which resist categorisation as either a process of cross-country convergence or divergence or indeed of standardisation or destandardisation of individual biographies (Billari and Wilson 2001; Billari 2004). The causes of the longstanding national variations in transition patterns lie in both cultural and institutional factors, raising the chicken and egg question, that is whether institutions reflect or create culture. The variations certainly reflect differences in attitudes towards family and marriage, linked to religious beliefs and strong social norms (Pfau-Effinger 1993, 1999; Mayer 1997 [2001]) as well as material and institutional factors, such as access to stable wage income (or alternative sources of income) and to property and family wealth. Recent changes in transitions also reflect both changing social norms and changing opportunities for access to independent living. Increasing diversity in transitions may not necessarily reflect diverging social norms or aspirations but changing structures of opportunities. One contender for explaining divergence is differences in social attitudes and behaviours with respect to the family and family formation. Southern European countries are regarded as having strong family ties, consistent with intergenerational cohabitation and late departure from the parental home. In contrast departures tend to be earlier for those countries with traditionally weak family ties and lower levels of intergenerational cohabitation at all life stages – for example in Sweden, Germany, the UK and France. Moreover, transitions out of the parental home may be associated with different social processes; in southern Europe the transition primarily involves marriage and the setting up of a formal separate family – for example in Greece in 2001 63 per cent of male departures and 79 per cent of female were to live with a partner and 48 per cent involved moving to their own home (Karamessini, this volume). Marriage is also expected to precede first birth, as indicated by the low shares of births outside of marriage. In the other countries transitions are associated with more variable social statuses – including independent living or cohabitation on a more informal basis – and may involve a series of departures and returns to the parental home. These more variable transitions reflect more varied life courses, for example with multiple unions, and high and rising shares of births outside of marriage which now often takes place after first birth. The cultural explanation of divergent patterns cannot fully account for evidence of increasing tensions and contradictions within the southern model, manifest first in the now very low fertility rates. Esping Andersen

Shaping the life course: a European perspective

25

et al. (2002) have argued that late departures lead to postponed fertility and ultimately unfulfilled desires for children as the biological time available for reproduction is restricted. Simonazzi and Villa (this volume) also argue that in the case of Italy late departure is not only to be explained by traditional family values but also by women’s increased aspirations for careers and their reduced willingness to enter into marriage at an early age. Indeed, while delayed departure involves a high level of family support for younger adults, it may also be indicative of a narrower range of supported behaviours: thus Holdsworth’s (2004) study found that families in Spain provide more support to young people than those in the UK and Norway, both through shared living and support for transitions to marriage, but parents in the UK and Norway were more likely to support young people leaving for individual independent living. The outcome of the wider range of support is in fact a greater standardisation of departure ages, for example in Sweden (Billari and Wilson 2001), compared to southern European countries where there is a more dispersed age of departure, reflecting variation in the age of marriage. Thus standardisation of the reasons for leaving parental homes is associated with a destandardisation of ages of leaving and marriage and vice versa (Billari and Wilson 2001). Whatever the continuing differences in social values and in modes of family support, it is the more immediate resource issues that shape changes in the timing of transitions, particularly the organisation of education, housing and the labour market. While extended education and delayed transitions into employment are a common feature of all nine countries, their impact on departure from the family home depends in part on whether higher education is largely provided in the local community or away from the home base. Billari (2004) points to arguments that the organisation of the educational system may itself reflect the strength of family ties and expectations that the family will bear the costs of education through cohabitation. Studying at home and receiving support in kind is much more common in southern European countries, while at the other end of the spectrum in Sweden, although higher education starts later and continues longer than most, the impact on transition out of the parental home is limited as there is state support for students on an individual basis. In the UK also only one fifth of students were living in the parental home in 2005. However, that share had risen sharply from a low base of 12 per cent in 1995/6 (Universities UK 2006) reflecting the replacement of the generous grants for students by loans and the introduction of student fees as the number of higher education places expanded. Even when students live outside the parental home, dependence on the parental household has often increased. This postponement of independence is institutionalised in Austria by extending family

26

The welfare state and life transitions

allowances up until the age of 26 for students (Mairhuber, this volume) and in France up until age 21 (Erhel et al., this volume). Several countries, for example France and Germany, provide for parental tax relief for support. In contrast, Sweden and the UK treat those over 18 as independent adults for tax and benefit purposes, although the UK is inconsistent in means-testing enhanced student loans and grants on parental income (Rubery, this volume). These different approaches in part reflect the lack of any legal obligations on parents within the Swedish and the UK systems for adult children. While educational arrangements affect transitions to independent living for those attending higher education, it is the housing regime that has an even more pervasive effect. The housing regime includes the availability of finance for housing (rent or purchase), the availability and price of housing and the role of housing in wealth transmission and creation. These different aspects impact on the ability of young people to move into independent living. In Sweden young people are able to call on, if necessary, state support to meet housing costs based on means-testing of their own independent incomes or student grants; this recognition of young people as independent adults reflects and supports the individualisation of society, based on universal citizenship rights in this distinctive social democratic regime (Anxo, this volume). In Germany early departure from the parental home reflects more the affordability and availability of rented housing. House prices are also low and have fallen relative to income since 1997,6 thereby reducing pressure on young people to make an early purchase and facilitating transitions to independent living in rented accommodation. Opportunities for independent living are extended to those on low incomes through state support for housing costs of apprentices who need to live away from home. In the UK early transitions to independent living have been fuelled in part by the opposite trends, namely the importance of early entry into the housing market to ensure future security and to avoid the high priced rental market. Data from the Luxembourg Income Study, averaged over a range of years from the 1980s and 1990s (Chiuri and Jappelli 2003), show that over 63 per cent of those aged 26–35 were owner-occupiers in the UK compared to under 19 per cent in Germany. Sweden also has a high rate of house purchase at an early age (55 per cent of 26–35-year-olds) though departure from the family home usually precedes house purchase. Spain at 40 per cent and France and Austria at 34 per cent occupy intermediate positions with respect to young persons’ home ownership while Italy is similar to Germany at 22 per cent but due to delayed departure not to high renting (no data for Greece or Hungary). In the UK extreme price rises over recent years have created obstacles for first-time buyers, creating more dependence on the family, either through

Shaping the life course: a European perspective

27

delayed departure or greater reliance on family finance for first purchase. In contrast to Germany, state support for housing costs has only been available to higher education students as well as to lone parents, possibly associated with high teenage birth rates in the UK. The delayed departure from the parental home in the southern countries is also associated with high house prices and an expectation of movement into owner-occupied rather than rented accommodation. A house price boom, particularly strong in Spain, has been fuelled in part by the increased availability of credit in the wake of EU internal market reforms but credit for young people still remains restricted in some countries, comparing for example Greece to the UK (Mulder and Billari 2006; Karamessini 2009). At the same time deregulation of the housing market has often pushed rents above the affordability line for many young people (Karamessini, this volume; Simonazzi and Villa, this volume). The effect has been to intensify class divides and reinforce a still high and in many cases increased dependency on family support, due to the high costs of housing. This increased dependency is mirrored by the maintenance, and in many cases reinforcement, of the role of the family in facilitating intergenerational transfers of wealth. Thus while the increased price of housing is a source of intergenerational conflict for those whose families do not have wealth or whose families do not wish to share it, for others it is a means of consolidating class divides through intra-family and intergenerational transfers (Arber and Attias-Donfut 2000). Spain has in fact introduced some state support for young people’s housing costs from 2005 (Miguélez and Recio, this volume) in response to these large increases in rents and house prices, but this is insufficient to offset the increased inequalities. Hungary is the country where the changes in the housing market have had the most significant effects on the timing and form of transitions to independent living. Departure from the parental home is now delayed to a similar extent to that in the southern countries but the reasons lie in the nature of the housing market, not in expectations of co-residence until marriage. There is in fact a common crisis in housing provision for young people across accession countries (Mandic 2008). The situation in rural Hungary is not so serious due to a tradition of rural self-build, but in the cities in Hungary there is also evidence of a housing crisis. Prior to 1989 most relied upon state-subsidised housing for rent and although queues for such housing were long, eventually young people would access some state housing. No significant private rental market has emerged as a substitute for the demise of state housing and young people in the 1990s were forced, due to a lack of alternatives, to take out state-subsidised loans for purchasing very small flats. This scheme is no longer available and credit is

28

The welfare state and life transitions

in short supply. However, home ownership now accounts for greater than 90 per cent of all housing, the highest rate in Europe (Spéder et al., this volume). Most young people now have to rely on help from their families, in either extended cohabitation and/or finance. Families that have benefitted from house price inflation are able to help but other young people face limited prospects of being able to leave the parental home. Although young people generally are experiencing a delayed and potentially more precarious integration into stable employment, research has not found a universal link between access to stable employment and the timing of transitions to independent living. Aassve et al. (2002) found that access to reasonable income and employment was in fact important in those countries which normally involved extended periods of intergenerational cohabitation. Gaining access to independent income seemed to be more of a precondition for early departure from the parental home in all the southern countries plus also the UK. In contrast it played little role in determining transitions in Denmark, the Netherlands and Germany and a moderate role in France. In Spain independent living is increasingly dependent on two income earners (Miguélez and Recio, this volume), a possible factor underpinning the relatively rapid increase in female employment in Spain over recent years where young people are more likely to take on mortgages compared, for example, to Greece where family purchase of housing is more common. While early access to employment facilitates early departure in the southern countries, the unemployed young have even more limited choices than their northern counterparts other than to live at home, dependent on the family as they have no or very limited access to unemployment benefits (Ékert-Jaffé and Terraz 2006). Assessment of the Transitions to Independent Living Using the criteria for assessment identified in Table 1.1, we find, with the exception of Sweden – and in different ways Germany – that transitions to independent living for young people are becoming increasingly dependent on family income and wealth (against the equity criterion) and also may in many cases be delayed to the point where fulfilment of life course objectives, including union and family formation (against the empowerment criterion) is put into question. With the primary exception of Sweden, this transition phase is primarily reliant on private finances to the exclusion of state supported decommodification of life chances. Spain has recently provided some limited support for housing for young people due to the major rise in cost of housing levels and some targeted state support for independent living is available for those with specific needs such as lone parents (for example in the UK) or for apprentices in Germany. Germany also

Shaping the life course: a European perspective

29

provides opportunities for young people’s independence through a large low-rent sector and limited pressure to enter home ownership. The UK with its relatively free availability of credit for housing has also enabled a large number of young people without family wealth to start to purchase housing but this practice also fuelled the house price boom, resulting in increasing inequalities for those excluded. Even within the UK the path out of the parental home has become more difficult with first the rapid rise in house prices and then the collapse of credit. This increasing importance of the family as the determinant of this life course transition cuts across beliefs that the EU consists of relatively meritocratic welfare regimes, providing opportunities that are independent of family wealth and influence. Furthermore, the dependence of this transition phase on housing arrangements highlights the problem of omitting the mechanisms for transmission and creation of wealth in standard analyses of socio-economic systems. Welfare state systems may modify income inequalities but are less able to influence and modify patterns of wealth creation and distribution. Reinforcing the role of the family not only strengthens class inequalities but also increases the patchiness and chance elements in the social support system due to the increasing fragility and fragmentation of families. Although family support may fill in important gaps to compensate for lack of employment and housing opportunities – for example in the southern European countries young people are better protected against poverty than the young people living independently in the north – these benefits may come at major costs to young people’s opportunities for self determination and for fulfilling life course goals including reproduction.

GENDER INEQUALITY AND PARENTHOOD TRANSITIONS The form and extent of gender inequality varies over the life course; problems of work–life balance dominate the mid years but follow on from sexual harassment in initial careers to discrimination on grounds of appearance in older age. Above all it is the transition to parenthood that has the most important impact on women’s life course and life chances. Welfare regimes can mitigate the life course costs to women (and to the rather small minority of men who become active fathers) but they can also exacerbate them. It is not only the direct conflicts between care and wage work at the time of intense parenting that create inequality but also the design of employment and welfare institutions to fit a male biography of continuous full-time work and of male or single earner responsibility for a

30

The welfare state and life transitions

family. Furthermore, while reformed welfare regimes coupled with genderspecific policies could significantly reduce parenthood costs (Gornick et al. 1997; Stier et al. 2001), the main policy drivers for reform in this direction are just as likely to be the agendas of higher employment, lower welfare dependency or countering the ageing society as the promotion of gender equality. Policies may even be promoted in the opposite direction, reflecting resurgent conservative ideologies or government concerns to reduce open unemployment. Transitions to Motherhood in Nine European States Patterns of transitions to motherhood in the nine countries still reflect their traditional classifications within typologies of gender and welfare regimes. Moreover the now widely recognised positive relationship between women’s employment opportunities and fertility rates (Esping Andersen 1990; Bettio and Villa 1998) is also evident (see Appendix Table 1A.1). Thus social democratic Sweden has a high overall female employment rate, a higher employment rate even for mothers of young children than for women without children and a medium/high fertility rate while Italy and Greece still follow the Mediterranean model of low overall female employment, low fertility and a perhaps surprisingly limited impact of motherhood on employment, due in part to the overall low employment rate for women (although women may give up the struggle to enter employment due to lack of childcare availability) (see Table 1.6a and Appendix Table 1A.2). However, Spain during the 2000s appeared to break somewhat free from the southern model as female employment rose and the gap with the EU average rate, although still negative, closed. The UK combines a high employment rate with a high motherhood effect reflecting a lack of support services for young children but has nevertheless maintained a medium/high fertility rate. Austria and Germany have broken with the low employment rates for women associated with conservative welfare systems but their relatively high female employment rates are still combined with high motherhood impacts and low fertility. Finally France and Hungary both have medium female employment rates, brought down by general problems of high unemployment and the use of early retirement for older workers of both sexes. Yet France has a medium/high birth rate and a limited impact of motherhood on employment rates (although higher than previously as we document below), while in Hungary low fertility is combined with the largest negative employment impact of motherhood. This pattern reflects the legacy from the previous regime of long paid parental leaves but also the disappearance under the new regime of workplace crèches.

Shaping the life course: a European perspective

31

Disaggregating mothers’ employment into full- and part-time work we find that over 60 per cent of employed mothers with at least one child under six work part-time in Austria, Germany and the UK. In Sweden around a half work part-time but the share drops to only around one third in France, Italy, Spain and to under 12 per cent in Greece and Hungary. Variations in part-time work opportunities cannot provide a simple account of variations in headcount employment rates for mothers of children under six, which only vary from 52.7 per cent in Italy to 64.4 per cent in France – excluding Hungary and Sweden. This is a much narrower spread than that for shares of part-time work. Motherhood employment gaps measured as full-time equivalents are particularly large in Hungary and the UK (Table 1.6a) followed by Austria and Germany, but much smaller in the southern European countries and France. The shares of part-time work among mothers are reflective of the overall shares of part-time work in the labour market; that is of the employment regime, not just the welfare system. Moreover increases in employment rates for mothers often run ahead of changes in the development regime; for example in Spain the economic boom led to significant increases in female employment rates overall and for mothers, ahead of changes in welfare support. Employment rates for mothers rise if those with older children (at least one child under 12) are included but the effects are modest (one to five percentage points in FTE rates), except for Hungary where the increase is a massive 16 percentage points (Table 1.6a). In all countries it is the employment rates of mothers with low or medium educational attainment which rise most when we include mothers of older children. Employment rates for mothers with low educational attainment are particularly low in Italy, Hungary and Germany. In contrast, mothers with at least one child under six with high educational achievement have employment rates in excess of 73 per cent in all countries except Hungary where it is still only around 40 per cent (Table 1.6b). Policy regimes impact on mothers’ transitions by shaping both financial incentives and disincentives and the availability of support services. During the initial debates in the early 1990s on gendered welfare states our nine countries could be clearly divided into those that provided: (i) only limited leave and childcare – the southern European countries and the UK; (ii) extended parental leave but with limited paid leave and childcare, notably Germany and Austria; and (iii) more extensive childcare and/or paid leave, that is Sweden, Hungary and France. These patterns were still largely in place in the mid 2000s (Table 1.7) although Hungary now primarily only provides long paid leave not childcare and Germany has significantly improved its paid leave provisions. Sweden and now Germany are

32

The welfare state and life transitions

Table 1.6a

Austria France Germany Greece Hungary Italy Spain Sweden UK

Table 1.6b

Austria France Germany Greece Hungary Italy Spain Sweden* UK Note: Source:

Impact of motherhood on employment by head count and fulltime equivalent (FTE) and by age of youngest child Employment rate women 20–49 no children

Motherhood gap – at least one child under 6

Motherhood gap – at least one child under 12

FTE Employment rate women 20–49 no children

FTE Motherhood gap – at least one child under 6

FTE Motherhood gap – at least one child under 12

83.5 78.4 81.6 77.9 76.5 67.8 76.9 73.0 83.3

−21.0 −14.4 −22.9 −14.7 −44.5 −15.1 −17.8 +12.0 −27.5

−15.0 −9.0 −17.7 −11.7 −28.1 −13.8 −16.1 +12.0 −20.6

73.4 70.5 70.9 61.4 75.3 60.8 70.7 n.a 76.2

−30.2 −17.5 −30.7 −10.3 −44.8 −17.9 −20.7 n.a. −37.5

−26.6 −17.5 −28.9 −7.7 −28.8 −17.0 −18.8 n.a. −32.4

Employment rates of mothers (20–49 years old) with low, medium and high educational attainment Mothers with at least one child under 6 by educational attainment

Mothers with at least one child under 12 by educational attainment

Low Medium by High by educaeducaby educational tional tional attainment attainment attainment

Low Medium by High by educaeducaby educational tional tional attainment attainment attainment

46.4 36.6 26.8 34.7 17.0 32.7 44.7 65.0 35.2

65.4 64.8 62.3 49.6 35.2 60.1 56.4 88.0 56.3

73.4 80.2 76.3 77.3 39.9 75.3 76.3 89.0 76.2

52.6 50.6 38.4 41.7 27.0 35.7 46.9 67.0 44.0

71.6 70.3 67.3 52.6 52.6 62.0 61.5 88.0 64.1

*Own calculation based on Statistics Sweden (2005), year 2004 for Sweden. Own calculations based on Eurostat (2008a) and own calculations.

77.9 81.3 78.6 79.3 60.2 77.7 77.5 89.0 80.2

Shaping the life course: a European perspective

Table 1.7

Austria France Germany Greece* Hungary Italy Spain Sweden UK

33

Support for transitions to parenthood Availability of childcare (1)

Cost of childcare (2)

Marginal tax on second income earners (3)

Total leave maternity plus parental (4)

Paid leave FTE equivalent (5)

7 28 9 7 7 6 21 40 26

19.1 14.8 9.1 6.6 8.5 n.a. n.a. 7.6 43.1

54.1 28.8 51.8 16.0 50.4 37.8 19.5 29.8 23.4

112 159 66 31 108 47 172 84 52

33 47 49 17 76 24 16 62 9

Note: *Data in columns 4 and 5 refer to 2006/7 and do not include the 2008 improvements in leave entitlements in Greece. Sources: (1) Enrolment of under 3s in formal childcare (OECD 2009a Chart SS3.1). (2) Net childcare costs as % average wage (AW) (dual earner household 167% of AW) 2 participating children aged 2 and 3 (OECD (2007) Babies and Bosses chart 6.5 panel A). (3) Effective tax burden as % new job (67% AW) when partner enters employment (first earner on AW) without childcare costs (OECD (2007) Babies and Bosses chart 6.6). (4) Maternity plus parental leave maximum for women (excluding extended childcare leave) 2006/7 Key characteristics of parental leave systems Table PF7.1 OECD family database version http://www.oecd.org/dataoecd/45/26/37864482.pdf, accessed 29 July 2009. (5) FTE maternity leave plus parental leave 2006/7 Key characteristics of parental leave systems Table PF7.1 OECD family database version, http://www.oecd.org/ dataoecd/45/26/37864482.pdf, accessed 29 July 2009.

the only ones to provide both a reasonable length of paid leave (calculated on an FTE income replacement basis) and a total leave entitlement that is not of excessive length. Too long leave results in disconnection from the labour market (OECD 2007) and the relatively long total paid leave available in France and Hungary on an FTE basis in fact requires the taking of very long leave paid at relatively low replacement rates. Austria, Germany and Spain have also provided long leave entitlements but with even lower entitlements to pay while the UK, Italy and Greece provide leave of both limited length and low income replacement. There are also tradeoffs in the provision of childcare; combining EU and OECD data, we find four countries have low-cost childcare but low availability – Germany, Greece, Hungary and Spain – with only Sweden combining low cost with high

34

The welfare state and life transitions

availability. France has high availability at medium cost while the UK and Austria fall in the medium availability categories but at high and medium cost respectively (no information for Italy). While the imprint of the traditional policy approaches is still evident, recently some significant changes in policy orientation can be identified, not all of which are yet fully implemented. One motivation for policy change is to address the increasing mismatch between actual behaviour and attitudes and the family models on which welfare regimes are based. Social changes have, if anything, been more rapid and fundamental than employment trends. For example, in 1980 fewer than 20 per cent of births were outside of marriage in our countries except Sweden where the share was already close to 40 per cent. By 2004 in five countries the shares of births outside of marriage exceeded one third and only Italy and Greece had shares below 15 per cent. These changes suggest some convergence in lifestyles across much of Europe. Furthermore, the decline in formal family structures raises the importance of financial economic independence for women which in practice may only be achieved through employment continuity. The need to adjust to new social patterns is also motivated by new fiscal challenges, for example to reduce the need for lone parents to be dependent on welfare or to increase prime age employment to expand the tax base. Moreover, not all policy changes are aimed at supporting mothers to remain in or reintegrate into work on a more equal basis. For ideological or other reasons there are still examples of policy changes aimed at encouraging mothers to stay out of the labour market or which are likely to lead to marginalisation if they re-enter employment. Some of our countries are represented in both sets of policy directions – either simultaneously or at different time periods. In policy developments to support working mothers, Sweden is either explicitly or implicitly taken as a reference point, although the full characteristics of the Swedish model are not always appreciated. Sweden still offers the only ‘model’ within our nine cases where the welfare regime aims to reduce the life course costs of parenthood and provide opportunities for both men and women to be active parents while retaining their employment status. By providing paid leave at high income replacement rates, guaranteed and subsidised childcare together with rights to reduce hours and to reverse any reductions, there is a more seamless transition between the status of wage work and non-wage work, thereby potentially reducing the impact of this life stage on lifetime income and life chances. Nevertheless, the model has been criticised for creating barriers to women accessing high level work in the private sector, possibly explained by the costs of adjusting to leave entitlements (Estévez-Abe et al. 2001; EstévezAbe 2005) but also possibly by women’s active choice of public sector

Shaping the life course: a European perspective

35

careers where they feel more able to exercise their rights. Policy development in Sweden over recent years has indirectly addressed this issue by promoting the active involvement of fathers in leave and childcare to reduce discrimination and promote change in gender roles. The result is more fathers taking part in leave but the underlying gender division of labour has still proved resilient. Many of the recent policy changes to support working mothers have come from countries with weak traditions of such support, indicating some process of ‘catch up’, in particular in Spain, the UK, Greece and Germany. However, while these signal significant changes in direction there are concerns in each case with respect to the coherence or efficacy of the new approaches. Spain’s 2007 equality bill now requires companies to make equality plans and allow reduced working hours, albeit unpaid, until the child is eight, in contrast to 1999 when the reconciliation bill called for changes only to be made if they did not affect company operations or other workers. However, the eventual impact may still be limited due to budget restrictions in the financial crisis. The UK has also moved to provide greater state support for employment continuity in response to the high level of two-earner families in the UK (Lewis et al. 2008) but the UK version of the ‘adult worker model’ has a strongly liberal tinge. Paid leave has been extended but at a low flat rate pay level. Childcare provision has been expanded but still involves high cost with no guarantee of services. Rights to request flexible working have been introduced but employers may refuse if they have reasonable grounds and there is no right to return to full-time employment. The Greek government has provided women with more rights to reconciliation – for example six months paid childminding leave after maternity leave from 2008 paid at the national minimum wage. Also under the influence of the EU, some improvements in public provision have occurred, including lengthening nursery and school provisions as well expanding childcare places, but relatives still provide the major source of childcare support to mothers. Germany has made the boldest moves towards a new approach to supporting parenthood transitions, starting around 2001 (Lewis et al. 2008) when incentives were introduced to return to work after one rather than the maximum three years of parental leave. From 2006 onwards childcare places for under threes have been increased and in 2007 parental leave has been shortened to 12 months (14 if the other parent takes at least two months of the leave) but paid at a much higher rate – two-thirds of previous earnings (67 per cent) with a minimum of €300 and a maximum of €1800 per month. This parental leave policy is closer to the Swedish model, and in France Sarkozy also has a plan for shortening leave, reserving leave for fathers and providing a higher income replacement. If this policy is implemented there may be

36

The welfare state and life transitions

significant impacts on some groups of women, but as French mothers are already more continuous and often full-time employment participants, the impact may be anticipated to be less than in Germany. The motivations for these changes are clearly mixed. Although ‘catch up’ provides part of the explanation, in Spain and the UK changes of governments provided the main catalyst. However, the main driving force is not necessarily gender equality; in the UK the stronger motivation has been the reduction of welfare dependency especially among lone mothers, and the associated reduction of child poverty. Likewise in Germany, the prime concern is not gender equity but the promotion of higher fertility, particularly among more educated women, as Germany has one of the lowest fertility rates among the EU15. This new leave policy has thus not formed part of a general overhaul of the German model of employment and family policy as we discuss below. The direction of policy change has not been universally in support of women’s labour market participation. Austria and France provide two examples where policies to encourage women to stay out of employment longer have been introduced, but for different reasons. The Austrian policy regime was already based on long parental leave, limited childcare and promotion of part-time work when in 2002, following the resurgence of a more conservative ideology, a new universal childcare benefit extended the benefit period to 30 months while the latest date by which mothers could return to a guaranteed job remained at 24 months. More recently there has been some reversal of this policy stance with options to take the childcare benefit at a higher rate for a shorter period, and with some progress made on rights to reduce working hours and to return to full-time work once children are older, but the eligibility conditions for these rights are likely to reduce their impact (Mairhuber, this volume). An apparently similar policy change in France from the mid 1990s onwards funds mothers to stay out of the labour market and care for their children. However, this policy is linked not to the rebirth of a stay at home ideology but to the dominant French public policy agenda of reducing open unemployment (Lewis et al. 2008). The effect is to reinforce a dual model in France, that of providing both childcare support and support for women to stay home, a policy approach evident in the 2004 reform which both extended paid childcare leave to the first child and introduced new forms of childcare services (Erhel et al., this volume). More mothers of young children are indeed staying home and/or working part-time but the underlying commitment to a model of full-time employment fostered by early development of childcare remains strong, with most mothers returning relatively rapidly to full-time work. Dualistic models are also emerging in Germany: on the one hand it has

Shaping the life course: a European perspective

37

maintained its tax-splitting system which provides disincentives to secondincome earners and promotes the taking of mini jobs that provide only dead end or marginal employment opportunities. Germany and Austria are the two countries where there has been in fact a trend decline in female FTE employment rates. The contradictions in the German model can be attributed in part to the clash of welfare state approaches between eastern and western Germany but they also relate to the reluctance of the government to reform the male breadwinner welfare state at a time when male breadwinners are facing losses from the reforms to unemployment and pension systems and from the erosion of collective bargaining (Bosch et al. 2009). So far we have focused on examples of policy change. Hungary and Italy are perhaps more notable for their inertia. Hungary has dismantled the socialist regime’s childcare provision but has done little to replace it while maintaining the legacy policy of long paid leave. The consequence has been a decline in fertility and it is only through postponement of childbirth that Hungarian women have been able to recover the employment levels they had already achieved by 1990. For those who do become mothers, paid leave is still being taken but re-entry is problematic because in the long gaps jobs disappear and the right to return to work is not properly enforced. Part-time work is now allowed after the child is one-and-ahalf without loss of benefit, but employers are apparently just as reluctant as workers and trade unions to operate part-time work systems (Cazes and Nesporova 2004, 2007). Continuing job shortages may be restricting motivations to improve reconciliation policies to facilitate re-entry at an earlier date. Italy has also made little attempt, certainly over recent years, to change the family-based Mediterranean model into a model providing public services to support motherhood and instead continues to rely on the family for the organisation of care. Parental leave legislation, although in principle relatively progressive and including incentives for participation by fathers, has not been supported by the development of childcare services. Indeed state intervention, where found, comes more in the form of cash payments to the family, fuelling an underground economy in care, staffed by women, particularly migrants (Simonazzi and Villa, this volume). This informal sector provides one way of overcoming the mismatch between Italian women’s aspirations and the opportunities offered them by the employment and welfare regime but they still remain relatively excluded from the formal employment sector. Assessment of the Transitions to Parenthood Sweden still stands out from other welfare regimes in pursuing a coherent and consistent policy of promoting equal parenting and mitigating the

38

The welfare state and life transitions

life course impacts of parenting. Other countries are beginning to see the Swedish adult worker model as providing something to learn from and are introducing some elements within their own welfare regime, but so far these initiatives do not add up to a coherent life course approach as many internal contradictions and tensions remain. The new leave schemes in Germany, Greece and France are too new or not yet passed for a judgement to be made on their effects. The UK and Spain have made some moves towards the adult worker model but the low compensation for income foregone, compared to the Swedish model, still leaves women as economic dependants during this crucial life stage. Very limited efforts have been made to increase fathers’ involvement. Moreover, although childcare provision has improved, only France and Sweden have a relatively comprehensive and reliable service. Where flexible working rights have been introduced, these have tended to be partial and to involve salary sacrifice, which either reinforces women’s dependence or leads to low takeup where low earnings make this an unpopular option. Many of the new positive policy approaches towards women’s employment have been motivated not by the pursuit of gender equality or better life course transitions but by objectives such as maximising employment rates, reducing welfare dependency or promoting higher fertility. There is no clear linear progress in policy support to match the rather universal changes in women’s aspirations for education, careers and empowerment. As such, the positive green shoots in policy agendas could still prove to be reversible if the recession leads governments to cut back on support for women staying in or reentering the labour market.

TRANSITIONS IN PRIME AGE In most publications on labour market issues the prime age is defined as the age between 25 and 54 years (for example Faggio and Nickell 2005). It is called ‘prime age’ because most careers and improvements in working conditions take place in this time span. In some publications, particularly those focusing on recruitment, prime age is defined as a much shorter time span, sometimes only from 25 to 35 years (for example Loretto et al. 2000). The implication is that in some labour markets and for some categories of employees there is only a narrow window of opportunity at the beginning of the working life in which to secure worklife trajectories with prospects for both good earnings and a career. This narrow window coincides with the main period of family formation with significant implications for both women’s careers and the opportunities for men to be active fathers. If one misses this opportunity to enter or stay on a ‘high-road trajectory’ he

Shaping the life course: a European perspective

39

or she remains on the low road in secondary labour markets and cannot catch up later unless there is institutional assistance for a second chance. The differences in definitions of prime age indicate that the term ‘older’ begins to operate in employment at different points for different types of transitions (recruitment, career, transition from a temporary to a permanent job, unemployment, further training and so on) and also for different types of jobs and workers. Within our nine countries there is a high diversity in the formative institutions for prime age careers, including education systems (age of completion of education), unemployment insurance systems, labour market policies, employment protection, wage systems and support systems for further training. These institutions are potentially important, not only in providing protection but also in empowering prime age workers to seek new opportunities through opening up new career possibilities and avoiding the scarring effects of unemployment or involuntary job changes. In the following we will analyse: first, the transition into a permanent job; second, policies for lifelong learning; and third, the impact of unemployment insurance systems and labour market policy. Transition into a Permanent Job and Career Moving from temporary or insecure employment into a stable or permanent job is a pivotal transition that for some may only be achieved in prime age. Indeed Table 1.3 shows that median entry to a permanent job does not occur until after age 25 in five of the nine countries. A permanent job offers most workers more social benefits with reliable income and better working conditions and more promotion possibilities, although the extent of employment security varies significantly across the nine countries. In eight of our nine countries most men (69 per cent or more), with Spain the exception, have obtained a permanent job sometime between the ages of 25 and 34 years (Figure 1.3). The peak of permanent employment (employment rates weighted by share of permanent work) is reached in all countries with the exception of Spain in the age group 35–45, indicating that in many countries a non-negligible minority of young men face a prolonged period of economic insecurity and dependence until their late 30s and/or early 40s. The employment profiles in Figure 1.3 do not indicate individual trajectories and may contain strong cohort effects. Some of the country chapters point to the disruptive effect of economic and political events on the employment profile of specific age cohorts. In Hungary many workers in prime age lost their job after the transition and were replaced by young better qualified employees (Spéder et al., this volume). This explains the exceptionally strong decline of the share of men in permanent work

40

The welfare state and life transitions 95 85

Employment rates

75 Sweden UK Germany Greece Spain Austria

65 55 45

Italy Hungary France

35 25 15 15–24

Figure 1.3a

25–34

35–44

45–54

55–64

Employment rates by age, weighted by the share of employees on permanent contract, men, 2007

95 85

Employment rates

75

Sweden

65 55

UK Germany

45

France Austria Hungary Greece Spain Italy

35 25 15 15–24

25–34

35–44

45–54

55–64

Note: Employment rates include self-employed implying an overestimation of permanent employment especially in countries with a high incidence of self-employment (Mediterranean countries). Source:

Own calculations based on Eurostat (2008a).

Figure 1.3b

Employment rates by age, weighted by the share of employees on permanent contract, women, 2007

Shaping the life course: a European perspective

41

between the ages of 34–45 and 45–54 in Hungary, so that in the latter age group under 70 per cent of the cohort has permanent employment, some 12 percentage points below the share in other countries except for Spain. The much lower share of young male workers in Germany with permanent jobs compared to Austria, despite similar employment models, results both from a lower youth employment rate and a higher share of temporary contracts for those employed. The cause could be the weak bargaining position of the young generation in the period after German reunification due to high unemployment (Bosch and Jansen, this volume). The higher share of permanent workers in Spain in the age group 45–54 years compared to the age group 35–44 indicates that the older cohorts have been less affected by the dramatic spread of temporary contracts. Nevertheless, the unweighted share of employees on permanent contracts never exceeds 88 per cent, even for the oldest age group 55–64, while in all other countries this share is 92 per cent or more. Subsequent cohorts can expect to have an even lower share of permanent employment, even at the end of their working lives. For women the entry into stable employment is affected by the continuity of their employment in prime age; some only find permanent employment before having children, some only after. A much lower share achieve permanent employment in the 25–34 period, due primarily to lower overall employment rates although in most countries, and for most ages, the share of permanent contracts is lower for women than for men (Figure 1.3a and b). Between ages 35 and 55 the share of women in permanent employment in the three southern European countries remains well below 60 per cent – and for Spain below 50 per cent. In the other six countries the shares rise to close to or above 70 per cent although never reaching the 80 per cent common for men in this age range. Hungary has the lowest share of this six at 67–68 per cent but in the age bracket 45–54 there is almost no gender gap, suggesting that men’s access to permanent employment was reduced more by the regime change in this age range than women’s. After prime age the share of permanently employed women decreases in all European countries, except Sweden, much faster than for men but primarily due to lower overall employment rates. There is not much comparative research on career patterns in prime age. One reason might be that there are different meanings of a career. A career might mean an advancement in the hierarchy to a job with more responsibility and higher social status. It can also mean improvements in working conditions within the same job or through a transition to a job at the same hierarchical level but in another company or industry. Such ‘horizontal’ careers are important in countries with high wage differentials between

42

The welfare state and life transitions

industries and companies of different sizes in which the most desirable jobs are found in the primary segment of permanent jobs, mainly in the big companies of high wage industries. Unfortunately we do not have much comparative information on the incidence and impact of these different forms of careers. A proxy for careers is the different patterns of wage increases by age, gender and education, which are available for five of our countries (Figure 1.4). The most obvious common trend is the gender difference in earning increases. For the same educational attainment men can expect higher wage increases over the life course. The second common trend is that earnings prospects improve with educational attainment (with some exceptions). The third trend is that persons with tertiary education can expect wage increases up to the end of their 50s while for the other two educational levels the peak is reached much earlier (except for France). The reason may be that many promotions to upper management positions occur after the age of 45. Beside these commonalities, the differences are striking. Sweden has the flattest income curves for men and women. Most wage improvements occur in employees’ late 20s and early 30s. Only men with tertiary education can expect wage improvements up to their late 40s. The wage curves of men and women with upper and lower secondary education follow a similar pattern, indicating a similar rate of advancement over the life course for the medium and lower skilled. Wages are stable until retirement age which shows the stabilizing effect of collective agreements, such that wages do not decrease for older workers. The flat Swedish wage curves are a result of the absence of seniority pay systems and the low wage differentiation between industries and companies. Therefore, the scarring effects of involuntary job changes are very low in Sweden. In the UK most wage improvements occur quite early, up until the mid 30s for men and women with secondary education and until the late 30s for those with tertiary education. As one expects in a liberal market economy with low coverage of collective agreements, the wage curves are highly stratified by individual bargaining power which is linked to educational level. Male workers with upper and lower secondary education are particularly at risk of losing income in their 50s, probably associated both with involuntary job changes and lower bonuses in performance-based wage systems. France is the best example of the impact of seniority-based wage systems on earnings profiles. Wages of French men and women of all educational levels increase throughout prime age until their 50s. Men get higher seniority premiums probably because of higher tenure and more continuous work careers. Men with tertiary education can expect wage increases even up until retirement, while wages at lower educational levels fall after age 55. On the other hand, tertiary education does not seem to pay off for

Shaping the life course: a European perspective Tertiary

Upper secondary

MEN Index 350 300 250 200 150 100 50

France

Germany

Lower secondary

WOMEN Index 350 300 250 200 150 100 50

15–24 25–29 30–34 35–39 40–44 45–49 50–54 54–59 60–64 Age Index 350 300 250 200 150 100 50

43

France

15–24 25–29 30–34 35–39 40–44 45–49 50–54 54–59 60–64 Age Index

Germany

350 300 250 200 150 100 50 20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age

Index 350 300 250 200 150 100 50

Italy

20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age Index 350 300 250 200 150 100 50

20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age Index 350 300 250 200 150 100 50

Sweden

20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age Index 350 300 250 200 150 100 50

18–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age Index 350 300 250 200 150 100 50

United Kingdom

20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age

Source:

Italy

Sweden

18–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age Index 350 300 250 200 150 100 50

United Kingdom

20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Age

Blöndal et al. (2002, pp. 11–12).

Figure 1.4

The structure of earnings by age and gender (late 1990s)

French women, nor upper secondary education for French men, possibly because of weak occupational structures in the French labour markets which often do not reward vocational training (Marsden 1990). If seniority pay is firm-specific, high penalties are paid for movements between

44

The welfare state and life transitions

companies. Italy has strong internal labour markets with high protection for core workers. The main rewards in the Italian internal labour markets seem to be job security as seniority-based wage increases are lower than in France. Average job tenure is highest in Italy after Greece.7 Obviously we need to differentiate between job security and seniority pay to understand different career patterns in countries with strong internal labour markets. Italy has income curves as flat as those in Germany with its strong occupational labour markets. In Germany men with upper secondary education receive wage improvements up to their late 40s. There are established pathways to further training in prime age to the ‘meister’ or technician level or in services to business administrator. These promotional training courses lead to generally recognized certificates and open up careers to middle management. In an ageing society, wage equity among adult workers, as found in Sweden and linked with high employment levels for men and women at all skill levels, seems to be the most future-proofed model. Seniority-based wage systems seem to be too costly in the long run and therefore not sustainable. U-shaped curves with income decreases for older workers indicate the potential risk of poverty problems among older workers. Policies for Lifelong Learning Further education and training can help employees to adjust their skills to new requirements because of structural or technological change or voluntary or involuntary job mobility. It may open up promotion opportunities or provide second chances for those who dropped out of education for various reasons and at various levels. Many studies have shown that participation in further education and training magnifies inequalities over the work life (O’Rand and Henretta 1999; Pallas 2003). Low-skilled workers with low income in particular often lack resources to invest in education and training. Financial support for further VET is strongest in Sweden. Adults are entitled to grants up to the age of 50 even for long-term leave to acquire general or vocational qualifications (up to university study). To increase training investments France introduced as early as the late 1970s a levy system for vocational training which also includes, besides a levy-exemption for training initiated by the company, a fund for long-term vocational training leaves (up to one year). In Hungary, Italy, Greece and the UK levy systems operate in some industries but with only low overall impact on training (Cedefop 2008). Table 1.8 provides OECD data on non-formal job-related training. These data thus exclude formal education and training for adults which, for example, are very important in Sweden. The strong impact of the levy

Shaping the life course: a European perspective

Table 1.8

Expected number of hours in non-formal job-related education and training by level of educational attainment between the ages of 25 and 64, 2003 Lower secondary education (1)

Austria France Germany Greece Hungary Italy Spain Sweden UK Note: Source:

45

140 450 130 c c 26 102 356 103

(1):(3) Gender ratio Tertiary All Upper Average secondary education levels of hours for (3) education and postwomen/ (4) secondary average hours nonfor men tertiary education (2) 420 692 390 c 270 111 261 562 297

767 1061 650 312 402 254 503 917 480

422 713 398 106 253 82 237 622 315

0.18 0.42 0.20

0.10 0.20 0.39 0.21

0.80 1.14 0.78 1.00 1.63 0.88 0.91 0.94 0.89

c = too few observations. OECD (2008a, Table C5.1A).

system in France on the overall level of training but also on the distribution of hours by skill level is evident in the table. Sweden has the second highest level of training followed by Austria and Germany. In these two countries low-skilled workers are highly disadvantaged. The investments of the southern European countries but also the UK and Hungary in further training are below average and the low-skilled rarely participate. In most countries further training hours are concentrated in the first half of prime age, particularly in countries with low employment rates for older workers such as the continental and the southern European countries and Hungary. Only graduates who have high employment rates between 55 and 64 years can expect high levels of training up until their mid 50s. Sweden has the most equal distribution of training hours over the age groups until retirement age. Surprisingly the gender gap in further training is low (OECD 2008b, Table C5.1.b) and in some countries is even in favour of women. This might be the result of an industry effect. More women are working in service industries with rather high levels of training (such as the health sector).

46

The welfare state and life transitions

Employment Protection, Unemployment Insurance, Labour Market Policy and Coverage by Collective Agreements Unemployment is linked with immediate income losses but also may result in diminished earning prospects for the rest of the working life. These scarring effects can be mitigated in various ways, for example by strong employment protection which reduces the numbers dismissed and encourages labour hoarding in economic crisis, by income replacement during unemployment to reduce the income losses, by active labour market policy to support job search and empower the unemployed, and by a high coverage by collective agreements which may guarantee an effective floor of payment for similar activities within an industry and protects workers with weak bargaining power from having to negotiate wages individually. Table 1.9 shows different institutional linkages which more or less Table 1.9

Public expenditure for labour market programmes, 2006, in percentage of GDP, OECD summary measure of unemployment benefit entitlements and index of strictness of employment protection legislation (EPL) Active measure

Austria France Germany Greece Hungary Italy Spain Sweden UK

0.71 0.92 0.88 0.13 0.28 0.53 0.80 1.36 0.42

Passive Total measure

1.39 1.39 2.09 0.40 0.36 0.79 1.43 0.96 0.19

2.10 2.31 2.97 0.53 0.64 1.32 2.23 2.32 0.61

Summary measure of unemployment benefits* 1981

2007

29 31 29 6 n/a 1 28 25 24

32 39 24 13 13 32 36 32 12

+3 +8 −5 +7 +31 +8 +7 −12

Strictness Coverage of EPL for by collective permanent agreements workers** 2007***

1.8 1.5 2.0 1.7 1.5 1.7 1.4 2.1 1.2

99 95 63 85 35 80 80 92 34

Notes: *** The OECD summary measure is defined as the average of the gross unemployment benefit replacement rates for two earnings levels, three family situations and three durations of unemployment. *** OECD EPL indicator for permanent employees and collective dismissals (OECD 2004, chapter 2). *** Visser (2008), data for Hungary for 2005. Source: OECD (2008a, Table J.), OECD Benefit and Wages Statistics, OECD Employment Database.

Shaping the life course: a European perspective

47

follow the well known typologies in the varieties of capitalism literature. The UK and also Hungary represent the liberal model with low scores in all categories. The southern European countries combine high scores of employment protection and collective bargaining coverage with low levels of expenditure on labour market policy (with the exception of Spain) especially in active measures. The replacement rates have been substantially increased particularly in Italy and Spain since 1981, but the coverage of the unemployed is below 30 per cent of the unemployed and has even decreased because of tightened entitlement criteria especially for persons without previous work experience (Immervoll et al. 2004, Figure 3.6). The continental countries combine high scores of employment protection with high levels of expenditure on labour market policy, particularly in passive measures and involving high replacement rates and high collective bargaining coverage (except Germany). Sweden is the exceptional case, combining the highest level of expenditures in active labour market policy, with both high replacement rates and a high coverage of the unemployed and high coverage of collective bargaining. The Swedish empowerment approach, based on investing a great deal in active labour market policy and especially in training, makes sense in a country in which the job structure has been upgraded. It makes much less sense in an environment with high shares of low-skilled jobs such as in the UK and southern European countries as reported in the respective country papers. The impact of the different institutional settings in European countries and the US on the scarring effects of unemployment has been investigated by Gangl (2006). He followed the trajectories of the unemployed in prime age (25–54) in the second half of the 1990s in 13 European countries and the US, including most of our countries. His analysis is restricted to those workers who were previously employed, which excludes the young people who had not yet found a job. The cross-national comparative analysis shows that labour market institutions such as employment protection and unemployment insurance did mitigate the costs of unemployment. The Scandinavian labour market institutions are most favourable to workers’ long-term earnings prospects after an unemployment spell. The continental countries occupy an intermediate position. They do better than the liberal economies although ‘the pool of unemployed workers consists of workers with poorer labour market prospects on average so that positive institutional effects materialize despite a stronger selectivity of jobs in those markets. This in turn suggests that behavioural and structural effects of institutional arrangements must be fairly pervasive’ (Gangl 2006, p. 1009). Probably the most surprising result is that prime age workers in the southern European countries in his study fare almost as well as in the Scandinavian countries although these countries are not investing much in active labour

48

The welfare state and life transitions

market policy and erect high barriers around internal labour markets. The price may be above average unemployment problems for young workers. Assessment of Transitions in Prime Age Work and career patterns in prime age are strongly shaped by the institutions of the welfare and employment system in eight of our nine countries. Most workers still secure in prime age a permanent job and profit from the high employment protection for core workers which is most pronounced in France and southern Europe but also evident at a medium level in the other countries. The strong protection of workers in prime age reflects the legacy of the old breadwinner model which required the main earner of the family to be privileged in the labour market (Nickell 1997). Only in the UK is employment protection and also average tenure relatively low. However, what is new is that substantial minorities of workers, especially in Spain, only obtain a permanent job in their 30s or possibly later, indicating that many in early prime age experience a prolonged period of social insecurity. In the southern European countries and in Hungary the traditional high protection of the breadwinner has not been supplemented by new instruments of activation, unlike in Sweden, France and to a lesser degree Germany and Austria. In these countries the welfare state supports lifelong learning or has developed schemes of active labour market policy to assist workers to update their skills to new requirements. Besides state intervention, pay systems negotiated by the social partners or set by the employers have an important impact on careers. In the liberal market economy of the UK, with its bifurcated skill structure and low coverage by collective bargaining, the wage curves differ by bargaining power and educational attainment. For the lower skill levels the income curves are not flat over the life course and wages start to decrease even for those in their late 40s. Seniority pay systems seem to have survived for the better skilled. In the occupational German labour markets there are strong pay differentials by skill level and less by age but, contrary to the UK, wage curves are flattened over the work life for all skill levels. The dominant career strategy in Italy is to obtain a secure job in prime age, while in France men and women at all skill levels can count on continuous wage increases in prime age. The model of high wage equity among adult workers linked with high employment levels for men and women at all skill levels, as found in Sweden, seems to provide the best prospects in an ageing society. In contrast, seniority-based wage systems may be too costly in the long run and therefore not sustainable, while U-shaped wage curves that imply income decreases for older workers raise the prospect of increasing poverty among older workers.

Shaping the life course: a European perspective

49

TRANSITIONS FROM WORK TO RETIREMENT From the early 1970s to the mid 1990s in most advanced economies there was a clear trend for people, or at least men, to withdraw earlier and earlier from the labour market, reflecting both lowering of standard pension ages and, in several EU member states, a massive use of early retirement schemes or alternative exit routes such as disability pensions or unemployment benefits. The resulting decline in employment rates among elderly male workers was particularly marked in France (32.5 percentage points), Spain (22.9 percentage points) and Germany (17.4 percentage points) (see Table 1.10). Increases in their employment rates since 1995 have only partially reversed these falls. It should, however, be noted that countries like Italy and Hungary even in the early 1970s already had a low employment rate among elderly male workers of below 50 per cent, while the decline started later in the other seven countries. Despite the declines in these seven countries, employment rates for older men have only fallen below 50 per cent in the case of France. If we also take into account older women’s employment rates we find six countries are far from reaching the EES target of 50 per cent, with four countries – Austria, France, Hungary and Italy – failing to reach even 40 per cent in 2007 (see Table 1.10, 9th column). The other group includes Sweden and also, but to a lesser extent, the UK, where the employment rates of older workers (55–64 years old) are significantly above the 50 per cent target (even reaching 70 per cent in Sweden). These two countries are often taken as representing polar types of welfare capitalism and indeed their relatively high employment rates among senior workers reflect the different welfare systems. The lower degree of decommodification, in particular the relatively low replacement rate of the statutory/mandatory pension schemes (see Table 1.12) and the uneven coverage of occupational pensions in the UK create strong incentives for working longer. In contrast, in Sweden it is the higher degree of decommodification and the high level of public spending that requires a high level of employment over the whole life course and at the end of the job career for both men and women. Obviously this later exit is also encouraged by the age culture or norms embedded in Sweden’s human resource management practices, such as less prevalent age discrimination, relatively flat age–earnings profiles and the financial incentives to postpone retirement in the new Swedish pension system (see below). The extremely low employment rate of older workers in Austria, France, Hungary and Italy partly reflects the large share of older working age people who are still receiving benefits from pre-retirement schemes as well as the presence of alternative benefit-funded exit routes.8 The low employment rate among senior workers in France results from two main

50

Source:

Note:

62.7* 73.0 77.1 74.8* 27.9** 46.5 82.7* 82.8 82.9

Men 1971

35.1 46.8 53.6 65.6 – 37.5 59.1 73.2 62.3

Men 1985 42.8 38.4 48.2 58.9 27.1 42.3 48.0 64.4 56.1

Men 1995 41.4 38.5 48.2 55.7 33.0 40.3 55.2 67.8 59.8

Men 2000

Eurostat (2008a) and Guillemard (2003).

49.8 40.5 59.7 59.1 40.7 45.1 60.0 72.9 66.3

Men 2007

Employment rates of older workers

+11.4 −32.5 −17.4 −15.7 +12.8 −1.4 −22.9 −10.1 −16.6

in % points

Change 1971–2007

+8.4 +2.0 +11.5 +3.4 +7.7 +4.8 +5.3 +5.1 +6.5

in % points

Change 2000–2007

38.6 38.3 51.5 42.4 33.1 33.8 44.6 70.0 57.4

All 2007

28.0 35.1 44.6 26.9 26.2 23.0 28.9 67.0 48.9

Women 2007

Employment rates of older workers

Employment rates of older workers (men 55–64 years old): trends in male rates and gender gaps

*Microcensus 1971 Data, **1970 Census Data.

Austria France Germany Greece Hungary Italy Spain Sweden UK

Country

Table 1.10

21.8 5.4 15.1 32.2 14.5 22.1 31.1 5.9 17.4

2007 in % points

Gender gap in emploment rates

Shaping the life course: a European perspective

Table 1.11

Early, standard and mean age of retirement breakdown by sex Earliest age of eligibility for pension benefits (2003)

Austria France Germany Greece Hungary Italy Spain Sweden UK

51

65/60 60 63 58 62/60 57/56 65 61 65/60

Standard/official age of retirement Men 65 60 67** 65 62 65 65 65 65***

Effective mean age of exit* (2002–2007)

Women

Men

Women

60 60 67** 65 60 65 65 65 60***

58.9 58.7 62.1 62.4 59.7 60.8 61.4 65.7 63.2

57.9 59.5 61.0 60.9 58.5 60.8 63.1 62.9 61.9

Notes: *** The average effective age of retirement is defined as the average age of exit from the labour force during a 5-year period. Labour force (net) exits are estimated by taking the difference in the participation rate for each 5-year age group (40 and over) at the beginning of the period and the rate for the corresponding age group aged 5 years older at the end of the period. The official age corresponds to the age at which a pension can be received irrespective of whether a worker has a long insurance record of years of contributions (OECD 2009b). *** The standard retirement age in Germany has been raised to 67 years old in 2007. The change will take effect from 2012 and be fully implemented by 2029. *** In the UK the state retirement age will be 65 years for both men and women in 2020 and is set to increase to 68 by 2050. Source: OECD (2003) and OECD (2009b) for the effective mean age of exit. For France, workers can retire at age 60 with 40 years of contributions; for Greece, at age 58 with 37 years of contributions; and for Italy, at 57 (56 for manual workers) with 35 years of contributions.

phenomena. First, from 1981 the statutory age of retirement was reduced from 65 to 60 years and massive use was made of public early retirement schemes for the 55–59 years old (see Table 1.11). Despite reduced public expenditure on such programmes in the mid 1980s, the ‘culture’ of early retirement remained dominant until the end of the 1990s. Secondly, unemployed persons aged over 57.5 years in France were exempted from job searching while still being entitled to unemployment benefits until retirement. In Austria and Italy massive use of early retirement schemes allowed and encouraged able workers in their 50s to exit the labour market. In Hungary, the massive use of disability pensions, targeted principally at the low educated and blue collar workers, was a way of handling the social tensions resulting from restructuring after the political regime

52

The welfare state and life transitions

change. In spite of efforts, even in the more stable conditions of the 1990s it proved impossible to eliminate the practice of early retirement such that it has become a typical method of exiting the labour force. In Germany restructuring due to reunification was accommodated through public preretirement schemes. The UK has never had a national early retirement scheme, although public sector workers for a period were particularly likely to be offered early retirement, while in Sweden access to public early-retirement schemes for labour market reasons was first of all severely restricted during the end of the 1980s and abolished in 1991. The gender employment gap among senior workers is lowest in France and Sweden, despite large differences in overall older worker employment rates, but is particularly pronounced in the Mediterranean countries, reaching 30 percentage points or above in Greece and Spain. These large gender employment gaps reflect women’s general problems of integrating into employment at earlier stages of the life course and lack of opportunities to re-enter at later ages (see Anxo et al. 2006, Anxo and Erhel 2008); in Austria, Hungary and the UK, lower statutory retirement ages still apply to women allowing them to retire in principle on a full benefit before the age of 65 (see Table 1.11), but the statutory retirement age in Hungary and UK is planned to be respectively 62 and 65 years old for both men and women in 2020. Recent pension reforms have reversed the trend to lower pension eligibility ages, with several countries introducing gradual increases in pension ages for both men and women. When these reforms are completed, most will have a standard retirement age of 65 years; 67 or more in Germany and the United Kingdom. Only France and Hungary intend to keep normal pension ages below 65. Effective retirement ages are still on average even lower than the current statutory pension ages, except for men in Sweden (Table 1.11). In Austria, France and Hungary, the effective retirement age is even below 60, indicating the still large-scale use of early retirement schemes (Austria, France) or other equivalent benefit-based exit routes such as unemployment insurance (France9), or disability pensions (Austria and Hungary). The decline in the effective retirement age, evident in most of our selected countries from 1970, has been reversed at the turn of the new century but the withdrawal age is still significantly younger than in the 1960s and 1970s.10 This decline in the effective retirement age has been common for both men and women, although the exit age is effectively only calculated for those in employment from age 40 onwards which applied to smaller shares of each female cohort in earlier decades. The narrowing of gender gaps in exit ages over the last 40 years implies some form of convergence in exit behaviour of men and women but in practice, if retirement is to facilitate complementary leisure for couples, women are likely to exit earlier as the male spouse is still on average a few years older.

Shaping the life course: a European perspective

53

These long-run trends in exit ages do not only reflect the impact of changing policy regimes but also the effect of rising living standards and the related increased demand for leisure.11 Also under technological and industrial restructuring the demand for low-skilled older workers has declined, leading effectively to more involuntary exits. The trend reversal in this century can be attributed primarily to the various pension reforms initiated in most of our selected countries over the last decade aimed at increasing financial incentives to postpone retirement and to the limiting or closing of national preretirement programmes or alternative routes to early withdrawal.12 Pension Reforms Over the last two decades, all our selected countries have undertaken pension reforms (see OECD 2008e). Austria, France, Germany, Hungary, Italy and Sweden engaged in comprehensive, structural pension reforms while reforms in Spain, Greece and the UK have been more marginal, at least in public pension systems. The primary objectives of reforms have been to ensure the long-run financial sustainability of public pension systems and to contain their future cost increases associated with the ageing population. Reforms have included, among other things, increases in retirement/entitlement ages, changes in eligibility criteria, a strengthening of the link between pension benefit levels and earnings, a lowering of replacement rates for new entrants as well as a greater role played by private pension schemes in providing incomes in old age. A common policy response has been to encourage postponement of retirement by changing financial incentives to retire. Income penalties for early retirement have been introduced or increased (Austria, Germany and Italy) and/or there have been across the board reductions in income replacement rates (Germany13). Benefits have no longer been indexed to real wages but to economic growth (Italy and Sweden). Similarly, some countries (Austria, France, Italy and Hungary) have extended the period over which earnings are taken into account instead of calculating benefit on a limited number of final years. France moved from the best 10 income years to the best 25 years in the public scheme while Sweden and Austria’s pension systems are nowadays based on a lifetime average earnings. Two of our selected countries – Italy and Sweden – implemented a gradual shift from a pay-as-you-go benefit-defined system into a mandatory pay-as-you-go notional defined contribution system (NDC).14 The structural pension reform launched in Hungary in 1997–98 continued the pay-as-you-go state pension system but also set up a private insurance system with private accounts, mandatory for young people and providing incentives for pre-pension savings. These comprehensive pension reforms

54

The welfare state and life transitions

have in common an important feature: pensions will in future automatically adjust to changes in economic growth and in life expectancy. Annuities will be lower, the lower is economic growth and the higher is life expectancy at the time of retirement, since the pension will be paid for a longer time. Such automatic adjustments to life expectancy have also been built into systems which have not undergone such systemic reform. For example Germany has linked benefit levels to life expectancy while France has opted instead to extend the years of contributions required for obtaining full benefits (OECD 2008e). In contrast to the other countries, state pensions constitute a relatively low level of income in the UK although the basic pension is supplemented by more generous means-tested pension credits which have reduced pensioner poverty rates. However, these benefits are likely to become unsustainable as means testing reduces incentives to save and more people will become eligible for benefits as the non-statutory company-based occupational pensions that have been relied upon by many groups are increasingly closed to new entrants. To limit future state responsibilities some major changes in policy have been agreed; from 2012 the basic state pension will increase in line with earnings instead of prices, the retirement age will gradually increase to 68 and a national savings policy for second tier pensions will be introduced. Assessment of Transitions to Retirement In assessing the transitions to retirement, particular attention needs to be paid to the intra- and intergenerational consequences for equity and income distribution of the current pension reforms. Extending contributing periods (Austria, France) or introducing lifetime income principles (Italy, Sweden) can be expected to have quite different effects on socioeconomic groups and by gender. Lifetime income principles, compared to a system based on a limited number of best income years as in many of the old pension systems, tend to reduce pension benefits more for those with strongly upward-sloping age–earnings profiles.15 Thus in countries with a strong seniority-based wage system such as France, the reform will affect the pension replacement rates more than in countries with low wage seniority as for example in Sweden. Extension of contribution periods will also have more severe gender equity implications where women are not continuous employees and where there are limited credits for childcare periods. Most of the pension reforms have taken some account of the differences in risks among social groups by limiting the cost of necessary work interruptions linked to parenting, care activities, or involuntary employment disruptions such as unemployment, disability or sickness, by introducing

Shaping the life course: a European perspective

55

some income-compensating mechanisms in calculating pension benefits, although not necessarily to an extent sufficient to offset the extensions of contribution years. Indeed there are major variations across countries in these compensating mechanisms according to the extent and type of interruptions across the life course and the generosity of compensation. In Sweden, by far the most comprehensive and generous in this regard, the time that workers devote to higher education, to small children or to national military service, as well as absence due to unemployment and sickness, all give rise to pension rights. Future entitlements to a pension in Sweden are thus currently not only related to work history and earnings but are also linked to other forms of activity across the life course and periods of benefit receipt. Some increased account of time spent in child-raising has been taken in Austria, France, Germany and the UK16 but there is no subsidy for reduced earnings for women due to time spent in part-time work related to family commitments, except partly in Sweden through the parental leave system.17 For many women, lower pay, fragmented work career and/or long periods of part-time work imply strong income penalties during retirement. In the Mediterranean countries but also in the UK elderly women are especially at risk of poverty18 (see Table 1.12). Furthermore, there remains a considerable gender divide over who has or who does not have a significant occupational pension. This relates to women’s interrupted careers and to lack of provision and uptake among those in part-time jobs. With the exception of Sweden, married women still remain strongly reliant on derived rights to statutory or occupational pensions. Benefits derived from marriage are becoming ever more uncertain owing to the increasing diversity of living arrangements and derived pension benefits have in some countries been continuously reduced (Austria) or even suppressed (Sweden). However, in some countries, like the UK, this dependency has been increasingly extended to cohabiting couples or same sex couples, in contrast to the development of a more general individualised pension system as in Sweden. The decline in state pensions and the inadequate coverage of women has been and will be a major source of inequality and poverty in the future in many of our selected countries. Thus there is a risk that the progressive substitution of the statutory pension scheme by occupational or private pension schemes in some countries will further increase the still existing gender inequalities. In general the interaction between the increasing precariousness in employment (the rise of atypical employment and the increase of unemployment risks) and the stronger link between pension entitlements and work history make it more difficult for atypical workers (low-skilled, immigrants, and so on) to provide for a decent pension at retirement.

56

Table 1.12

EU25 Austria France Germany Greece Hungary Italy Spain Sweden UK

The welfare state and life transitions

Old age pension gross and net replacement rates at average earnings (mandatory pension schemes) and proportion of men and women aged 65 years and older at risk of poverty*, 2006 Gross replacement

Net replacement

– 80.1 51.2 39.9 95.7 73.0 67.9 81.2 62.5 30.8

– 90.9 63.1 58.0 110.1 97.8 77.9 88.2 65.6 41.1

Risk of poverty Risk of poverty women men 30 27 25 21 37 22 32 42 20 44

24 17 22 16 33 14 25 37 9 38

Note: *At risk of poverty: Percentage of persons with an equalised disposable income below the risk of poverty threshold which is set at 60% of the national median equalised disposable income after social transfers. Source: Society at a Glance: OECD Social Indicators, 2006 edition (www.oecd.org/els/ social/indicators/SAG) and Eurostat (2008a) for risk of poverty.

Another issue is the time period for reform. In countries such as Austria, Hungary and Italy, the pension reforms involve a very long transitional period. The coexistence of different pension regimes as in Italy or Hungary leads to a striking degree of intergenerational inequality.19 The social contributions of the younger cohorts finance the generous pension benefits of the older cohorts, but at the same time are required to make additional savings to compensate for their future reduced statutory pension benefits. The UK’s younger age cohorts are being excluded from private companybased defined benefit schemes and at most have the option of participating in stock market-based defined contribution schemes, often without any inflation up-rating. Even those joining the public sector are encountering pressures to reform the still generous public sector schemes. These developments raise major issues of intergenerational equity, with younger people not only funding older people’s pensions but also facing much more limited prospects of retiring on decent pensions themselves. By contrast, in Sweden the new NDC system is the result of a broad political consensus and the awareness among all politicians of the urgency of reshaping the pension system in order to not only secure its long-run sustainability but also to ensure intergenerational fairness. Piecemeal reform of the

Shaping the life course: a European perspective

57

old system was not practicable as it would have required either too high increases in contributions by the current and future active populations or too large reductions in benefits. Compared to Italy, the Swedish pension reform has been implemented rapidly and the burden has been distributed more evenly across generations (see Anxo, this volume). Germany provides a more extreme example where pension reforms often have an immediate effect, because changes, such as the across-the-board reduction of pension benefits, affect all existing pension entitlements, including pensions in payment (OECD 2008e). According to a recent study (OECD 2008e), the individual consequence of pension reforms at different levels of earnings varies between our selected countries. In France and Sweden, for example, as a consequence of the pension reform, pension benefits for average earners are expected to drop by around 20 per cent. However, low earners should expect only a slightly smaller pension than previously, implying a reduction in the dispersion of income among retirees. While the benefits of state pensions for average earners are expected to remain unchanged in the UK, low earners can expect a higher net replacement rate because of the new pension credit and second state pension. In Italy, the reduction in benefits for low earners is estimated to be larger than for people on average pay, increasing the risk of poverty in retirement for people with low earnings, who also tend to have incomplete contribution records. The German pension reform with its across-the-board reduction of benefits entails a proportional decrease in benefits, broadly similar for low and average earners. A future rise in old-age poverty is also a concern in Germany, where the across-the-board undifferentiated cuts in public pensions may be considered regressive. With future lower public pensions, there is a risk that a larger share of retirees will be reliant on social benefits or other social transfers. While Germany’s pension reforms might have achieved financial sustainability, it is doubtful whether the drop in the value of the statutory pensions will be counterbalanced by supplementary occupational and private pensions, implying that a stronger safety-net will be needed to avoid a resurgence in old-age poverty.

CONCLUSION The major institutions that shape the life course are the family, the labour market and the welfare state. These institutions provide the private and public resources which, in interaction with individual agency, determine the actual life course of individuals. The welfare state is the ‘only overarching institution that extends to the entire life including periods of non

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work, and lack of family’ (Leisering 2003, p. 210). Through this coverage of the whole life course, welfare states have the potential to increase equity in opportunities and outcomes; not only may they mitigate the impact of class and family position but they also provide resources as entitlements, thereby reducing the randomness in access which occurs when these are dependent upon family or employment structures. Life courses seem to be less determined than in the past by normative age markers or strong role models. There are more possibilities for individual decisions and negotiations. Male and female careers, for example, are still ‘linked lives’ or ‘interrelated life courses’ (Krüger 2003) but these interrelations are less determined by traditional role models and are increasingly the subject of negotiations between partners (Heinz 2003). At the same time substantial changes in the economy and society, such as the ageing of the population, technological progress, international competition and increasing skill demands, impact on individual life courses. We have argued that as a consequence of both more individualised lifestyles and structural social and economic changes, life courses are becoming more diverse and flexible. This brings about not only increasing heterogeneity but also new risks such as the obsolescence of acquired skills, divorce or unemployment. The main question is whether these new risks and the new requirements for flexibility, whether they be voluntary, negotiated or imposed, have longlasting scarring effects across the life course. If so, can new institutional pathways for flexible life courses be developed that mitigate the risks of scarring effects? Most comparative analysis takes a holistic view of systems and develops typologies of different varieties of welfare states. These typologies may be too general to grasp the impact of welfare state arrangements on different critical life transitions especially when it comes to change. In no country is the welfare state a homogeneous entity. It consists of many different subsystems with different actors; as a consequence it may work well in one area but not in another. Therefore, in spite of similar external policy pressures, such as from the European Employment Strategy, each national welfare state may respond to new risks in relation to some transitions but not those in others. Starting from these theoretical considerations, we analysed in this volume, on the basis of nine country reports together with some comparative empirical data, the responses of these countries to the changing lifestyles and needs in five critical transitions. This analysis showed convergence of preferences ahead of convergence of policies and institutional arrangements. In all countries we found, for example, a remarkable expansion of education over recent decades which was fuelled to a large degree by the increasing ambitions of parents and students to improve their

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chances of obtaining a decent job with good career prospects as well as by government goals to develop a competitive knowledge society. A major change is that the average educational attainment of young women is now at the same level or above the educational attainment of young men. Therefore it comes as no surprise that another example of convergence is the increasing preferences of young women to continue to use these skills by combining motherhood and work. The responses to these and the other changes, which we have described earlier in this chapter, were variable. They extend from a proactive and consistent life course policy in Sweden, to selective and often contradictory responses to changes in different life stage transitions, to inertia. They also include active efforts by governments in some countries and in relation to some life stages to change preferences and behaviour. Examples of inertia, and limited and contradictory actions are found in all five transitions. The prolongation of education increases the financial burden of the families with children in higher education. All nine countries support parents of children in compulsory education by family allowances, tax reliefs or study grants. However, when it comes to the recently expanded post compulsory tertiary education, the picture is very heterogeneous. Only Sweden has developed a universal grant system for young adults, which reduces the impact of class and family in participation in education and training. In all other countries the families are bearing most of the costs which have been increased by the introduction of tuition fees and growing living costs for students. The burden on the families is partly mitigated by targeted support according to parental income. The subsidies to private households for tertiary education remain, however, small, especially in southern European countries but also in France and Hungary. Contrary to the individual aspirations of young people, rising house prices enforce delays in their transitions to independent living or require increased support from the family. Again it is primarily Sweden where the state provides support for independent living, although Spain has also now begun to provide limited assistance. In Germany the exceptionally low housing prices – which are not a result of intended policies – have the same positive effect. While housing policy for young people is not on the welfare policy map in most countries, public support for improving reconciliation of parenthood and work has been put on the agenda even in the conservative welfare states. There is a move from an originally high reliance on family support (except Sweden and France) to some state support and increased obligations on employers in some countries (like Germany, Austria, Greece, Spain and the UK). The policies in some countries (Germany, Austria) can be described as contradictory since the institutions providing the traditional support for the male breadwinner model remain unchanged.

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In contrast to Sweden, where family policy is clearly designed to support the dual-earner household, in these two countries politics tries to support different family models at the same time which makes their family policies both very expensive and ineffective. The same picture of piecemeal policy can be observed in the support of lifelong learning. Only Sweden has developed a universal grant system which provides a second chance for adults and has succeeded also in engaging employers in the training of the low-skilled. Also France, due to its levy system, has achieved a high participation rate at least in company-based training, while in the other countries, particularly in southern Europe and Hungary, there are only patchwork systems without aggregate effects. In the transition from work to retirement, the increasing precariousness in employment and the stronger link between pension entitlements and work history make it more difficult for individuals with interrupted careers (mainly women) and atypical workers (low-skilled, immigrants, and so on) to provide for a decent pension at retirement. Thus those following a flexible employment path face increased penalties, except where there is generous compensation applying to a range of forms of work interruptions. The Swedish policy stresses that entitlements to a future pension should be related not only to work history and earnings but also be linked more to other forms of activity across the life course and periods of benefit receipt. In Figure 1.5 we summarise our findings with respect to the role of state policies in shaping the life course. We use Leisering’s (2003, p. 210) concept of active life course policy which is defined as a policy which aims at shaping the life course by politico-administrative intervention. Negative or rather ‘passive life course policies’ leave the formation of the life course mostly to market forces, private companies and the family. We add in our overall evaluation two intermediate categories which we categorise as ‘limited life course policies’ and ‘supportive life course policies’. Both types are characterised by a patchwork policy approach where the state intervenes in certain life stages policy and for certain groups but not in others. However we reserve ‘supportive’ for those countries where there is evidence of strong active support for at least one life stage and limited for those where interventions remain at the moderate or medium level and even then apply to no more than three of the five life stages. This evaluation of interventions of the welfare state should not be confounded with outcomes. The actual outcomes are the result of the joint impact of the welfare state, the family and the market. In some cases welfare state interventions may not produce optimal outcomes: for example if these interventions are not well designed, if they are not coherent or if they discriminate against some groups in society such as women, ethnic minorities or foreigners. Our analysis, based on some indicators of active intervention but also

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16 15

From work to retirement Career in prime age

14

To parenthood 12 11

To independent living

11

From education to first job 10 9 8

7

7

7

7 6

6 4 2 0 Sweden Germany France Austria

Active

Source:

Supportive

Spain

Greece Hungary

UK

Italy

Limited

Passive

Own presentation (scores see indicator grid in Appendix Table 1A.2).

Figure 1.5

Welfare state and social interventions in five critical life stage transitions

taking into account the evaluations within the country chapters, revealed only one example of an active life policy (Sweden) and only three of supportive life policies (France, Germany and Austria). In Sweden the welfare state is taking an active role in all five transitions. The three countries in the supportive policy group are intervening at different levels and at different critical transitions. The two German-speaking countries strongly support the transition of young into the labour market and show medium scores in all other transitions for Germany and two for Austria. France has been trying to improve the transition of young people into the labour market but as yet with only moderate success. With regard to parenthood, a major recent change in Germany is the stronger focus on reconciliation of parenthood and work. Over a long period France has built up institutions to facilitate the reconciliation of parenthood and work but also protects the male breadwinner in prime age even more than the two German-speaking countries. The remaining five countries are classified as only limited in their support

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or in the case of Italy as passive. Complete abstinence from life course policy is not possible in highly developed countries so that even where policies are predominantly passive the family may only be able to take on protective functions if the main breadwinner in prime age up to retirement is well paid and protected. This is the main reason for the one medium score for Italy for prime age, as high protection of the male breadwinner is a pivotal point for its life course policy because dismantling this protection would diminish the capability of families to support their members in other life stages and would thus require a more active welfare state policy. Protection of the male breadwinner is also important in Greece and Spain – but protection is either not at so high a level or it provides less extensive coverage due to high levels of temporary working in Spain, for example. Nevertheless, Spain and Greece are still primarily reliant on the family but there is more evidence of efforts to provide additional, non-family support for the school-to-work and the parenthood transitions than in Italy. Hungary falls into the limited category not so much because of its longstanding reliance on the family but because of the general weakness of its institutions and its lack of resources in the post-socialist regime. The UK comes into the limited category by a different route, that is as a liberal market economy with weak state and family support systems. In some respects the welfare system may be more developed in the UK than in other ‘limited’ countries with respect in particular to safety nets, but these are more required due to low employment protection and weak family ties. Most of the countries we have considered here do not have an explicit normative model for the life course but where they rely on, for example, the family or the labour market to provide support for life stage transitions there is an implicit acceptance of certain class and gender outcomes. In contrast there is an explicitly formulated life course model behind Swedish life course policy which contributes to its coherence. The model is based on the independent adult, which means that subsidies are paid to families only for children up to 18 years. Entitlements are individualised which reduces risks related, for example, to divorce. The model is based on the assumption that all adults work. The flexibilisation of work careers is institutionalised to reduce the scarring effects of voluntary and involuntary job changes. Low inequality also diminishes the costs of flexibility and increases the acceptance of the model in the population. However, a ‘bricolage’ of institutions (Crouch 2005), rather than coherent life course policies, seems to be the normal situation. Only selective support is provided leading to a substantial degree of incoherence, not only within the policies targeted at specific life stages but also when one looks at the life course as a whole and the cumulative effects of the different policies. Such patchwork policy development may mean that the impact of the policy in

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one stage is undone in another stage. Earlier in this chapter we gave examples of such inconsistencies. Thus even an absence of active life course policy has a normative base (Leisering 2003, p. 210). Leaving the financing of many critical transitions to the family and market forces reinforces existing class divisions. Indeed the increasing importance of the family in the school-to-work and independent living transitions casts doubt on the European ideal, as presented by the EU, as consisting of meritocratic societies, offering a high level of equality of opportunity. Such laissez faire approaches may also shore up the outdated traditional breadwinner model, although the long-term success of such policies depends upon whether women will continue to accept a passive role in the family and employment system. Passive life course policy can be ‘actively’ pursued and can prove to be a powerful and frequently used tool in shaping life courses. By not debating the need for new life course policy, important issues for equity and empowerment within and between generations across different life stages are allowed to disappear from the political arena. In the long run it may, however, not be possible to ignore the need for change. Inconsistencies in life course policy may come onto the agenda because of the unintended consequences of limited or passive life course policies such as decreasing fertility, loss of competiveness or lack of social cohesion. In the best of our worlds such inconsistencies would indicate a transition from one normative model and type of life course policy to a new more sustainable one. However, even where new normative models have emerged among citizens or in political debate, it may still be difficult to deviate from the old path. Path dependency in life course policy may result from constraints which spill over from other areas of politics. For example, the small fiscal tax base in southern Europe may limit the capacity of the welfare states to react to new challenges. Or the resistance of the defenders of the old family breadwinner model in the conservative welfare state may bring about a stalemate in politics without further development. In liberal economies an active policy of promoting apprenticeship systems or obliging employers to invest more in lifelong learning may be found to be in conflict with the policy of non-interference in product markets and may be effectively ignored by employers. Above all interventions by the state in life course policies need to be legitimised and responded to by other actors. Another reason for a contradictory life course policy may be populist strategies to maximise votes. An easy way to solve problems in the present is to shift them into the future. This approach seems to be dominant for example in Italy, where the young generation has to finance the costs of both its own and the older generation’s more generous benefits. Such short-term ‘shareholder value’ policy is not only found in private

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management but has increasingly affected politics and is the ‘natural’ enemy of an active life course policy which aims at reducing inequality not only between gender and classes but also between generations. This debate on life course policy finally leads us to the issue of whether destandardisation of life courses is necessarily linked with deinstitutionalisation as many scholars argue (Castells 1996; Carnoy et al. 1997; Beck 2000). Is the old reciprocal relationship between institutions and individual agency shaping the life course eroding away with only the individual as a sole and unprotected actor remaining? We have already argued that destandardisation and deinstitutionalisation are not the same (Bosch 2004). Indeed a reinstitutionalisation of life course policy may well lead to a restandardisation of life courses. Swedish life course policy is an example of institutionalised flexibility where workers alternate between periods of full-time employment, part-time employment and career breaks (parental or educational and training leave). Flexible career paths of this kind differ from market-driven individual ‘human capital portfolios’ (Carnoy et al. 1997) in that they are decommodified. Institutions that provide support at key life stages may not only open up new choices for individuals but also reduce the risks associated with increasingly heterogeneous life courses and erratic employment trajectories and the scarring effects of critical transitions. Thus active responses by the welfare state to new challenges require a reinstitutionalisation of life course policy.

NOTES 1. 2.

3. 4. 5. 6.

7. 8.

For good reviews of the literature see Heinz and Marshall (2003), Mortimer and Shanahan (2003) and Anxo and Boulin (2005, 2006). For example: Germany wants to expand the share of graduates from tertiary education from around 20 per cent to the OECD average of more than 36 per cent. France aims to educate 80 per cent of an age cohort up to baccaulauréat level from the current 65 per cent. Until the credit crisis the UK had the objective of 50 per cent of a cohort being in higher education. This family support is not means-tested. However, it can only be claimed if the young adult is still ‘dependent’, that is, not earning above a certain limit. This analysis is based on the British Household Panel 2001–05 and the European Community Household Panel (ECHP) (1997–2001). One finds similar close links between education and training across Europe in regulated professional labour markets (such as doctors, nurses or lawyers) in which a recognized certificate is needed to enter these labour markets. Between 1997 and 2007 the house price to income ratio fell in Germany from 86.1 to 65.2 while rising significantly in all the other five countries for which we have information; France from 82.8 to 140; Italy 77.9 to 115; Spain 94.9 to 158.8; Sweden 77.1 to 124.3; and the UK 77.2 to 149.7. Source: OECD (2008d) annex table 60. In 2006 average job tenure in Italy was 12.3, in Greece 13.1, France 11.8, in Germany 11.1, in Sweden 10.9, in Spain 9.6 and in the UK 8.6 years. Source: Eurostat 2008a. The low but variable likelihood of re-employment for unemployed senior workers is

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9. 10.

11.

12. 13. 14.

15. 16. 17. 18. 19.

65

partly a reflection of discriminatory practice from the employers’ sides and also a good illustration of contrasted human resource practices among countries. To illustrate, in France and Germany only 3 per cent and 4 per cent respectively of the seniors who were unemployed in 2000 became employed in 2001. The probability of making a transition from unemployment to employment was thus very low, in comparison with the prime age adults (27 per cent and 37 per cent respectively), or with other countries (20 per cent in Denmark, 27 per cent in the UK), see Anxo and Erhel (2008). As well as a lower statutory retirement age in France and Hungary. The effective mean age of retirement during the period 1965–70 was for men 66.7 years in Austria, 67.6 in France, 67.3 in Greece, 65.9 in Italy, 69.4 in Spain, 67.9 in Sweden and 67.7 in the UK. The corresponding figures for women were 64.2 years in Austria, 68.2 in France, 64.6 in Greece, 62.1 in Italy, 71.9 in Spain, 66.6 in Sweden and 65.7 in the UK (OECD 2009b). According to OECD (2003), past changes in financial incentives (implicit tax rates on continued work) and standard retirement ages explain only a third of the trend decline in older males’ employment rates in OECD countries over the last three decades. This result suggests that other determinants, such as demand side factors and social norms play an important role in driving down the participation rates of elderly workers. It is however difficult to disentangle the impact of these reforms from business cycle aspects and/or cohort or generational effects. In Germany, the gross replacement rate of the statutory pension scheme is estimated to decrease from 52.7 per cent in 2005 to 46.3 per cent in 2019. Sweden stands out in this group of countries, since occupational pension schemes have always been important in pension provision and based on collective agreement. More than 90 per cent of the employed are covered by such occupational pensions. After the pension reform, this component increased to just under 50 per cent of the pension promise. The old system based on the best income years also favoured people with a shorter contribution history. In the UK contribution years will be reduced to 30, with more credits for caring activities, thereby increasing the share of women who qualify for a full state pension in their own right. The Swedish parental leave system offers considerable scope for flexibility in that part of the leave can, for example, be taken over a longer period by working a shorter week/ part-time with wage compensation (80 per cent of previous earnings). In Italy, lower social security contributions due to lower pay and fragmented work careers add up to an average pension that is only slightly more than half the average male pension (see Simonazzi and Villa, this volume). In Italy, only new entrants from 1996 will have their pensions entirely computed according to the new notional defined-contribution scheme, with no entitlement to seniority pensions.

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Rhodes, M. (2005), ‘Varieties of capitalism and the political economy of European welfare states’, New Political Economy, 10 (3), 363–70. Rubery, J., G. Bosch and S. Lehndorff (2008), ‘Surviving the EU? The future for national employment models in Europe’, Industrial Relations Journal, 39, 488–509. Rubery, J., M. Smith, D. Anxo and L. Flood (2002), ‘The future of European labour supply, the critical role of the family’, Feminist Economics, 7 (3), 33–69. Rubery, Jill, Mark Smith and Colette Fagan (1999), Women’s Employment in Europe: Trends and Prospects, London: Routledge. Saar, E., M. Unt and I. Kogan (2008), ‘Transition from educational system to labour market in the European Union: a comparison between new and old members’, International Journal of Comparative Sociology, 49 (1), 31–60. Sengenberger, Werner (1987), Struktur und Funktionsweise von Arbeitsmärkten. Die Bundesrepublik Deutschland im internationalen Vergleich, Frankfurt/M: Campus Verlag. Settersten, R.A. and K. Mayer (1997), ‘The measurement of age, age structuring and the life course’, Annual Review of Sociology, 23, 233–61. Shavit, Y. and W. Müller (2000), ‘Vocational secondary education – where diversion and where safety net?’, European Societies, 2 (1), 29–50. Statistics Sweden (2005), Longitudinell Individdatabas (Linda), 2004, Statistics Sweden (SCB), Stockholm. Stier, H., N. Lewin-Epstein and M. Braun (2001), ‘Welfare regimes, familysupportive policies, and women’s employment along the life course’, The American Journal of Sociology, 106 (6), 1731–60. Ungdomsstyrelsen (2005), En analys av ungas etablering och egen försörjning, Report 1005:1, http://www.skl.se/artikel.asp?C=1141&A=19189, accessed 28 October 2009. Universities UK (2006), Patterns of Higher Education Institutions in the UK: Sixth Report, Universities UK. van der Velden, Rolf and Maarten Wolbers (2003), ‘Training Systems and Labour Market Regulation’, in Walter Müller and Markus Gangl (eds), Transitions from Education to Work in Europe. The Integration of Youth into EU Labour Markets, Oxford: Oxford University Press, pp. 186–211. Visser, J. (2008), ‘Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts (ICTWSS)’, an international database, Amsterdam Institute for Advanced Labour Studies (AIAS), Amsterdam.

71 3.2 0.8 −8.2 15.1

−6.8

−2.7

6.6

−3.4

3.0

4.9 −6.4

−5.7

18.3

−6.1

−0.8

France

6.0

Austria

Employment performance, 2007

Employment rate – EU27 rate Youth employment rate – EU27 rate Female employment rate – EU27 rate Older workers employment rate – EU27 rate Youth unemployment rate – EU27 rate Unemployment – EU27 rate Part-time share – EU part-time share Fixed-term share – EU27 fixed-term share

Table 1A.1

STATISTICAL APPENDIX

0.3

8.3

1.8

−3.6

6.8

5.3

8.1

4.0

Germany

−7.3

−3.4

1.4

7.4

−2.3

−10.7

−13.2

−3.9

Greece

−4.3

−11.2

0.4

2.5

−11.6

−6.8

−16.2

−8.1

Hungary

−0.4

−3.2

−1.0

4.8

−10.9

−12.4

−12.5

−6.7

Italy

−2.1

−11.8

1.0

2.7

−0.1

−4.2

1.9

0.2

Spain

−2.4

4.1

−1.7

3.8

25.3

14.8

5.0

8.8

Sweden

−7.8

8.1

−2.4

−1.1

12.7

6.2

14.9

5.9

UK

72

(continued)

Source:

6.3

+0.47

−0.13

2.6

France

−3.5

1.3

Austria

Eurostat (2008a, 2009).

Female FTE employment rate – EU27 Mother one child under 6 FTE rate – EU27 rate Fertility rate 2006 – EU27 rate 2006

Table 1A.1

−0.20

−6.5

−1.6

Germany

−0.13

3.4

−4.0

Greece

−0.19

−16.2

0.3

Hungary

−0.18

−3.8

−8.3

Italy

−0.15

3.3

−1.3

Spain

+0.32

n.a.

12.1

Sweden

+0.31

−8.0

1.5

UK

73

2.

1.

M M L

L

H L

L

H

H

H

L

France

M

Austria

M

M

H

H

H

M

L

L

L

L

M

L

L

L

M

L

H

L

L

L

L

M

L

L

Germany Greece Hungary Italy

M

M

L

L

L

L

H

H

H

M

H

H

Spain Sweden

Indicator grid: welfare state and social interventions in five critical life course transitions

School to work 1.1 Subsidies to tertiary education (Table 1.4) 1.2 Share 25–34 with at least upper secondary education (Table 1.4) 1.3 Importance of vocational education 1. School to work summary index Transitions to 2.1 State independent intervention in living housing for young (country chapters) 2. Transitions to independent living summary index

Table 1A.2

L

L

M

L

M

M

UK

74

4.

3.

Transitions in prime age

3.1 Enrolment of under 3s in formal childcare (Table 1.7) 3.2 Affordable childcare (Table 1.7) 3.3 Incentives to work (Table 1.7) 3.4 Paid leave (Table 1.7) 3. Parenthood transitions summary index 4.1 Expected hours in job-related training for low skilled (Table 1.8) 4.2. Active labour market policy (Table 1.9)

(continued)

Parenthood transitions

Table 1A.2

H

H

M

L

M

M

H

L M

M

M

L

H

France

L

Austria

M

M

M

H

L

H

L

L

L

M

L

H

H

L

L

L

M

M

H

H

L

M

L

L

L

M

(L)

L

Germany Greece Hungary Italy

M

M

L

L

H

(L)

M

H

H

H

H

H

H

H

Spain Sweden

L

M

M

L

H

L

H

UK

75

5.

Transitions to retirement

4.3. Employment Protection Legislation for permanent workers (OECD 2004) 4.4. Summary measure of unemployment benefits (Table 1.9) 4.5 Coverage by collective agreements 4. Transitions in prime age summary index 5.1 Income compensation for work interruption over the life course in public pensions (country chapters) 5.2 Learning opportunities for older workers (OECD 2008b)

M

H

H H M

M

M

M

H M M

M

M

M

M

M

M

H

L

L

M

H

L

H

L

L

L

L

L

M

L

L

M

H

M

H

L

L

M

H

H

M

H

H

H

H

H

H

M

L

L

L

L

L

76

5.3 Active ageing/ lack of support for early retirement (inactivity rate older men as a proxy) (Eurostat 2008a) 5.4. Reduced risk of poverty (Eurostat 2008a) 5. Transitions to retirement summary index Overall index

(continued)

M

M

M

M

M

L

L

M

L

H

L

L

L

L

Germany Greece Hungary Italy

L

L

M

H

H

H

Spain Sweden

L

L

M

UK

Supportive Supportive Supportive Limited Limited Passive Limited Active Limited

M

L

L

M

France

Austria

2.1 L = no or limited subsidies; M = selected or limited subsidies; H = universal subsidies based on individual income Index 2: L, M, H as under 2.1.

Notes: Scoring: H (3) = high, M (2) = middle, L (1) = low 1.1 H > 0.4% of GDP; M = 0.2% – 0.4%; L < 0.2% (Table 1.4) 1.2 H > 80%; M = 70% – 80%; L < 70% (Table 1.4) 1.3 H > 70% of upper secondary students in vocational training dominantly in dual systems, M > 50% in vocational programmes mainly in schoolbased systems; L < 50% in vocational programmes (OECD 2009a Table C1.1; van der Velden and Wolbers 2003 p. 199) Index 1: H 8 and more; M = 5–7; L up to 4

Table 1A.2

77

Overall index: Active > 12; Supportive 9–12; Limited 7–8; Passive <7

5.1 H high income penalty for necessary work interruptions; M medium income penalty for necessary work interruptions, L low income penalty for necessary work interruptions in the public pension system 5.2 H >150 hours; M = 90–150 hours; L< 90 hours of non-formal job-related education and training. 5.3 H inactivity rate > 45%; M = 30%–45%; L < 30% with inactivity rate of older men as proxy for active ageing. 5.4 H 20% and more; M = 11%–20%; L < 11 % Index 5: H 10 and more; M = 7–9; L up to 6

4.1 H 300 hours+; M 299–100 hours; L < 100 (Table 1.8) 4.2 H > 1% of GDP; M 1% to 0.5% of GDP; L < 0.5% of GDP (Table 1.9) 4.3 H > 1.7; M = 1.4–1.6; L < 1.3 4.4 H 30+; M = 29–20; L < 20 (Table 1.9) 4.5 H 80%–100%; M 50 – 79%; L < 50% (Table 1.9) Index 4: H 13 and more; M = 9–12 ; L <9

3.1 H > 25%; M = 10%–25%; L < 10% (Table 1.7 column 1) 3.2 H <10%; M = 10%–30%; L > 30% (Table 1.7 column 2) 3.3 H < 30%; M = 30%–50%; L > 50% (Table 1.7 column 3) 3.4 H > 48 weeks FTE total leave < 78; M = 26–48 FTE (or > 48 if total leave greater than 78); L < 26 weeks (Table 1.7 columns 4, 5) Index 3: H 10 and more; M 8–9: L up to 7 (Italy and Spain for missing data score of 1 based on country information)

2.

The UK welfare state: more than residual but still insufficient Jill Rubery

Analysing the UK’s social model through the lens of the support it provides for key life course transitions has a number of advantages. First, it illuminates the strengths and weaknesses of welfare systems that may not be revealed when welfare regimes are classified as a whole (EspingAndersen 1990). For example, the UK is often classified along with the US as a residual welfare model, which may not adequately capture the characteristics of the UK welfare system.1 Second, the approach reveals the interactions between three key elements of the UK model, as commonly classified – its residual welfare model, its flexible labour market and its weak family system. Finally, by focusing on the changing mix and levels of support at these life stages, the potential impact of current and planned changes by gender, class and generation may be identified. As this is prospective as much as current or retrospective, the analysis will be more indicative than detailed and quantified.

TRANSITION FROM SCHOOL LEAVING TO HIGHER EDUCATION OR FIRST EMPLOYMENT Traditionally the UK school-to-work model split into direct entry into employment for the majority and entry into an elite higher education system for a minority. The move to a more mass higher education system since the early 1990s, with a target for 50 per cent of the cohort to attend higher education, marked a major change in this model. Change for those young people still not entering higher education has been less significant as training opportunities in the workplace remain limited and, despite many policy initiatives, vocational qualifications in the UK are still not highly regarded by employers. Progress within the labour market is based more on informal experience and learning (Gangl 2001), so that opportunities are haphazard and limited. This lack of effective pathways for lower achieving young people is reflected in the high share who are neither in 78

The UK welfare state: more than residual but still insufficient

79

education, employment or training: so-called NEETs constitute just under 10 per cent of the cohort, higher than other EU15 countries except for Italy, Finland and Austria (OECD 2006). Transitions through Higher Education Education in the UK has traditionally primarily served to select and rank young people, with educational qualifications treated as key signals of general ability rather than of specific competences. As Young argues: ‘The English qualification system is characterized by the dominance of its selective function, and its use of exclusion as the main means of achieving standards, goes a long way to explain the persistence of low participation and achievement’ (1993, p. 207). This elitist approach has made it difficult to gain recognition for vocational training so that expansion of the skills base through education is more in tune with the UK model. Although higher education has moved in scale from elite to mass, some of the specific characteristics of the elite system have been retained, in particular the practice of requiring completion within three years of starting a degree, and the consequent early entry of graduates onto the labour market (see below). Studying away from home is also still common, but more students are home based to economize on costs. However, the traditional system of fully funded fees and means-tested grants for living costs has been replaced by a loan system and the introduction of partial tuition fees in 1998 with a further rise in 2006 to £3000 per annum. The fees and the loans are in the first instance funded by the state, with repayment only if earnings are above a certain threshold; the state’s contribution thus remains high even though more costs are passed to the student. All students have access to the standard loan, irrespective of family income, and it is the student not the family who is liable for the costs; extra loans and bursaries are meanstested on household income. There are no legal obligations on parents to support offspring after age 18 and parents receive no tax relief for student support, unlike in Germany or France. In practice many families do provide support as maintenance loans are set at much lower levels than the previous grants, but support is variable. Many students are now also working part-time during their studies but as they still normally need to complete their studies in three years without interruption, it is not possible to cover all the costs through wage work. Transitions through Training and/or Labour Market Entry Those making transitions to work without entering higher education have continued to face poor employment and skill development opportunities.

80

The welfare state and life transitions

In many of the expanding service sectors the flattening of job hierarchies has removed stepping stones or ladders to careers (Beynon et al. 2002; Grimshaw et al. 2002). Moreover, although training systems have improved since the 1980s when they were little more than a parking place for young people who could not find work (Hyman 1992), employers are not required to participate in schemes such as the revived apprenticeship system (Gospel 1998). The government has decided against extending the training levy imposed in engineering and construction, on grounds that it is only justified where there is evidence of a clear market failure (DES 2003). Employers in the UK continue to design work systems that make limited use of skills (Cully et al. 1999, table 3.4) and to pay scant regard to training qualifications in recruitment, particularly those not validated through higher education institutions. Studies indicate that vocational qualifications may in fact be a disadvantage in the labour market (Brauns et al. 2001; Dearden et al. 2004). One initiative is to develop ways of credentializing employer-led training programmes within the higher education system to gain employer interest in both valuing and investing in vocational training (Leitch 2006). While young people may lack skill development opportunities, they do have a comparatively high employment rate. For Van der Velden and Wolbers (2001) this reflects the large and low-skilled service economy and the comparative openness of the deregulated UK economy to new entrants, due to the limited protection for existing employees. One result of this openness has been declining relative earnings, as employment among young people has become ‘marginalized’ (Bynner et al. 2002). Buoyancy in the youth labour market from 1997 onwards meant that the New Deal for Young People, the active labour market programme introduced by New Labour, became an immediate success due to a 70 per cent fall in the young people eligible to enrol between 1997 and 2000. However, the House of Commons’ Select Committee (Select Committee 2001) found that no fewer than 40 per cent had moved into ‘unsustained employment’ (op. cit., paragraph 40). Moreover, many of the NEETs have either never engaged with the programmes or subsequently dropped out of unstable jobs. Another contributor to the high level of NEETs among young people is the UK’s high teenage pregnancy rate which is almost double that in most other EU15 countries (Berthoud and Iacovou 2002), a phenomenon often associated with poor employment prospects and the opportunity for greater economic independence due to more state support for young people with children. Indeed, apart from for specific groups, such as teenage mothers, state support for young people has been declining since the 1980s even though families have no legal obligation to fill the gap. Only the under 25s who

The UK welfare state: more than residual but still insufficient

81

are parents are supported to set up or maintain independent families if either not employed or in low wage work.2 Meanwhile, young people are still expected to contribute to the family budget, at least in low income households (Holdsworth 20043). However, the state now supports young people from low income households who stay on in education after age 16; this represents a belated redistribution from the higher to the lower income groups and also reflects the continued expectations in the UK that the state should play a role in funding and supporting young people. There are also now plans to raise the school leaving age to 18 and to include vocational training within the programme of study. Transitions from School: the UK Model in Comparative Perspective The UK social model, as applied to the transition from school to first employment, does not fully fit a residual welfare state model. State support for education is still strong, measured by both scale and quality and even by the public funding of the students’ educational costs – through publicly subsidized loans, postponed fees and bursaries for low income students.4 The UK also achieves a high graduation rate by the very early age of 21. Its expenditure per student, standardized for GDP per capita, puts it in fifth place among EU15 countries behind Scandinavia and the Netherlands (Eurostat 2005, table 1). University applications are still rising, suggesting that this mode of skill development is attuned with young people’s aspirations, even given the increased cost. However, participation rates are rising most slowly in the most disadvantaged local areas (Galindo-Rueda et al. 2004). It is with respect to provisions for those not entering higher education that the UK fits the residual welfare state model: there is little publicly funded support for young people, except for lone parents, and a failure to provide strong skill development or career paths for the other 50 per cent or more of the population. However, the problems lie not only with government policy but also with the attitudes of both employers and young people towards training. Gangl (2001) characterized the UK labour market allocation mechanism for young people as experience-based which involves more complex transitions than those based on occupational qualifications, as in Germany. The UK has a poor history of family support for young people. The state has had to step in to provide support and, perhaps by doing so, may have weakened further the commitments of families to supporting young adults. The expansion of higher education may further polarize life chances between those with and without degrees. Barriers to mobility will increase if it becomes commonplace to expect degrees for middle level jobs. More

82

The welfare state and life transitions

and more graduates also risk not securing a job high paid enough to recompense them for their increasing educational costs. Young people are thus absorbing high levels of risk while a large part of the UK service economy, particularly its city centres, is relying on young people to provide both the cheap labour and the spending power to sustain their youth-oriented clubs and pubs. Students living away from home provide a major boost to the economies of university towns. Young people are under considerable pressure to participate in this culture. This reliance on the youth market to fuel the service economy may partly explain both the rising indebtedness of the young5 and the preference for employment – and thus wages – over training among the non-student population.

TRANSITIONS TO CAREER AND INDEPENDENT LIVING Moving into stable employment and/or independent living is not a distinct transition stage and occurs at different time periods, if at all. Nevertheless there are clear differences between social models in the time taken to become secure in employment and to move out of the familial home (see chapter 1, this volume). For the UK this transition has four distinctive characteristics, two concerning the labour market, two the move to independent living. The first distinctive feature is the weaker link between employment patterns and specific qualifications than in some European countries, where educational and training choices predetermine the types of jobs that can be applied for (Brennan et al. 2001; Gangl 2001). The carving out of a career track in the UK takes place over a longer time period than for example in Germany, with education continuing to play some role in the transition but less so than in France. Brauns et al. (2001, p. 27) summarize: By contrast, less rigid hiring practices in France and the UK imply that transition into employment upon completion of schooling is typically less ‘structured’ in terms of an institutionalised ‘correspondence’ of educational and occupational entitlement at labour market entry. . . . The conversion of educational resources into an adequate and safe job takes place over a longer period than in occupational labour markets . . . . Therefore, the consequences of educational achievement in terms of low unemployment risks will unfold later in the course of young people’s early careers than in Germany, with respect to their chances of career advancement and continued employment. Yet, differences between the two countries exist in the general importance of educational credentials: the historical tradition of credentialism in France gives formal education an even stronger importance in employers’ personnel decisions than in the UK.

The UK welfare state: more than residual but still insufficient

83

This lack of structure to transitions applies to both non-graduate and graduate jobs, except where specific technical knowledge is required. General arts degree graduates enter into accountancy occupations and receive vocational training to enable them to qualify and practise. In other countries entry would typically require an economics, business, law or accountancy degree. In a comparative study UK graduates were the least likely to consider their degree subjects as significant for their current job (Brennan et al. 2001). A similar lack of articulation between qualifications and career paths is found in other segments, related to the lack of a developed vocational training system. This dislocation between education and training and work careers may be growing, creating increasing uncertainty over the long-term prospects for occupational and organizational careers. The plus side of this rather open system is that it can reduce mismatch between the jobs on offer and the supply of people seeking jobs. UK graduates have been absorbed not only into ‘traditional and modern graduate’ occupations, for which a degree is essential, but also into occupations where a niche exists within which graduates may utilize their skills and knowledge and indeed into lower level jobs where their capacities remain underutilized (Elias and Purcell 2003). Some seven years after graduating, about 10 per cent of male and 15 per cent of female graduates are found still to be in such jobs (Elias and Purcell 2003). By and large research suggests employers have not redesigned jobs to allow graduates to utilize their skills (Mason 2002). Thus, although the absorption of new entrants into some form of employment is high, the consequences are that many are uncertain of their career prospects and the skill base in many UK sectors remains superficial and fragile (Crouch 1997). The second distinctive characteristic of UK careers is the importance attached to achievement at early ages, manifest in the stress on exam performance at ages 16 and 18, and in the requirement to graduate in three years6 (Brennan et al. 2001). This focus on age-related achievement continues in the transition to career; promotions in the age group up to 35 are 40 per cent higher than in the older age group and moreover tenure of two to six years in a job maximizes the chances of promotion, with the chances declining with longer tenure (Francesconi 2001). A recent survey of managers (Chartered Management Institute 2005) reveals that 63 per cent of managers in their 30s view themselves as having promotion prospects compared to only 18 per cent of those in their 40s and 2 per cent of those in their 50s. The potential to embark on a career at a relatively young age is of particular importance to women, enabling them to make progress in a career before having children. However, the reverse side of this early start is the prevalence of age discrimination (Crompton et al. 1991), with high flyers expected to make their mark in their 30s if not before. This creates

84

The welfare state and life transitions

pressure both on women who combine work and motherhood and those who want to take a career break before re-entering to pursue a career. It also places pressures on fathers as it is precisely during the years when children are young that there is most pressure to perform and to achieve promotion (Kodz et al. 2003). Francesconi (2001) has found that promotion prospects are particularly improved by employees working additional hours of overtime. Pay inequality also increases significantly for those in their late 20s and early 30s, with well-qualified males the main beneficiaries. The gender pay gap for graduates widens significantly during the first seven years post graduation, associated with rapidly increasing earnings in sectors such as finance where women are underrepresented (Purcell and Elias 2004). Women are more likely to enter the public sector where earnings rise less steeply than in the private sector, resulting in a widening public–private pay gap with age. The third distinctive feature of this transition phase is the high rate of departure from the parental home at a young age (Holdsworth 2004, this chapter, p. 78). Students lead this trend, with many studying away from the parental home, but others follow. The UK is ranked fourth of 13 European countries by the age at which at least 50 per cent of young people have left home (21.2 years for women, 23.3 years for men); many leave to form single households, although the share of young men leaving to live with a partner is higher than in many European countries (Berthoud and Iacovou 2002). Holdsworth (2004) found that parents in Britain, along with Norway, assist young people to leave home even when they are not entering into a partnership or marriage, while in Spain support was provided to stay in the family and only to leave when the young person married. Leaving home in the UK is often related to entering the housing market, the fourth distinctive feature of this transition. Even by age 25–34, 56 per cent of households are buying their property rather than renting, although this share has in fact declined from a peak of over 60 per cent in the 1980s (DCLG 2007 – data for England only). This early entry into house ownership is due in part to a restricted rented sector: the private rented sector only accounted for around 12 per cent of all households in 2006, similar to the 11 per cent share in 1981 but down from 20 per cent in 1971, and the share renting public housing was only 18 per cent in 2006 compared to 32 per cent in 1981 and 29 per cent in 1971 (DCLG 2007). In comparison the share owning their home rose from 51 per cent in 1971, 57 per cent in 1981 to 70 per cent in 2006. House price inflation has created problems for young people, leading to major falls in owner occupiers among the under 25s and some falls in the 25–34 bracket. The outcome has been for younger

The UK welfare state: more than residual but still insufficient

85

people to stay on in the parental home longer and to seek additional parental support to enter the market. Further falls in home ownership among the young can be anticipated as the increased burdens of debt from education further reduce capacities for house purchase. Transitions to Career and Independent Living: the UK Model in Comparative Perspective Despite the characterization of the UK’s labour market as highly flexible, in practice most adults in the 25–34 age bracket are integrated into employment. Most of the increase in short-term flexible jobs applies to the under 25s (Gregg and Wadsworth 2002). While there has been much attention paid to differences between employment regimes with respect to flexibility, their consequences for career patterns has been underresearched. The UK model is distinctive for promoting an early transition from education into stable career-oriented employment, associated with the early exit age from education. This early exit could be considered a potential contributor to equal opportunities between men and women. However, although women are able to embark on careers before having children, inequalities by gender still increase notably in the early stages of careers (Olsen and Walby 2004). Moreover, although opportunities for quite rapid rewards at a relatively young age assist in covering the increased costs of education, the consequence is high levels of intra-generational inequalities between those with and without access to career-oriented jobs. The significance of housing in the UK social model cannot be exaggerated. Housing does not just contribute to the quality of life but is also a store of wealth, including an alternative to, for example, pensions funds. Young people seeking to enter the housing market are under pressure to secure high earnings to meet the mortgage requirements. This ensures acquiescence in a performance-oriented, long hours work culture. The impact is to exacerbate intra-generational inequalities: 40 per cent of working families under 40 cannot afford to buy at the lowest decile level in the local housing market (Wilcox 2005). Assistance from parents with first purchase is also becoming increasingly important, thereby intensifying inequality in opportunities. The UK has both a relatively high rate of early independent adult household formation and has sustained its fertility rate more than many other EU states, despite a lack of state support for parenting. However, dual earning is essential to support independent household formation, with middle class households facing the costs of paying for education and for expensive housing, and the working class households facing declining

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The welfare state and life transitions

relative earnings, as wage inequality increases (Machin and van Reenen 2007). Recent government interest in supporting working parents (see below) may be recognition that fertility rates may decline unless there is more support for dual-earning households.

TRANSITIONS IN PRIME AGE Transitions in prime age can take various forms: to simplify discussion, we look at three main kinds – job-to-job transitions, transitions to and from unemployment and inactivity (not associated with childcare) and transitions associated with childcare. Job-to-Job Transitions The weak links in the UK between qualifications and job grade in principle provide greater opportunities for career changes, to accommodate changing labour market conditions or personal circumstances. Internal labour markets are still in operation but these tend to be permeable with recruitment opportunities at all levels, even within the strongest internalized markets, such as the public sector.7 The barriers to mobility across organizations and sectors have been further reduced by the decline in organization-specific final salary pensions. Pay rises at the top end of the male labour market are achieved more through employer mobility than internal pay rises (Francesconi 2001), suggesting that job-to-job mobility is part of the process of widening wage inequalities.8 Operating against this fluidity in labour markets, and apparent opportunities for changes to careers, is the strong system of age discrimination that prevails within the UK-based companies, thereby inhibiting career changes beyond a certain age (see earlier discussion of promotion opportunities by age). Also restricting mobility may be the increase in dual-earner households, which places new barriers to geographical mobility for the male partner. More significant barriers to mobility are found in the housing market, related to north/south differentials in house prices. Transitions to and from Unemployment and Inactivity It is in the treatment of the unemployed that the UK’s social model has been firmly associated with the residual model. Contribution-related benefits are low and limited, and recipients are pressured to take whatever job is on offer. Furthermore, many women are not able to claim benefits as

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87

they work in jobs in which the earnings fall below a minimum threshold for national insurance.9 The policy of New Labour has been to continue to increase pressure on the unemployed and the inactive in receipt of benefits to enter employment. It introduced a range of New Deal programmes10 and requires all, including most lone parents and those claiming disability to attend regular work-focused interviews and to face benefit penalties if not complying with the work first policy. The UK system is categorized along with that of the US as providing minimal support for those without work but the UK differs in one major respect, that is in its continued commitment to means-tested benefits for those who cannot work with no time limits to the provision (Barbier 2006). Moreover, when means-tested additions for housing costs and dependants are included, the actual level of benefits received by the unemployed are considerably higher. Indeed the share of benefits as a proportion of income of the lowest fifth of households is high in the UK at over 60 per cent, with only Ireland recording a higher share (Berthoud and Iacovou 2002, chart 19). This reflects the high share of workless households in the UK but also demonstrates the importance of the state as provider of last resort for low income households. Part of the work first policy has been to provide generous subsidies for breadwinners in low paid employment. This promotion of low wage employment in preference to inactivity is to reduce the risk of disconnection from the labour market and also to reduce childhood poverty, particularly for children of lone parents. The UK’s working tax credit is paid when someone enters employment and is adjusted at the end of the year, thereby providing immediate incentives to leave benefits but also giving rise to major problems of overpayment. This system was borrowed from the US, but the US earned income tax credit is paid for the most part annually in arrears (Holt 2008), thereby avoiding overpayment problems. However, as fewer people are on benefits in the US there is not the same need to provide a bridge between benefits and employment. The UK policy has had some impact, particularly on the employment rate of lone parents, mainly mothers, that rose to 56.6 per cent in 2005 up 11 percentage points since 1997. The policy of mobilizing those on disability benefits into employment is now entering a more intensive phase (DWP 2006a), with potential reductions in benefits for those who do not comply with the requirement to attend work-focused interviews. However, some recipients will still be classified as not able to work and receive a higher long-term benefit without attending regular interviews. The new system also creates disincentives to work, particularly for married women and young people, in households where there is already one person in work and claiming tax credits (Brewer and Clark 2003).

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The clawback rate on in-work benefits has been reduced from 70 to 55 per cent but as the working tax credit now covers more households11 the share of women affected is likely to have increased (Brewer and Clark 2003). The working tax credit system has, however, encouraged the government to raise the minimum wage to reduce potential subsidies to employers, a policy of benefit to all low paid workers. New Labour had focused on creating incentives to enter work but, apart from the minimum wage, has few policies to improve the employment conditions encountered on entry. The UK has a problem of both persistent low pay and poverty with often only short respites (Hills 2004, pp. 121–3) and of cycling between low paid work and unemployment (see Arulampalam 2001; Gregg 2001; Gregory and Jukes 2001 for the scarring effect of unemployment on subsequent employment and wage prospects). Strong regional differences in employment rates remain (Beatty and Fothergill 2005) and, even though the employment rate of lone parents has gone up, many find it difficult to sustain their employment due to both job instability and to problems of balancing work and family responsibilities. Transitions Associated with Parenthood Traditionally the UK state has provided limited support for parents: up until 1977 child benefits were only available for the second child and subsequent children and were paid at a low level, childcare was not part of public policy and provision of paid leave was limited. In a comparative study using the Luxembourg Income Study, UK families were found in the 1990s to suffer one of the highest reductions in income associated with having children (Rubery et al. 2002). There were changes to all these policies under New Labour. Child benefits were increased and supplemented by child tax credits; although means tested, 90 per cent of families became eligible for some payment. These policies reflect both the commitment to reduce child poverty and the policy of encouraging people into work.12 Childcare provision has remained amongst the most expensive in Europe but the childcare credits do provide some assistance. Furthermore, the government has encouraged the development of both pre- and in-school childcare (Fagan 2002). While limited, these developments nevertheless mark a significant change from past policy. Improvements have been made to the length and payment for maternity leave (albeit still at a low level) and some transfer of leave to fathers is to be made possible. Moreover, new rights for parents to request to work flexibly has seen an extension of employee-oriented flexible working options. The share of women returning to work after maternity leave has increased

The UK welfare state: more than residual but still insufficient

Table 2.1

Percentage of mothers returning to work over time in the UK 1988

Proportion who had returned to work within 9 months Proportion who had returned to work within 11 months Proportion who had returned to work within 17 months Source:

89

1996

2002

45

2005 60

67

73

68

80

80

Smeaton and Marsh (2006).

substantially in the UK (Table 2.1) and the right to request flexible working may have a further positive impact on the share who are able to return to the same employer.13 The proportion of working mothers who change employer on returning to work following maternity leave fell from 41 per cent in 2002 to 20 per cent in 2005. These developments take on particular importance because of the very high penalties attached to breaks from employment and entry into part-time jobs (Olsen and Walby 2004). Parttime work has been found to have an even more negative impact on lifetime earnings than inactivity. The more that reduced hours work options are provided by the mother’s previous employer, the less the expected negative impact on hourly earnings; jobs specifically designed as part-time jobs tend to offer few opportunities for career progression.14 However, there is no reciprocal right to return to full-time working (Fagan et al. 2006) and this policy risks increasing pressure on women to take up the part-time work option, reinforcing the gender division of labour. Individualized reductions may come at high costs, measured in lifetime career prospects, and do not solve the problem of pressure on fathers to work long hours. Not all these changes in transitions around childbirth are attributable to specific family support policies; more important in promoting women’s employment are women’s own aspirations, their higher education, the change in gender and household relations and the problems of surviving on a single income due to housing costs, labour market instability and so on. Prime Age Transitions: the UK Model in Comparative Perspective The UK is regarded as having an archetypical flexible labour market and as such should be expected to facilitate transitions between jobs and

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employment statuses. In practice, however, this flexibility works best in job-to-job mobility, due to flexible recruitment practices and the lack of strong internal labour market ties. Even in this case, age discrimination reduces the scope for job changes over the lifecycle. Other transitions, involving spells of unemployment, inactivity or part-time work, impose long-term penalties on the individual. Recent government policy has been addressing these problems by providing incentives to return to the labour market for the unemployed and by supporting working families. These policies, however, operate in a context of a segmented labour market, that tends to confine those following non-standard and discontinuous careers to low paid, low skilled and often insecure jobs that provide few stepping stones to security or higher pay. Recent years have seen contradictory tendencies in the UK’s welfare state policy. The pressure on benefit recipients to seek work has increased, in line with a residual and coercive welfare system, but the significantly more generous guaranteed income levels, particularly for those receiving in-work benefits, and the development of a family policy to support working parents has moved the system in other directions. It is no longer appropriate to classify the UK simply as a strong male breadwinner society (Lewis 1992); it has had independent taxation since the early 1990s and there has now been a significant increase in state support for childcare and leave and significantly enhanced maternity leave rights and pay. Support falls far short of that found in the Nordic countries or France or Belgium, but is significantly better than in the mid-1990s and in the US. Furthermore, the long-term support for all those who try but cannot enter employment has remained, thereby distancing the UK social model from that in operation in the US.

TRANSITIONS TO RETIREMENT AND OLD AGE Transitions from economic activity to retirement depend upon the mix of employer policies towards older workers (Casey and Wood 1993), the support provided through public and private pensions and social norms and expectations with respect to both leisure on the one hand and economic activity on the other. The UK system of pensions is based on low state provision coupled with private pensions, organized at the company level or sector in the case of the public sector. The mean average retirement age in the UK was on a consistent downward trend between 1950 and the mid-1990s, declining from over 67 to below 63 for men, and from 64 to below 60 for women. Since 1995 this trend has reversed with the mean rising by around

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91

one year for men and by up to two years for women (data summarized from DWP 2006b, Figure 4.i, p. 140). In the UK, in contrast to many European countries, there has been no national early retirement scheme although early retirement schemes were at one stage quite frequently used for public sector employees (Turnbull and Wass 1997). The long-term downward trend was in part fuelled by employers using age discrimination in redundancy decisions (Casey and Wood 1993) but softening the impact by enhancing occupational pension benefits for those taking early retirement. Tighter eligibility requirements and changes to the mode of funding of public sector early retirements may partially account for the reversal of the trend. The government is seeking a further increase in the age of retirement and is offering the option of a lump sum after deferring a state pension for two years. State pensions constitute a relatively low level of income in the UK, but as those groups most dependent on the state pension have less than the average life expectancy,15 it may be these groups that are least likely either to voluntarily postpone their retirement or indeed to be able to continue to work as productivity in manual jobs probably declines faster than in non-manual jobs. The provision of occupational pensions is highly variable in the UK; 43 per cent of employees are estimated to be contributing to occupational pensions and 16 per cent to personal pensions (CEC 2005). Coverage is much higher in the public sector where women outnumber men as active members of schemes (GAD 2007). Nevertheless, there remains a considerable gender divide over who has or who does not have a significant occupational pension (DWP 2005) related to women’s interrupted careers and to lack of provision and uptake among those in part-time jobs.16 Married women still remain strongly reliant on derived rights to occupational pensions and this dependency has been increasingly extended to cohabitees and the partners of the same sex, instead of a move towards more general individualized pensions. The long-term decline in state pensions and the inadequate pension coverage for women has been a major source of inequality and poverty in the UK. There have thus been two key policy dilemmas for New Labour: how to provide an adequate pension for those dependent upon state funds without creating disincentives for people to save towards a private or occupational pension; and how to provide an adequate pension for the middle and upper classes, now that private sector employers have decided to reduce their provision of occupational pensions. In practice most of their activity focused around the first policy dilemma and the second issue is yet to be tackled. The first issue, squaring social justice with savings incentives, proved to be tricky and required some reversals of policy. New Labour initially

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targeted improvements on the less well off by providing a higher guaranteed income, under a pension credit system, similar to the working tax credits. The approach reduced incentives to save for an occupational pension for many low to middle income earners (Clark and Emmerson 2002) as the increased pension would be offset against means-tested benefits. Projections suggested that the proportion of pensioner households in receipt of means-tested Pension Credit would rise from around 45 per cent in 2006 to 70 per cent by 2050 (DWP 2006b, p. 41). As a consequence some major changes in policy were agreed, including a decision to increase the basic state pension in line with earnings instead of prices from 2012 (a reversal of the policy adopted by Thatcher in the early 1980s), to raise retirement ages and introduce again from 2012 a national savings policy for second-tier pensions with obligatory matching contributions by employers and the state for participating employees, with contributions set at 4 per cent for employees, 3 per cent employers, 1 per cent the state (DWP 2006b, p. 31). Furthermore, contribution years would be reduced to 30, with more credits for caring activities, thereby increasing the share of women who would qualify for a full state pension in their own right (DWP 2006b, p. 31). Under these reforms only one-third of pensioner households were expected to receive Pension Credit in 2050. However, the level of pension support to be provided by this new occupational pension scheme would be much below the current final salary occupational schemes on which people are currently retiring. Over recent years there has been a major change in private sector pension provision: between 1991 and 2006, the number of active members of occupational pension schemes was estimated to have fallen from 10.7m to 9.6m. While the number in the public sector grew, the number in the private sector fell from 6.5m to 4.4m (GAD 2007, Table 3.1, p. 14). Moreover, the 4.4.m includes 1.1m already on defined contribution schemes. Many defined benefit schemes are now closed to new employees and, where new schemes are offered, these are defined contribution schemes that are both riskier and involve lower employer contributions. This retreat from good quality pension provision by private sector employers was unanticipated and has left the UK government in a quandary as to how to provide for pensions in the future. These developments raise major issues of intergenerational equality, with younger people not only funding older people’s pensions but also facing much more limited prospects of retiring on decent pensions themselves. There is also the prospect that the public sector occupational final salary pension system that has remained largely intact may be under threat, simply to bring about parity with the private sector. A second major challenge for welfare policy in this transition to

The UK welfare state: more than residual but still insufficient

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retirement is the provision of care when older people become partially or fully incapacitated. The UK has a better record in elder care than childcare; Anttonen and Sipilä (1996) categorized the UK as having relatively abundant care for older people. Elderly people all have a right to be assessed for their care needs by their local authority, even though only some will receive the care entirely free. Elderly care is thus a hybrid between a universal welfare right, such as healthcare, and the targeted means-tested benefits characteristic of many parts of the UK welfare model. The policy is to provide more care support in the homes of older people as well as continuing support on a means-tested basis for those who have to enter care homes. Care remains primarily publicly funded, but to save costs local authorities have contracted out domiciliary work to private agencies and private homes. Wage levels are much lower than in the public sector and private agencies often do not pay for travel time. There are problems of labour shortage and high turnover and in some places also a shortage of residential places for older people, partly as a result of the privatization of this sector. Often there are no realistic alternatives to state organized care. Families are geographically fragmented and less than 10 per cent live with one of their children (Tomassini et al. 2004). The result is often a shortage of actual care for elderly people, many of whom live on their own. Care for the elderly is thus a relatively unplanned system in the UK, in which the state pays for 70 to 80 per cent of the care but is a minority provider. A key controversial issue is the extent to which older people should pay for care and whether their housing assets should be available to pay for their care provision (Wanless 2006). Personal care needs are now paid for by the state in Scotland but not elsewhere where only nursing care is paid for. The UK Model in Comparative Perspective; the Transition to Retirement The UK conforms to the notion of a residual social model with respect to the provision of the basic state pension, but this classification needs to be modified in two respects. First, the basic state pension is supplemented by a more generous means-tested minimum income guarantee and secondly the basic state pension has been supplemented for many people by a much more generous occupational pension (with women often receiving these pensions via their partner’s employment). The UK thus has a highly stratified system of pension provision but with employers strongly involved in the system of social protection. This model is changing as employers are effectively withdrawing from this role.17 It is not clear how this change to pension provision for the middle classes will be accommodated but by the

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The welfare state and life transitions

time the situation is fully grasped by the electorate, the employers may have moved a long way away from the provision of good quality pensions. In the meantime the uncertainties over pensions contributed to the high level of house price inflation as investments in housing were, until the recent credit crunch, seen as safer than stock markets after poor results from defined contribution pensions. Thus the further fragmentation of the pension system in the UK is leading to a breakdown of the post-war settlement system whereby workers could look forward to relatively well-paid and protected retirement. The UK is moving towards a US-style system of company pensions, where there is less reliance on final salary schemes and more on stock market-based defined contribution schemes, often without any inflation uprating. However, in another dimension to the social model – the provision of social support for the elderly through care in their own homes or in residential homes – the UK not only scores relatively highly in level of provision but also provides a high degree of public funding for these services. The problem is that it is trying to provide these services without paying adequately for the skills and labour required, such that there is a significant incidence of low pay and also overall labour shortages, reinforced by high turnover rates, and skill shortages associated with weak accreditation of skills.

CONCLUSIONS The consequences of the UK’s labour market, welfare, gender and family system for the form and quality of support provided over key life stages and for intra- and intergenerational inequalities is mixed. The UK labour market, in line with its characterization as flexible, does a relatively good job in absorbing new entrants, in part through a flexible matching of skills and qualifications to jobs. This enables young people to make their transitions to independent adulthood and careers and the weak internal labour market system provides opportunities for job-to-job mobility in prime age. However, these characteristics are in part a reflection of specific institutional structures, particularly the tradition of an elite educational system that has inhibited the development of a widely based system of occupation-specific entry qualifications. Moreover, a better characterization of the UK labour market than flexible is segmented; the segmentation takes its form not so much in differences in formal employment security but in wage differentials, as witnessed by the high penalties for working part-time in the UK and for any interruptions to employment

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95

and the limited opportunities for those without higher education. The introduction of a national minimum wage, together with some improvements to pay in the public sector, has reduced the incidence of very low pay but with the effect of squeezing differentials among lower paid workers. A varied overall assessment can also be made concerning the UK’s so-called residual welfare state model. The UK has some strong elements to its welfare model that were also in many respects reinforced by New Labour. These include commitments to strong public support for higher education, which has been reinforced through expansion of places plus the provision of universal state subsidized loans; the continuing income support for those unable at a household level to access sufficient wage income (through the more generous in-work tax credits, improved support for children, together with a continued support for the inactive and poor, albeit subject to a much stricter ability to work test); and a medium to high provision of support for elderly care in comparative terms. In these areas, together with the universal provision of free healthcare, the UK’s social welfare model differs significantly from that found in the US. Indeed although public social spending is low in the UK compared to other European countries, and has been declining (from 23.1 to 22.9 per cent of GDP 1979–80 to 1999–2000), public financing of welfare is relatively high and growing (from 23.8 per cent to 26.6 per cent over the same period) (Hills 2004, p. 139).18 The weaknesses of the social protection provided by the welfare model are nevertheless clear. These include limited individual benefit entitlements, resulting in widespread dependency on means-testing with the complexities and lack of dignity that this entails; the low level of support for childcare and paid parental or maternity leave, even after taking into account the significant improvements after 1997; the low state pension (although ameliorated by the higher guaranteed income levels and by the planned return in 2012 to uprating the pension in line with earnings) and the inadequate coverage of occupational pensions; and the reliance on low paid labour, often employed by the private sector, for delivery of social services – for example in elder care. Social floors have been improved but only through a reinforcement of means testing, one of the key characteristics of a residual social model. The extension of means testing adds considerably to the complexity of the welfare model, leading to low take-up, low compliance and high failure rates when new IT systems are introduced.19 A further major problem is the increasing withdrawal of the private sector from pension provision. Current proposals for a national savings scheme will only partially replace private provision. A key unanswered question is whether the UK welfare state will have to step in to fill the gap.

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The welfare state and life transitions

The third pillar, the family, is an unreliable source of social support in the UK. There are no legal obligations on parents to support children past 18 or for children to care for parents. This principle of adult independence influences how higher education is funded and the care system for elderly people. Marital instability is further fragmenting family support. Many families are still cohesive and supportive and do fill some of the holes in the welfare system but the impact of such family solidarity is also to exacerbate interclass inequalities. Intergenerational mobility is decreasing, with parental and children’s earnings found to be increasingly correlated, as parental earnings have an increasingly positive impact on education attainment (Hills 2004). Families are also the major agents of transmission of wealth, an issue of increased importance to a higher share of the population with the rapid rise in the value of housing assets. A major social divide is thus between those with and without access to housing assets, both individually and through their family. Gender relations have been changing in the UK, reflecting women’s higher participation in education and employment and changes in household and family formation. These changes have occurred largely in advance of recent policies to support working parents. Although the pace of change is rapid, women still face high levels of inequality, with mothers still concentrated in low paid and low skilled part-time jobs, partly as a consequence of the limited provision of affordable childcare, even since the improvements under New Labour. There are some benefits of the UK education system for women, notably the early entry into careers, but this is counterbalanced by the focus on achievement at a young age, coupled with pressure to work long and variable hours. Combining parenthood and a worthwhile career remains difficult for both men and women. Overall the UK social model, although much more complex than its classification as a residual social model would imply, has major deficiencies in its ability to deliver equitable outcomes by class, gender or generation. The UK has high levels of wage and wealth inequality and a tendency for those who fall into poverty to face repeated poverty spells. This tendency is similar to that found in the US but greater than in the Netherlands, Sweden, Germany and Canada (Hills 2004, p. 122). The UK also still has high levels of child poverty (UNICEF 2007), although higher provision for children within the model succeeded in reducing poverty rates by a third since their peak in the 1990s. Reforms to social policy are unlikely on their own to be sufficient to provide protection while the wide inequalities within the employment system itself remain. These inequalities are the key factor in the persistence of the wide gender pay gap in the UK; better access to childcare and to leave will improve women’s position, but the main problem is the high number of low skilled and low paid jobs in

The UK welfare state: more than residual but still insufficient

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the labour market, many of them part-time, that do not provide ladders to more secure and better paid employment. New Labour staked all on the idea that the labour market would provide routes out of social exclusion, without direct intervention in the labour market to improve rewards and skill development systems. So far, however, the labour market has not delivered the pathways that the government claims are there, if only people would try hard enough. Intergenerational inequalities are also widening; the UK social model has favoured those born in the 1950s, who are set to receive much higher returns from the welfare system than they paid in, while later cohorts will receive smaller surpluses or returns only equal to what their generation contributed (Hills 2004, p. 199). Young people face a double squeeze, paying tax to fund current pensioners while being required to fund their own pension needs through savings. These problems come on top of the higher debt associated with studying and high housing values. Current generations of the middle-aged and middle class will by and large retain access to quality pensions as many companies have only closed pension schemes to new recruits. The improvements to the basic pension should come on stream sooner, with benefits for women in particular. The current generations of pensioners and pensioners-to-be will not, however, be spared the problems within the elderly care system as the government tries to find low-cost ways of providing an ever more demanding and expanding service to a more dependent elderly population. The UK model is not only generating problems of equity but also of efficiency. The experience over the last decade has demonstrated that the commitment to a social model in the UK is far from dead (Rubery et al. 2009). Yet to a considerable extent the strengthening of social minima are required simply to deal with the problems thrown up by the deregulated and flexible labour market. Active measures that simply prod or push young people or the unemployed to take up the current jobs on offer will not solve the problem of the underutilization of the potential of people in large segments of the labour market. The tax credit system is there explicitly to subsidize jobs that are too low paying to provide adequate resources for families or even independent adults. Likewise, issues of poverty for women and for children will not be resolved while women are confined to low paying and dead-end part-time work. Unless the state has the courage and gumption to adopt policies that aim to shape labour market practices, the social welfare nets in the UK are going to be needed just to mop up the fallout from an employment culture in which employers are free to abandon their responsibilities towards skill development on the one hand, and towards the provision of decent work, with income and employment security, on the other.

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NOTES 1. 2. 3.

4. 5. 6. 7. 8. 9. 10. 11. 12.

13. 14. 15.

16. 17. 18.

Anttonen and Sipilä (1996), for example, classify regimes with respect to childcare and elder care services separately and find the UK has high elder care and low childcare provision. Since 1988, under 18s have not been entitled to Income Support and the adult rate of benefit starts only at 25 (University of Keele 2009). A comparative study found that the notion that young working adults in parental homes should ‘pay keep’ was prevalent in Britain and Norway but absent in Spain (Holdsworth 2004). However the amount paid was often insufficient to cover costs of food consumed. Of the EU15 countries the UK provides the highest share of its total expenditure on tertiary education to student financial support after Denmark and Sweden (Eurostat 2005, table 3). The number of young people aged 18–29 declaring themselves bankrupt has risen from 1681 in 2001–02 to 6520 in 2004–05 (Insolvency Service 2006). OECD data shows the UK and Ireland among EU15 countries to have the earliest typical age of leaving the education and training systems at 24, with the highest ages being 28 in Finland and Germany and 31 in Denmark (Couppié and Mansuy 2001). For example Blair was proud to announce in 2004 that ‘a fifth of Director General posts are now filled by people brought in from outside and the proportion is rising’, www. number-10.gov.uk/output/Page5399.asp, accessed 12 February 2009. Gregg and Wadsworth (2002) found the strongest decline in job tenure among males over 50, probably associated with greater job-to-job mobility. Despite criticism (EOC 1999) this national insurance threshold has been maintained; one concession when the threshold was raised was to credit those with earnings in between the old and the new threshold with contributions. Public policy towards transfers to employment tends to focus exclusively on benefit recipients, such that other inactives – mainly women – are not eligible to join New Deal programmes. Between 1998 and 2005–06 the number of households facing 70–80 per cent clawback declined from around 750 000 to around 250 000 but those facing a 60–70 per cent clawback rose from 750 000 to 1 250 000 (HM Treasury 2006, table 4.2). The Government set an interim target to reduce relative child poverty by 25 per cent from 1998/9 to 2004/5, by 50 per cent by 2010 and to eradicate child poverty by 2020. The first target narrowly missed if poverty is measured before housing costs (BHC), with a reduction in child poverty of 23 per cent, but if poverty is measured after housing costs the reduction was only 17 per cent. In both cases 700 000 children were in poverty compared to 1998/9 (DWP 2006c), www.dwp.gov.uk/mediacentre/pressreleases/2006/ mar/cphs015-090306.asp, accessed 12 February 2009. Note this is only a right to request flexible working and to be given reasons for not granting the request. Women face even higher costs of gaps in labour market experience, with the wage penalty for a one-year gap for childbirth and so on estimated to be 16 per cent, but this is twice that for a one-year gap for men (Gregg 1998). TUC research argues that more than one in five people, one in three men, will die before they get a pension if the retirement age rises to 70. This rises to almost 50 per cent of men in Britain’s most deprived areas (www.tuc.org.uk/pensions/tuc-8159-f0.cfm, accessed 12 February 2009). Only 27 per cent of female part-timers compared to 56 per cent full-timers were members of occupational schemes according to the EOC (2001). The reliance on employers’ voluntary compliance in providing welfare is even stronger in the US where employers provide health benefits. Furthermore total welfare activity including public and private increased from 32.7 per cent of GDP in 1979–80 to 38.7 per cent in 1999–2000 (Hills 2004).

The UK welfare state: more than residual but still insufficient 19.

99

For example, the agency set up to collect childcare support from absent fathers is now being closed after a series of failures to relaunch the programme.

REFERENCES Anttonen, A. and J. Sipilä (1996), ‘European social care services: is it possible to identify models?’, Journal of European Social Policy, 6 (2), 87–100. Arulampalam, W. (2001), ‘Is unemployment really scarring? Effects of unemployment experiences on wages’, Economic Journal, 111 (475), 585–606. Barbier, Jean-Claude (2006), ‘Has the European Social Model a Distinctive Activation Touch?’ in Maria Jepsen and Amparo Serrano Pascual (eds), Unwrapping the European Social Model, Bristol: Policy Press, pp. 123–44. Beatty, C. and S. Fothergill (2005), ‘The diversion from unemployment to sickness across British regions and districts’, Regional Studies, 39 (7), 837–54. Berthoud, Richard and Maria Iacovou (2002), Diverse Europe: Mapping Patterns of Social Change Across Europe, Colchester: Institute of Social and Economic Research, University of Essex. Beynon, Huw, Damian Grimshaw, Jill Rubery and Kevin Ward (2002), Managing Employment Change: The New Realities of Work, Oxford: Oxford University Press. Brauns, H., M. Gangl and S. Scherer (2001), ‘Education and Unemployment: Patterns of Labour Market Entry in France, the United Kingdom and West Germany’, Prepared as part of the TSER project: Comparative Analysis of Transitions from Education to Work in Europe, Mannheim, Germany: Centre for European Social Research (MZES), www.mzes.uni-mannheim.de/publications/wp/wp-6.pdf, accessed 12 February 2009. Brennan, J., B. Johnston, B. Little, T. Shah and A. Woodley (2001), The Employment of UK Graduates: Comparisons with Europe and Japan, A report to the HEFCE by the Centre for Higher Education Research and Information, Open University, www.hefce.ac.uk/Pubs/HEFCE/2001/01_38.htm, accessed 12 February 2009. Brewer, M. and T. Clark (2003), ‘The impact on incentives of five years of social security reforms in the UK’, Institute for Fiscal Studies WP02/14, www.ifs.org. uk/wps/wp0214.pdf, accessed 12 February 2009. Bynner, John, Peter Elias, Abigail McKnight, Huiqi Pan and Gaelle Pierre (2002), Young People’s Changing Routes to Independence, York: Joseph Rowntree Foundation, www.jrf.org.uk/bookshop/eBooks/184263108X. pdf#search=%22Young%20People%E2%80%99s%20Changing%20Routes%20 to%20Independence%22, accessed 12 February 2009. Casey, Bernard and Stephen James Wood (1993), ‘Great Britain: Firm Policy, State Policy and the Employment and Unemployment of Older Workers’, in Frieda Naschold and Bert de Vroom (eds), Regulating Employment and Welfare, Berlin: de Gruyter, pp. 363–94. CEC (Commission of the European Communities) (2005), Privately Managed Pension Provision by the Social Protection Committee, DG Empl, http:// ec.europa.eu/employment_social/spsi/docs/social_protection/private_pensions_ en.pdf, accessed 12 February 2009. Chartered Management Institute (2005), Tackling age discrimination in the

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workplace: Creating a new age for all, London: Chartered Management Institute http://www.managers.org.uk/listing_with_description_1.aspx?id=10:106&id=1 0:9&doc=10:878, accessed 12 February 2009. Clark, T. and C. Emmerson (2002), ‘The Tax and Benefit System and the Decision to Invest in a Stakeholder Pension’, Institute for Fiscal Studies, Briefing Note No. 28, www.ifs.org.uk/bns/bn28.pdf, accessed 12 February 2009. Couppié, Thomas and Michele Mansuy (2001), ‘The Position of Young People and New Entrants in European Labour Markets’, Prepared as part of the TSER project: Comparative Analysis of Transitions from Education to Work in Europe, Marseilles: CEREQ, www.mzes.uni-mannheim.de/projekte/catewe/ papers/paper2.pdf, accessed 12 February 2009. Crompton, Rosemary, Linda Hantrais, Nicola Le Feuvre and Patricia Walters (1991), Women in Professional Occupations in France and Britain, European Equal Opportunities Unit, European Commission, Brussels, DV/342/91-EN. Crouch, C. (1997), ‘Skills-based full employment: the latest philosopher’s stone’, British Journal of Industrial Relations, 35 (3), 367–91. Cully, Mark, Stephen Woodland, Andrew O’Reilly and Gill Dix (1999), Britain at Work: As Depicted by the 1998 Workplace Employee Relations Survey, London: Routledge. DCLG (Department for Communities and Local Government) (2007), Housing in England 2006, DCLG: London, www.communities.gov.uk/documents/housing/ pdf/HousinginEngland0506.pdf, accessed 12 February 2009. Dearden, L., L. McGranahan and B. Sianesi (2004), ‘An In-Depth Analysis of the Returns to National Vocational Qualifications Obtained at Level 2’, London: Centre for the Economics of Education, CEE Discussion Paper No. 46, http:// cee.lse.ac.uk/cee%20dps/ceedp46.pdf, accessed 12 February 2009. DES (Department for Education and Skills) (2003), National Skills Strategy, London: HMSO. DWP (Department for Work and Pensions) (2005), Women and Pensions: The evidence, November, www.dwp.gov.uk/publications/dwp/2005/wp/womenpensions.pdf, accessed 12 February 2009. DWP (2006a), A New Deal for Welfare: Empowering People to Work, Green Paper, January, Cm 6730, www.dwp.gov.uk/welfarereform/readyforwork, accessed 12 February 2009. DWP (2006b), Security in Retirement: Towards a New Pensions System, Cm 6841, www.dwp.gov.uk/pensionsreform/pdfs/white_paper_complete.pdf, accessed 12 February 2009. DWP (2006c), New Figures Show Good Progress on Poverty, London: DWP, www. dwp.gov.uk/mediacentre/pressreleases/2006/mar/cphs015-090306.asp, accessed 12 February 2009. Elias, P. and K. Purcell (2003), ‘Measuring Change in the Graduate Labour Market: Researching Graduate Careers Seven Years On’, A research project jointly funded by the Economic and Social Research Council and the Higher Education Careers Services Unit, Research paper No. 1, Warwick Institute for Employment Research, University of West of England, www2.warwick.ac.uk/ fac/soc/ier/research/completed/7yrs2/rp1.pdf, accessed 12 February 2009. EOC Research Findings (1999), Lower Earnings Limit in Practice, Manchester: Equal Opportunities Commission. EOC (2001), Women and Men in Britain: Pensions and Social Security, Manchester: Equal Opportunities Commission.

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Esping-Andersen, Gøsta (1990) The Three Worlds of Welfare Capitalism, Princeton, NJ: Princeton University Press. Eurostat (2005), Statistics in Focus: Spending on Tertiary Education in Europe in 2002, 18/2005, Luxembourg, EC. Fagan, C. (2002), ‘Supplementary Information Regarding Policies to Promote Gender Equality and Employment’, Report for the European Commission’s Expert group on Gender and Employment, European Work and Employment Research Centre, Manchester Business School, www.mbs.ac.uk/research/ europeanemployment/projects/gendersocial/documents/EGGE2002_UK.pdf, accessed 12 February 2009. Fagan, Colette, Ariane Hegewisch and Jane Pillinger (2006), Out of Time: Why Britain needs a New Approach to Working-time Flexibility, London: TUC, www. tuc.org.uk/extras/outoftime.pdf, accessed 12 February 2009. Francesconi, M. (2001), ‘Determinants and consequences of promotions in Britain’, Oxford Bulletin of Economics and Statistics, 63 (3), 279–310. GAD (Government Actuary’s Department) (2007), Occupational Pension Schemes Annual Report 2006, ONS, London: HMSO, www.statistics.gov.uk/downloads/theme_population/Occ-pension-2006/OPSS_Annual_Report_2006.pdf, accessed 12 February 2009. Galindo-Rueda, F., O. Marcenaro-Gutierrez and A. Vignoles (2004), ‘The widening socio-economic gap in UK higher education’, National Institute Economic Review, 190 (1), 75–88. Gangl, Markus (2001), ‘Education and Labour Market Entry across Europe: The Impact of Institutional Arrangements in Training Systems and Labour Markets’, Prepared as part of the TSER project: Comparative Analysis of Transitions from Education to Work in Europe, Mannheim, Germany: Centre for European Social Research (MZES), www.mzes.uni-mannheim.de/projekte/ catewe/papers/PAPER5.pdf, accessed 12 February 2009. Gospel, H. (1998), ‘The revival of apprenticeship training in Britain?’, British Journal of Industrial Relations, 36 (3), 435–57. Gregg, Paul (1998), ‘The impact of unemployment and job loss on future earnings’, in HM Treasury, Persistent Poverty and Lifetime Inequality: The Evidence, Occasional Paper No. 10 (also CASE Report 5, LSE March 1999), pp. 89–96. Gregg, P. (2001), ‘The impact of youth unemployment on adult unemployment in the NCDS’, Economic Journal, 111 (475), F623–F653. Gregg, P. and J. Wadsworth (2002), ‘Job tenure in Britain, 1975–2000. Is a job for life or just for Christmas?’ Oxford Bulletin of Economics and Statistics, 64 (2), 111–34. Gregory, M. and R. Jukes (2001), ‘Unemployment and subsequent earnings: estimating scarring among British men 1984–94’, Economic Journal, 111 (475), 607–25. Grimshaw, D., H. Beynon, J. Rubery and K. Ward (2002), ‘The restructuring of career paths in large service sector organisations: “delayering”, upskilling and polarisation’, Sociological Review, 50 (1), 89–116. Hills, John (2004), Inequality and the State, Oxford: Oxford University Press. HM Treasury (2006), Report on the Budget, London: HM Treasury, www.hmtreasury.gov.uk/bud_budget06_repindex.htm, accessed 12 February 2009. Holdsworth, C. (2004), ‘Family support and the transition out of parental home in Britain, Spain and Norway’, Sociology, 38 (5), 909–26. Holt, Stephen (2008), Periodic Payment of Earned Income Tax Credit, Background

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Paper for Brookings Institution Metropolitan Policy ProgramWashington: The Brookings Institute, www.brookings.edu/~/media/Files/rc/papers/2008/0505_ metroraise_supplement_holt/metroraise_supplement.pdf, accessed 12 February 2009. Hyman, Jeff (1992), Training at Work: A Critical Analysis of Policy and Practice, London: Routledge. Insolvency Service (2006), Characteristics of a Bankrupt, London: DTI, www. insolvency.gov.uk/insolvencyprofessionandlegislation/policychange/cob.pdf, accessed 12 February 2009. Kodz, J., S. Davis, D. Lain, M. Strebler, J. Rick, P. Bates, J. Cummings, N. Meager, D. Anxo, S. Gineste, R. Trinczek and S. Palmer (2003), Working Long Hours: A Review of the Evidence, Volume 1 – Main Report, Employment Relations Research Series No. 16, London: Department for Trade and Industry, www.berr.gov.uk/files/file11543.pdf, accessed 12 February 2009. Leitch, Lord (2006), Leitch Review of Skills: Prosperity for all in the Global Economy – World Class Skills, HM Treasury HMSO, www.dcsf.gov.uk/ furthereducation/uploads/documents/2006-12%20LeitchReview1.pdf, accessed 12 February 2009. Lewis, Jane (1992), Women in Britain since 1945: Women, Family, Work and the State in the Post-War Years, Oxford: Blackwell Publishing. Machin, Stephen and John van Reenen (2007), ‘Changes in Wage Inequality’, Special Paper No.18, April 2007, Centre for Economic Performance LSE, http:// cep.lse.ac.uk/pubs/download/special/cepsp18.pdf, accessed 12 February 2009. Mason, G. (2002), ‘High skills utilisation under mass higher education: graduate employment in services industries in Britain’, Journal of Education and Work, 15 (4), 427–56. OECD (2006), Employment Outlook, Paris: OECD. Olsen, Wendy and Sylvia Walby (2004), ‘Modelling Gender Pay Gaps’, EOC Working Paper Series No. 17, Manchester: Equal Opportunities Commission. Purcell, K. and P. Elias (2004), ‘Higher Education and Gendered Career Development – Researching Graduate Careers Seven Years On’, Employment Studies Research Unit, University of West of England/Warwick Institute for Employment Research Working Paper No. 4, www2.warwick.ac.uk/fac/soc/ier/ research/completed/7yrs2/rp4.pdf, accessed 12 February 2009. Rubery, Jill, Damian Grimshaw, Rory Donnelly and Peter Urwin (2009), ‘Revisiting the UK Model: From Basket Case to Success Story and Back Again?’ in Gerhard Bosch, Steffen Lehndorff and Jill Rubery (eds), European Employment Models in Flux: A Comparison of Institutional Change in Nine European countries, Basingstoke: Palgrave. Rubery, J., M. Smith, D. Anxo and L. Flood (2002), ‘The future of European labour supply, the critical role of the family’, Feminist Economics, 7 (3), 33–69. Select Committee on Education and Employment (2001), Fifth Report, London: House of Commons, www.publications.parliament.uk/pa/cm200001/cmselect/ cmeduemp/58/5806.htm, accessed 12 February 2009. Smeaton, D. and A. Marsh (2006), ‘Maternity and paternity rights and benefits: survey of parents 2005’, DTI Employment Relations Survey, 50, March, www. dti.gov.uk/files/file27446.pdf?pubpdfdload=06%2F836, accessed 12 February 2009. Tomassini, C., K. Glaser, D.A. Wolf, M.I. Broese van Groneu and E. Grundy (2004), ‘Living arrangements among older people: an overview of trends in

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Europe and the USA‘, Population Trends, Office of National Statistics, www.esf. org/articles/201/Famsuparticle.pdf, accessed 12 February 2009. Turnbull, P. and V. Wass (1997), ‘Job insecurity and labour market lemons: the (mis) management of redundancy in steel making, coal mining and port transport’, Journal of Management Studies, 34 (1), 27–51. UNICEF (2007), Child Poverty in Perspective: An Overview of Child Well-being in Rich Countries, Innocenti Report Card 7, UNICEF Innocenti Research Centre, Florence, www.unicef.org.uk/publications/pdf/rc7_eng.pdf, accessed 12 February 2009. University of Keele (School of Sociology and Criminology) (2009), Youth Policies in the UK, www.keele.ac.uk/depts/so/youthchron/SocialSecurity/8090socsecurity. htm, accessed 12 February 2009. Van der Velden, R.K.W. and M.H.J. Wolbers (2001), ‘The Integration of Young People into the Labour Market within the European Union: The Role of Institutional Settings’, prepared as part of the TSER project: Comparative Analysis of Transitions from Education to Work in Europe, Maastricht: Research Centre for Education and the Labour Market (ROA) Maastricht University, www.mzes.uni-mannheim.de/projekte/catewe/papers/paper9.pdf, accessed 12 February 2009. Wanless, Derek (2006), Securing Good Care for Older People: Taking a Long-term View, London: King’s Fund, www.kingsfund.org.uk/publications/the_kings_ fund_publications/securing_good.html, accessed 12 February 2009. Wilcox, Steve (2005), Affordability and the Intermediate Housing Market: Local Measures for all Authority Areas in Great Britain, York: Joseph Rowntree Foundation, www.jrf.org.uk/bookshop/eBooks/185935243X.pdf, accessed 12 February 2009. Young, M. (1993), ‘A curriculum for the 21st century? Towards a new basis for overcoming academic/vocational divisions’, British Journal of Educational Studies, 41 (3), 203–22.

3.

Towards an active and integrated life course policy: the Swedish experience Dominique Anxo

INTRODUCTION The Swedish model is based on a strong political commitment to the goal of full employment, price stability and to egalitarian ideals (Anxo and Niklasson 2006). Presented often as the ideal type of the so-called Nordic social democratic regime, the Swedish welfare state emphasises the principles of egalitarianism, de-commodification and individualisation (Esping Andersen 1990). In the whole spectrum of social policies, individualisation has been a key part of the Swedish universal welfare state. The basic principle of the institutional model is entitlement based on citizenship/residence. The individual, and not the family, has for many years been the unit not only of taxation but also of social benefits as social rights. The individualisation of Swedish social policy is further strikingly illustrated by the lack of social benefits awarded to women on the basis of their status as wives. Sweden stands out as providing one type of societal system based on high employment rates with only a small gender gap, a high incidence of dual-earner households, extensive and generous family policy, strong welfare support systems both for childcare and parental leave, and egalitarian wage structures, including low gender wage inequality. To a considerable extent the good employment records experienced by the Swedish economy during the last three decades are clearly related to the creation of a modern welfare state, a strong public involvement in the financing and provision of healthcare, social care and education and the related expansion of public employment. Individualised taxation systems in a context of high average and marginal tax rates reinforce the dual breadwinner model. As far as working time is concerned, some gender differences persist with a relatively high share of women working part-time, but in contrast to other Member States with high part-time rates like the UK or the Netherlands, many women in Sweden work part-time for long periods and some of 104

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them receive income compensation for working reduced hours. Part-time work in Sweden must be considered more as an historical transition from married women’s inactivity towards a strategy, largely initiated by labour market and political institutions, to strengthen women’s labour market commitments. The parental leave system allows for income-compensated temporary reduction of working time, thereby reinforcing women’s bargaining power and status as a significant breadwinner even when they are temporarily not participating on a full-time basis in the labour market. The overall political context characterised by gender mainstreaming, high female involvement in the political process and institutions (government bodies, parliament and labour market organisations) creates a favourable institutional set-up conducive to a more balanced gender division of labour and responsibilities over the life course. The main objective of this chapter is to analyse the potential link between the extent of labour market participation during different phases in the life course and the prevailing welfare and employment regimes focusing on the extent to which the institutional framework in a broad sense handles critical transitions over the life course. We intend, in particular, to examine how the transitions from the educational system to the labour market, to the formation of couple households (whether by marriage or consensual cohabitation) and to parenting has evolved during the last decade and the extent to which the modifications in household composition over time affects both male and female labour supply and income developments over the life course. Special focus will be placed on the prevailing legal rights that may assist and the continuing institutional barriers that may hinder individuals in their efforts to adjust their labour supply over different life phases. This chapter is structured as follows. After a presentation of the specific features of the Swedish institutional framework, focusing on its internal logic and its life course dimension (first section), we investigate the employment and working time patterns of Swedish men and women over the life course (second section). In the third section we analyse the gender gap in wages and discuss the consequences of the prevailing division of work on income development over the life course. Finally in the last section, the major policy implications and conclusions of our study are provided.

INSTITUTIONAL FRAMEWORK, POLICIES AND IMPACT UPON LIFE TRAJECTORIES AND TRANSITIONS OVER THE LIFE COURSE In order to understand the high employment rates and the current similitude of the gender employment profiles over the life course, Sweden’s

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institutional structures and the policy reforms undertaken during the 1970s are crucial. These reforms had explicitly the aim of encouraging participation of women and reducing the gender employment gap by promoting similar patterns of employment over the life course. Three institutional features appear to be determinant: the parental leave system and the embedded opportunities for flexible working time arrangements with extended reversibility options (part-time–full-time and vice versa), the expansion of publicly-subsidized and high quality childcare and the taxation system. The Parental Leave System The Swedish parental leave programme, introduced in 1974 (replacing the maternity leave legislation), has obviously sustained the growth of female labour participation and contributed to the changes in women’s behaviour in the labour market. Since this period women have ceased to withdraw from the labour market with anything like the same frequency as during the 1960s with the result that the employment rate of mothers of children less than seven years old is among the highest among OECD countries. The change of the name also reflects the public authorities’ desire to influence the division of labour between men and women and favour equal opportunities by gender. The length of parental leave was initially six months but was successively extended to 16 months (480 days) in the 1990s with full job security on return.1 The level of compensation is 80 per cent of gross earnings for the first 390 days. For the remaining 90 days parents receive a flat rate of 60 SEK.2 Parental leave offers considerable scope for flexibility in that part of the leave can, for example, be taken over a longer period by working a shorter week with wage compensation. Generally speaking Sweden’s parental leave schemes offer considerable scope for re-arranging working time. Parents may use their right to parental leave from the child’s birth or adoption until its eighth birthday. It is interesting to note that the parental leave system is one of the few social rights that is not fully individualised.3 In order to favour a more equal gender distribution of absence a first earmarked non-transferable month for each parent was introduced in 1993 and a second in 2002. This rule constitutes, therefore, a strong incentive for the father to use his right to parental leave for at least 60 days. The gender division of parental leave remains, however, unevenly distributed since in 2005, 81 per cent of the total amount of compensated days are taken by the mothers.4 Even though, by international standards, the extent of universalism and the degree of de-commodification of the Swedish welfare state is high, the

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level of income compensation in the parental leave system is not independent of the individual’s work history and job experience.5 Since the amount of income-related benefits is based on the income during the six months immediately preceding the birth of the first child, this system of income replacement constitutes a strong economic incentive for parents to be gainfully employed and work full-time prior to childbirth. This benefit system has had, therefore, a great influence on working time patterns for presumptive parents. Typically, Swedish women work full-time before childbirth, take parental leave, come back to employment on a part-time basis and increase working time when the children grow up. In Sweden, the law also enables parents to take paid care leave for sick children (60 days per year and per child, up to the child’s twelfth birthday6 compensated at the same replacement rate as sickness benefit, that is 80 per cent of previous earnings). Employees are also entitled to leave of absence or reduction of working time to take care of a relative (spouse, parent, sibling or child) who is seriously ill (60 days). The loss of income is also compensated in accordance with the replacement rate for sickness benefit. According to another law (since 1998), employees have the right to take unpaid leave for pressing family reasons. Public Child Care The public childcare system has substantially improved during the last three decades. In 1995, the legislation was modified and the municipalities became liable for providing pre-school programmes and leisure-time activities for school children without unreasonable delay. The liability applies to all children, from age one up to and including age twelve, whose parents are gainfully employed or studying. The number of places in community childcare centres or community-sponsored homes has increased from about 12 per cent of children between one and six years old in 1972 to almost 86 per cent in 2007. The Swedish system is specially designed to facilitate market work for parents. The daycare centres provide catering facilities for the children and are open until 18.00. During the period 2001–03 several childcare reforms were also undertaken in order to extend childcare facilities. Local authorities were required to provide pre-school or family daycare places for children aged one to five even for job seekers and for parents taking parental leave to take care of a sibling. Pre-school care, free of charge, was introduced for all children aged four to five for at least three hours a day during the school term. Furthermore a maximum fee that is a ceiling on the amount parents were required to pay for public childcare at a pre-school was also introduced. The main objective of these reforms is to make public childcare a part of the general welfare system,

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available to all. The basic principle is that all children in Sweden shall have access to childcare and that childcare costs shall be so low that no child is excluded. Tax System The Swedish tax policy has also contributed to the sharp increase in female participation. The shift in Sweden in 1972 from family-based to individual income taxation treatment has encouraged the labour force entry of married women. The development of public employment during this period, together with rather generous social benefits and transfer systems for income redistribution, involved increasing public expenditures and, thus, an overall increase in tax pressures, with a sharp rise in marginal tax. As mentioned previously, the Swedish system of individualised taxation systems in a context of high average and marginal tax rates has reinforced the dual breadwinner model. Many Swedish economists have stressed the detrimental impacts of high taxes on work incentives, on investment in human capital (educational attendance and attainment) and entrepreneurship. To a considerable extent, however, there are reasons to believe that these negative impacts are determined by the tax (and transfer) structure rather than by the level of overall tax rate. Such considerations led to a comprehensive tax reform in 1991, primarily aimed not at reducing the total tax level but at reforming the tax structure. The tax reform implied a reduction of marginal tax rates on earned income, a widening of the tax base and a more uniform taxation of capital. Despites this reform, Sweden remains a high-tax country and the decrease in the total tax pressures in terms of GNP has been limited.7

TRANSITIONS AND PATTERNS OF LABOUR MARKET INTEGRATION OVER THE LIFE COURSE Transition from School to Employment One of the major features of the development of the youth labour market during the last decade is a gradual postponement of the entry into the labour market and a longer transitional phase from the educational system into the labour market. Using Statistics Sweden’s definition of the average age for labour market entry/settlement as that age when 75 per cent of a cohort is employed, we find that the average age for labour market entry rose from 20 years old in 1990 to 26 years at the turn of the century (Ungdomsstyrelsen 2005).

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The Swedish educational system is constituted by four major components: compulsory primary school (7–16 years old), voluntary secondary school (16–19 years), university or university college and adult education. Since the mid 1960s Sweden has had nine years of tuition-free compulsory education system starting at age seven. All children follow basically the same curriculum. Upper secondary school is voluntary and offers several programmes ranging from vocational training to programmes preparing pupils for further studies at the tertiary level (college/university). In 1991, a reform added one year of mainly theoretical studies to the upper secondary vocational programmes, implying that the students in these vocational programmes should fulfil the entry requirements for university. Swedish youth may apply for university education at age 19 after having completed three years of high school. Swedish universities are primarily public, tuition-fee free and administrated by a central government agency. All students admitted to a university are eligible for subsidised loans and a grant. The objective of this financial system is to reduce credit constraints and enhance equal opportunity. Over the past ten years there has been little change in school enrolment rates in compulsory school while those for upper secondary school have increased significantly. In order to prevent early drop-outs from the compulsory educational system, a growing number of municipalities during the 1990s introduced a 10th year of education on a voluntary basis in order to help disadvantaged pupils to qualify for upper secondary school. In the second half of the 1990s around 95 per cent of each cohort was enrolled in upper secondary schools.8 During the late 1980s the university enrolment rate started to increase after having fallen continuously during the previous decade. When the youth labour market deteriorated in the early 1990s, the university enrolment rate also increased as a consequence of significant expansion in the volume of slots at the public universities. As stressed by Björklund et al. (2004), the main motivation behind this expansion was a belief that tertiary education was a better alternative to unemployment or participating in active labour market policy programmes. Also worth noting is the fact that a large share of young people do not enter university or university college directly after completing their secondary school but work first or take a period of leave before enrolling in higher education. At the turn of the century, the median entry age into tertiary education was 22.7 years, a figure clearly higher that the OECD average. Another characteristic of the Swedish educational system is the considerable opportunities offered to complete educational attainment,9 either through active labour market policy measures targeted at youth training or adult education10 (see the section below). The Swedish educational

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system is also characterised by its relative lack of educational dead-ends and extended bridges between various curricula. Since the early 1990s, students finishing a high school vocational training programme are in principle eligible for further education at higher levels, even though additional qualifications must sometimes been taken, for example within the Swedish adult education system. As a consequence of the expansion of upper secondary schools during the late 1960s, the share of the adult population with secondary education rose to around 30 per cent while the expansion of tertiary education was still limited (7 per cent in 1970). The effect of the various reforms of the educational system over the last two decades has been a large increase in the educational attainment of the Swedish adult population. By international standards, the educational attainment of the Swedish population is clearly higher than in most European Member States and OECD countries. By the end of the century more that 50 per cent of the adult population had upper secondary education and more than 30 per cent a tertiary education. In the school year 2005–06 almost 45 per cent of young persons aged 19–26 years were enrolled in tertiary education. This large expansion of educational enrolment, in particular higher education, has therefore entailed a postponement of entry of young people into the labour market. The youth labour market in Sweden has, however, altered significantly during the last fifteen years. The dramatic upsurge of youth unemployment11 during the deep recession of the early 1990s has been accompanied by a sharp decline in their employment rates. The drop in employment rate has been closely related to the above-mentioned expansion of secondary and tertiary education and the large enrolment of young people in youthtargeted active labour market policy programmes (mainly training). The youth population does not constitute a homogeneous group and a successful transition from the educational system to the labour market, in Sweden like in other industrial countries, is clearly dependent on educational attainment. Early drop-out from the educational system or only secondary level educational attainment are associated with more erratic employment patterns and higher unemployment rates. Sweden is characterised by the combination of a relatively strict labour market regulation regime and relatively weak linkages from the weakly vocationally-oriented educational system to the labour market, implying that the ‘barriers’ to labour market entry of young people, especially the low–medium educated, are relatively high compared to other industrialised countries, such as Germany. This explains why the proportion of young unemployed engaged in youth programmes has traditionally been high in Sweden. Youth programmes constitute an important component

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of the transition between the educational system and the labour market. The recent policy development in Sweden, in particular the reinforcement of measures aimed at preventing early drop-outs from the educational system, enhancing the quality of vocational training through a closer collaboration, at the local level, between high school authorities and local actors (employers, unions and so on), seems to be going in the right direction. The last decade has also seen a steep increase in the volume of fixedterm contracts (Holmlund and Storrie 2002). This growth of fixed-term contracts may have caused some rise in unemployment through higher labour turnover. The incidence of fixed-term contracts has been particularly high among the young and foreign-born residents. Among young women aged 16–24 close to 60 per cent were in temporary work by the end of the century; the corresponding share for young men was around 40 per cent. There is also a marked trend rise in temporary work, also among the young. Transitions out of the Parental Home, Patterns of Household, Union and Family Formation Compared to other European member states, in particular those in southern Europe, the transition out of the family and the formation of independent household appears to happen at an early stage in Sweden. On average, girls move earlier than boys; in 2001 around 62 per cent of girls aged 21 years and 46 per cent of boys had moved from the parental home. According to register data only 2.5 per cent of Swedish young people aged 20–25 years old lived with their parents in 2004.12 This is partly related to the fact that adult and tertiary education in Sweden are free of charge and that the state offers fairly generous student assistance in the form of subsidised loans, grants and a housing allowance.13 The grant and public loans are granted on the basis of an individual student’s own income, disregarding their partner’s or parents’ economic resources. Hence student dependence upon their parents in terms of economic support and housing is, compared to other European countries, rather limited, easing the transition out of the family and the constitution of their own household. As in many other Western countries, the last four decades have also been characterised by an increased heterogeneity in household structures and private living arrangements. Since the end of the 1960s non-marital cohabitation has steadily increased whereas the marriage rate has declined and divorce increased. Furthermore, consensual cohabitations have had a tendency to start at earlier ages, to last longer and to include childbearing. More than half of all first-born children are born out-of-wedlock with the

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large majority born within a consensual cohabitation (Bygren et al. 2005, p. 139). Besides the changes in values and norms, the gradual increase in consensual cohabitations is also related to legal changes, introduced in the early 1980s, that have made the legal status of marriage and consensual cohabitation rather similar (inheritance rights excepted). Since the early 1960s, there is also in Sweden a clear tendency to postpone parenthood to older ages. The share of childless women aged 25 years increased from 43 per cent in 1975 to 62 per cent in 1985 and 78 per cent in 2005. Between 1970 and 2004, the average age of the mother at first birth increased from 24 years to 29 years old (from 26.5 to 32 years for fathers, Statistics Sweden 2006). Fertility rates in Sweden have shown strong fluctuation over time. In the mid 1960s the total fertility rate was 2.4, a figure similar to other European countries at that time. Up to the end of the 1970s and early 1980s fertility steadily declined, reaching 1.6 in 1983. From this date up to the early 1990s we see a reverse tendency and in 1990 the total fertility rate reached 2.1, one of the highest rates in Europe at that time. With the deep recession in the early 1990s and the unprecedented dramatic rise of unemployment, the fertility rate started to decline again, reaching 1.5 in 1999 but by 2007 it had risen to 1.9. Since the compensation level of the Swedish parental leave system is related to previous work history, there is reason to believe that Swedish fertility is pro-cyclical and that the fertility pattern is sensitive to the situation in the labour market. When looking at different cohorts of women, the share of childless women aged 45 years old has remained almost constant since the early 1960s, implying a non-rising rate of childlessness across cohorts of women in Sweden (Statistics Sweden 2006). As shown by Bygren et al. (2005), the likelihood of becoming a parent is significantly much lower for individuals out of the labour force (students and those between education and their first job). In other words, employment status remains a strong predictor of entering parenthood, consistent with the above described Swedish parental leave system that provides strong economic incentives to be gainfully employed before first childbirth. This is especially true for mothers who, as mentioned previously, still use the lion’s share of parental leave days. This system reduces the cost of having children and strongly favours the combination of paid work with childbearing. As previously mentioned, in terms of pension rights, the period of parental absence and/or the period of temporary reduction of working time within the framework of the parental leave system is fully compensated and is thus neutral in terms of income after pension age, if one disregards the impact of absence and/or reduced hours on wage development and career opportunities (loss of human capital and job experience, statistical discrimination and occupational segregation).

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Transitions in Prime Age Disparities in the patterns of labour market integration and working time arrangements over the life course Although our analysis is not longitudinal and is based on cross-sectional register data (Statistics Sweden 2005), the approach can still serve as an heuristic device to identify the gender differences in the patterns of labour market integration and income level across different household types. Bearing in mind the usual drawbacks associated with cross-sectional analysis, in particular the difficulties of disentangling age, cohort and period effects, our approach allows us to analyse the impact of the institutional set-up on the gender pattern of involvement in paid and unpaid work over the life course. As mentioned previously, one of the most salient features and persistent trends in Sweden has been the increased feminisation of the labour force and the related shift from the single male breadwinner household towards the dual-earner household. Sweden is characterised by high employment rates at the two ends of the age distribution, high employment continuity over the life course, and relatively low gender disparities in labour market integration (see Figure 3.1). In Sweden, neither the marriage/couple formation nor childbirth impacts on women’s employment rates, with the latter even positively related to female labour market participation. It is interesting to note that children have, compared to other member states, no lasting echo effects on women’s labour supply. The main impact of childbirth is a temporary reduction of working hours to long part-time hours while children are young (pre-school children) (see Figure 3.1). It is also interesting to note that young childless single or cohabiting employed women work full-time before childbearing in order to maximise their income level during parental leave. Also worth noting is the fact that their working time increases smoothly and attains a level similar to their male counterparts at the end of working life. Comparing seven member states and using standard econometric techniques we found (Anxo et al. 2006) that in Sweden, controlling for a range of socioeconomic variables, young couples with or without children have a higher degree of labour market participation than young childless single households. This suggests that neither living as a couple nor having children is any longer associated with a withdrawal of women from the labour market in Sweden, unlike in Southern European countries where marriage or living as a couple is still associated with a drop in employment rates. Not surprisingly, Swedish mothers do reduce their labour supply, but the impact of young pre-school children principally takes the form of a reduction in working time not non-participation. Much of this working

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The welfare state and life transitions PROFILES OF EMPLOYMENT RATES OVER THE LIFE COURSE, SWEDEN 2004 1.00 0.90

EMPLOYMENT RATE

0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Singles with parents 20–25

Singles <36 on their own

Couples < 46 no children

Couples, children 0–6

Couples, Couples, Couples empty Older retiring children 7–12 children 13–18 nest age 46–59 couples >59

Men

Older singles >59

Women

YEARLY WORKING TIME, EMPLOYED, 2004

2000 1750

HOURS/YEAR

1500 1250 1000 750 500 250 0 Singles with parents 20–25

Singles <36 on their own

Couples < 46 no children

Couples, children 0–6

Couples, Couples, Couples empty Older retiring children 7–12 children 13–18 nest age 46–59 couples >59

Men

Older singles >59

Women

Note: In order to map men’s and women’s employment and working time profiles across the life course we have selected household categories coinciding with widely experienced transitions and phases in the life course. These are young, childless single adults who are still in or have left the parental home (transition out of the family and to adulthood, the two first categories on the x-axis), union formation (cohabiting couples without children, third category), parenting in two-parent households (differentiating couples according to the age of children, fourth–sixth categories), mid-life ‘empty nest’ couple households (middle-aged couples without cohabiting children, seventh category) and older couples or singles in the transitional period to retirement (the last two categories) (see Anxo et al. 2006, for further details). Source:

Statistics Sweden (2005), LINDA and own calculations.

Figure 3.1

Employment and working time patterns over the life course, Sweden

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time reduction occurs within the parental leave system and in the context of higher employment rates compared to other member states. Men’s labour supply in couple households also varies across European countries according to the presence of pre-school age children. Our study shows that Swedish fathers of young children have a higher labour supply than childless men, mostly due to higher employment rates, and that working time of employed men is barely affected by young pre-school children. For older couples without resident children (empty nesters), women still show the high integration levels comparable to younger childless women living in a couple household. Over recent decades, Swedish women, and particularly mothers of young children, have strengthened their position in the labour market. The share of part-time has progressively declined and employment stability (measured as average tenure) has also increased over time. This trend towards increased stability applies to all educational levels and sectors except for the private service sector. The recent decline in employment duration in the private service sector is probably related to the strong employment growth in this sector during the second half of the 1990s. Compared to other European countries, the considerable opportunities to adjust working time over the life course, through the above described forms of income-compensated legal rights to absenteeism (parental leave, leave for sick child or relatives), with complete employment guarantees and reversible reduction of working time, allow a flexible management of work and family constraints. Globally, this strategy appears to be an efficient tool both to secure women’s labour market integration, foster employment continuity and improve gender equal opportunities. Unemployment risks and integration of immigrants into the labour market While the risk of unemployment increased for both men and women, particularly in the wake of the deep recession of the early 1990s, there is no indication that this risk has evolved differently by age and/or educational groups and sector. Furthermore, as stressed by Korpi and Stern (2006), the dramatic change in the working life of adult Swedish women during the last three decades seems to be unrelated to the globalisation process. In other words the major transformation in the patterns of female labour market integration over the life course appears to be related to the specificity of the national institutional framework, in particular the expansion of the public sector, and the policy reforms and regulations regarding parental leave, public childcare, working time flexibility and tax and benefit systems. Hence, the Swedish experience is a good illustration that ‘there is substantial leeway for domestic policy even in the face of extensive international economic integration’ (Korpi and Stern 2006, p. 138).

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While Sweden has been very successful in integrating women, the older workers and those with a work handicap, it should be stressed that Sweden has been singularly less successful in integrating immigrants into the labour market. Despite some improvement in the labour market situation during the second half of the 1990s, the extent of labour market integration of the foreign-born population, in particular immigrants born outside Europe, remained very low. At the beginning of the new millennium the employment rate among foreign-born citizens was 22 per cent lower and their labour income 33 per cent lower than native-born. Several explanations have been put forward for explaining the decline in the extent of labour market integration of immigrants in Sweden. Firstly, in spite of the strengthened legislation against discrimination, the changes in the composition of the foreign-born population towards a larger share of immigrants from outside Europe might have entailed a tendency toward more discrimination from authorities, employers and employees. Secondly, the large structural changes experienced by the Swedish economy, in particular the shift toward a service-oriented and knowledge-based economy and the related demands of qualifications and skills might have been detrimental to the labour market integration of the foreign-born population. The growing awareness among politicians of the marginalisation process at play has led Swedish governments to take specific measures in order to ease the entry of immigrants and refugees into the labour market. The active labour market measures targeted towards immigrants, introduced in the early 2000s, are promising and the few evaluations performed suggest that these measures have had beneficial impacts on the labour market integration of immigrants experiencing difficulties in getting a foothold in the labour market. While these specific measures are going in the right direction there are reasons to believe that the overarching goals of the Swedish integration policy, namely to integrate immigrants to roughly the same extent as the native population, will not be achieved in the near future and that discrepancies in the extent of labour market integration between native- and foreign-born will remain, implying the need for further political efforts to sustain the process of labour market integration of the foreign-born population. Lifelong learning and skill development Statutory leave of absence is not confined just to parental leave. Since 1974, employees have been able to take career breaks to pursue training or further studies. The legislation on training leave is particularly flexible and gives individuals considerable leeway in their choice of studies. Access to training leave is also promoted by the above-mentioned system of individualised non-means-tested public grants and loans with highly subsidised

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interest rates and other repayment terms (see note 13). The Individual Training Leave Act (1974) had two aims: to encourage social and occupational mobility and to facilitate access to education for employees with the lowest levels of compulsory education. The Act is exceptionally liberal in allowing all workers with at least six months’ service to follow training of their choice, with no restriction on either the type or length of training which may, therefore, be in a field completely unconnected with the worker’s job. The arrangements for taking leave are also very flexible: absence may be hourly (several hours a week combined with normal work) or taken in a block. As with the other forms of statutory leave of absence, the right to training leave is backed by a full employment guarantee; the employee is reinstated to his/her job with the same working conditions and the same pay. While the Act affords employees considerable leeway, the employer is nevertheless entitled to decide when the training shall start. However, training may not be deferred for more than six months without the express agreement of the trade union representatives. The employee may also abandon his/her course before completion and be reinstated in his/her job subject to varying periods of notice depending on the length of the course (two weeks to a month). While the training leave legislation offers no compensation for loss of income, a mixed system of grants and long-term public loans facilitates the exercise of the right (see below). Lifelong learning (LLL) is an integrated part of the Swedish educational and employment system. One feature of the Swedish LLL system is the extensive opportunities it provides to complete or enhance educational attainment after leaving initial education, either through adult education or through various training courses within the framework of labour market policy. At the workplace level, access to on-the-job training and the opportunity for an employee to further develop his/her skills also constitute important components of the Swedish LLL system. The basic policy orientation regarding public initiatives for adult education is that resources should be directed to those who have the greatest need for education, for example those who have not had the opportunity of obtaining the basic qualifications required for access to higher education or who need education in order to strengthen their position on the labour market. In 2005/2006, Statistics Sweden conducted a comprehensive household survey on the participation of adults in education and learning (Statistics Sweden 2007): 73 per cent of the Swedish population aged 25–64 years participated in formal and non-formal adult education over a twelve-month period (2005/2006). If formal education is excluded the participation rate amounted to almost 70 per cent. Many Swedish workplaces provide comprehensive in-service training for personnel at all levels of the organisation. This type of training can involve everything from practical vocational skills to extensive theoretical

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studies. The training can be carried out in cooperation with universities and institutions of higher education, commissioned from municipal education authorities or training companies. On-the-job training (OJT) at the company level accounts for 50 per cent of those engaged in lifelong learning. The results from the International Adult Literacy Study show that Swedish adults performed well in terms of the literacy and numeracy skills. In a cross-national perspective, not only did Swedes perform well on average, but particularly in the lower tail of the distribution. As stressed by Björklund et al. (2004), the fact that in Sweden the mean level is comparatively high, combined with a comparatively low dispersion in achievement test scores for adults, suggests that educational policy has been successful at raising the achievement for low-skilled workers. Transition out of the Labour Force at the end of the Job Career: the Swedish Pension System There is in Sweden a large consensus on the necessity to increase the share of the working population in order to counteract the probable substantial reductions in total production and standards of living and also to guarantee the long-run sustainability of the social protection system in the context of the ageing of the population. The proportion of the population aged 65 or over is expected to increase from 17 per cent in 2008 to around 23 per cent in 2030. The proportion of persons aged 80 or more is expected to reach more than 7 per cent at the same date. The share of the working age population (20–64 years) is expected to decrease from around 59 per cent in 2008 to 54 per cent in 2030. The continued expansion of higher education, as well as the increasing needs for recurrent education caused by rapid technological and structural changes, will involve an increase in the proportion of individuals participating in different kinds of educational programmes, contributing to a reduction in the total labour supply. Over the last 30 years, Sweden has experienced, like many other industrialised countries, a clear shortening of working life due principally to the conjunction of later entry into the labour market (lengthening of educational period) and earlier exit from the labour market. During the period from 1970 until the mid 1980s, 56 per cent of older workers left the labour market before the retirement age of 65 and the average drop-out age was 63 years old. During the late 1980s up to the mid 1990s, 76 per cent of older workers anticipated their exit from the labour market and the average drop-out age fell to 61.3 years old (Sjögren 2004). Despite this trend, the employment rate among older workers (55–64 years old) is still clearly above the Lisbon Target of 50 per cent, namely 72 per cent for Swedish men and 67 per cent for Swedish women.

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The old defined-benefit ‘pay-as-you-go’ pension system introduced in the early 1960s combined a flat universal benefit (Folkpension) with a supplement based on previous earnings. A full earnings-related benefit could be obtained with 30 years of employment at age 65 and calculated on an average of the best 15 years, the so-called 15–30 years rule (Palmer 2000). During the 1980s this system became increasingly under-financed and it was clear that the problem would grow more serious. Many observers considered that the required increase in contributions or the reduction in benefits necessary to sustain the old system were not practicable. In June 1994 parliament passed legislation replacing the old benefitdefined system (DB) with a mandatory defined contribution (DC) scheme. The old state pension system was converted into two defined contribution pillars: a pay-as-you-go notional defined contribution system (NDC) and a financial defined (FD) contribution system. These two earnings-related components are both based on contributions from lifetime earnings and the total contribution amounts to 18.5 per cent of earnings.14 The two mandatory defined contribution schemes were also supplemented by a guaranteed minimum pension for those with a low income or no income from work, and were designed to protect the lifetime poor. This new system is the result of a broad political consensus15 and the awareness among all politicians of the urgency of reshaping the pension system in order to secure its long-run sustainability, thereby to ensure intergenerational fairness. Intragenerational fairness also played an important role since the old system based on the 15–30 years rule favoured people with a shorter contribution history and/or steeper lifetime earning profiles. The pension reform introduced in 1994 was implemented gradually, starting with the earmarking of funds for the mandatory financial account system (FD) in 1995 and with full implementation in 2003. The new legislation also allowed a gradual transition to the new system, beginning with people born in 1938 and ending with those born in 1953. People born in 1938 receive 20 per cent of the pension benefits from the new system and 80 per cent from the old system. These proportions change gradually with increments of 5 per cent per year for each younger cohort, so that people born in 1954 and later are completely covered by the new system. As previously mentioned, the new pension system comprises three main components: a pay-as-you-go notional defined contribution system (NDC), a pre-funded pension (FD), and a guaranteed minimum pension.16 The first and most important component, the notional defined contribution pay-as-you-go system is based on lifetime earnings and is also linked to national economic growth and demographic development. This contribution-based component means that the ‘pay-as-you-go’ character

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The welfare state and life transitions

of the pension system is maintained, since its financing is based on the working age population. The 16 per cent contribution is registered in an individual account with a yearly interest at 1.6 per cent. The annuities of pensioners are calculated by dividing notional capital by a unisexual life expectancy at retirement (Palmer and Wadensjö 2004). The initiators of the reform were aware that the lifetime income principle could affect individuals’ income during retirement quite differently, depending on the distribution of risks concerning career and employment disruptions between socioeconomic groups. Hence, the reform of the pension system had to consider the diversity in patterns of labour market integration over the life course and the uneven distribution of risks by limiting the cost of necessary work interruptions linked to parenting, care activities, or involuntary employment disruptions such as unemployment, disability or sickness. While one important motive in the pension reform was to increase the labour supply and lengthen the time devoted to paid work over the life course, the time that workers devote to higher education, to small children or to national military service, as well as absence due to unemployment and sickness, also gives rise to pension rights. In other words, future entitlements to a pension are currently not only related to work history and earnings but are also linked to other forms of activity and periods of benefit receipt, including parental, unemployment, sickness and partial disability benefits. The second component of the new pension system, the financial defined (FD) contribution system, is a mandatory premium pension which is invested by individuals in funds of their own choice. The FD component is, as previously mentioned, based on a contribution rate of 2.5 per cent and the individual accounts are administrated by a government agency (PPM) which is part of the social insurance administration. This agency manages fund shares on behalf of participants during the saving phase and is the sole supplier of annuities. Like the NDC pillar, the annuity in the financial defined contribution scheme is calculated by dividing the accumulated capital by the estimated life expectancy at retirement (Palmer and Wadensjö 2004). As stressed by Joakim Palme (2005, p. 43) this second component illustrates: the changing boundaries of public and private in the system of old age security. It opens up the possibility for private fund management to act within a public framework, where public authorities both collect contributions and pay out the pension. Moreover it introduces individual risk sharing within the social insurance system, where programmes are usually designed for collective risk sharing.

The third component, the guaranteed minimum pension is a universal basic pension for those who have had a low income or no income; it is a

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way to fulfil the traditional social policy goal of preventing poverty in old age. The minimum pension can be drawn at 65 and is subject to income tax. Since the guaranteed minimum pension might not be sufficient to meet the minimum subsistence level, it may be supplemented by a rent and meanstested housing allowance and/or if necessary by social assistance benefits. Even though the new pension system does not include a fixed retirement age, the pension cannot be drawn before the age of 61 and there is no legal right for employees to work after the age of 67.17 It is also worth noting that the new system is flexible since the annuities for both the NDC and the FD can be claimed partially or fully at age 61, whether the beneficiary leaves the labour force or not. If the individual decides to continue to work while claiming a partial or full annuity, the pension benefits will be recalculated given the additional work contribution (Palmer and Wadensjö 2004). The new pension system makes it possible and financially advantageous to gradually withdraw from the workforce after the age of 65 and therefore to postpone the retirement decision. One crucial issue is to assess whether the new pension system will mean that people choose to retire later. The average exit age from the labour market in Sweden is one of the highest in the EU and recent data from Eurostat show that the average age of retirement rose by almost two years between 2001 and 2008, from 62.1 to 63.8 years (63.2 years for women and 64.4 years for men).

INCOME DEVELOPMENTS OVER THE LIFE COURSE The overwhelming share of employment growth since the end of the 1960s can be ascribed to the increase of the female labour supply. Besides the policy reforms and legal rights listed previously, a large part of the increase of labour force participation is due to the expansion of the public service sector, even though over the last decade employment growth has been primarily due to the expansion of the private service sector. One consequence is that the Swedish labour market is noticeably gender segregated by sectors and occupations, explaining a large part of the remaining gender wage gap. Even though Swedish women are relatively highly paid, compared to other western economies, they still earn only 80 per cent of men’s hourly wage (see Figure 3.2). By controlling for standard human capital variables, the gender wage gap is reduced by about one half (le Grand 1997). And by taking into account occupational segregation, most of the remaining wage gap is eliminated (Meyerson and Petersen 1997). By international standards, the age–wage profile is also relatively flat, reflecting a relatively low seniority premium (see Figure 3.2). There is

122

The welfare state and life transitions HOURLY WAGE PROFILE OVER THE LIFE COURSE, SWEDEN 2004 22.0 20.0 18.0 16.0

EURO

14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Singles with parents 20–25

Singles <36 on their own

Couples <46 no children

Couples, children 0–6

Couples, Couples, Couples empty Older retiring children 7–12 children 13–18 nest age 46–59 couples >59

Older singles >59

HOUSEHOLD CATEGORIES Men

Women

LABOUR AND NON-LABOUR INCOME (EUROS), SWEDEN 2004 35000 30000

EURO

25000 20000 15000 10000 5000 0 Singles with parents 20–25

Singles <36 on their own

Couples <46 no children

Couples, children 0–6

Couples, Couples, Couples empty Older retiring children 7–12 children 13–18 nest age 46–59 couples >59

Older singles >59

HOUSEHOLD CATEGORIES

Source:

Male labour income

Female Labour income

Male non-labour income

Female non labour income

Statistics Sweden (2006), LINDA and own calculations.

Figure 3.2

The gender wage gap and income developments over the life course in Sweden, 2004

strong reason to believe that this low seniority premium contributes to sustain a high employment rate of older workers. The resilience of a traditional gender division of labour has dynamic implications in terms of career prospects, expected life cycle earnings and

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also welfare developments over the life course. Labour supply adjustments made in connection with the parenting phase typically imply penalties in terms of reduced career and wage development over the subsequent working life. It is also still largely women who make these adjustments, and in part the penalty incurred in career and wage evolution is because it is a gender ‘signal’ of women’s deviation from the standard employment relationship. Men incur these penalties when they deviate too, presenting a further obstacle for those men who would prefer to deviate from the standard employment relationship at different stages in their life course (Albrecht et al. 1998). As stressed previously, men’s take-up rates in parental leave system or part-time arrangements remains low although progress has been made in some areas, including the gradual individualisation of the parental leave system (with the introduction of a second non-transferable fathers’ month in the early 2000s). The question of how to raise men’s take-up rates of extended leave and other working-time adjustments over the life course is therefore a crucial political issue and could provide a policy instrument for reducing gender inequality in the division of labour and income development over the life course. Turning now to the development of labour and non-labour income (see Figure 3.2), the previous development confirms that Sweden still displays large gender disparities in earning profiles over the life course. The gender disparities in labour income can largely be explained by the gender wage gap and also by the lower labour commitments of women over the life course (shorter working time). Also worth noting is the fact that the reduction in wage income for women with young pre-school children is more than offset by the increase in non-wage income (parental leave benefits and so on). The impact of children on women’s labour supply lessens once children are older, but since mothers still bear a disproportionate burden of caring responsibilities compared to fathers, it still has a significant and longlasting effect on earnings level. There is reason to believe that the after-tax gender income gap, due to the Swedish income tax structure and benefit system is, however, much lower. We see also that for older singles, the gender gap in non-wage income (essentially pension, net capital income and other allowances such as housing allowance) is dramatically reduced, partly due to the specificity of the old Swedish pension system, which was based on the best 15 years of labour income.

CONCLUSION The various reforms of the Swedish tax and social protection system undertaken over recent decades have without doubt secured and strengthened

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the position of men and women in the labour market and reduced gender inequalities. The Swedish social protection system remains, by international standards, still clearly universal and inclusive in nature and still enjoys a high level of across-the-board political and public support. The structural reforms undertaken in the tax and benefit system, in particular the reshaping of the pension system and the tax reform, initiated in the early 1990s and more recently in 2007 aimed at strengthening work incentives and fostering investment in human capital, are also clearly in line with the general philosophy of the original Swedish model favouring integrative transitions instead of passive support and social exclusion. From a life course perspective, the Swedish social protection system constitutes an integrated and coherent system of time and income management over the life course. The large palette of individual working time and leave options in Sweden, backed by a complete employment guarantee, generous income replacement rates and extended childcare facilities, gives extensive opportunities for households to adapt their labour supply to various situations and commitments over the life course without large income loss. In spite of the major reduction in the gender employment gap over recent decades, gender inequalities in time allocation and income development over the life course persist. In fact, the bulk of unpaid housework and care activities are still predominantly performed by women, even though the male share of household and caring tasks has increased over recent years (Anxo 2002). Efforts still have to be made in order to reduce the gender gap in the division of unpaid work in order to favour a more even distribution of time and income over the life course. A gradual individualisation of the parental leave system, further reduction of the prevailing gender wage gap and gender occupational segregation appear to be good policy instruments to address the remaining gender disparities and foster gender equal opportunity. Despite some improvement in the labour market situation of immigrants during the second half of the 1990s, the extent of labour market integration of the foreign-born population, in particular among immigrants born outside Europe, remains very low. Further political efforts to sustain the labour market integration of the foreign-born population also need to be undertaken. Reconciling employment with changing family commitments and other considerations such as lifelong learning, health aspects, and so on, requires policies which support a more flexible adaptation of time and income over the life course. Hence, more reversible time options which secure individual entitlements to make labour supply adjustments over the life course appear to be a good policy instrument for conciliating employment with other responsibilities, events and risks over the life course. The Swedish experience shows that an increased range of statutory and/or

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collectively negotiated options for individual working-time adjustments over the life course have to be combined with income transfer mechanisms to prevent pronounced income reductions at particular life phases and limit their negative impact on subsequent earning development later in life (such as pension claims). The Swedish experience highlights not only the role of legal provisions and empowerment (civil rights) but also the importance of the specific conditions under which they are implemented, including employment guarantees, income compensation, maintenance of social protection and so on. In this sense they illustrate the linkages and interrelated effects of various institutions such as the educational and care system, labour market and social protection systems in shaping individual life trajectories and limiting social exclusion.

NOTES 1. 2. 3. 4.

5.

6. 7.

The parental leave system is associated with a full employment guarantee and the employment contract is not suspended during the work absence. Parents not in employment before the birth or adoption of their child are entitled to a flat rate of 180 SEK for the first 390 days and the same flat rate of 60 SEK for the remaining 60 days (1 SEK = 0.107 Euro, 1 Euro = 9.38 SEK). The current Swedish policy and political debate focuses on the advantages and disadvantages to fully individualise the system of leave of absence. The incidence of fathers taking parental leave and the average duration of the fathers’ absence have, however, continuously increased during the last decades, from 1 per cent of compensated days in the mid 1970s to almost 20 per cent in 2004 (that is corresponding to around 50 working days of absence). To be entitled to the 80 per cent level of income compensation, a period of employment during the 34 weeks before the birth of the child is required. The Swedish unemployment insurance system is also related to previous job history. Unemployment benefits (80 per cent of previous earnings up to a ceiling for the first 200 days and 70 per cent thereafter) require that the individual should have been a member of a certified unemployment insurance fund for at least 12 months – the membership requirement. In addition, the unemployed must have worked for at least 5 months during the previous 12 month period before the unemployment spell – the work requirement. This makes it difficult for new entrants (like the youth and newly arrived immigrants) to qualify for this level of compensation. According to Swedish law all persons with an income below a threshold are eligible for means-tested social assistance. Social benefit is equal to the difference between the threshold and income before assistance. Unemployed persons who are not entitled to receive wage-replacement benefit or have a low level of compensation may, therefore, apply for social assistance benefit. Social assistance is provided by the social welfare offices who decide, on behalf of the local authorities, who is entitled to receive such benefits. In case of child disability, this right is extended up to 16 years old. The current income tax is composed of a municipal tax rate ranging from 26 to 35 per cent depending on the municipality, and a national income tax of 20 per cent for income between 252 000 SEK and 390 000 SEK and a 25 per cent tax rate for income above 390 000 SEK (1 SEK = 0.107 Euro). The highest marginal tax is therefore 55 per cent compared to over 80 per cent during the 1990s. All capital income is taxed at 30 per cent regardless of the amount. According to OECD, in 2002 Swedish tax revenues

126

8. 9. 10. 11. 12. 13.

14.

15. 16.

17.

The welfare state and life transitions amounted to 50.6 per cent of GDP. The corresponding figures for the 15 EU member countries, the OECD countries and the United States were 40.5, 36.9 and 28.9 per cent, respectively. An increase of 15 percentage points compared to the 1980s. In relation to early drop-out from the educational system. Adult education in Sweden has a long tradition and has expanded markedly since the end of the 1960s. It must be stressed, however, that the relative unemployment rate between adults and young people (20–24 years old) has remained stable during the last decades. In 2001, around 73 per cent of children aged 1–17 years old lived with their biological parents or adoptive parents. The student financial aid programme comprises two parts: a grant system and a public subsidised loan. The Swedish grant system is universal, open to all students (20–54 years old) attending a college/university or adult primary or secondary education programme. A supplementary allowance is given also for students with children. The Swedish loan programme is also universal, with low interest rates (2.1 per cent in 2008) and favourable conditions for reimbursement (annuity of 4 per cent of previous earnings). The duration of the financial aid is limited to 240 weeks (12 semesters) for college and university, up to 120 weeks for adult upper secondary schools and up to 100 weeks for adults who need to complete compulsory schools. The financial aid amounts to around EUR 800 per month (grants, 35 per cent and loans, 65 per cent). The free tuition and the widespread availability and use of Sweden’s generous system of student loans means that Swedish students face by far the lowest out-of-pocket costs for higher education – about EUR 410 per year. Effectively, this means that the short-term financial constraint for Swedish students is, by international perspectives, low; it also means that Swedish students are likely to graduate with, on average, much higher levels of debt than students elsewhere. However, given the low costs facing them, the take-up rates of student loans remain high (over 80 per cent). Half is an employer contribution, half an employee contribution. For people covered fully by the new rules 16 percentage points will go to the NDC pay-as-you-go component of the system and 2.5 percentage points to the mandatory funded component (FD). The new system is the result of a broad political consensus among five of the seven parties in Parliament in 1994, representing 80 per cent of voters. As stressed by Palmer and Wadensjö (2004), around 80 per cent of the Swedish workforce is also covered by contractual pension benefit schemes in the four main bargaining areas (blue collar, white collar, state and municipal employees). The contractual schemes supplement the public pension system, since the replacement rates in the public pension applies up to a ceiling. The contractual schemes partly compensate for the share of earnings above the income ceiling (see Palmer and Wadensjö 2004 for details). In other words, employees aged 67 can still work and accumulate capital on their individual account and get a higher pension, however, employers have the right to terminate their employment when they reach 67 years old.

REFERENCES Albrecht, J., P.-A. Edin, M. Sundström and S. Vroman (1998), ‘Career interruptions and subsequent earnings: a reexamination using Swedish data’, Journal of Human Resources, 34 (2), 294–311. Anxo, Dominique (2002), ‘Time allocation and the gender division of labour in France and Sweden’, in Peter Auer and Bernard Gazier (eds), The Future

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of Work Employment and Social Protection, Geneva: International Labour Organization (ILO), pp. 99–108. Anxo, D. and H. Niklasson (2006), ‘The Swedish model in turbulent times: decline or renaissance?’, International Labour Review, 145 (4), 339–71. Anxo, D., C. Fagan, I. Cebrian and G. Moreno (2006), ‘Patterns of labour market integration in Europe: a life course perspective on time policies’, Socio-Economic Review, 5 (2), 233–60. Björklund, A., P.A. Edin, P. Fredriksson and A. Krueger (2004), ‘Education, Equality and Efficiency – An Analysis of the Swedish School Reform During the 1990s’, Report 2004: 1, Institute for Labour Market Policy Evaluation (IFAU), Stockholm. Bygren, Magnus, Ann-Zofie Duvander and Mia Hultin (2005), ‘Elements of Uncertainty in Life Courses. Transition to Adulthood in Sweden’, in Hans-Peter Blossfeld, Erik Klijzing, Melinda Mills and Karin Kurz (eds), Globalization, Uncertainty and Youth in Society, Advances in Sociology, London: Routledge, pp. 135–58. Esping-Andersen, Gøsta (1990), The Three Worlds of Welfare Capitalism, Cambridge: Polity Press. Holmlund, B. and D. Storrie (2002), ‘Temporary work in turbulent times: the Swedish experience’, The Economic Journal, 112, 245–69. Korpi, Tomas and Charlotta Stern (2006), ‘Globalization, Deindustrialization and the Labour Market Experiences of Swedish Women 1950 to 2000’, in HansPeter Blossfeld and Heather Holfmeister (eds), Globalization, Uncertainty and Women’s Careers, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 115–41. le Grand, Carl (1997), ‘Kön, Lön och Yrke – Yrkessegregering och Lönediskriminering Mellan män och Kvinnor’, in Inga Persson and Eskil Wadensjö (eds), Kvinnors och Mäns Löner – Varför så Olika?, SOU 1997: 136, Stockholm: Fritzes. Meyerson, E. and T. Petersen, (1997), ‘Är kvinnor utsatta för lönediskriminering?’ Ekonomisk Debatt, 25 (1), 17–23. Palme, Joakim (2005), ‘Feature of the Swedish Pension Reform’, The Japanese Journal of Social Security Policy, 4 (1), 42–53. Palmer, Edward (2000), ‘The Swedish Pension Reform Model: Framework and Issues’, SP discussion Paper No. 0012, World Bank, Washington DC. Palmer, Edward and Eskil Wadensjö (2004), ‘Public Pension Reform and Contractual Agreements in Sweden’, in Martin Rein and Walter Schmäll (eds), Rethinking the Welfare State: The Political Economy of the Pension Reform, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Sjögren, Gabriella (2004), ‘Essays on Personnel Economics and Gender Issues’, PhD Dissertation, Institutet för Socialforskning; Stockholm. Statistics Sweden (2005), Longitudinell Individdatabas (LINDA), 2004, Statistics Sweden (SCB), Stockholm. Statistics Sweden (2006), Medelålder vid Första Barnets Födelse, Statistics Sweden (SCB), Stockholm. Statistics Sweden (2007), Tema Utbildning: Vuxna Deltagande i Utbildning, Avdelning för Befolkning & Välfärd, 2, Stockholm. Ungdomsstyrelsen (2005), ‘En Analys av Ungas Etablering och Egen Försörjning’, Report 1005:1, www.skl.se/artikel.asp?C=1141&A=19189, accessed 27 September 2006.

4.

From the breadwinner model to ‘bricolage’: Germany in search of a new life course model Gerhard Bosch and Andreas Jansen

INTRODUCTION For many Germans in the years after the Second World War, instability and mobility were the dominant characteristics of their lives. Twelve million refugees had to be absorbed. At the same time, many agricultural workers and tradesmen were flooding into the rapidly expanding large-scale industrial sector. Only after these movements had played out did employment and individual careers stabilise in a short-lived ‘dream of everlasting prosperity’ (Lutz 1984) and the institutions of the German variant of ‘Rhenish capitalism’ (Albert 1992) were established in West Germany. The chief characteristic of this variant of capitalism was its combination of a strong economic dynamic, a high level of social security and low inter-household inequality. The high level of value creation was based on the German manufacturing industry’s specialisation in high-quality products, the socalled diversified quality production, which was supported by relations of trust between capital and labour and the broadly based vocational training that workers received. Generalising institutions such as the industry-wide collective agreements and the wide-ranging protection afforded by labour law and social insurance and social protection programmes jointly administered by labour and capital ensured that productivity gains benefited society as a whole. Individual life courses, particularly those of German men, were traced out by this production model. The life courses of married women in West Germany conformed to the housewife model. The high female participation rates during the war and the economic privations of the post-war years were seen as an undesirable deviation from the ideal of the non-working mother and housewife. Women’s withdrawal from the labour market after marriage or after the birth of the first child was not only made financially attractive but, for many years, also fulfilled the aspirations of many men and women. The 128

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‘conservative welfare state’ (Esping-Andersen 1990) was also developed in such a way as to clearly differentiate it from the East German model, which encouraged women to be economically active. Whereas the East German employment model was intended to produce full employment for both men and women, career breaks during the child-raising years or women’s complete withdrawal from the labour market were an inherent part of the West German model. The institutions that structure life courses have undergone constant change over the years. Four phases can be identified. Between 1955 and 1976, the foundations of the West German production and welfare state model were laid. Some of the significant milestones of these years were: the introduction of the wage-indexed pension in 1957, which linked the annual increase in pensions to the general growth rate of wages; the introduction of the ‘splitting’ system of taxation for married couples in 1958; the Labour Market Promotion Act (Arbeitsförderungsgesetz) of 1969, which expanded active labour market policy, particularly further training for the unemployed; the Vocational Training Act (Berufsausbildungsgesetz) of 1969, which put the arrangement for vocational training on a national footing and embedded codetermination in the specification of occupational profiles; as well as the Works Constitution Act (Betriebsverfassungsgesetz) of 1972 and the Company Codetermination Act (Mitbestimmungsgesetz) of 1976, which extended rights of codeterminations for both works councils and employee representatives on supervisory boards. Plans to abolish the tripartite education system and introduce integrated secondary schools along American or Swedish lines met with determined resistance from the conservative parties in the ‘school battles’ of the 1970s and came to nothing. As a result, the expansion of the German education system took place within the traditional organisational structures. In the second, overlapping phase (1969–89), these new institutions were given life. The institutional complementarities of ‘Rhenish capitalism’ that are identified in the varieties of capitalism literature were not simply handed to the actors on a plate. Rather, they were laboriously put in place through the creative and often hotly disputed exploitation of the newly institutionalised options for action. Most studies of the German employment model date from the 1980s, the period during which the positive interactions between vocational training, codetermination, long-term planning by companies, low social inequality and specialisation in high-quality products could be observed.1 The studies tended to overlook the fact that it was during this phase that, under the pressure of high unemployment, the first cuts in the social welfare systems were made, particularly in unemployment benefit, and the legal scope for employers to make use of new employment forms, such as agency work and fixed-term contracts, was

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expanded. At the same time, the first ‘intergenerational contract’ provided for an increase in the opportunities for early retirement as a means of easing labour market entry for the large baby boom cohorts. In the third phase (1989–2000), reunification decided the competition between the East and West German employment models in favour of the latter. Instead of combining the GDR’s modern ‘Swedish’ education and social security system with the West German production model, the West German institutions were transferred lock, stock and barrel to East Germany, and many sustainable institutions in East Germany were wound up. A few fragments of the East German heritage remained, in the shape of all-day schools and extensive childcare facilities. East German women also retained their orientation to work, which was no longer supported by the new environment. However, the institutional transfer did not succeed everywhere. Little attention was paid to the fact that the West German labour market institutions, with their high wage levels, required a stable economic base that could ensure long-term growth. After the collapse of the old command economy, such a base had to be rebuilt from scratch. The differences in productivity levels between firms in East Germany, most of them newly founded, were so great that any idea of agreeing a single wage rate, even at a lower level, was simply illusory. The cracks in the traditional institutions of the German employment system, particularly in wage bargaining, began to appear in West Germany as well. They are the main reason for the increase in income inequality to the level of the liberal market economies. Above all, in this period of high unemployment, neo-liberal proposals for the deregulation of the old German production model, which had hitherto gained no ground at all in the light of the economic success of ‘Rhenish capitalism’, began to gain acceptance. The 1990s were dominated by efforts to meet the challenges of reunification. Most of the reform plans for the West German employment model that were being discussed at the end of the 1980s were put on ice for ten years. The German export industry could not afford such a long period of stagnation. A ‘silent revolution’ saw most firms, including those in the service sector, reorganised, usually with the active support of works councils and employee representatives on supervisory boards. Management hierarchies and stock holdings were dismantled to produce a German variant of lean production and the classic functional mode of organisation was replaced by a process- and customer-oriented mode. This reorganisation also included a reform of vocational training and the outsourcing of many activities to small and medium-sized enterprises. The last phase, from 1999 to the present, has been characterised by a process of institutional dismantling and conversion. The ‘intergenerational contract’ has been rewritten: restrictions have been placed on early

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retirement schemes, the retirement age has been raised and pension levels have been reduced several times. The Hartz Acts of 2004 sharply reduced the benefits available to the long-term unemployed and significantly expanded the use of precarious employment forms. At the same time, efforts were underway to restructure the German family model. In what follows, we will investigate how life courses have been shaped by the various institutions and the changes they have undergone in recent decades and by the collapse of the East German system. Our investigation will be based on examination of four critical phases of the life cycle: (1) the transition from education to employment, (2) from first job to career and independent living, (3) prime-age careers and (4) the transition from employment to retirement.

FROM EDUCATION TO FIRST JOB Many international comparative studies have shown that the transition from education to first job, evaluated in terms of youth unemployment, the transition to stable employment and subsequent careers, is effected with less difficulty in Germany than in many other countries. In their largescale comparative study, Gangl et al. conclude that: ‘In fact, the average apprentice in Germany is found to have the most positive occupational outcome across European countries’ (2003, p. 293). The origins of the dual vocational training system, which helps young people to integrate quickly into the labour market, reach far back into the past. However, it is only in recent decades that it has developed into the dominant route into the labour market. In 1964, 63 per cent of employees had no vocational training qualification (Geissler 2002, p. 339); by 2005, more than two-thirds of each age cohort successfully completed a course of vocational training, predominantly in the dual system. Only slightly more than 20 per cent of young people enter higher education (Figure 4.1), which is far below the OECD average of around 37 per cent (OECD 2008, Table A3.2). The reason for the relatively low growth rates in higher education lies in the continuing attractiveness of vocational education, which is based on the close links between training and the employment system. More than 80 per cent of those completing a training course in the dual system move into jobs that correspond to their training (Konsortium Bildungsberichterstattung 2006, p. 185). The most important explanation for this astonishingly stable linkage between the training occupations and the labour market is undoubtedly the merging of different occupations into broadly-based occupational profiles. Another reason is the creation of new occupational labour markets mainly in services, through for

132

The welfare state and life transitions Higher education Dual system

No vocational training

Dual system only

16.7%

43.8%

Dual system with H.E. 5.4%

H.E. only

School-based vocational training

16%

18%

Vocational training

General Education 8.2% 24.8% with without Lower secondary school leaving qualification

Source:

41.6% Intermediate secondary school leaving qualification and equivalent

1.3% 24.1% Advanced H.E. entrance technical college entrance qualification qualification

Uhly et al. (2008).

Figure 4.1

The structure of qualifications in Germany: vocational training and general education, 2005

example the new IT occupations, as compensation for the shrinking of old ones, particularly in the manufacturing sector. Individual returns to training are further evidence that vocational training is readily negotiable in the labour market. Indeed, per year of training, they are actually higher for qualifications acquired in both the dual and school-based systems than for those obtained in higher education (Ammermüller and Dohmen 2004). Therefore parents and young people regard vocational training as a good means of gaining access to good jobs, while companies value the advantages of firm-based training, which saves them the costs they might otherwise incur in laboriously integrating school or university leavers into the workplace. Despite this overall positive assessment, it cannot be denied that transactions into vocational training and employment have become more difficult since 1990. As a result of the collapse of the East German economy, the low rate of growth in the German economy between 1995 and 2005 and firms’ increasing reluctance to provide training, the number of training places has declined. At the same time, demand has increased as a result of the entry into working life of the large birth cohorts. An increasing share

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of young people is being channelled into a newly established transitional system offering a diversity of vocational preparation programmes. This transitional system is now catering for almost a whole age group, a good half of whom are already adequately qualified for vocational training. At the beginning of the 1950s, almost 80 per cent of young people left school after eight years of education in the elementary schools (Volksschulen); 13 per cent attended the selective upper secondary schools (Gymnasien), while 6 per cent went to the intermediate secondary schools (Realschulen). The remainder went to special schools. The various school leaving certificates thus obtained largely determined the path children were to take on leaving school. The vast majority of those entering vocational training came from the elementary schools; at that time, those leaving the intermediate secondary schools were recruited mainly for commercial and clerical occupations. Most of those educated in the Gymnasien went on to university or applied for special training courses in firms. The situation at that time was characterised by a high degree of segmentation, not only of school types (there were few opportunities to move from one to the other) but also of post-school education and training paths. As a result, there was virtually no competition between those leaving the various types of school. When the two Germanys were reunified, there was an opportunity to adopt the East German education system, which was integrated up to the end of the first stage of secondary education. This opportunity was not taken. Instead, the outdated West German education system was introduced in East Germany. This backward step met with some resistance, with the result that a bipartite rather than a tripartite system was introduced. This system is now the model for education reforms in West German Länder. There are strong indications that the vocational training system is losing its integrating function at the bottom end. The share of young people entering the labour market without a vocational training qualification declined continuously for 40 years (Wagner 2005, p. 113) and by the year 2000 had fallen to 14 per cent. By 2005, however, it had risen again to 16.7 per cent (Figure 4.1). The main reasons for this are the largely unsuccessful policy for integrating immigrants as well as early selection in the education system, the negative effects of which intensified as the system expanded. Today only a minority of young people (Figure 4.1), primarily immigrants and children from families of low social status, attend lower secondary school (Hauptschule). Young people leaving the lower secondary schools (Hauptschulen) are being increasingly less successful in competing with leavers from the other types of school for the scarce training places. Fewer than 50 per cent of them now obtain a training place. Because of the increasing unlikelihood of finding a training place, pupil motivation

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is declining in many Hauptschulen. As a result, lower secondary school leaving certificates are becoming even more devalued in the market for training places. Even ‘simple’, low-skill jobs are no longer available to young people without vocational qualifications. As a result of the high unemployment that developed in the wake of reunification, applicants with vocational qualifications are now preferred even for menial jobs. Poorly qualified individuals usually do not succeed in obtaining stable employment until they have moved several times between state-supported vocational preparation programmes, unemployment and employment. Young non-Germans are particularly badly affected, since educational attainment and possession of vocational qualifications increasingly differ by ethnic background. The share of young foreigners in the total trainee population declined by more than half between 1994 and 2006, from 9.8 per cent to 4.2 per cent (BMBF 2008, p. 126). Among the third generation of immigrant children, some possess a lower level of linguistic competence than the second generation. Early selection in the education system and inadequate support for the development of linguistic competence in pre-school education are the main reasons why social origin and educational performance are more closely linked in Germany than in any other OECD country (Autorengruppe Bildungsberichterstattung 2008, p. 84). Consequently, the unemployment rate among young non-Germans is more than 30 per cent, which is considerably above the German average of roughly 10 per cent. Because of the expansion of the service sector and hence of the occupations in which a disproportionately high share of women are trained, young women today find it easier than young men to find regular employment on completion of their training. Consequently, since the beginning of the 1990s, the unemployment rate among women aged 15–24 has fallen below that for young men of the same age (Autorengruppe Bildungsberichterstattung 2008, p. 182). The average age at which individuals start work following completion of a vocational training programme has risen considerably since the 1970s. Because of the longer periods spent in education and training and the ‘waiting loops’ in the transitional system, the average age on commencement of a training programme in 2006 was 19.6 years, three years later than in 1970 (BMBF 2008, p. 139). Since vocational training programmes last three years, they are at least 22.5 before they enter employment, and young men tend to be a year older because of military or alternative national service. The average age of labour market entry has also risen for university graduates. In 1975, graduates were on average 26.9 years old when they entered the labour market. By the year 2000, the average age of labour market entry had risen to 30, despite the fact that there had

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been no change in university organisation (Reinberg and Hummel 2006, p. 80). Thus university students in Germany are considerably older when they graduate than their counterparts in other European countries. One reason for their lengthy periods of study is unemployment. Because of poor employment prospects, many students do not see any need to complete their degrees quickly. Since most faculties do not impose any upper limit on the length of time taken to complete a degree, a ‘hidden reserve’ of labour is in fact ‘parked’ within the German university system. A second reason is the increasing number of individuals who, having obtained vocational qualifications in the dual system, go on to university (Figure 4.1). A third reason is the increasing number of students working part-time to support themselves. In 2006, about 63 per cent of all German students were working, compared to 51 per cent in 1991 (Deutsches Studentenwerk 2007, p. 316). In East Germany, where the university system was much more tightly organised, only 21 per cent of students were working in 1991. However, that figure has now increased almost to the 1991 level in West Germany (ibid., p. 322). As part of the Bologna Process, the standardised degree courses, which used to require a minimum of four years’ study, are being replaced by a two-tier structure based on bachelor’s and master’s degrees. The reorganisation is due to be completed in 2010. Since the degree courses are more tightly structured and only a proportion of those graduating with threeyear bachelor’s degrees will go on to do master’s degrees, future cohorts of university graduates will be significantly younger. Finally, while their children are in education (including vocational training), parents receive child benefit until the children reach the age of 27 (25 for those born in 1983 and after). Instead of the child benefit, parents can opt to claim a tax allowance for dependent children. This arrangement is unique in Europe and is advantageous to higher earners. The justification for paying education transfers to parents rather than, as in Sweden, to young people themselves is that parents have an obligation to support their children. The failure of some parents to pass these transfers on to their offspring is a source of family disputes. University students from less affluent households receive financial support in the form of means-tested grants, half of which has to be repaid. The share of students who receive support in this way fell in the 1990s to its lowest level of 18.6 per cent. Since then, the income thresholds have been raised several times and the share has risen again to over 30 per cent (Deutsches Studentenwerk 2007, Chapter 8). However, since many students receive only very small grants once their parents’ incomes have been taken into account, the share of government grants in students’ income fell from 20 per cent in 1991 to 14 per cent in 2006. Thus the share of the cost

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of their children’s university education borne by parents has risen, from 45 per cent in 1991 to 52 per cent in 2006. The declining share of state support is undoubtedly one of the reasons why the share of working-class students in the universities has fallen.

FROM FIRST JOB TO CAREER AND INDEPENDENT LIVING Because of the close link between education and vocational training and subsequent careers and employment trajectories in Germany, the transition to careers and independent living is strongly influenced by the path taken in the school-to-work phase. The likelihood of embarking upon a career with long-term prospects is consistently high for those with vocational and educational qualifications. Over the long run, and in spite of the enormous expansion of vocational training, the level of occupational mismatch, that is the share of workers whose first job is different from the one they were trained or educated in, has remained fairly stable at between 22 per cent (for the 1950 age cohort) and 20 per cent (for the 1971 age cohort). Because of job losses in manufacturing, it has risen slightly for men from 20 per cent to 23 per cent, whereas for women it has fallen from 27 per cent to 17 per cent as a result of the expansion of the service sector (Mayer 2005). However, the transition to stable employment is more difficult for those without qualifications. Indeed, as a result of the expansion of vocational training, a vocational qualification has now become the entry ticket to the labour market in virtually all manufacturing and services in Germany. Moreover, career opportunities are also more determined by vocational training and its enhancement through further training than they were in the past. Thus the single most important variable determining the risk of becoming, and staying, unemployed is the possession of qualifications. From 1975, the unemployment rate for unskilled workers increased fivefold, that for workers with a vocational qualification doubled and the rate for graduates increased only slightly (Biersack et al. 2008). Today, lowskilled workers are more likely to be either unemployed or employed on marginal contracts. Over the last two decades, labour legislation has gradually made it easier for employers to use fixed-term contracts and agency workers (Keller and Seifert 2006; Weinkopf and Vanselow 2008). This has made access to stable employment more uncertain even for better qualified workers. Although, contrary to many expectations, the general level of temporary contracts has not increased dramatically, rising from 10.5 per

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cent in 1995 to 14.5 per cent in 2006 (European Commission 2007), such contracts are most widespread, and increasingly so, among employees aged 30 and under (Kurz et al. 2006). As an analysis of German panel data shows, the likelihood of entering the labour market on a fixed-term contract is particularly high for young persons without a vocational qualification of some kind. What is perhaps more surprising, however, is that a comparable trend can be observed at the opposite end of the skill hierarchy, where university graduates are also more likely than average to start their working lives on fixed-term contracts. Temporary jobs for the more highly qualified can be found especially in public services, in education and in the social welfare and healthcare systems (Giesecke and Groß 2006). In contrast to developments at both ends of the qualification spectrum, the intermediate qualifications provided by the dual system of vocational training have proved to be the gateway to the least staggered or interrupted employment trajectories. Not surprisingly, the similarities in this respect between the lower and the upper ends of the labour market, in terms of qualifications, tend to disappear after a few years. When it comes to the risk of becoming unemployed, most of the more highly qualified gradually move towards the safe side, whereas the least qualified face the highest risks. To begin with, ‘manual unskilled and semi-skilled workers have a risk of being temporarily employed that is considerably (about 2.7 times) higher than among their skilled colleagues’. Moreover, the insecure situation of the least qualified tends to be extended as ‘employees with fixed-term contracts indeed face a higher risk of unemployment than those with permanent contracts. This means that those with an initial temporal uncertainty are also at risk of suffering economic insecurity’ (Kurz et al. 2006, pp. 63, 66). Not only do transitions to stable careers take place at a relatively young age for those Germans with vocational qualifications, but there is also a tendency for young Germans to leave the parental home somewhat earlier than they did in the 1990s (men 23 years of age, women 21 in 2005) (see Introduction). Only in Sweden do young people leave the parental home at a younger age. The particular situation in the German housing market, in which real house prices and rents have been falling since the beginning of the 1990s, has encouraged this early independence.2 Another factor is the dual system. In many industries, apprentices’ wages rise in the second and third years of their courses to a level that enables them to live independently. In addition, high-school pupils and apprentices who are unable to live at home because their parents live too far away from their school or training company can apply for financial support to enable them to live independently, although earnings in excess of 6000 euros per year are offset against any grant awarded.

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TRANSITIONS IN PRIME AGE Occupation and Career Transitions in prime age are still heavily influenced by educational and vocational qualifications. Not only are these important in securing access to particular pathways of stable employment, but promotion along the pathways is dependent upon acquisition of higher qualifications. In all training occupations, whether in the dual system or school-based, standardised promotional training programmes have been developed for those seeking advancement to the grades of master craftsman, technician or business administrator, the service-sector equivalent of master craftsman or technician. This advanced training lasts between one and two years or up to four years on a part-time basis. Participants generally need to have a minimum of five years’ experience in their occupation. There are strong incentives to embark on such programmes, since successful completion opens up opportunities for promotion to middle management positions, which in other countries without developed vocational training systems are usually filled by graduates. Participants in these programmes receive means-tested grants (35 per cent) and loans (65 per cent).3 The share of employees who have completed advanced training programmes of this kind rose from 6.2 per cent in 1976 to 9.3 per cent in 2006 (Kümmerling et al. 2008, p. 37). Until 2004, unskilled and semi-skilled workers who were unemployed had the possibility of training for a recognised occupation with financial support from the Labour Office equivalent in value to unemployment benefit. All unemployed people who had not been working in the occupation for which they had trained for more than six years were regarded as unskilled. These further training programmes for the unemployed were the largest publicly funded ‘second chance’ training programmes and offered support for employees who had been working for years outside of their occupations or whose occupations had become obsolete as a result of structural change. After reunification, very many East Germans were sent on further training programmes that in many cases served merely to massage the unemployment figures in the wake of the mass redundancies of the early 1990s. It is hardly surprising that many participants in fact saw no improvement in their employment prospects.4 The Hartz Acts severely curtailed longer-term further training programmes leading to a recognised vocational qualification; as a result, the traditional link between initial training and labour market policy has been severed. Since 2004, short training courses are virtually the only ones for which funding is available. Only in exceptional cases are unemployed people now able to avail

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themselves of a second chance to take part in a publicly funded vocational training programme. Current provision consists largely of short training courses that are intended, among other things, to prepare the unemployed psychologically for occupational downgrading or lower wages. The pressure to accept lower paid jobs has been further increased by the abolition of income-related unemployment benefit and its replacement by a flat-rate benefit (Arbeitslosengeld II) roughly equivalent in value to what used to be known as social assistance. The Hartz Acts also provided for the extensive deregulation of agency work; since 2004, when the new legislation came into force, unemployed workers have, as a result, been increasingly finding themselves in precarious employment. The number of temporary agency workers rose in just three years from just over 300 000 in 2003 to more than 700 000 in 2006. Three-quarters of temporary agency workers have a vocational qualification (Weinkopf and Vanselow 2008, p. 8). Since the length of placements is no longer restricted and temporary agency workers are paid at significantly lower rates than permanent workers as stipulated in the new agreements negotiated by the employer-friendly Christian trade unions, firms no longer have any incentive to offer agency workers stable employment.5 This is one of the reasons why mobility from the low-wage sector into better-paid jobs has reduced (Bosch and Kalina 2008, p. 41). Overall, employment trajectories have become more heterogeneous. Individuals without vocational qualifications have very little chance of finding stable employment in the German labour market. The more highly qualified now have to accept a longer search period at the beginning of their working lives spent in precarious employment relationships; subsequently, however, promotion opportunities will present themselves to those who complete advanced training programmes, some of which are publicly funded. Support is no longer available for those who have experienced gaps in their work histories, unemployment or the devaluing of vocational qualifications as a result of structural changes. Initial education and training qualifications now determine employment trajectories to an even greater extent than they did in the past. There is considerable evidence that the German labour market has, as a result, become more rigid. Men’s and Women’s Employment and Working Time In East Germany, women’s employment was developed at an early stage in the GDR’s history through the establishment of childcare facilities, allday schools and independent social security. By reunification, the female employment rate in East Germany had risen almost to the level of that for men (Figure 4.2). Since there were no early retirement programmes in East

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100%

80%

60% Men West Germany Men East Germany Women West Germany Women East Germany

40%

0% 1950 Source:

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

Bothfeld et al. (2005) based on Statistisches Bundesamt.

Figure 4.2

Activity rate of men and women in Western and Eastern Germany, 1950–2004

Germany and seamless transitions from school to vocational training and employment were an integral part of the command economy, considerably more men were also in employment than in West Germany. The mass redundancies that took place in East Germany following reunification were cushioned by early retirement programmes for workers aged 55 and over. Besides unemployment, this is the most important reason for the equalisation of the employment rates for East and West German men. However, it was not just two different economies that collided with each other when Germany was reunited, but two different welfare systems as well. The winner was the conservative West German model of the welfare state. The West German taxation and social security system, which is geared to the single male breadwinner model, was introduced into East Germany as well. One of the effects of the ‘splitting’ system for taxing married couples6 is that it offers tax advantages of up to 8000 euros per year for the single breadwinner model, particularly in medium and highearning households. Economically inactive spouses benefit from the health and old age insurance entitlements derived from their partners. If the inactive partner, usually the wife, enters employment, these tax advantages are gradually lost, with the result that the marginal tax rate in this case is higher in Germany than in any other European country (Anxo et al. 2000). Only marginal part-time jobs, so-called mini-jobs paying less than 400

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euros per month, do not lead to any loss of the derived health insurance benefits or the tax advantages conferred by the ‘splitting’ system. Because of reduced non-wage costs, marginal part-time employees are cheaper for firms than regular employees. As a result of these regulations, mini-jobs are equally attractive to many on both the supply and demand sides of the labour market. Declining birth rates show that this support for the traditional family has become increasingly ineffective. Nevertheless, the conservative welfare state has actually been strengthened in recent years. Thus the earnings threshold for mini-jobs has been raised several times in recent years, for the last time in the Hartz Acts of 2003. And in 1986, a childraising (Erziehungsgeld) allowance was introduced for low-income families, which was also paid for a maximum of two years to economically inactive parents, on condition that they looked after their child themselves and did not participate in the labour market or, if they did so, only on a part-time basis. In practice, this was a deliberate encouragement for low-earning women to withdraw temporarily from the labour market. Whereas the financial incentives for married couples were harmonised across Germany in the wake of reunification, considerable differences persist with regard to childcare provision and education systems. Despite extensive cutbacks after reunification, there are proportionately more daycare places in East Germany than in West Germany. In both parts of Germany, approximately 90 per cent of all children now attend kindergarten. The differences here lie in the opening hours. In West Germany, 80 per cent of children spend less than seven hours per day in kindergarten, whereas the share in East Germany is only 37.5 per cent (Autorengruppe Bildungsberichterstattung 2008, p. 244). There are also marked differences in school hours. In West Germany, only 13 per cent of all children attend a school that opens all day; the figure for East Germany is almost 65 per cent (Autorengruppe Bildungsberichterstattung 2008, p. 261). Thus East Germany’s institutions make it easier to reconcile paid work and family life. East German women tried to maintain their employability in the new institutional context and reacted to the reversion to an outmoded family model by halving the birth rate. However, even this did not protect them from unemployment, since it was mainly women who were dismissed in the mass redundancies that took place in East Germany after reunification. Although the employment rates for East and West German women are slowly converging, employment preferences still differ markedly. The unemployment rate for East German women is twice as high as that for their West German counterparts but would fall to zero if their employment preferences matched those of women in West Germany. Nor have

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East German women been able to resist the pull of part-time work, which has expanded considerably as a result of cutbacks in childcare provision and the conversion of full-time jobs into part-time ones in many service activities. Because of the increase in part-time working, Germany is, with Austria, one of the few European countries in which the volume of work performed by women has been stagnating for years. It is true that the female employment rate rose by 6.2 percentage points to 61.5 per cent between 1995 and 2006. Calculated in terms of full-time equivalents, however, it remained virtually unchanged (+0.4 percentage points), since the female part-time rate rose over the same period from 33.7 per cent to 45.8 per cent. Very short hour part-time work – the so-called mini-jobs offering less than 15 hours’ work per week – is particularly highly developed. Most women in East Germany work part-time only because they cannot find full-time jobs. In West Germany, on the other hand, twothirds of women claim that they work part-time because of personal or family obligations (Kümmerling et al. 2008, p. 48). Employment rates among young, well-educated women before they have their first child are very similar to those for young men. However, when the first child is born, the rate falls significantly. In 2005, only slightly more than 30 per cent of West German women and 41 per cent of East German women with children under three were in employment (ibid. 2008, p. 28). Male employment rates and working times, on the other hand, are scarcely affected by fatherhood, as in most conservative welfare states. It is only recently that alternative arrangements to the single breadwinner model have been put in place. Since 2004, the federal government has been supporting the development of all-day schools, particularly in western Germany. By 2013, all children over one year of age are to have an entitlement to a daycare place. The childcare allowance (Erziehungsgeld) has been replaced by a parental benefit (Elterngeld) modelled on the Swedish example, which pays parents 67 per cent of their previous net income for up to one year and can be extended by two months if it is also claimed by fathers. An initial evaluation has shown that, because parental benefit is income-dependent, it is being claimed by a growing share of young fathers (16 per cent, compared with 3 per cent for the former childcare allowance) and that the overwhelming majority of women plan to return to paid work after two or three years (Deutscher Bundestag 2008). Wages Over the Life Course Wages reflect careers, gender inequality, continuity of employment and labour market structures as if through a magnifying glass. The German wage system is largely based on qualifications (OECD 2005). The pay

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Average income over the life course

1.2

143

Average age at birth of 1st child 2nd child 3rd child

1.0 0.8 0.6 0.4 0.2 0

14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 Age No child 1 child 2 children 3+ children

Source:

Klammer and Tillmann (2001).

Figure 4.3

Average income of West German women over the life course by number of children by age cohorts, 1936–55

rates stipulated in all collective agreements are based on the qualifications obtained in the vocational training and higher education systems; employees with the same qualifications are paid the same rates, with the only exceptions being a small number of premium payments for experience. With the major exception of the public service, seniority rules have always played a minor role. However, in a recent groundbreaking collective agreement covering the whole of the public service, greater emphasis is being placed on performance-related pay. Most employees with a vocational qualification can improve their pay in the early years of their working lives and then remain at the same level, unless they undertake further training, rise in the company management hierarchy or change employer. Pay rates for those who reach the grades of master craftsman, technician or business administrator are close to those for graduates (Bosch and Kalina 2008, p. 75), which reflects the particular career opportunities open to those who undertake further vocational training in Germany. The influence of career breaks for raising children on women’s lifetime earnings is particularly clear if we examine the incomes of women with differing numbers of children (Figure 4.3). Income in the various age groups is measured in so-called earnings points.7 West German women, especially those with more than one child, face substantial income cutbacks due to reductions in working time and career opportunities (Figure 4.3). Women with three children earned less than 20 per cent of the average income.8 While this profile reflects the average of various age cohorts in the past, it still represents the basic features of today’s situation. However, men’s

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and women’s income trajectories have drawn somewhat closer together. The younger cohorts of women reduce their economic activity somewhat later than earlier cohorts (from their late 20s) and return to work quicker after a break for childraising (Klammer 2004). Since the 1950s, the gender gap in hourly pay rates in West Germany has fallen from more than 40 per cent to around 25 per cent. Contributory factors include significantly better levels of education among women and the strong growth of service industries, such as banking and insurance, with high pay rates and high shares of female employees. However, the decisive factor is the reduction in career breaks as a consequence of declining numbers of children. To put it bluntly, most of the convergence in earnings by gender in West Germany is at the expense of children. In East Germany, the gender gap before reunification was significantly narrower, but has since risen to the West German level as a result of the transfer of West German pay structures. Germany was known for its ‘flat’ income distribution, which was attributable to the higher rate of coverage by collective agreements. In 1990, more than 80 per cent of employees were covered by a collective agreement (OECD 2004, p. 145). Since then, coverage has declined to less than 65 per cent in West Germany and 54 per cent in East Germany (Ellguth 2007). The share of low wage earners (< 2/3rds of the median wage) rose from 15 per cent in 1995 to 22 per cent in 2006 (Bosch and Kalina 2010). Well-paid middle-class jobs in particular are being lost and replaced by low-wage jobs. For young people, the typical entry wage is now a low wage. In 2006, 56 per cent of all young employees were on a low wage, compared with around 29 per cent in 1995. Among 25–34-year-olds, the share rose from 14 per cent to 25 per cent. More women (31 per cent) than men are low paid. However, the share of men on low pay has increased and is now double the share in 1995. More than 90 per cent of ‘mini-jobbers’ are low paid. The share of low pay continues to be high among non-Germans and in small and medium-sized businesses. At the same time, upward income mobility has declined, so that the low-wage sector is becoming rigidified and no longer constitutes a springboard for better paid jobs (Bosch and Kalina 2010). These few figures indicate that the declining importance of collective agreements and the increase in ‘unregulated’ segments of the labour market are leading to changes in the life courses of younger workers, nonGermans, women and low-skilled workers in particular. The increase in low-paid employment will have substantial effects on pensions. A worker with an average income has to pay contributions for around 27 years in order to receive a pension above the tax-funded basis subsistence allowance. For a low wage earner on 75 per cent of average income that figure

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10 1995 2000 2006

9 Share in employment (in %)

8 7 6 5 4 3 2 1

U

nd er 3 3 € – < 4 4 – < 5 5 – < 6 6 – < 7 7 – < 8 8 – 9 <9 – 10 <1 – 0 11 <1 – 1 12 <1 – 2 13 <1 – 3 14 <1 – 4 15 <1 – 5 16 <1 – 6 17 <1 – 7 18 <1 – 8 19 <1 – 9 20 <2 – 0 21 <2 – 1 22 <2 – 2 23 <2 – 3 24 <2 – 4 < 30 25 – 25 € an <3 d 0 ov er

0

Note: All dependent employees including part-time and marginal part-time, inflation adjusted (basis=1995). (The German Socio-Economic Panel Study (GSOEP) is a wideranging representative longitudinal study of private households, located at the German Institute for Economic Research, DIW Berlin.) Source:

German Socio-Economic Panel (2006), own calculations.

Figure 4.4

Distribution of hourly wages in Germany

would be 36.3 years and for someone on half of average income it would take as long as 54 years. The trends in incomes summarised here are reflected in the changes in the transitions from active labour market participation to old age pensions, to which we now turn.

TRANSITION FROM WORK TO RETIREMENT While the original intention was simply to provide a minimum level of protection against poverty, the introduction of the index-linked pension in 1957 was intended to guarantee living standards in old age. The level of protection was linked to the average income obtained from paid work over the life course. Since pensions were automatically uprated every year in line with the overall increase in gross pay, pensions not only retained their value but also tracked the increases in real wages. And since pension increases were initially calculated on the basis of gross pay,9 but those in work had to pay a growing share of their earnings in tax and social

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The welfare state and life transitions

1.20

45.0 40.0

1.00

35.0 0.80

30.0 25.0

0.60

20.0 0.40

15.0 10.0

0.20

5.0 0.0

0.00 1960

1965

1970

1975

1980

Ave. earnings points Men Ave. no. contribution years Men Source:

1985

1990

1995

2000

2006

Ave. earning points Women Ave. no. contribution years Women

Deutsche Rentenversicherung (2008, p. 96).

Figure 4.5

Average earnings points and contribution years for pensions for men and women; West Germany, 1960–2006

security, pensioners’ relative income position actually improved. It was in this way that relatively high benefit levels were achieved by the statutory old-age insurance scheme in Germany. By the end of the 1970s, the standard pension10 had risen to around 60 per cent of the average net income and was also significantly above the poverty threshold because pensioners were largely exempted from tax and social security contributions. However, in order for their living standards to be protected through the statutory old-age insurance scheme, individuals had not only to have been on average earnings but also to have been in insurable employment for a long period of time. Because of the male breadwinner model that predominated in Germany, it was primarily men who were able to build up good pension entitlements. Since 1960, men’s average number of contribution years has actually increased, since the share of previously self-employed individuals with discontinuous employment histories among the new retirees has gradually declined. Because of their responsibilities for childcare and domestic work, women were not usually in a position to build up adequate pension entitlements (Figure 4.5). In 2006, not only was the average number of contribution years for women in West Germany considerably shorter (25.7 years compared with 39.1 for men) but they also had a considerably smaller number of earnings points (0.75 compared with 1.01).11 In many cases,

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the entitlements derived from their spouses are significantly greater for current female pensioners, particularly in West Germany, than those they have accrued in their own right. Thus the average surviving dependants’ pension, which pays 55 per cent of the husband’s pension after his death, amounts to 610 euros compared with the 472 euros to which women are entitled from their own old-age pensions. If all pension entitlements, including occupational and private pensions, of the economically active population over 40 years of age in 2003 are added together, then West German men have the highest level of entitlement, with 2095 euros.12 Their entitlements are 31 per cent greater than those of East German men and about 50 per cent greater than those of women in West and East Germany, whose entitlements amount to 1410 and 1393 euros respectively. The differences between the sexes and between East and West Germany are further increased by private and occupational pensions. Since all the old-age pension schemes in East Germany were merged with the statutory old-age insurance scheme, supplementary occupational pensions play virtually no role there. In West Germany, 46 per cent of men employed in the private sector but only 9 per cent of women have built up entitlements to an occupational pension. Since, until 2001, occupational pensions did not become vested until employees had at least ten years’ job tenure, women with children had virtually no opportunity to build up vested pension entitlements. Moreover, supplementary occupational pensions are less common in sectors with high shares of female employees than in sectors with high shares of male employees. Despite lower average incomes, East German women, whose employment histories are more continuous, tend to accumulate higher pension entitlements (1076 euros on average) through the statutory old-age insurance scheme than their West German counterparts, whose average entitlement is 987 euros. It is only through occupational pensions and higher private provision that West German women managed to build up higher overall pension entitlements than women in East Germany (Kortmann et al. 2005, p. 94). In order to deal with the major structural crises in manufacturing industry and increasing unemployment after the oil shocks, the already existing early retirement opportunities for women and following a period of unemployment (in both cases after age 60) were supplemented by additional early retirement options for the severely disabled (after age 60) and those with a lengthy contributions history (after age 63). In addition, more labour market programmes were introduced and collective agreements were concluded that bridged the waiting period between redundancy and early retirement from age 60. These more flexible arrangements for managing the transition into retirement triggered a wave of early retirements. The average age on drawing a pension, which for the age cohorts

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born between 1904 and 1908 had been 64.9 (63.4 for women), fell continuously to 62.4 (62.6 for women) for the 1938 cohort; however, it is beginning to rise again for subsequent cohorts. The employment rate among 55–64-year-olds fell from more than 50 per cent in the 1970s to less than 38 per cent at the end of the 1990s. Since then, it has risen to 48.4 per cent (2006 figure) (European Commission 2007, p. 291).13 The high costs of early retirement, together with the predicted demographic change and its effects on the long-term financial security of the statutory old-age insurance system, led to a policy reversal at the beginning of the 1990s. In the course of that decade, the incentives for early retirement were gradually abolished. Early retirement is now largely self-funded through pension reductions for early retirees. In 2001, a state-supported private pension scheme, the so-called Riester pension, was introduced, which equalises the expected income losses in old age and keeps contributions to the statutory old-age insurance scheme stable. The level of pensions has been reduced in several steps. Thus, in 2005, the pension adjustment formula was amended through the introduction of a so-called ‘sustainability factor’. According to the new formula, future pension increases will be reduced to the same degree as the relation between contributors and pensioners changes. The Hartz Acts of 2004 reduced the period for which unemployment benefit could be paid to older workers from 36 to 18 months,14 in order to increase the cost of company social plans that topped up the unemployment benefit paid to employees made redundant from age 57 until the age at which they could draw their pensions under the provisions of the early retirement schemes. In 2007, the pension contribution for the long-term unemployed was reduced. In addition, the standard retirement age was raised to 67. The new retirement age comes into force from 2012 and will be fully implemented by 2029. The cohort born in 1946 is the last one that will be able to draw a full pension without deductions at the age of 65. From the 1964 age cohort onwards, the new statutory retirement age of 67 will apply to all age cohorts. The only exceptions are for those permanently incapable of working, the severely handicapped and those entitled to long-service pensions. As a consequence of these reforms, the average age on retirement rose to 63.2 in 2006 (Brussig et al. 2008, p. 8). Even so, it is still about two years below the statutory retirement age. At the same time, transitions into retirement have become more precarious. In 2005, only about a quarter (24.6 per cent) of enrolees moved directly from insurable employment to an old-age pension. The vast majority, in contrast, start to draw their pensions after a period of unemployment (30.9 per cent) or inactivity (17.1 per cent) (Brussig and Wojtkowski 2007, p. 6). These figures clearly show

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that registered and concealed unemployment is the fundamental problem for older workers, and it is low-skilled, older workers who are most badly affected (Bosch and Schief 2007). If the conditions for employment up to the statutory retirement age cannot be successfully put in place, then any rise in the retirement age will merely lead to a reduction in pensions. As a result of the changes to the pension adjustment formula, the level of the net pension for a ‘standard’ pensioner with 45 contribution years will fall from 51 per cent of the average earned income over the whole time of employment in 2006 to 46 per cent in 2021 (BMAS 2007, p. 12). The statutory old-age insurance scheme will in future be increasingly unable to maintain in old age the living standards that employees enjoy during their working lives. It is doubtful whether this drop in the value of the statutory pensions will be counterbalanced by supplementary occupational and private pensions. The state-supported Riester pension is not compulsory; more particularly, so far it is not being taken up by low earners, whereas it is precisely in low-wage sectors that occupational pension schemes are not provided. Riedmüller and Willert (2006) took ten hypothetical employment histories as the basis for calculating the level of pension the 1985 age cohort will receive in 2050. Different industries with different pension systems, income and skill levels, and biographies with and without interruptions or working time reductions, were selected. Only three of the ten biographies reach a level of pension by 2050 that exceeds the inclusion threshold of 40 per cent of a full-time worker’s average income. Whereas the current generation of pensioners and the upcoming cohorts are still relatively well provided for, old-age poverty, which the index-linked pension had as good as eliminated in Germany, is set to increase significantly again.

CONCLUSION The ‘institutional complementarities’ and the ensuing ‘comparative institutional advantages’ (Hall and Soskice 2001) that once characterised the institutions of the German employment model can no longer be observed. What we see, rather, is an ‘institutional bricolage’ (Crouch 2005) with many inconsistencies, which are reflected in increasing heterogeneity and breaks in individual employment histories. The discontinuities are probably more pronounced in Germany than in other Western European countries, since the common causes of institutional change, such as ageing populations, gender equality, increased educational requirements, unemployment, migration, globalisation and deregulation, have been further compounded by the collapse of the East German social and economic

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system. The particular feature of this East German system collapse is that, as a consequence of reunification, it has had repercussions on a new national system, unlike in Hungary for example (see Chapter 6 on Hungary). No overall plan can be discerned behind the institutional reforms of the past 15 years. Some have followed the Swedish, others the American model, while yet others have revitalised old German strengths or have drawn on East German experiences. In West Germany too, aspirations have changed to such an extent that the normative basis of the conservative welfare state has become fragile. All the evidence suggests that the social differences in life courses will increase further. In no other country in the European Union are social differences as powerfully reproduced by the general education system as in Germany. The vocational training system alone can no longer prevent the emergence of a new underclass. At the same time, the collective bargaining systems have been weakened and the Hartz Acts have deregulated the labour market to such an extent that the share of low-wage workers has increased. As a result of the evolution of wages and the decline in pension levels, old-age poverty, which had been largely dispelled by the introduction of the index-linked pension, will start to rise again in a few years. In order to prevent any further increase of the ‘new underclass’, not only must minimum wages be introduced and the collective bargaining system strengthened but – even more importantly – the education system must also be reformed. The expansion of pre-school education and all-day schools is now regarded across all the political parties as the key to reducing social inequality in the education system, integrating immigrants and ensuring the future supply of skilled workers. However, the middle and upper classes have been so vigorous in defending a selective and divisive education system that continues to confer considerable advantages on their children that any attempts at reform have so far been thwarted.

NOTES 1. 2. 3. 4. 5.

One example is Finegold and Soskice’s argument, first advanced in 1988, concerning Germany’s ‘high skill equilibrium’. Between 1995 and 2006, real house prices in Germany fell by 2.9 per cent per annum, while in the major OECD countries (excluding Japan) they rose by 3.2 per cent per annum (calculated on the basis of Table 1 in Hoeller and Rae 2007, p. 7). In 2006, 136 000 participants received state support. However, more recent evaluations that focus on the longer-term integration effects show positive integration effects for further training (Expertenkommission 2003, pp. 89–90). The 2008 EU Directive on Equal Treatment for Fixed-Term Workers stipulates equal

Germany in search of a new life course model

6.

7. 8. 9. 10. 11. 12. 13.

14.

151

pay for temporary agency workers. As in Germany, however, collective agreements can be concluded that work to their disadvantage. The ‘splitting’ system has even been interpreted by conservative judges as a constitutional protection for the ‘stability of the average marriage’ (for example BverfG, Urteil of 3 November 1982/Federal Constitutional Court, judgment of 3 November 1982). As a result, no government has dared to reform it for fear of the Constitutional Court. A value of one represents the average income of a contributor to the statutory old-age insurance scheme. Figure 4.3 includes only women who work, but not those who have interrupted their careers. The pension formula was changed in 1992 and increases were henceforth based on net wages. After 45 contribution years on average income. See note 7. The survey population is limited to employees who have entitlements to occupational pensions. Employees without entitlements are excluded. However, a differentiated analysis shows that only a small part of the increase in the employment rate can be attributed to changes in behaviour. The larger part is due to demographic effects, that is the reduction in the size of the current 55–64-year-old cohorts (Bosch and Schief 2009). The period of entitlement for older workers has now been increased again to 24 months because of higher unemployment.

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The Institutional Foundations of Comparative Advantage, New York: Oxford University Press, pp. 1–71. Hoeller, Peter and David Rae (2007), ‘Housing markets and adjustment in monetary union’, OECD Economic Department Working Paper No. 550, ECO/ WKP (2007) 10, Paris. Keller, B. and H. Seifert (2006), ‘Atypische Beschäftigungsverhältnisse Flexibilität, Soziale Sicherheit und Prekarität’, WSI-Mitteilungen, (5), 235–40. Klammer, U. (2004), ‘Arbeit und soziale Sicherung im Lebensverlauf – Empirische Befunde und politischer Handlungsbedarf’, Expertise zum 7. Familienbericht, Düsseldorf: Hans-Böckler-Stiftung. Klammer, Ute and Katja Tillmann (2001), Flexicurity: Soziale Sicherung und Flexibilisierung der Arbeits- und Lebensverhältnisse, Forschungsprojekt im Auftrag des Ministeriums für Arbeit und Soziales, Qualifikation und Technologie des Landes Nordrhein-Westfalen, Düsseldorf: MASQT. Konsortium Bildungsberichterstattung (2006), Bildung in Deutschland. Ein indikatorengeschützter Bericht mit einer Analyse zu Bildung und Migration, Bundesministerium für Bildung und Forschung, Bonn und Berlin. Kortmann, K., P. Haghiri and M. Pupeter (2005), ‘Künftige Alterseinkommen der Arbeitnehmer mit Zusatzversorgung 2005’, München: Untersuchung im Auftrag des Bundesministeriums für Gesundheit und Soziale Sicherung. Kümmerling A., A. Jansen and S. Lehndorff (2008), ‘Die Veränderung der Beschäftigungs- und Arbeitszeitstrukturen in Deutschland 2001 bis 2006’, Projektbericht Institut Arbeit und Qualifikation, Gelsenkirchen. Kurz, Karin, Nikolei Steinhage and Katrin Golsch (2006), ‘Case Study Germany – Global Competition, Uncertainty and the Transition to Adulthood’, in HansPeter Blossfeld, Erik Klijzing, Melinda Mills and Karin Kurz (eds), Gobalization, Uncertainty and Youth in Society, Abingdon, Oxon and New York: Routledge, pp. 51–82. Lutz, Burkart (1984), Der kurze Traum immerwährender Prosperität. Eine Neuinterpretation der industriell-kapitalistischen Entwicklung im Europa des 20. Jahrhunderts, Frankfurt a. M. and New York: Campus. Mayer, Karl Ulrich (2005), ‘Sinn und Wirklichkeit – Beobachtungen zur Entwicklung sozialer Ungleichheiten in (West-) Deutschland nach dem Zweiten Weltkrieg’, in Karl-Siegbert Rehberg et al. (eds), Soziale Ungleichheit, Kulturelle Unterschiede. Verhandlungen des 32. Kongresses der Deutschen Gesellschaft für Soziologie in München 2004, Frankfurt and New York: Teilband 2, pp. 1329–55. OECD (2004), Employment Outlook, Paris. OECD (2005), Ageing and employment policies: Germany, Paris. OECD (2008), Education at a Glance, Paris Reinberg, Alexander and Markus Hummel (2006), Zwanzig Jahre Bildungsgesamtrechnung. Entwicklungen im Bildungs- und Erwerbssystem Ostund Westdeutschlands bis zum Jahr 2000, IAB Beiträge zur Arbeitsmarkt- und Berufsforschung 306, Nuremberg. Riedmüller, B. and M. Willert (2006), ‘Chancen und Risiken der Eigenvorsorge in der Alterssicherung’, WSI-Mitteilungen, (4), 206–11. Uhly Alexandra, Lydia Lohmüller and Ute M. Arentz (2008), ‘Schaubilder zur Berufsausbildung 2008. Strukturen und Entwicklung in der dualen Ausbildung’, Bundesinstitut für Berufsbildung, www.bibb.de/de/10274.htm, accessed 11 March 2009.

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Wagner, Sandra J. (2005), Jugendliche ohne Berufsausbildung, Aachen. Weinkopf, Claudia and Achim Vanselow (2008), ‘(Fehl-)Entwicklungen in der Zeitarbeit?’, in Wiso Diskurs, Expertisen und Dokumentationen zur Wirtschaftsund Sozialpolitik, Gesprächskreis Arbeit und Qualifizierung, Expertise im Auftrag der Friedrich-Ebert-Stiftung, Bonn: FES.

5.

Transitions in female and male life course: changes and continuities in Austria Ingrid Mairhuber

INTRODUCTION Austria’s ‘conservative welfare state’ (Esping Andersen 1990) traditionally provided a relatively strong system of intergenerational support and protection for employed (male) persons and their families across their life course, linked to their occupational status. For decades men easily found stable jobs and moved on to a career and independent living, although not necessarily in the professions they were trained for. At the height of the postwar expansion even unskilled male workers were able to find relatively decent jobs although another characteristic of the Austrian employment model was strong segregation between industrial sectors in the level of wages and employment conditions. In addition, Austria traditionally was a country with low female labour market participation. Young women often left the labour market after marriage or at least after the first childbirth. Thus, women were traditionally highly dependent on the direct and indirect support of their spouses or partners – via derived rights in the social security system, especially with regard to health insurance and pension benefits (Mairhuber 2000). The gender specific division of labour or the male breadwinner and female carer model was endorsed both by the conservative welfare state (for example, by a generous family allowance system, social-security protection derived from marriage and inadequate childcare facilities) and by trade unions, who long ignored the gender pay gap. Full employment for men and protecting male occupational status were among the primary objectives of Austria’s socioeconomic model. The following chapter investigates the question of how transitions in the female and male life course are shaped by the Austrian socioeconomic system and takes a closer look at the changes (and continuities) which have taken place in recent decades. The four transitions analysed are, in more detail: from education to first employment; from first employment 155

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to a career and to independent living; career and non-career paths in prime age; and from employment to retirement. The main institutional arrangements that play a key role in shaping these transitions in Austria include: the training and education system, the labour market, the welfare state and the family, although the importance of these institutions varies, depending on the life phase. The analysis of major life course transitions and the way they are shaped by the Austrian socioeconomic system attempts to take differences in social class, education and ethnicity into account – as far as the available literature and data allow. The main focus, however, is on the structural differences between women and men, which is why a distinction between the female and male life course is already made in the title. Close to 40 years ago, Levy (1977) already pointed out major differences between male and female working life trajectories and identified two ‘standard norm biographies’. With the exception of feminist researchers (for details, see Born et al. 1996, pp. 25ff), these insights were long ignored in life course research. In his seminal work on the ‘institutionalization of the life course’, Kohli (1985) claims that in modern industrial societies working life is above all structured by the system of gainful employment (including the education system preceding it and the old-age pension system following it). (Male) working life trajectory is seen as a succession of education, gainful work and retirement. The family is largely ignored as an institution influencing the life course, with women’s life courses seen as an ‘exception’ to the male standard (Born et al. 1996, pp. 21ff). Levy (1977), however, regards the systems of gainful work and the family as the two ‘central institutions of a person’s biography’. It is the different degrees of participation in these systems that produce gendered life course trajectories. Levy also shows that these central institutions do not structure a person’s life course chronologically or in a certain order but that these institutions are major ‘social sub-systems’ that act simultaneously and in parallel.

TRANSITION FROM EDUCATION TO FIRST EMPLOYMENT Education System: Crisis of the Apprenticeship System and Rising Educational Levels For decades the transition from education to employment for Austrian youngsters was facilitated by the dual vocational education and training system (VET) in which young people are inserted in the labour market through apprenticeships. It has been shown that the Austrian VET system

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helps young people to achieve integration into the labour force both with considerably lower incidence of initial unemployment and with fewer and shorter periods of job search than in other European countries with more general education systems (Gangl 2003, p. 116). However, compared to other countries with dual vocational training systems, apprentices in Austria have the least positive outcome (Gangl et al. 2003, p. 293). The higher skill specificity in the training especially in SMEs could be a reason for this (Culpepper 2007). Austria’s educational system essentially offers two main types of education following the nine years of primary and lower-secondary education compulsory in Austria: vocational education and training or general education. VET is available either through the dual system of apprenticeships combined with vocational school education (VET apprenticeships) or at school only (vocational schools or colleges). Apprenticeships account for a large part of vocational training in Austria, and increased in significance especially during the 1970s and 1980s. In 2001, 45.5 per cent of all 20–24-year-olds active in the labour market had completed an apprenticeship (Novak and Schneeberger 2006, p. 6). Apprenticeships, however, were and continue to be male-dominated and extremely gender segregated. Thus, only about a third of apprentices are female. In this respect, little has changed over the past 40 years. In 2006 50 per cent of female apprentices chose one of three and 73 per cent one of ten service-sector occupations. By contrast, eight of the ten occupations most frequently chosen by male apprentices are production jobs (WKO 2006). In addition, since the mid-1990s, Austria’s apprenticeship system has been facing major problems. The number of available apprenticeships has dropped considerably, with demand for positions now far outstripping supply. Measures taken by the government and the social partners since 1996 have had little effect: in 2001, the number of young people seeking an apprenticeship outnumbered available openings by about 60 per cent, with female-dominated occupations particularly affected (Alteneder et al. 2006). This lack of apprenticeship placements is due to a range of factors; in part it is due to structural economic change which has reduced the size of sectors and occupations traditionally training large numbers of apprentices, coupled with a decline in the willingness of enterprises to invest in training (Flecker et al. 2007, pp. 52f). In addition, many tertiary-sector institutions, including secondary and post-secondary VET colleges, are increasingly taking over from apprenticeships as the most common form of provision of vocational training. Structural change has also resulted in new and higher entry requirements for apprentices which many applicants are unable to meet (Biffl 2006, p. 4). Moreover, the chances of

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young people being kept on by the same company on completion of their apprenticeships have become increasingly slim (Alteneder et al. 2006). An analysis of the careers of qualified apprentices in Upper Austria has shown that ten years after completing their apprenticeship more than a third had been unemployed at least once and more than half were no longer working in the occupation they had originally trained for (Neuhofer and Niederberger 2006, p. 72). Over recent decades, Austria has experienced some major changes in education and associated qualification levels, especially among women but also among men. The share of 20–24-year-olds without higher education beyond compulsory schooling has dropped from more than 40 per cent in 1971 to about 17 per cent in 2005 while the share with completed higher secondary education or above has risen from about 13 to more than 34 per cent. Gender education gaps have also shrunk amongst this age group, with women’s educational level rising more significantly in past decades than that of men (Schneeberger 2006, pp. 23f). The result of these changes is that young people are remaining within the education system longer, postponing the transition towards employment. This is not the case for youngsters from migrant families, however: in 2001, the share of 20–24-year-olds without formal education above compulsory schooling amounted to 13.5 per cent among Austrian nationals but to 47 per cent among non-nationals of the same age group. Female migrants are more severely affected (50.2 per cent) than their male peers (43.7 per cent) (Biffl 2006, pp. 7f). Entry into Work: ever Later and ever More Insecure With more people staying on in the education system, as described above, participation rates of young people (up to age 20) have dropped in recent decades, with a more significant decline among women than men (see Table 5.1). Since the mid-1990s, Austria has not only experienced growing problems within the apprenticeship system but also a greater flexibilization of young people’s employment relationships, evident in ever shorter employment tenure and an increase of atypical employment (Biffl 2006, p. 11). While still rather infrequent by international standards, atypical employment among youngsters is on the rise, with young women more frequently forced to resort to atypical work than men. Of these types of atypical work, part-time work is the most widespread also for (female) youngsters. The relatively high ratio of marginal employment1 among young women and men can be put down to this form of work being often used by young people as a means of financing their education or training2 (Fink et al. 2001). Job entrants are often expected to accept fixed-term employment, with

Transitions in female and male life course: Austria

Table 5.1

159

Participation rates by age and gender in Austria

15–64 15–19 20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 Women 1971 2001 Men 1971 2001 Source:

49.1 65.0

60.0 36.9

68.1 75.7

56.3 84.7

50.9 83.6

51.1 82.1

53.1 81.6

53.7 77.9

48.5 58.6

35.8 26.2

13.2 6.0

86.3 80.9

65.6 50.4

87.6 82.3

94.7 92.3

97.9 97.0

98.4 97.5

98.0 96.9

95.9 95.2

92.8 89.1

83.8 65.0

44.9 14.0

Census data, Statistik Austria (2007, p. 71).

most fixed-term contracts to be found among people aged below 25. If apprenticeships, which are male-dominated, account for a large part of short-term contracts among young men, fixed-term employment largely affects girls and young women. In addition, fixed-term contracts beyond apprenticeships are on the rise (Statistik Austria 2007, p. 79). Based on an analysis of individual social insurance data we can say that job stability among young people has fallen dramatically over the past 30 years: ‘There are considerable decreases in job stability affecting in particular both female and male young job entrants. In addition to that, consequences of job endings have worsened in the sense that the share of job endings with destination of non-employment increased’ (Mahringer 2005, p. 112). Growing job instability and the ensuing insecurity of young people is also reflected in a massive rise in youth unemployment especially of young men. Between 1998 and 2003 the unemployment rate for young men aged between 19 and 25 years rose from 6.9 to 10 per cent and for young women from 6.5 to 7.5 per cent (national calculation, PES data). According to Biffl (2006, pp. 3f), rising youth unemployment is partly the consequence of an increase in labour supply associated both with modifications to Austria’s immigration policy which now facilitates family reunification, that is migrants being joined by their spouses and children, and with demographic changes increasing the supply of older people at the same time as there has been a reduction and/or abolition of early retirement schemes which were extensively used to smooth out the employment effects of economic restructuring in the 1980s and 1990s. Financing the Transition: State Support, Gainful Employment and Family In order to support themselves financially during years of training and education and the transition from education to work, young Austrians rely

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mainly on their families but also on gainful employment. State support is available in the form of family allowance (Familienbeihilfe) and grants for students from low-income families (Studienbeihilfe). Until the mid-1980s, parents were eligible for family allowances until the child’s 19th birthday. To offset growing labour-market problems, eligibility was extended to unemployed youths in 1986 and, from 1988, to students over the age of 19. For children aged 19–26, the allowance ranges from €145 to €206 per month per child. Although family allowances are, in theory, a universal social transfer, migrants are only eligible to claim the benefit under certain conditions. A 1996 directive establishing that a child for which family allowance is claimed must be permanently resident in Austria served to further exclude migrant families from eligibility to the allowance. Grants for students were introduced to allow students from low-income families to study at university or other tertiary education institutions.3 Grants are means-tested, with claimants required to provide evidence of adequate academic accomplishment. The maximum grant available to eligible students currently amounts to €424 a month. Students who were gainfully employed for a minimum of four years before taking up studying can claim up to €606 a month. Claimants must begin their course of study before their 30th birthday or – if they have been in employment or raised children previously to studying – their 35th birthday. In 2002, income from gainful employment amounted to on average 43 per cent of the average total student budget. In addition, a comparison with a 1996 survey shows that gainful employment among students has risen. The second most important source of income for students is the support they receive from their parents, relatives or partners (37 per cent). State support only accounts for 9 per cent of the average total student budget (Wroblewski and Unger 2003, pp. 121ff). To sum up: Austria’s dual vocational training system has traditionally provided a good example of a smooth transition from school to work. While apprenticeships still account for a large part of vocational training, they continue to be male dominated and heavily gender segregated. In addition, since the mid-1990s, Austria’s apprenticeship system has been facing major problems, which have led to its position within the Austrian educational system to be increasingly called into question. The number of available apprenticeships has dropped considerably and completing an apprenticeship no longer automatically leads to continued employment opportunities with the same company. In addition, tertiary-sector institutions are increasingly taking over from apprenticeships as the most common form of provision of vocational training. This must be seen in the context of the dramatic rise in education and qualification levels, especially

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161

with regard to young women. Higher education levels also mean that young Austrians remain within the education system longer, postponing the transition towards working life. This is not true for youngsters from migrant families, however, and even less so for young female migrants. Because of the smooth transition from school to work the VET system offered, Austria was long believed to be impervious to youth unemployment. Yet, the problems within the apprenticeship system described above, as well as the increased competition for work associated with the abolition of early retirement schemes and changes within the country’s immigration policy, have led to a significant increase in youth unemployment even if it still remains low by European standards. Although Austria has one of the most generous family allowance systems in Europe, young Austrians – especially students – increasingly rely on income from gainful employment and help from their families.

TRANSITION TO CAREER AND INDEPENDENT LIVING Labour Market Participation: Structural Change and Persistent Segregation Transition to a career and to independent living depends heavily on the access to stable and well paid jobs fully covered by labour law and social protection. For decades, men (in manufacturing) in Austria easily moved into a career and independent living, although not necessarily in the professions they were trained for (many workers with VET training ended up in semi-skilled jobs in large factories because these in practice paid higher salaries). Even unskilled male workers were able to secure relatively decent jobs while young women, on the other hand, left the labour market after marriage or at least after the first childbirth. With regard to female and male labour market participation some major changes can be observed in Austria. Thus, female labour market participation has risen substantially over recent decades, while that of men has been in decline. Differentiated by age, the rates (see Table 5.1) show that these developments are predominantly due to the (continuous) labour market integration of women aged 25–44 (Statistik Austria 2007, p. 19). The gender employment gap, that is the difference between the female and male employment rate, has narrowed significantly, from more than 30 per cent in the 1970s to some 15 per cent 30 years later. These changes in labour market participation can, amongst other things, be attributed to structural changes within the Austrian economy.

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Since the 1970s, Austria has, like many industrialized countries, seen a shift of employment from manufacturing towards the service sector so that by 2006, two-thirds of all gainfully employed persons in Austria were working in the service industry. For women, service-sector jobs already dominated by 1980 (61 per cent), and in 2006 as many as eight in ten women were working in the service industry (Statistik Austria 2007, pp. 26f). While women found new and partly highly-qualified jobs in the expanding (public) service sector, many – predominantly male – jobs in manufacturing disappeared (Prenner and Steiner 2005). Although Austria is seen as an example of ‘social partnership’ and ‘solidarity’ (Tàlos 1993) and despite – or perhaps because of – a rising female activity rate and structural changes towards a service economy, the Austrian labour market is still very much segmented and gender segregated. Women and men not only work in different industries but also, and in particular, in different occupations (horizontal segregation). Only a small part of the working population is active in so-called ‘integrated’ occupations, with roughly equal numbers of male and female workers. In addition, women are also underrepresented in higher levels of all organizational hierarchies and occupations (vertical segregation). All available studies on gender segregation in Austria stress that occupational segregation persists or is showing but minor signs of relief (see for example Friedl and Kreimer 2005). Indeed the 2005 Employment in Europe report finds that Austria has by far the highest index of dissimilarity in the EU27, indicating the most gender-segmented labour market Flexibilization of Employment Relationships Although standard employment (open-ended full-time employment, fully covered by labour law and social protection) still is the prevailing employment relationship (for most men), Austria has experienced major increases in all forms of atypical employment since the 1990s but particularly in parttime work where the incidence is now well above the EU average. Between 1995 and 2006, the part-time rate (Labour Force Concept) rose from about 27 to 40 per cent among women, but only from 4 to 6.5 per cent among men. According to the Austrian Statistical Office (Statistik Austria 2007, p. 31), the rise in female labour-market activity is exclusively due to the growth in part-time employment, while the number of female full-time jobs has even seen a decrease since 1995 (see also Walterskirchen 2006, pp. 8ff). Because of the fast increase in female part-time work, especially of marginal part-time, Austria and Germany are the only EU countries where the female employment rate in full-time equivalents has been decreasing (from 53.2 per cent in 1995 to 49.9 per cent in 2006: EC 2007, p. 305).

Transitions in female and male life course: Austria 60

Women

163

Men

50 40 30 20 10 0

15–19

Source:

20–24

25–29

30–34

35–39

40–44

45–49

50–54

55–59

Microcensus 2006, Statistik Austria (2007, p. 32).

Figure 5.1

The part-time rate (Labour Force Concept) in Austria by age and gender in per cent, 2006

Differentiated by age, the rates reveal that women work part-time at all stages of the life course, with the highest levels achieved during prime age. By contrast, the small number of male part-timers is concentrated in the 20–30 age group (see Figure 5.1). The reason for these gender differences lie in the motivations for choosing part-time work: young women mainly work part-time for childcare reasons, even if this share is declining, while young men increasingly opt for part-time work to combine work and education (Statistik Austria 2007, p. 82). These patterns must be seen in the context of the traditionally conservative Austrian welfare state (Esping-Andersen 1990) which is based on the male breadwinner and female carer model. Generous state support4 and derived social security entitlements combined with an enduring lack of childcare facilities and all-day schooling5 frequently leads women to accept part-time work – or other non-standard forms of employment – as the only way to reconcile work and childcare obligations. But part-time work does not only mean fewer working hours and thus a lower income but often entails further disadvantages: employment instability, jobs below the qualification level and limited career prospects. The risk of losing their job within a year of starting is much higher for part-time workers than for those working full-time. One in three female part-timers is working in unskilled or manual jobs, compared to only one

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in four women in full-time employment. And while only one in ten women working part-time is employed in middle to senior management, among full-timers it is one in four (Kammer für Arbeiter und Angestellte Wien 2005). Marginal employment – that is short hours part-time working – has also grown rapidly in recent years (from 4.8 per cent in 1995 to 7.2 per cent in 2004) with women more often affected than men. Not surprisingly, it is mainly found in low-qualified female sectors, such as business-related services, including cleaning services (18 per cent), retail (14 per cent) and hotels and restaurants (10 per cent) (Fink et al. 2001). Other forms of atypical employment, such as agency work, ‘quasifreelance’ workers and the ‘new self-employed’ may still be rather rare by average European standards but absolute numbers have grown very rapidly since the mid-1990s. In total, in 2004, as many as 26.9 per cent of gainfully employed Austrians found themselves in atypical forms of employment, with 45.9 per cent of women but only 14.3 per cent of men atypically employed (Stadler 2005, p. 1098). New inequalities between workers, in particular between men and women, arise from the insufficient integration of atypical employment within Austrian labour and social law: while, from the mid-1990s, efforts were undertaken to partially incorporate the marginally employed, ‘quasifreelance’ workers and the new self-employed into the Austrian socialsecurity system (Mairhuber 2000, pp. 195ff), much remained unsolved. All three groups were excluded from unemployment insurance; the marginally employed were not statutorily included in the health and retirement pension insurance scheme but are free to ‘opt in’, and health insurance for ‘quasi-freelance’ workers and the new self-employed only covered healthcare costs. Thus no or very little social security was available to these groups of atypically employed in the case of unemployment, sickness or motherhood. As of January 2008, however, ‘quasi-freelance’ workers have been included in unemployment insurance and are now eligible to claim sick pay and income-dependent maternity benefit. While, since the mid-1990s, atypical forms of employment have been included to some extent into social-security provisions, the fundamental problem remains that Austria’s social-security system favours continuous working life trajectories generating medium to high incomes, even though an increasing proportion of the workforce is found in atypical and low quality – often part-time – work. Despite neoliberal calls for ever more flexible employment relationships, recent reforms have linked social security ever more tightly to the still prevailing standard career biography, thus contributing to the structural exclusion of those in atypical employment, many of them women. Thus the conservative character of the Austrian welfare state, that

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165

is welfare support depending on occupational status and the ‘male breadwinner’ system, has been reinforced. Use of Qualifications: Gendered Opportunities for Job Entry and Income Growth As described above, young women in Austria have made enormous strides in closing both education and employment gender gaps. However, women are far less frequently able to translate their education into adequate occupational positions. According to the 2003 Social Survey, 56 per cent of male but only 18 per cent of female university graduates assume highly qualified or leading positions. ‘Female university graduates often achieve higher-level positions but then hit the “glass ceiling”’ (Friedl and Kreimer 2005, p. 285). Graduates of vocational colleges feel the ‘glass ceiling’ even more acutely: only 2 per cent of female vocational-college leavers but 32 per cent of men manage to acquire highly qualified positions. The picture is similar for higher general education school-leavers, but at a lower level. Workers who have attained apprenticeship training – the largest group for both sexes – display a considerable degree of gender asymmetry: 41 per cent of qualified male apprentices manage to translate their training directly into skilled or/and supervisory blue-collar work, with only 20 per cent taking on unskilled and semi-skilled jobs. For women, it is the other way round: as few as 7 per cent are skilled workers, with 29 per cent working in unskilled or semi-skilled jobs (Friedl and Kreimer 2005, p. 285). Fundamentally it must be noted that inequality of income distribution in Austria has increased in recent decades. Mainly as a result of growing unemployment and an exceptional rise in part-time and marginal employment jobs, the share of wages as a proportion of GDP has significantly declined since the 1970s. Conversely, profits and other non-wage incomes, especially from financial assets, have increased substantially in the last 30 years. But inequality has also increased within wage incomes. Pay differentials between various branches and sectors of the economy in Austria tend to be relatively high and widening (CEC 2005) despite the fact that Austria has an exceptional degree of ‘corporatism’ and relatively strong trade unionism which is marked by an extremely high degree of unity (for details see Guger and Marterbauer 2005, pp. 615ff). This high degree of general wage inequality also leads to an extensive gender pay-gap, evident from the very start of working life. This too has remained largely unchanged and starts with lower entry wages. According to Gregoritsch et al. (2000), Austrian employees can expect significant gains in income from gainful employment during the first years of their working lives. Once they have

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reached a certain earnings level, however, major pay increases are rare. This applies to both women and men (Gregoritsch et al. 2000, pp. 35ff). In their early working years, women manage to slightly reduce the gender pay gap. They cannot, however, make up for the initial handicap of lower starting wages described above (for detail see Table 5.2). Thus, measured according to wage distribution, Austria is in fact more similar to the Anglo-Saxon model than to the other economies with high levels of coordination such as the Scandinavian countries (Guger 1993; CEC 2005). Overall, the Austrian model has always been characterized by highly segmented and gender segregated labour markets in spite of counting as an example of ‘social partnership’ and ‘solidarity’. The increase in the labour market participation of women in recent decades has changed little in this respect. Women and men not only work in different industries but also, and in particular, in different occupations and are underrepresented in high levels of all organizational hierarchies and occupations (vertical segregation).

TRANSITIONS IN PRIME AGE – CAREER AND NONCAREER PATHS Gainful Employment and Childcare: Reconciliation Issues for Women As already pointed out in the introduction, family responsibilities and women’s unpaid care work lead to a structural difference in female and male life courses. Due to the enduring lack of childcare facilities, compounded by short school days and enhanced financial state support for (long) career breaks, Austrian female labour market integration is still marked by discontinuities to a high degree. After family-related career breaks women show an increased rate of job change, are more likely to work part-time and experience a loss of income that cannot be made up later on. Based on the results of a number of empirical studies, over the last 15 years traditional perceptions of gender roles do appear to have changed in Austria. The data from the 2001 Population Policy Acceptance Survey, for instance, indicates that more than half of those questioned (roughly equal numbers of men and women) are in favour of new gender relations and a redistribution of housework and childcare duties (Tarzi-Preve 2004, p. 124). According to the 2003 Social Survey, female employment is far more frequently approved of – at least during certain stages of the female life course – than was the case 15 years previously, even though a majority of respondents still regard working mothers of pre-school-age children with

167

Source:

−6.4 36.2 45.7

Gregoritsch et al. (2000, pp. 31ff).

Gender pay gap Women Men

University/ Tertiary education institution −12.1 48.7 38.5

Vocational or general higher secondary school −8.4 45.1 37.8

Vocational lower secondary school −19.1 35.3 39.2

Apprenticeship

−19.5 22.3 28.2

Compulsory education

−23.4 22.3 23.5

No qualification

The gender pay gap for labour-market entrants (1993) and income gains during work entry phase by qualification, in per cent (1993–1997)

Qualification level

Table 5.2

−18.3 39.0 37.2

Total

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scepticism (Beham and Haller 2005, p. 425). Close to 70 per cent (with little difference between the responses of women and men) are in favour of fathers taking parental leave. Despite these changes in the attitudes and awareness of both genders, in practice the reconciliation of work and family obligations remains a ‘woman’s issue’. A comparison of analyses of microcensus data on time use for 1981 and 1992 and the 2001 Population Policy Acceptance Survey shows that male behaviour or the gender division of labour remains largely unchanged (Gisser 2003, pp. 35f). Ever since an unpaid mothers’ leave was introduced in 1961 in Austria, the ‘sequential’ reconciliation of employment and unpaid care work has been given priority over ‘parallel’ reconciliation (Mairhuber 2000, p. 123). As a consequence, providing adequate childcare has always lagged behind, especially in terms of facilities for children under the age of three and school-age children aged 6–9.6 Changes in female working patterns have led to a considerable shortage of outside the family childcare places and to an ongoing debate about the additional facilities needed. Although institutional childcare has improved in the last ten years, the care ratios are still below the EU’s ‘Barcelona targets’ for childcare coverage (11 per cent for the under-threes instead of the 33 per cent target and 83 per cent for 3–5-year-olds instead of the 90 per cent target). In addition, opening hours frequently do not meet the needs of parents working full-time (for more details see Mairhuber 2008), forcing women who cannot afford additional informal childcare to reduce their working hours. In addition to childcare another important instrument for enabling ‘parallel’ reconciliation of gainful employment and childcare is the formal right for parents to reduce working hours. Following years of discussion, a right of parents to part-time work was introduced in Austria in 2004. Parents are now entitled to work part-time until the child’s seventh birthday and to return to full-time employment afterwards. However, this right is only available to claimants who have been employed with the same employer for at least three years and is also limited to companies employing more than 20 staff. In view of Austria’s enterprise structure, with its marked predominance of SMEs and ever shorter employment contracts, this means that about 50 per cent of Austrian workers will not be able to enjoy this right (Lamplmayr 2004, p. 90). To allow parents (especially women) to opt for a ‘sequential’ reconciliation of a career and childcare, opportunities to take career breaks protected by labour and social-security law are necessary. The long-term effects of parental leave on women’s life course, however, depend on the specific way in which it is structured – especially in terms of its maximum length and protection against redundancy. The conservative Austrian welfare state encourages extended and – by international standards – long

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career breaks. When parental leave was introduced for fathers in the early 1990s, for instance, the period of leave was extended from one to two years. Whereas fathers hardly made any use of their right to parental leave, a majority of mothers opted for the longer two-year career breaks. The system was completely transformed in 2002. Parental-leave benefit for parents in gainful employment was abolished and replaced with a childcare benefit for all mothers (or fathers). Although this was claimed by the government to be a universal benefit for all parents, a large share of immigrants are in fact excluded. Furthermore claiming childcare benefit was completely decoupled from career breaks or taking up parental leave, with the results that the timings of leave entitlements and benefit receipts are not synchronized and rights for part-time parental leave are subject to income thresholds and employer discretion. Thus, while childcare benefit – currently €436 per month – can be claimed until the child is 30 months (one parent) or 36 months old (both parents), there is only a right to take parental leave up until the child’s second birthday. Parents can, but only with their employers’ consent, opt for part-time parental leave until their child is 48 months old. Subject to the employer’s consensus, it is also possible to arrange employment during parental leave for a period up to 13 weeks per calendar year (either with the same or another employer). However these earnings and earnings under the part-time parental leave arrangements are subject to an additional earnings threshold of €14 600 annually (Mairhuber 2008). The effects of this system change were significant in two respects: first, decoupling parental leave (that is, the need to take a career break) from the childcare benefit has resulted in more fathers drawing childcare benefit. Second, extending the period over which the benefit may be claimed has led to extended labour-market absences and massive re-entry problems among women as well as to women changing jobs more frequently (Riesenfelder et al. 2006). In order to reduce the length of (women’s) career breaks and thus improve their labour market integration another reform was enacted very recently. From 2008 parents are free to choose between three different childcare benefit schemes: in addition to the scheme already available, parents can now claim higher benefits for shorter periods of time; childcare benefit to the amount of about €624/month up to the 20th month of the child (one parent)/24th month of the child (both parents), or to the amount of about €800/month up to the 15th month of the child (one parent)/18th month of the child (both parents). It is too soon to judge the impact of these new options. All in all, working mothers in Austria undertake huge efforts to adapt their lives to reconcile the conflicting demands of gainful work and having

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a family. Typical reconciliation strategies chosen by women include career breaks and, in particular, part-time work. By contrast, having children continues to have little effect on Austrian fathers, both in terms of career biography and income. In fact, fathers tend to have even fewer career interruptions than childless men and employment rates of men with children exceed those of men without children (Friedl and Kreimer 2005, p. 290). But working-time reductions due to family responsibilities and career breaks are responsible for a major part of the gender pay gap in Austria. According to Gregoritsch et al. (2000, pp. 64ff), by 1997, women who had not taken a career break earned 20 per cent more than in 1993, while the average income of women who had taken parental leave was 9 per cent below its 1993 level. In keeping with the greater labour market and employment integration of fathers, the 2003 Social Survey data also show that the income of fathers is above the average male income while the income of mothers is below the average female income (Friedl and Kreimer 2005, p. 282). Rising Unemployment – Decline in Social Security Beside the transition from gainful employment to unpaid childcare, career and non-career paths in prime age are mainly characterized by the risk of losing a job and in the worst case remaining unemployed for a long period. In this respect the regulation of the unemployment system (for example eligibility criteria and level of benefits) and active labour market policies are of great importance. In contrast to other European countries, Austria for a long time could prevent increases in unemployment rates through special policies (for example the use of early retirement pensions). However, over the last two decades unemployment has gone up more or less continually, from a low level of 1.9 per cent in 1980 to 7.1 per cent in 2004. On disaggregating unemployment rates by age we find that workers aged 25–50 are less likely to be affected by the rise in unemployment. In this context, however, ‘hidden’ unemployment, in particular of women, must be taken into account: women who claim parental leave benefit or childcare benefit are not counted as unemployed, even if they are no longer properly employed. Similarly, many women do not qualify for unemployment assistance (paid to the long-term unemployed) because their partner’s income is taken into account and therefore they often do not register with the unemployment office. Nationality, on the other hand, seems to have a major influence on the incidence of unemployment. Thus, while in 2004 the unemployment rate

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was 4.2 per cent among Austrian nationals, it amounted to 11.6 per cent among migrants (Schneeberger 2006, p. 21). Qualification level also plays a decisive role: in 2006, almost half of unemployed women (48 per cent) had at most completed compulsory education, with another 27 per cent having completed an apprenticeship. For men, the rates amounted to 45 and 40 per cent respectively. Lower and upper secondary and tertiary education still offer the best protection against unemployment, even though, in relative terms, unemployment among female university graduates increased substantially (Statistik Austria 2007, p. 35). In parallel to the rise in unemployment, Austria’s unemployment insurance system has been subject to a number of reforms, which, especially since 1993, have tightened eligibility criteria and reduced benefit levels (Tálos 2005, pp. 66ff). This has meant a ‘privatization’ of economic and structural labour-market problems as well as – depending on the individual’s insurance biography – ever lower benefits. In the mid-1990s, for instance, the waiting period for renewed claims of unemployment benefit was raised from 20 to 26 weeks while the level of unemployment assistance was cut or capped, dependent on the previous period of insurance (for more details see Mairhuber 2000, pp. 198ff). It has thus become harder for men and women with atypical or flexible employment biographies, as well as for those employed in certain sectors (such as construction or tourism) to claim or renew their claim for unemployment benefit, with many receiving less in the case of longterm unemployment. In 2001, the calculation mode for benefits from unemployment insurance was amended and the family supplement cut by 40 per cent. While this has resulted in slightly higher benefits for lowincome earners (without a family), benefits for people with dependent children have been drastically reduced. Low-income parents with several children and single parents have been hardest hit7 (for more details see Mairhuber 2007, p. 10). Unemployment benefit levels in Austria are not only low by international standards but also there is no guaranteed minimum benefit. Thus, in 2002, 84 per cent of unemployment payments to women and 50 per cent of payments to men were below Austria’s unofficial poverty threshold (Moritz et al. 2004, p. 14), that is the level at which a supplement is paid to pension benefits (€631 in 2002). In addition to benefit cuts and longer waiting periods, reforms have introduced ever tighter regulations regarding the reasonableness of job offers coupled with increasingly severe sanctions for refusal (Tálos 2005, pp. 66f). Under these rules, claimants of unemployment benefit and, especially, unemployment assistance have to make themselves available on the labour market as quickly as possible under ever stricter conditions.

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They must also provide evidence of ‘the efforts undertaken to find work’. The regulations also allow an ever broader interpretation of the concept of reasonableness (concerning qualification level, working hours, income, stability and commuting times) the longer the period of unemployment lasts (Dimmel 2001, p. 335). Between 1990 and 2005 the number of cases in which unemployment benefit was temporarily ended saw a fivefold increase. During this period, but especially after the mid-1990s, the emphasis of labour-market policy shifted from passive to active measures, with (further) training regarded as a key instrument. The main focus is on speedy labour-market reintegration, however, which often conflicts with sustainable training measures or finding placements in stable jobs that actually secure a living. In 2004, claimants of unemployment benefit were given the right to only accept employment at a pay level similar to their previous job (‘wage protection’) but at the same time ‘job protection’ provisions (allowing claimants to only accept employment in the occupation they trained for) were watered down, while the definition of ‘unwillingness to work’ was tightened and harsher sanctions imposed. We can conclude that in Austria, a country with a traditionally low female labour market participation, the gender-specific division of labour or the male breadwinner and female carer model was endorsed both by the conservative welfare state (for example, by a generous family allowance system, social-security protection derived from marriage and inadequate childcare facilities) and by trade unions, who had long ignored the gender pay gap. Full employment among men and securing male occupational status were among the primary objectives of Austria’s socioeconomic model. Even though in recent decades attitudes towards the gender division of labour have (at least to some extent) changed, this has had little effect on (male) behaviour. The reconciliation of work and family obligations de facto remains a ‘woman’s issue’. The rise in female labour market participation – especially at prime age – of recent years has been largely due to part time work. Austria’s conservative welfare state reacted to women’s changing labour market behaviour primarily by promoting extended career breaks and working-time reductions. Family-related career breaks and reductions in working hours, however, account for a major part of the gender pay gap and lack of financial security in old age. The recent decades have, however, also brought about fundamental transformations. Since the 1980s, unemployment in Austria has seen a continuous and substantial rise, with migrants and the low-educated particularly affected. While active labour market measures were expanded at the same time passive transfers were drastically reduced (with tightened

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eligibility criteria and a reduction of benefit levels). This has meant ‘privatization’ of economic and structural labour-market problems while unemployment provisions are being ever more closely tied to the standard norm biography. Thus, in terms of unemployment insurance, the Austrian welfare state is increasingly moving towards the liberal model.

TRANSITION FROM WORK TO RETIREMENT Low Labour-Market Activity and High Unemployment on the Rise Not only the transition to unemployment but also the transition from work to retirement is strongly influenced by recent changes in the Austrian system indicating a shift to the liberal welfare state model. As already mentioned, in Austria early retirement was extensively used over several decades as a means of smoothing out the employment effects of restructuring. Thus, the labour-market activity rate of persons aged 55–65 in Austria has been decreasing almost continuously over the past 30 years. It is also rather low by EU standards. A closer look reveals that since the mid-1990s the activity rate of women aged 55 and above has been rising again. Here, the tendency among older women to take early retirement may be offset by a rising share of women who increasingly work until a later age. Among men, an increase in the activity rate among 55–64-year-olds has only been evident in recent years (Statistik Austria 2007, p. 20). The low employment rates of older workers not only reflect the legal provisions facilitating early retirement but also labour market discrimination against older workers. The latter can also be gleaned from the higher unemployment rate among older workers. Unemployment among older workers not only exceeds the general average and that of young people but has also risen far more dramatically over recent decades. Between 1988 and 2003 the overall unemployment rate for people aged between 55 and 60 rose from 5.1 to 11.1 per cent and for people aged over 60 years even from 2.6 to 12.5 per cent (national calculation, PES data). Pensions: Restrictive Reforms and Gender Gaps Even though, on average, women in Austria do not retire much earlier than men, gender gaps in pension benefit levels are massive (around 50 per cent),8 as discrimination against women is enshrined in the Austrian pension system. The traditional (male) ‘standard biography’ (continuous 40-year full-time work, medium to high income) continues to be a

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prerequisite for adequate financial security in old age and is difficult to be attained by women, especially mothers. The old-age pensions that women accumulate for themselves are usually insufficient to secure a living. In 2006, for instance, almost half of new women’s pensions were below the equalization supplement threshold.9 In old age, women are thus either dependent on derived pensions (that is, widow’s pension) or directly on their husbands’. Benefits derived from marriage, however, are becoming ever more uncertain owing to the increasing diversity of living arrangements.10 Since the mid-1980s, several pension reforms have led both to considerable reductions in benefit levels and to limitations in the access to early retirement pension. Regardless of the labour market changes (including the rise of atypical employment and increasing unemployment), the reforms have continually strengthened the insurance or equivalence principle. This made the claim to a pension as well as pension levels ever more dependent on employment, especially in terms of continuity, length and level of earned income. Career breaks, part-time work and low income result in lower pension benefits. At the same time derived pension benefits have been continuously reduced (for details see Mairhuber 2000, pp. 183ff). Thus, it is mostly women who lack financial security in old age, even if the number of men with increasingly discontinuous careers is also on the rise. The 1993 pension reform was an exception in so far as it not only brought about benefit cuts but also structural improvements for women. Thus, so-called ‘child-raising periods’ were introduced, which are due for a maximum of 48 months per child and are calculated cumulatively, independently of any simultaneous insurable employment: employment and child raising are thus treated as two parallel ‘occupations’ (for more details see Mairhuber 2000, pp. 165ff). The 2003 pension reform (as well as the 2004 ‘harmonization’), by contrast, went far beyond simply tightening access criteria and reducing benefit levels: the abolition of all early retirement pensions and fundamental reform of the calculation mode (now extended to a person’s entire lifetime earnings) meant a reorientation in Austrian retirement pension policy and a departure from the principle of safeguarding living standards. Improvements in the calculation of benefits (for example better upgrading factors and longer child-raising periods) introduced by the 2004 ‘pension harmonization’ were far outweighed by the disadvantages these changes brought about, especially for women: years of part-time work are now fully taken into account in the pension assessment, and the assessment basis for periods of unemployment was drastically reduced (for more details see Mairhuber 2009).

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Caring for Elderly or Disabled Relatives: a Reconciliation Issue for Older Women Older people in Austria are not only affected by increasing labour-market problems and the impact of restrictive pension reforms but also by the growing importance of caring for elderly or disabled relatives. The overwhelming majority of care work is unpaid and carried out privately within the household environment. Available data provide estimates that fluctuate between 80 and 90 per cent. According to the 2002 microcensus, 425 900 people in Austria are currently engaged in caring for or looking after close relatives and friends. In contrast to childcare, care of elderly or sick relatives is usually undertaken at an older age: almost half of the people who provide care and assistance are over 55 (Kytir and Schrittwieser 2003, p. 44). As with childcare, however, the care of elderly relatives is largely provided by women. According to the 2002 microcensus, some two-thirds of carers are women, 45 per cent of carers are in gainful employment, 2 per cent are unemployed and 55 per cent are non-earners (Streissler 2004, p. 11). According to a 2004 study on the reconciliation of informal care work and gainful employment in Upper Austria, 87 per cent of working carers were women (Stelzer-Orthofer and Jenner 2004, p. 92). The correlations between the amount of time spent on caring and employment status lead to the conclusion that increased informal care responsibilities within the family are a major impediment to employment (Streissler 2004, p. 12). Re-entry into the labour market is even more problematic for these carers than after periods of childcare: not only are career breaks usually longer and their length much harder to predict11 but the women (and men) providing the care work tend to be considerably older than mothers returning to work after parental leave. As a result, their chances on the labour market are significantly lower. Nevertheless – and again similar to childcare – regulations in Austria encourage career breaks rather than parallel reconciliation. Thus provisions were introduced in 1998 granting favourable continued pension rights to persons who give up work in order to care for close relatives in need of intense care. Introduced in 2002, unpaid family hospice leave allows families to accompany dying family members or care for severely ill children for a maximum of six months. The 1993 ‘reform of care provisions’ saw the introduction of a universal need-oriented care benefit for those in need of care. This was intended to facilitate the ‘purchase’ of care services both inside and outside the family. While placing special emphasis on the monetary aspects of care provision, the care benefit is built explicitly and implicitly on the availability of women to provide free or cheap ‘care within the family’, thereby

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cementing the gender division of labour. The level of care benefit is too low to finance professional care appropriate to the needs of those in care (for more details see Mairhuber 2000, pp. 174ff). There is a current debate on the apparent tendency in Austria to outsource care work to female migrants, particularly to provide so-called ‘24-hour care’ at home. This is creating further inequalities between women based on ethnicity and social class. What is more, the growing number of care-benefit drawers, up 36 per cent in a decade from 230 000 in 1995 to 310 000 in 2005, reflects changes in the population structure and the ever greater proportion of older people in need of care (Kammer für Arbeiter und Angestellte Wien 2006, p. 73). To sum up: Austria is among those European countries that have relied for many years on the instrument of early retirement pension to adjust to economic restructuring. While this had a particularly positive impact on youth employment, it also served to keep down unemployment among older workers for a long time. Despite the growth of atypical forms of work with low wages and discontinuous careers a number of pension reforms, introduced since the mid-1980s, have continually strengthened the insurance principle. Thus, the claim to a pension but also pension levels are becoming ever more dependent on continuous employment and the level of earned income contributing to improved pension levels. For this reason, many women but also a growing number of men with increasingly discontinuous career biographies face a lack of financial security in old age, with women in particular financially dependent on their (deceased) spouses. The latest two reforms in 2003 and 2004 have not only further enshrined gender discrimination by basing the calculation of pension levels on a person’s lifetime earnings but have also further disadvantaged the unemployed, thereby departing from the traditional principle of safeguarding living standards, and moving towards the liberal welfare state model. Austria was one of the first European countries to react to the growing demand for elderly and sick care at home by introducing a ‘care benefit’ in 1993. On the one hand, the universal care benefit (independent of the employment status and not means-tested) meant a step towards the socialdemocratic model of the Nordic countries. On the other hand, it also strengthened the conservative character of Austria’s welfare model as it is built explicitly and implicitly on the availability of women to provide free or cheap ‘care within the family’. In the context of elderly and sick care, another paradox of the Austrian welfare state emerges. While – as in the case of childcare – the Austrian system encourages career breaks, discontinuous working lives are heavily penalized within the employment-oriented old-age security system. In addition, elderly and sick care is becoming ever more necessary and significant

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due to demographic changes, while at the same time the availability of informal care by family members (mainly women) is falling – also due to political interventions, such as the abolition of early retirement provisions.

CONCLUSIONS In this contribution we have discussed the question as to how transitions in the female and male life course are shaped by the Austrian socioeconomic system and what changes and continuities have occurred in this respect in recent decades. The analysis focused on the transitions from education to employment, from first employment to a career, from employment to nonemployment in the prime age, and from employment to retirement. For a long time, youth unemployment was only a minor problem in Austria because the VET system offered a rather smooth transition from education to employment for a comparatively large number of young people. Yet, in view of increasing overall unemployment, the decreasing readiness of employers to offer apprenticeships resulted in a strong rise in youth unemployment. In addition, apprenticeships continue to be male dominated and heavily gender segregated. In regard to social security, the relatively strong support offered by the Austrian ‘conservative welfare model’ (Esping-Andersen 1990) has considerably weakened over the past decades, especially in terms of the unemployment and pensions systems. Since the 1980s, unemployment in Austria has risen continuously and substantially, while at the same time unemployment benefits have been reduced (with tightened eligibility criteria and a reduction of benefit levels) and ever more closely tied to the standard norm biography. Similarly, the claim to a pension and also pension levels are becoming ever more dependent on continuous employment and level of earnings. These developments indicate at least a partial shift towards a liberal model of the welfare state (Hermann and Flecker 2009). Although standard employment still is the prevailing employment relationship (for most men), Austria has been subject to a massive rise in all forms of atypical employment since 1990s. Despite neo-liberal calls for ever more flexible employment relationships these atypical employed will be especially negatively affected by recent reforms of the Austrian social security system. With regard to ethnicity, the reforms have further diminished the already low levels of solidarity, with migrants now qualifying for only very few, insurance-based benefits (for example unemployment benefit and pension benefit, but without family supplements). Within the Austrian model, women have traditionally been highly dependent on the direct and indirect support of their spouses or partners – via

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derived rights in the social security system, especially with regard to pension benefits. The reforms of recent decades have somewhat reduced these derived rights. At the same time, social benefits for childcare and elderly care have been extended but in ways, however, that strengthen women’s dependency on the welfare state or their partners’ direct support. With its strong orientation towards financial transfers, the Austrian welfare state has done little to contribute to the full labour market integration of women but has, at most, aided the transition from a traditional ‘male breadwinner’ to a ‘oneand-a-half earner’ model. This is the main reason why the employment rate of women in full-time equivalents has in fact fallen over the last decade.

NOTES 1. 2. 3. 4. 5. 6. 7. 8. 9.

10.

11.

Marginal employment is a job entailing less than 12 hours’ work a week or (in 2008) a monthly income of below €349 (= marginal employment threshold). In Austria, incomes up to the marginal employment threshold can generally be combined with welfare benefits (for example family allowance). Austria does not offer a system of student loans; scholarships only play a very limited role (about 1 per cent of students) (Wroblewski and Unger 2003, p. 191). See, for instance, ‘family allowance’ in the section on the ‘Transition from education to first employment’ or the ‘childcare benefit’ in the section on ‘Transitions in prime age’ in this chapter. See the section on ‘Transitions in prime age’ in this chapter. All-day schools are still rather rare in Austria (Mairhuber 2008). The proportion of single parents in all families with children under the age of 15 amounted to 16 per cent in 2006, with 90 per cent of those affected women (Kammer für Arbeiter und Angestellte Wien 2006, p. 49). In 2006, for instance, the median new pension (old-age and invalidity pension) was €778/month for women and €1368/month for men. There is a right to an equalization supplement in Austria if the pension benefit is below a particular level. There is a level for individuals (2006: €690) and a level for married couples (€1056). De facto, owing to the gender pay gap, women usually only have a claim to the equalization supplement when they are widows. Thus, the number of marriages has fallen dramatically (from 42 000 in 1970 to 27 000 in 1998), the number of cohabiting couples has more than tripled (from 52 000 in 1970 to 188 000 in 1998) and the total divorce rate rose from 13.8 per cent in 1961 to 46.1 per cent in 2004 (Tálos 2005, p. 48). According to the findings of the empirical survey in Upper Austria, more than half of those in need of care had been in that position for more than three years (StelzerOrthofer and Jenner 2004, p. 93).

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Guger, A. and M. Martenbauer (2005), ‘Die langfristigen Tendenzen der Einkommensverteilung in Österreich’, WIFO-Monatsberichte, 9/2005, 615–28. Hermann, Christoph and Jörg Flecker (2009), ‘Stable Institutions Masking a Creeping Paradigm Shift. Continuity and Change in the Austrian Social Model’, in Gerhard Bosch, Steffen Lehndorff and Jill Rubery (eds), Employment Models in Flux. A Comparion of Institutional Change in Nine European Countries, Basingstoke: Palgrave Macmillan. Kammer für Arbeiter und Angestellte Wien (2005), ‘Weibliche Teilzeitarbeit’, Fachinfo, http://www.arbeiterkammer.at, accessed 23 April 2006. Kammer für Arbeiter und Angestellte Wien (2006), AK Frauenbericht 1995–2005; Arbeit – Chancen – Geld, Vienna. Kohli, M. (1985), ‘Die Institutionalisierung des Lebenslaufes. Historische Befunde und theoretische Argumente’, Kölner Zeitschrift für Soziologie und Sozialpsychologie, 37 (1), 1–29 Kytir, Josef and Karin Schrittwieser (2003), Haushaltsführung, Kinderbetreuung, Pflege. Ergebnisse des Mikrozensus September 2002, Vienna: BMSG. Lamplmayr, E. (2004), ‘Elternteilzeit, erste Schritte in die richtige Richtung’, WISO, 2/2004, 79–91. Levy, René (1977), Der Lebenslauf als Statusbiographie, Stuttgart: Ferdinand Enke. Mahringer, Helmut (2005), Essays on Child Care Costs and Mothers’ Employment Rates and on Trends in Job Stability, Dissertation, University Linz. Mairhuber, Ingrid (2000), Die Regulierung des Geschlechterverhältnisses im Sozialstaat Österreich – Traditionen, Wandel und feministische Umbauoptionen, Frankfurt am Main/Berlin/Bern/New York/Paris/Vienna: Peter Lang. Mairhuber, I. (2007), ‘Gender Mainstreaming in Austria – An Analysis of Employment Policies from a Gender Perspective’, External report commissioned by and presented to the EU Directorate-General Employment and Social Affairs, Unit G1 ‘E fquality between women and men’, Vienna. Mairhuber, I. (2008), ‘The Provisions of Childcare Services in Austria’, External report commissioned by and presented to the EU Directorate-General Employment and Social Affairs, Unit G1 ‘Equality between women and men’, Vienna. Mairhuber, Ingrid (2009), ‘Entwicklung der österreichischen Alterssicherung seit den 80er Jahren’, in Christoph Herman and Roland Atzmüller (eds), Die Dynamik des ‘Ősterreichischen Modells’. Brüche und Kontinuität im Beschäftigungs-und Sozialsystem, Berlin: edition sigma, pp. 149–63. Moritz, I., G. Schmid, J. Wallner and G. Mitter (2004), ‘Arm durch Arbeitslosigkeit’, Kontrastel, 4/2004, 13–24. Neuhofer, M. and K. Niederberger (2006), ‘Berufsverläufe’, WISO, 29 (4), 69–84. Novak, S. and A. Schneeberger (2006), ‘Lehrlingsausbildung im Überblick, Strukturdaten zu Ausbildung und Beschäftigung’, ibw-Bildung&Wirtschaft, 37, Vienna. Prenner, Peter and Peter Steiner (2005), ‘Der Wandel der Qualifikationsstruktur der österreichischen Beschäftigten 1991–2001’, in Michael Mesch (ed.), Der Wandel der Beschäftigungsstruktur in Österreich – Qualifikation – Beruf, Vienna: LIT-Verlag, pp. 157–218. Riesenfelder, A., C. Sorger, P. Wetzel and B. Willsberger (2006), Evaluierung der Einführung des Kinderbetreuungsgeldes, Kurzfassung des Forschungsberichtes, www.lrsocialresearch.at, accessed 10 December 2006.

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Schneeberger, Arthur (2006), ‘Sekundärstatistische Analyse ausbildungsbezogen benachteiligte Jugendliche’, in Helmut Dornmayr, Peter Schlögl, Arthur Schneeberger and Regine Wieser (eds), Benachteiligte Jugendliche – Jugendliche ohne Berufsbildung, Vienna: AMS, pp. 18–38. Stadler, B. (2005), ‘Daten zu atypischer Beschäftigung in Österreich’, Statistische Nachrichten, 12/2005, 1093–100. Statistik Austria (2007), Frauen und Männer in Österreich – Statistische Analysen zu geschlechtsspezifischen Unterschieden, Vienna. Stelzer-Orthofer, C. and E. Jenner (2004), ‘Informelle Pflegeleistung und Erwerbsarbeit – eine empirische Erhebung von erwerbstätigen pflegenden Angehörigen’, WISO, 27 (4), 89–109. Streissler, Agnes (2004), ‘Geriatrische Langzeitpflege – Situation und Entwicklungsperspektiven’, Materialen zu Wirtschaft und Gesellschaft, 87, Vienna. Tálos, Emmerich (1993), Sozialpartnerschaft. Kontinuität und Wandel eines Modells, Vienna: Verlag für Gesellschaftskritik. Tálos, Emmerich (2005), Vom Siegeszug zum Rückzug, Sozialstaat Österreich 1945–2005, Vienna: Studien-Verlag. Tarzi-Preve, Irene M. (2004), ‘Vaterschaft im Wandel? Eine Bestandsaufnahme von Verhalten und Einstellung von Vätern’, in Brigitte Cizek (ed.), Familienforschung in Österreich. Markungen – Ergebnisse – Perspektiven, ÖIF Schriften Heft 12/2004, Vienna, pp. 57–78. Walterskirchen, Ewald (2006), Aktive Beschäftigung in Österreich, Vienna: Österreichisches Institut für Wirtschaftsforschung. WKO (Wirtschaftskammer Österreich) (2006), Lehrlinge in Österreich, Vienna. Wroblewski, Angela and Martin Unger (2003), Studierenden-Sozialerhebung 2002. Bericht zur sozialen Lage der Studierenden, Vienna: Studie im Auftrag des Bundesministeriums für Bildung, Wissenschaft und Kultur.

6.

Life course transitions in Hungary before and after the societal transformation Zsolt Spéder, Balázs Kapitány and László Neumann

INTRODUCTION In their fully developed state, modern welfare state regimes distinguish between three main life stages in all modern societies: the preemployment, employment and post-employment periods (Kohli 1985). This tripartite division was also characteristic of the former state socialist countries. Moreover, by suppressing individuality the state socialist redistributive systems made the tripartite division a more general phenomenon. Since unemployment was ‘eliminated’, there were no disruptions to the central employment period while pre-employment education and training was both unified and universal and the pension payments to finance post-employment old age had also gradually become universal. Female employment was radically extended, which was made possible by the establishment of a comprehensive system of family policy institutions (see section on ‘Profound changes in occupational careers’, p. 194 this chapter for details). Female life courses began to closely resemble male ones, though significant differences, for example maternity support for women, continued to exist. The profound social, economic and political transformation that occurred between 1989 and 1990 brought the employment system closer to the one working in western Europe. The changes in Hungary have had very different effects by cohort and gender. Most people falling within the ‘middle+’ (40+) cohort experienced the transition as a kind of an external shock that completely disrupted their career perspectives. Naturally, this process has opened up new opportunities for the younger cohorts, first of all for those who entered into the labour market immediately before the transition. Gender differences have developed unexpectedly, since the transformation of the labour market has made men’s position more difficult. Due to the sectoral nature 182

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of the restructuring women were not in fact the main losers: jobs in the service sector, dominated by females, were more easily preserved than jobs in industry (cf. Spéder et al. 2002) and women’s educational advantages also led to a narrowing of the gender wage gap (Kertesi and Köllő 2003; Delteil et al. 2004). Regarding employment rates, although female employment in Hungary is 4–6 per cent lower than the EU15 average on a headcount basis, the full-time equivalent women’s employment rate is now above the EU15 average (owing to the fact that female part-time work in Hungary is not significant). Nonetheless, the employment rate for men has been lagging behind the EU15 by 10 percentage points on average for a long time. It is not the women’s life course that has been re-traditionalised, but the male life course that has been de-traditionalised. In this chapter, special attention is paid to changes over time. In the course of discussing each key event, we shall briefly describe the pre-1990 situation before moving on to the changes arising out of the political transformation, ending with an analysis of the current situation. After a brief presentation of the relevant trends of labour market restructuring, the central, second section of the chapter explores the key life events and situations, identifying the sources of support provided by the state, the family and the labour market. Finally, in the final third section, we adapt Anxo et al.’s (2006) life course-specific household typology to conditions in Hungary.

A BRIEF OVERVIEW OF THE RESTRUCTURING OF THE LABOUR MARKET The contraction and the restructuring of the labour market after 1990 can be divided into three main periods. The first began a few years prior to the transition and continued at an increasing pace until 1993–94, resulting in the elimination of 700 000 jobs and growing unemployment, reaching a peak in 1994 at 14 per cent. During this period there was a serious decline in GDP. In the next period, lasting from 1995 to 2000, the disintegration of the state socialist structure still continued, albeit at a slower pace, but the phenomenon primarily influencing the labour market was the emergence of new (usually multinational) companies. GDP entered a stable growing phase and significantly exceeded the figure for 1990 well before the end of this period. The unemployment rate dropped to 6 per cent and continued to stabilise at a low rate. However, the participation rate continued to be very low, only increasing for the population aged 15–64, from 52 per cent to 54 per cent.

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Between 2002 and 2006,1 we witnessed a new period, in which the situation stabilised and the influx of foreign direct capital slowed down. GDP continued to grow (at around 4 per cent) but simultaneously with this, employment stagnated at a low level and unemployment started to grow. The ratio of employed people decreased in all age groups, but not to the same extent and not in the same time periods (see Figure 6.1). After an initial decline in the early 1990s, the ratio of the employed grew significantly among older people (age group 55–59). This is true to an even greater extent for women and even for women aged 55–59. The rate of female employment also changed among younger people: as a result of the observable ‘postponement’ of childbearing, the employment rate of women aged 25–29 is now approaching the 1990 rate. There were more fundamental changes in the generational structure of wages. While prior to the transition wages were tied to seniority, in the second half of the 1990s wages were much more tied to diplomas and qualifications. Young people (age 25–32) with university degrees, and even those with only secondary school diplomas, started to enjoy better wages than older people (Köllő 2000). This is a consequence, according to research, of both differences in productivity and of selection processes that are unfavourable to older people. The employment chances and income options of older and less trained people have deteriorated significantly. The economic trauma of the transition can still be felt: within the extraordinarily large inactive population there is a great number of people who, having lost their jobs in the early 1990s, have been excluded from the labour market for good. This phenomenon has to do with the emergence of demand for new service jobs requiring high qualifications and the elimination of ‘traditional’ (industrial) jobs.

LIFE STAGE TRANSITIONS RELATED TO THE LABOUR MARKET SITUATIONS AND SPECIFIC WELFARE PROGRAMMES Early Ages Entering the labour market To understand the characteristics of the process of entering the labour market and gaining a foothold there, changes in the educational system need to be considered. The primary feature of these changes is expansion in education: the number of students enrolled in higher education grew fourfold between 1990 and 2004 (threefold among full-time students) and in 2005 nearly half of college-age young people participated in higher

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Males 100

1990 1996 2001 2005

90 80 70 60 % 50 40 30 20 10 0 15–19

20–24

25–29

30–34 35–39 40–44 45–49 Age group (in years)

50–54

55–59

60–64

Females

100

1990 1996 2001 2005

90 80 70 60 % 50 40 30 20 10 0 15–19

Source:

20–24

25–29

30–34 35–39 40–44 45–49 Age group (in years)

50–54

55–59

KSH Census (1990, 2001), Microcensus (1995, 2005).

Figure 6.1

Employment rates by age group and gender in Hungary, 1990–2005

60–64

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education. The structure of higher education also underwent serious changes, with an increase in the ratio of non-full-time students and in tuition-paying students. In the academic year 2004/2005, nearly half of all students were paying tuition fees. In spite of the expansion, government spending on education between 1992 and 2002 dropped from 6.7 per cent to 5.2 per cent of the GDP. In other words, the system of financing studies also changed: from being fully state-funded, higher (and sometimes even lower) education is beginning to be financed through a mix of public and private funding. This of course will also lead to the transmission of social inequalities through the education system. These changes to education have occurred alongside an increasing problem of gaining entry to the labour market (for example Róbert 2002; Bukodi and Róbert 2005) but the chances and risks of entry are very different for each education level. Advantages of university graduates Well-trained young people were the beneficiaries of the years following the political transition, for in those years there was a significant shortage of computer-literate young graduates speaking foreign languages. Thus, in the first half of the 1990s, university graduates not only had an easy time securing relatively well-paid jobs but many of them also acquired managerial positions. Between 1995 and 2004, some 400 000 new graduates entered the labour market, which was able to absorb this quantity without problems because (1) a significant portion of the new jobs generated by the economy in transition required university education; (2) new graduates filled positions earlier occupied by people with lower education (Kertesi and Köllő 2005) and (3) there was emigration of a portion of the graduates. In recent years, however, the transformation of the labour market has slowed down and levelled out, resulting in a reduced ability to absorb new entrants, which in turn led to the devaluation of university degrees, contributing, along with market saturation, to an oversupply of university graduates. This has not yet manifested itself in increased risks of unemployment though the earlier, oversized wage advantages are beginning to diminish (Kertesi and Köllő 2005). Aware of this process, an increasing number of students opt to stay on in higher education by postponing their studies or commencing new ones. While in 1993, 98 per cent of the students were awarded degrees when they completed their final year, this figure had dropped to 72 per cent by 2004 (KSH 2004). All of this notwithstanding, new graduates in Hungary still have a better chance of securing employment than the European average. This is indicated by an unemployment rate for young graduates, which is still lower in Hungary than the EU average and by the fact that students in

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Hungary are less given to prolonging their higher studies than the average European. Shortage of trained skilled workers Currently, the shortage of skilled workers in certain occupations is a greater problem than the oversupply of graduates. The reason for the shortage is a complex one. After the political transition, a lot of manual jobs were eliminated which devalued the overall prestige of manual labour. The quality of secondary vocational training declined sharply and vocational training did not offer the opportunity for continuing studies. As a consequence, more people opted for general, as opposed to vocational, secondary education. It became increasingly difficult for vocational schools to offer traineeships/internships, as the big companies that formerly operated these were eliminated and newlyformed companies were reluctant to offer similar services. Vocational training thus had great difficulties in keeping up with the rapidly changing demand shaped by the fast-paced economic transition. A significant part of vocational training by 2000 had become schools for disadvantaged young people (underprivileged, Roma ethnicity, learning handicapped) up to the age of the compulsory education, with no real chance of attaining employment subsequently. Today, instead of enrolling in vocational education, some 80 per cent of secondary school age students have opted for general education, which provides a secondary school diploma and also offers, in many cases, some sort of vocational training as well. Those with a secondary school diploma will almost never revert back to a vocational career trajectory. As a result of these processes, a serious shortage developed in certain occupations (turner, electrician, machine operator, skilled construction worker, and so on), which has been exacerbated by a low level of labour mobility and only partly alleviated by the import of ethnic Hungarian labour from neighbouring countries. Continuous vocational training does not provide the solution either. Hungary is one of the EU member states with the worst record of lifelong learning: in 2005 only 23 per cent of employees were given training at the workplace, and half of employers (51 per cent) did not support their employees’ training at all (KSH 2002b). The undereducated Estimates put the ratio of youngsters leaving the education system without receiving a secondary school diploma at about 20 per cent in each of the cohorts (Fazekas and Varga 2004; Kapitány 2006). Most of these had completed primary education (eight years) and dropped out of secondary education. These people cannot obtain longterm employment in the legal labour market and have access only to low and uncertain income. Available data suggests that the correlation in

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Hungary between an early exit from school and an unsuccessful entry to the labour market (and a long-term exclusion from it) is extremely strong, almost deterministic (see Róbert 2002; Bukodi and Róbert 2005). It seems that this correlation is stronger in Hungary than what we generally find in EU countries.2 Of course the Roma population is over-represented in this low-educated group. However, we cannot say that low educational attainment is only a question of ethnicity. Estimates based on the 2001 census and other survey-type researches point out that a minimum of 10 per cent of the younger cohorts are unable to enter the (legal) labour market in any form after finishing their studies. Analysing the data from the Hungarian Central Statistics Office (KSH) survey from 2000 called ‘Lifestyle and Time-use’, Péter Róbert pointed out that ‘if a person did not start to work within a year or two of leaving school, he or she would be increasingly unable to do so with the passage of time. This is especially true for women’ (Róbert 2002, p. 228). This group then constitutes a continuous source of the unemployed and of recipients of various forms of social support (social assistance, healthcare). In summary, the unemployment rate among people under 25 had been significantly (by 4 or 5 per cent) lower than the European average until 2003 but it then took an upward turn and reached 19.4 per cent in 2005, well above the EU15 average (16.7 per cent) and somewhat greater than the EU25 average (18.5 per cent). Leaving the parental home The change of the political regime also impacted the housing market such that young people wishing to have their independent residence must face both new constraints and new opportunities. Prior to the transformation the methods of attaining a residence had differed greatly from villages to cities (Farkas and Vajda 1988). In villages, people would actually own their residence and the prevalent method was self-financed (that is, no state subsidy) home construction. In contrast, most of the housing units in cities were state-owned apartments with very strong rights for the tenants. Young people in the cities could attain their ‘council flat’ through a process of ‘allocation’ or could participate in apartment construction projects in heavily state-funded schemes. The system of allocations was overly bureaucratic, slow and rife with corruption, but considering everything, the tenants – just like the participants of state-funded home construction projects – were never under great financial pressure. However, it was also common that for the time period before attaining their independent residence in a state-owned rental unit (which could take years, even decades) in the cities, or in the villages until having the ‘starting capital’ for construction, young couples

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moved in with their parents, other relatives or had some other temporary arrangement in which to start their ‘independent living’. After the change of the political regime, state-funded home construction projects ceased entirely and the number of home constructions dropped to one-third of the earlier volume in just a few years. However, between 1990 and 1996, urban tenants were given the opportunity to purchase their rented apartments for a fraction of the market price. Therefore, the stateowned housing sector had practically ceased to exist by 2004. Less than 4 per cent of all apartments are owned by local governments and 92 per cent of all housing units are occupied by the owners. This ratio, along with the 88 per cent of Slovenia and 82 per cent of Spain is conspicuously high in the EU25 (KSH 2006). But when owning one’s residence became not only a general phenomenon but also a social expectation, housing mobility practically ceased to exist. Thus, for lack of a tradition of renting, the practice which in other countries sees the young couple leave the parental home and move into rental units has never become widespread in Hungary. Only 3 per cent of units are rented by private persons, which is the lowest figure for the EU25, even allowing for a number of non-registered private renters. The traditional system, in which the young couple temporarily lives in one of the parental households, albeit quite widespread still today, is increasingly insufficient for young people launching their independent life. The large size of the generation that reached adulthood in the 1990s exerted an increasing pressure on the state which offered a subsidised system of loans that made it possible (and unavoidable) for all (employed) young persons to purchase their own homes. The loan system was taken advantage of en masse and by 2004, more than 400 000 state-subsidised loans were taken out. Childbearing couples wishing to purchase a home were entitled to a one-time state grant of significant value which they never had to pay back. However, this system quickly became a trap, since it imposed a great burden on state finances and the majority of homes purchased with state subsidies were rather small (one or two rooms) suitable for having and raising only one child. To make matters worse, the long-term loans practically ‘cemented’ the young couple into this tiny apartment. Moreover, not all young adults could afford to participate in the above-mentioned way of accessing a home. The widening inequalities in wealth and income have resulted in a robust differentiation in the method of attaining one’s home. At one extreme, there are young people who are studying but already living in their own residence which they have received from their parents, at the other extreme we have people for whom the attainment of a home depends upon the fulfilment of such conditions as a stable partnership (two certain

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incomes and the starting capital of two parental families), ‘commitment’ to a certain number of children and taking out loans of various types. Leaving the parental home occurs later in life on the average than it did two decades ago. The main reasons for this, besides the peculiarities of the housing market, are longer education and difficulties in securing the first stable job. Partly because of the factors mentioned earlier, they will form their first stable partnership later in life and have children later – and in many cases, it is the actual occurrence of these life course events that ‘force’ them to leave the parental home. According to Turning Points of the Life Course data (Spéder 2001), the situation was rather stable from the 1960s to the mid-1980s. Forty percent of young people left home by the time they were 21, 70 per cent by the time they were 27. In this period, the average age by which over half of a generation had left the parental home was around 22–23. The postponement of leaving the family home started around the time of the political regime change and by 2000, 80 per cent of the age 21 cohort resided in the parental household. Of course, leaving the parental home does not automatically mean the attainment of independent residence, either rented or owned. Leaving home may be followed by a period when one resides either in a university hostel, with the parents of one’s partner, or maybe renting a room individually or a larger unit collectively with others. Our data on the state socialist period present a picture of stability: 40 per cent of people leaving home moved into their independent residence in the same year. On the other hand, some 30 per cent had to wait at least five years before moving into their own residence. The prospects for the generation that reached adulthood after the political transition changed drastically: after leaving home a significantly lower percentage of people were forced to wait years before they moved into their own home. After 2000, nearly 66 per cent of those members of the 22–26 age cohort who had already left home could move into their own home right away. The same figure in the 22–26 cohort around 1980 was around 45 per cent. These findings all seem to indicate that in the past decade and a half, leaving the parental home has been generally postponed, but those who made the move had a greater chance to attain their independent residence. The means by which they achieve this have also been transformed and are increasingly tied to unequally distributed resources of the young adults and to the social inequalities of their parents. Middle Ages Reconciliation of work and family A key role is played by welfare programmes designed to enable employment by easing reconciliation of work and family obligations. To increase

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female employment, which also boosted general economic development, the state socialist system had to design a family policy package to make possible (1) childbearing without great financial risks and (2) a relatively rapid return of mothers to the labour market after childrearing (Frejka 1980). The major family policy measures, in their full development of the 1980s, provided to fulfil these objectives were as follows. 1.

2.

3.

To reduce the financial cost of children, cash support was provided by the family allowance provided for each child under 18, was intended to offset the costs of childraising. To compensate for the contribution of maternity a flat rate child care allowance (GYES) was paid to all, while a child care fee (GYED) at 70 per cent of the former wage was paid to make up for lost income in recognition of the opportunity cost of maternity. To facilitate the return to work, transfers in kind were provided involving nursery and daycare institutions. These were essential for women to return to work as the forced geographical mobility during extensive industrialisation of the 1950s had largely eroded the resources (family ties) that could be relied on when raising a child. Nurseries were very often integrated into ‘the factory environment’. Full-time employment became universal when an after-school-care system for children aged 6–12 was developed. In addition to these specific family policies a third essential element of social policy to facilitate reproduction was the development of a system of housing subsidies, as described above.

While the institutions mentioned above made it possible to reconcile work and the family, this harmony was far from perfect, since a multitude of household tasks still fell almost exclusively to women (Frey 2002). This is demonstrated by time-use studies: in 1986/1987 employed women spent a daily average of 269 minutes on their paid job and another 228 minutes on household chores and caring for the family (KSH 2002a). After the change of political regime, significant modifications occurred in the family policy system (for details, see Aassve et al. 2006) but the changes were so frequent that the whole system became unpredictable for the would-be beneficiaries (Pongrácz 2002). Between 1996 and 2000 the wage-proportionate GYED was put on hold which resulted in a decreased rate of childbearing among women in employment. However the wagerelated GYED was reintroduced in 2000, although having a maximum level of twice the minimum wage. Over a long time period the real value of family allowance was allowed to steadily decrease, but in 2004 it rose sharply again. This was the

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result of an institutional change, namely that the family tax deduction system, introduced in 1998 to benefit tax-paying earners having children, was abolished at the same time. Since family allowance was universal, non-tax-payer families benefited from these changes. The number of available spaces at the childcare institutions was decreasing, primarily because of the closure of the ‘factory nurseries’ but the number of children enrolled in these institutions did not drop drastically. All in all, family policy was basically ‘zigzagging’ in the 15 years following the change of political regime in 1989/1990, and therefore unpredictable for the target population (Spéder and Kamarás 2008). With regard to current problems of reconciliation between paid work and parenthood, the most important problem seems to be the return to the workplace after giving birth. Even though it is enacted in legislation that after maternity leave mothers must be re-employed, at least for three months, this regulation often fails to guarantee the mother’s reintegration into the workplace. This is sometimes because the job or the workplace is eliminated in the meantime or alternatively because the person’s work is no longer required by the company. The situation of the ‘successfully reintegrated’ is not easy either: requirements for intensive labour performance – including for instance working overtime – make it more difficult to reconcile unpredictable demands from both the family and from employment. A large number of multivariate analyses have demonstrated that the lower level of female employment is mainly attributable to the existence and number of children. Chances for female employment decrease if there are pre-school or school age children and if the number of children increases (Galasi 2001; Frey 2002). The existence and number of children increase the risk of exit from the labour market, decrease the chances of reintegration and increase downward mobility (Bukodi and Róbert 2002). The phenomenon of children increasing poverty risks became a permanent one (Spéder and Kapitány 2005). There are a great many ways to resolve the conflict of employment and family. However, Hungary’s low proportion of part-time employment by international standards (OECD 2004) is an obvious indication of the potential to be explored. At the same time, the future role of males in easing tensions should not be ignored either: telecommuting, a redistribution of household chores, a reinterpretation of responsibilities and tasks better suited to the life cycle of the child(ren) and the occupational demands of the partners are all highly likely to improve the situation of women/families. Becoming unemployed and overcoming unemployment The mass experience of unemployment is largely responsible for the disillusionment prevalent in the early 1990s.3 Expecting an improvement in the

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standard of life, society was instead faced with mass unemployment and high inflation. Political freedoms could hardly compensate for these hardships (Róbert 1999). Initially, the system of benefits for the unemployed was rather generous: the replacement rate was relatively high – in 1992, it was 70 per cent in the first phase of unemployment, 60 per cent in the second and 50 per cent in the third phase – and the entitlement period was also rather long (two years). However, the rules have changed a number of times since this initial period: the entitlement period had shortened and the replacement rate had dropped, in order to relieve the burden of the state budget and to provide incentives for reintegration into the labour market. In 2000 the compensation rate was 51 per cent, which amounted to 26 per cent of the average wage. From the beginning of the transition period various governments tried different active labour market policy (ALMP) measures; as commentators noted, ‘there is no such programme that cannot be found in the Hungarian practice’. Nowadays, Hungary spends roughly 1 per cent of the GDP on labour market policies, with ALMPs accounting for between 30–40 per cent of this expenditure in recent years. Of the wide range of measures implemented in the 1990s, labour market training, communal work and wage subsidies have been the most widely used measures. Since 2002 the socialist-liberal government has introduced a number of new ALMPs in order to get more of the inactive into work. In 2004, targeted active ALMPs were introduced to increase the employment rate among the Roma, young job-seekers, women returning to work from parental leave and the long-term unemployed aged over 50 (Frey 2007). There were some especially vulnerable groups hit hard by unemployment (Bukodi and Róbert 2002; KSH 2002b and Spéder et al. 2002). There were two reasons for the above-the-average rate of unemployment for the young: (1) in case of downsizing, companies let them go before others and (2) their transition from school to work was often preceded by a ‘waiting’ period (see second section, p. 184 this chapter). Older age groups, as we will show, often became not unemployed but inactive. Unemployment in Hungary primarily threatened people with lower education levels (that is, primary and vocational schooling). Even if controlled for education level, the unemployment risk is greater in routine occupations requiring lower skills. The geographical distribution of unemployment risks shows a radical revival of regional differences: unemployment is concentrated in Northeastern Hungary and in the Northern Great Plains. As for distribution by sectors of the economy, the risk of unemployment was highest in industry, particularly in construction, and this is the case today just as it was in the early 1990s (KSH 2002b, pp. 54f). Previous occupational career played a significant part in losing one’s job (Bukodi and Róbert 2002). People with

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shorter active occupational experience and people with previous spells of unemployment were more likely to become unemployed, which indicates a separation of occupational trajectories. Unemployment in Hungary tends to be longlasting which indicates low reintegration rates. The rate of longterm unemployment (longer than a year) has been around 45 per cent since 1995 and that for more than two years unemployed reached 25 per cent in 1995–96, stagnating at around 20 per cent ever since. Welfare and poverty studies point out that when unemployment becomes embedded in the household/family there are serious consequences in terms of poverty (exclusion) and reemployment. Employed persons living in the household can offset the individual chances of unemployment risks while the unemployed in the household can exacerbate these risks. It is also common knowledge that family ties play a significant role in securing a new job. The regional concentration of unemployment and the low mobility due to the housing market situation (see the section on ‘Leaving the parental home’) promotes the regeneration of unemployment and its household concentration as well as an increase in social exclusion. Needless to say, there is unemployment in Budapest and to the west of the Danube, but in these regions securing new employment is less problematic and therefore the spell of unemployment is shorter. We have relatively little in the way of trustworthy data on successful returns to the labour market. The regional differences in unemployment are a strong indicator that in some areas with a higher unemployment rate (for example North-eastern Hungary) jobs are harder to find (Bukodi and Róbert 2002). It is a crucial issue whether the support system for the unemployed goes beyond helping making ends meet and actually provide incentives for a return to the labour market. Not only theories and hypotheses, but also empirical data are divided on this issue. Research measuring the effectiveness of the changes to the unemployment support systems (Galasi et al. 2005; Micklewright and Nagy 2005) arrived at the conclusion that shortening the entitlement period did not provide significant motivation for reintegration into the labour market. In other words, the rate of return to the labour market failed to increase after the entitlement period ended. At the same time, research carried out by Bukodi and Róbert (2002) showed that among the factors contributing to a successful securing of employment, the length of time spent in unemployment played a significant part in the 1990s: those who had spent a year in unemployment and were subsequently entitled to a significantly lower level of support were more likely to find work. Profound changes in occupational careers Only a few investigations, and even these have been limited in scope, have been carried out on the whole employment trajectories – general success in

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careers (Habich and Spéder 1998; Bukodi and Róbert 2002). Bukodi and Róbert (2002) studied life courses between 1991 and 1997 and found that of males being active for all these eight years, spanning the turbulent years of regime change, 31.2 per cent had experienced unemployment (op cit, p. 27). To complete the picture, we must add that of those employed in 1991 and not yet retired in 1997, 9.5 per cent experienced no occupational status change whatsoever and 23 per cent had experience of both unemployment and occupational mobility. Of the 60 per cent who only changed workplaces, only 8 per cent retained their status, while the majority of the rest experienced both upward and downward mobility in the labour market. The research programme and the data collected by the Demographic Research Institute through the Turning Points of the Life Course survey (Spéder 2001) reveal an unemployment experience similar to the one described above: 37.5 per cent of the ever-employed males and 35.8 per cent of the ever-employed females had experienced a period of unemployment (Table 6.1). We get similar ratios if we only take into account those who were employed at the time of the interview – 38.9 per cent and 33.1 per cent respectively. In other words, it seems that those whose employment career may be regarded as traditional – uninterrupted from the perspective of continuous employment – are only in a slight majority. It Table 6.1

The distribution of males and females in certain selected occupations by age groups and frequency of unemployment experience in Hungary

Gender/ unemployment experience Male Never unemployed One unemployment Multiple unemployment N = (100%) Female Never unemployed One unemployment Multiple unemployment N = (100%) Source:

Ever employed

62.5 23.3 14.2 7206 64.2 22.6 8.4 7793

Ever employed

50.7 28.7 20.6 1413 54.4 31.1 14.5 1666

56.5 25.3 18.1 1335 63.4 25.5 11.1 1532

Demographic Research Institute (2006), own calculations.

Employed in 2002 (at interviewing) 61.1 25.7 13.2 4573 66.9 25.0 8.1 3864

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is, however, advisable to standardise the ratios according to age groups, for people of different ages had different lengths of time in which to experience the different periods. To demonstrate this we formed age groups, which unequivocally showed that the ratio of traditional (uninterrupted) trajectories is on the decrease among younger generations, since only roughly half (50.9 per cent) of the males aged 30–39 fall into this category. We also looked at whether the respondents had one or multiple experiences of unemployment. According to our data, although more people had only a single period of unemployment (28.7 per cent of ever-employed 30–39-year-old males), the ratio experiencing recurring unemployment is on the rise (20.6 per cent of ever-employed 30–39-year-old males). Thus the political regime change in Hungary produced an employment system where a significant ratio (40–50 per cent) of the employed experience interruptions. Those who have already experienced unemployment have a higher likelihood of experiencing it again. Then, of course, there are those for whom becoming unemployed is ‘fatal’ – that is, they will never find work again, although precise information on the proportion to whom this applies is lacking. At the same time, we must keep in mind that the majority of the employed, half of the young middle-aged, did manage to have a traditional, uninterrupted career up to the time of data collection. In summary, employment trajectories since the early 1990s became differentiated in Hungary and we have good reason to believe that this is not a horizontal differentiation but a phenomenon pointing in the direction of the polarisation of life courses. Divorce Divorce is a kind of event in the life course which is never planned. However, if for no other reasons than its prevalence and consequences, welfare regimes must reckon with it. Some 25 000 marriages are dissolved annually in Hungary (2004: 24 683). The total divorce rate4 has increased steadily, exceeding 40 per cent in recent years. It is clearly higher than the rates in most of the other new EU member states. An overwhelming majority of divorcees (over 80 per cent), both males and females, are between the ages of 25 and 50, that is, in the most active life period. In 2004, 76 per cent of the divorced males were employed, 10 per cent unemployed and only some 14 per cent inactive. For females, the same ratios were 74 per cent, 9 per cent and 17 per cent respectively (KSH 2005a). A good majority of divorces happen before a child is born to a couple or after the children reach adult age. This is the reason why in 2004, ‘only’

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61 per cent of the divorcing people had common underage children. The negative effects of divorce are well-known: the disintegration of objective material circumstances (poverty, risk of homelessness), the increased difficulty of bringing up the children, a drop in the educational performance of the children and emergence of deviant behaviour (alcoholism, traumatised children). Divorces, however, also have some less well-known societal consequences. Divorcees are often forced to fall back on parental resources (moving back to the parental home, parental help in taking care of the children, and so on) and after a divorce, friendships that earlier became neglected are rekindled and become conduits of assistance. Divorce also demands active involvement on the part of the welfare systems; because the event usually entails temporary crises, it requires the emergence of short-term support systems such as crisis counselling, crisis homes and so on. In many cases, divorcees establish new partnerships, or more often cohabitation in Hungary, soon after their divorce. In 2004 over a quarter of divorcees (28.29 per cent) were remarried within two years and over half of them (52.55 per cent) within four years, for both sexes. In these cases, divorce is only a temporary phenomenon of the life course. A sizable group of divorcees, however, never remarries or enters into a cohabitation, which makes their divorced status a permanent social position. From social policy perspectives, the situation of single parents – that is the mother in over 90 per cent of cases – is highly interesting. In 60 per cent of cases, lone-parent households are the result of divorce. However, in today’s Hungary, most of the divorced women who do not enter into new partnerships but choose to raise their child alone are of higher social status and possess higher education levels. Moreover, the ratio of inactives among lone mothers is very low (27 per cent) compared to the overall inactivity ratio among parents raising at least one under-18 child at 41 per cent. Thus, lone mothers who are highly dependent on their employment income demonstrate an above average activity rate even though their household imposes extra burdens on them. Divorced women with child(ren) have two alternatives: they either enter into a new relationship or have to make extra effort and bring up their child(ren) as working mothers. This latter trajectory is more accessible to well-educated parents, who enter into new relationships less frequently (Spéder and Kapitány 2005). Later Ages A brief overview of European labour market indicators draws attention to some basic peculiarities with respect to Hungary. One such idiosyncrasy

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is the extraordinarily low employment rate among elder males. In 1996 only 27 per cent of Hungarian males aged 55–67 were employed, as opposed to the 47 per cent average of the EU15. In the 1980s, the socialist ‘shortage economy’ needed the extra workforce of elder people: in 1980, 33.4 per cent of the population above the retirement age but under 74 worked, either retained at work or had a job along with their pension, while in 1993 the same figure was only 14.2 per cent. At that time, the Hungarian employment rate was at its lowest level by far and even though the employment rate of older males has since increased faster than in any other countries, the 41 per cent reached by 2005 lags 13 per cent behind the EU15 average. Early retirement The extraordinarily high number, even in international comparisons, of people receiving ‘disability pensions’ or other kinds of retirement payments5 before reaching the official retirement age is a crucial feature of the post-transition society in Hungary. In 2006, over 3 million, out of a total resident population of just over 10 million people, were receiving ‘pensions, allowances or other pension-like transfers’ and of these some 7–800 000 (one-quarter of all pensioners) had not yet reached the official age for retirement. The life stage transition that is most different from the general European model is perhaps the circumstances of retirement. The reason for this may be found in the uniquely Hungarian way of handling the social tensions resulting from restructuring after the political regime change. To mitigate these tensions the new political leadership made it possible, through a variety of methods, for elder people whose workplace was eliminated to retire. The most preferred method by which these ‘mass retirings’ were achieved was through claims for disability pensions, submitted on the basis of some official medical justification. Disability pensions provided a very low but stable source of income – and because disability claims were often not processed in the most legal of ways, they also ‘pacified’ the social groups involved in the process. While officially speaking almost none has returned to the labour market from a disability pensioner status, it has become customary for disability pensioners to perform occasional, semi-legal work on the side. In spite of all the efforts, the practice of early retirement could not be eliminated even after the stabilisation of the labour market after the mid1990s and it has become a typical method of exiting the labour force; a prelude to old age pension. The number of people securing disability pensions for themselves had regularly exceeded, until 2003, the number of those awarded ‘old age’ or ‘old age-like’ pensions, even though a significant part of the latter group failed to reach the official retirement age

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(KSH 2005b). Only the most recent data (2005) indicate some changes in this situation. The state behaves in this question rather ambiguously. On the one hand, the legal retirement age has been gradually increased since 1997 (to reach age 62 by 2009 for both males and females) and the conditions for retirement on medical grounds have been made stricter, while on the other hand the force of custom and specific regulations6 continue to assist early exit from the workforce. Social criteria influence the outflow from employment via disability pensions: lower educated and blue-collar workers are over-represented. Old age retirement When assessing old age retirement we must keep in mind that people may arrive at being an old age pensioner7 from many different directions. There is a great difference, for instance, in the situation of someone entering retirement from a stable, active status compared to someone who spent the years prior to reaching the official age as a disability pensioner or being unemployed. For the first group, retirement means a decrease in activity and income; for the second group, retirement secures an increased level of income that is due for the rest of the recipient’s life; while for the last group, retirement brings existential security. Similar to other countries, the financing of pensions is a source of tensions. The worsening of the situation is due to the pension system as well as to the employment system and population increase. Since retirement age people, without exception, have spent a significant part of their active lives in the state socialist period, almost all of them possess the required length of employment history and thus are entitled to a pension. The state socialist pay-as-you-go pension system was the responsibility of the government and was not separated off from the central budget. The financing of the various types of allowances was anything but transparent. On a personal level, there was a loose correlation between pensions and contributions paid, and political and other privileges entered the equation (Fultz and Ruck 2001). Due to the unified pension system and full employment, a rather sizeable group of pensioners, united in their interests and sources of income, emerged during the period of political change and carried an extraordinary amount of political weight.8 In recent years, promises of pension rises and other favours to pensioners have become central elements of political campaigns. Over the past few years, the real value of pensions has increased significantly while the gap between wages and pensions has decreased. In 2005 the ratio of pensions to net incomes was 61 per cent and even higher (65 per cent), if only ‘real’ old age pensions are considered. Therefore, current old age pensioners are situated in the middle stratum of society with regards to their standard of life and risks of poverty.

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The pension reform launched in Hungary in 1997–98, continued to maintain the pay-as-you-go state pension system but also set up a private insurance system with private accounts, mandatory for young people (the second pillar) and providing incentives for pre-pension savings (the third pillar). Needless to say, the restructuring resulted in an immediate and highly significant shortage of funds in the state-run system and generally increased the deficit of the central budget by an annual 1.5 per cent. The consequence of the employment system described earlier (disability pensions, early retirement) is that in spite of the slow and continuous raising of the official retirement age, there are very few earners for each pension recipient. If we consider only old age pensioners and those disability pensioners of retirement age, the earner–pensioner ratio is below 2:1. And if all pension type benefits are considered, the ratio is down to 1.25:1. When assessing the role of population structure we must keep in mind that the differences between the sizes of the various generations in Hungary are greater than is usual in the EU. In recent years, the number of employed people stagnated even though a relatively large cohort reached employment age and the number of retirees continued to grow, thanks to increased life expectancy, in spite of a relatively small cohort entering retirement. The pressure on the pension system will increase rapidly when the active members of a very large cohort (those currently in their 50s, the so-called ‘Ratkó children’9) reach retirement age en masse. In the long run, however, the demographic pressures on the pension system will be relieved by the fact that the generations reaching retirement age will not have full work histories and therefore will have no or very limited entitlement to pension payments. However, this implies new social problems and challenges for social policy, including the need to introduce a universal minimum pension, a policy option which recently emerged in the debates on the future of the pension system.

FAMILY TYPES, EMPLOYMENT AND POVERTY (WELFARE DEFICITS) The key events and characteristic periods of the life course outlined in the previous chapter, as discussed by Anxo et al. (2006) create typical household types. Gender, partnership, children and parenting were taken into account. Using data from the research programme The Turning Points of the Life Course, we also set up a household typology according to key events, adjusting it somewhat to suit the peculiarities of the system of institutions in Hungary. The special traits of the housing market made us

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divide young singles and couples according to whether or not they were living with their parents.10 The categorisation of nuclear families by the age of the youngest child was conducted along the entitlement criteria of the Hungarian welfare programmes. Single-parent households, the majority of which are single-mother households, were similarly categorised.11 We could thereby fit 70 per cent of the people aged 18–74 in this typology. The lower coverage of people by the types in Hungary than in the western countries (Anxo et al. 2006) are largely due to the higher ratio of extended families in Hungary, the existence of which is due to a significant degree to the housing market. By way of summarising our research, we look at the employment rate of women and men living in typical households and their income–poverty ratio,12 a widely accepted indicator of material well-being. One of the most significant determinants of material well-being is the labour market status and its configuration in the particular household. Labour market status plays a direct and indirect/intermediatory role in poverty risks. For instance, labour market transmits educational differences. At the same time, many factors (ethnicity, number of children, and so on) outside of labour market status play a significant role in poverty risks. It is our expectation, therefore, to find a correlation between the employment level of the individual household and the rate of poverty. Employment in households set up more or less follows the patterns described alongside the life cycle, discussed earlier. Employment is a precondition for leaving the parental home. Thus it is no accident that those living on their own have a higher employment rate than those living with their parents, both among lone parents and childless households (Figure 6.2). For both sexes, the highest employment rate is to be found among those living on their own. Following the birth of a child, the career trajectories of men and women separate: men will continue to have high employment rates but in the case of women, childbearing usually results in a drop in the employment rate. This takes an upward turn as the children grow older but does not reach the male employment rate even in the ‘empty nest’ type of family. The employment rate for women is relatively high in lone-parent families. We assume this is because employment for the mother is essential for the maintenance of a household. However, the supportive participation of both childcare institutions and a network of relatives is also necessary. If the mother (parent) is unemployed, he or she is more likely to be forced to live with his or her aging parents or in the extended family. Employment continuously decreases among middle-aged and older parents no longer with children. If we also take the number of children into account, the employment rate for women with three children is conspicuously low.

202

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100

Ratio of employed Ratio of poor

90 80 70 60 % 50 40 30 20 10 0

1

2

3

Young labour market entrants

4

5

Childless couples

6

7

8

12

Couple households with children living at home

13

Older couples

Gender and households types Females

100

Ratio of employed Ratio of poor

90 80 70 60 %

50 40 30 20 10 0 1

2

Young labour market entrants

3

4

Childless couples

5

6

7

8

Couple households with children living at home

9

10

11

Lone parent families with children at home

12

13

Older couples

14 Wid. fem.

Gender and households types

Notes: 1 2 3 4 5 6 7

Single persons (age 20–39) living with parents (family of origin) Single persons (age 20–39) living alone Childless couples (age 20–39) living with parents (family of origin) Childless couples (age 20–39) Couples, with youngest child(ren) 0–2 years Couples, with youngest child(ren) 3–6 years Couples, with youngest child(ren) 7–14 years

Source:

8 9 10 11 12 13 14

Couples, with youngest child(ren) 15–18 years Youngest child(ren) 0–6 years Youngest child(ren) 7–14 years Youngest child(ren) 15–18 years Midlife ‘empty nest’ couples (respondent age 40–59), without resident children Older ‘retiring’ couples (respondent age 60–75) without resident children Widowed women (aged 60–75) living alone

Spéder and Kapitány (2005).

Figure 6.2

Employment rates and the poverty ratio by household type in Hungary

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Poverty risks exhibit the expected patterns, underpinning the centuryold experience that poverty also has a generational/life-cycle character (Rowentree 1901; Leibfried et al. 1995): poverty episodes and financial crises are more likely to occur early in the life course. Thus, poverty risks are higher among singles living alone and people with underage children. It is also well known that lone-parent families and families with three or more children have higher poverty risks than the average (for more details, see Spéder and Kapitany 2005). Older generations enjoy relatively stable material circumstances – it is with good reason that we stated earlier that the elderly constitute a massive part of the middle stratum in Hungary (Spéder 2000). Of course we are well aware that prosperity is not determined by household types but we have to point out that poverty in Hungary also has a generational/demographic aspect.

SUMMARY In this study we aimed to highlight certain life course events and identify the challenges to the employment model and the associated social programmes as well as for the family and for different age cohorts. For this, we selected seven important transitions and phases of the life course and discussed their changing characteristics, their settings within the employment, and their relation to the relevant welfare programmes (second section). Since Hungary has experienced a transformation from a redistributive economy based on state property into a market economy dominated by private ownership, we devoted special attention to discussing the changing social and economic circumstances in each section. The special attention being paid to the transformation was highly justified, since profound changes were identified according to each transition. In summarising these changes we saw clearly growing opportunities on the one side and increasing risks and instability on the other side. Educated people and those belonging to the younger cohort could access advantageous labour market positions on the one hand. Less educated and people in their late middle ages, on the other hand, were those who lost mostly from the transformation. Interestingly, we found that in Hungary the pensioners were not losers but rather winners from the regime change. Employment trajectories have also been profoundly restructured. Before the transformation they were well institutionalised, foreseen and accountable: people used to get immediate access to employment after finishing school, remain employed their whole lives, and retire on a pension as early as they could. Of course there was occupational mobility in the labour market, therefore employment experiences and rewards were different.

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With the transformation all these patterns changed almost overnight; the emergence of unemployment as a distinct social status, the volatility of economic performance and job opportunities, the increased competition among employees, and so on, established new circumstances for employment careers. The share with an unbroken, linear employment career has strongly decreased and those experiencing unemployment phases or unstable careers has increased. Unfortunately, due to the limited timespan and the lack of relevant research, we do not yet have a clear overview of the features and types of new employment trajectories. However we can assume the growing importance of education and the permanent prevalence of instability.

NOTES 1. 2. 3. 4. 5. 6.

7. 8. 9.

10. 11.

12.

The timespan of this analysis cannot go beyond 2006, when the government introduced austerity and reform programmes resulting in a stagflation period with growing unemployment. In 2001 in Hungary, people with only primary education were over nine times as likely to become unemployed than people with higher education diplomas. In the EU15, this was little over two times. (KSH 2003). In this section we do not discuss female unemployment since a separate section (Reconciliation of work and family) is devoted to the characteristics of the female life course. This indicates the rate at which marriages would end in divorce if the present conditions were to last. Bureacratically speaking the Hungarian systems of pensions is amazingly complex, there are dozens of different types of pensions and benefits and many people are recipients of a number of them simultaneously. A good example of this is the so-called ‘Premium Years’ programme introduced in 2005, designed to lower retirement age first for public employees, then later for employees of the private sector. Participants are to receive the same pension payments (after meeting some financial conditions, of course) as the others, even though they will retire three years earlier. In our terminology, an old age pensioner is someone who has reached the retirement age and is receiving some sort of lifelong social support, regardless of its title. Thirty-five per cent of the voter population receive some kind of pension-type allowance and 25 per cent of them are old age pensioners. The popular term for the baby-boom of the 1950s. In 1953, the Ministry of Health, headed by Anna Ratkó, introduced drastic, chiefly prohibiting, restrictive measures in order to increase fertility (induced abortion became practically prohibited, and so on). As a consequence births rose enormously. The measures were valid for a duration of two years. As the basic distributions show, a large majority of young singles live with their parents, but more young couples live with their parents than on their own. Since the number of children is highly significant from the perspectives of both employment and especially the poverty situation of the household, we also created a typology (not shown) in which we regarded as significant not the age of the youngest child but the number of under-18 dependent children. We have already performed a detailed analysis on the poverty of the population (Spéder

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and Kapitány 2005). Family circumstances and labour market situations constituted important factors in that research, but in that case we obviously took a lot of other factors (education, ethnicity, region) into consideration.

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Rowntree, Benjamin S. (1901), Poverty. A Study of Town Life, London: Macmillan. Spéder, Zsolt (2000), ‘Getting Better and Becoming Dissimilar. Economic WellBeing of the Elderly between 1987 and 1996 – Hungarian Case Study’, in Tine Stanovnik et al. (eds), Economic Well-being of the Elderly, Aldershot: Ashgate, pp. 53–98. Spéder, Z. (2001), ‘Életünk fordulópontjai. Az NKI társadalmi-demográfiai panelfelvétele kutatási koncepciója és a kérdőívének vázlatos ismertetése’ [The turning points of the life course – a presentation of the research concept and questionnaire of the KSH NKI Sociodemographic Panel Survey], Demográfia, 44 (3–4), 305–20, www.dpa.demografia.hu, accessed 20 January 2009. Spéder, Z. and F. Kamarás (2008), ‘Hungary: secular fertility decline with distinct period fluctuations’, Demographic Research, 19 (18), 599–664. Spéder, Zsolt and Balazs Kapitány (2005), ‘Poverty and deprivation: assessing demographic and social structural factors’, Working Papers on Population, Family and Welfare, 8, Budapest: Demographic Research Institute. Spéder, Zsolt, Zsuzsanna Elekes, István Harcsa and Péter Róbert (2002), ‘The Outlines of the Transformation in Hungary’, in Wladyslaw Adamski, Pavel Machonin, Wolfgang Zapf and Jan Delhey (eds), Structural Change and Modernization in Post-Socialist Societies, Hamburg: Krämer-Verlag, pp. 79–153.

7.

From selective exclusion towards activation: a life course perspective on the French social model Christine Erhel, Léa Lima and Chantal Nicole-Drancourt

INTRODUCTION For several decades now, advanced societies have been challenged by a series of radical changes. Trends towards increasing individualisation and liberalisation of social behaviour have coincided with a major process of global economic restructuring and significant shifts in societal demographic structures. These transformations are associated with growing variation in individuals’ life trajectories, thereby undermining the traditional linearity and coherence of people’s biographies. Life trajectories have become increasingly deinstitutionalised and destandardised1 at the same time as traditional welfare systems are also becoming destabilised. The result is an emergence of new social risks; these are associated on the one hand with changes in social organisation consequent on the increased fragility of marriage, later and reduced childbirth, the growing share of single-parent families, and a decline in intergenerational solidarity; and on the other hand with changes in labour market patterns, including increased occupational and geographical mobility, the growth of new forms of employment and working time arrangements, and the general resurgence of marginal employment forms and social exclusion. These new social risks, unless new approaches are developed, are sufficient to challenge the principle of the social contract that can be said to govern the organisation of many Western societies, including France. In the mid 1970s, France adopted an employment policy that was designed to cope with the problems of downsizing, weak employment growth and growing unemployment, through managing the size and structure of the labour supply. As in some other European Member States such as Belgium, Germany, Italy and the Netherlands, employment policy was aimed at reducing labour supply at the two ends of the age distribution. 208

A life course perspective on the French social model

209

120 100 80 % 60 40

Male’s Employment Rate - 2005 Male’s Employment Rate - 1980

20

Female’s Employment Rate - 2005 Female’s Employment Rate - 1980

Source:

5

65 a m nd or e

–6 60

55

–5

9

4 –5 50

9 45

–4

4 –4 40

35 –3 9

30 –3 4

9 25

–2

4 –2 20

15 –1 9

0

OECD (2006), and own calculations.

Figure 7.1

Employment rates by age and gender in France, 1980–2005

Two main instruments were adopted: for the young, the outcome was a further increase in processes of ‘selective exclusion’,2 while for senior citizens, the instruments of choice were early retirement and redundancy support (Michon 1995). The result of these policies 20 years later is a pattern of activity that has been labelled in comparative studies a ‘French specificity’ (Elbaum and Marchand 1994): that is there is primarily only a single generation at work, the 24–50-year-olds, to the detriment of young people under 25 and those over 50 whose employment rates were 24 per cent and 50 per cent respectively, compared with 87 per cent among prime adults (INSEE 2006a) (see Figure 7.1). These two age groups were recognised by the government to be particularly vulnerable to the risk of restructuring. These life course stages were termed ‘transitions’ – towards adulthood in one case and old age in the other – but, in fact, far from defining these stages in demographic terms with well-defined boundaries by age, the approach taken was sociological. The high risk transition periods were regarded as symptomatic of the destructuring of the standard life course and were identified as periods when there was a high risk of social exclusion. How to deal with these high-risk life stages thus became the focus of a succession of welfare policies developed over two decades, the 1980s and 1990s. For young people this meant the implementation of a range of active labour market policy programmes (lowering of payroll taxes,

210

The welfare state and life transitions

job experience and labour training measures, subsidised jobs both in the private and public sectors) and, for the older workers, an array of ‘retirement’ schemes initiated in the name of the ‘right to rest’3 (with no obligation on the older unemployed workers to search for a job). By closely linking age-related models of employment and welfare to social rights, these public policies were institutionalising not only a new way of organising life courses but also two new life stages: that is, a stage of extended adolescence, through the institutionalisation of a period of post-education socialisation before entering the labour market, and a stage of ‘senior citizens’ or ‘older workers’, through the institutionalisation of a period of active retirement at the end of the job career (Guillemard 2003). This age segmentation of employment careers cannot only be ascribed to the new orientation of public policies. Indeed this age structuration of the social division of labour in France is to a large extent the reflection and crystallisation of societal conventions that involve individuals as much as employers and public authorities. There are common rules and expectations of specific abilities and disabilities related to age categories.

SCHOOL-TO-WORK TRANSITION The situation of young people in France is often described as worrying because of the high unemployment rate among young people. The major transformations in this particular transition over recent decades have involved a strong expansion of education and a related rise in the age of exit from education. Non-vocational education was extended to act as the shock absorber in the context of the economic crisis and it is this development that has defined the characteristic of the school-to-work transition in France. Changes in skill requirements and the associated demands by employers for higher educational attainment have raised the costs for individuals of dropping out early from the educational system and entering the labour market without qualifications. At the other end of the spectrum, well-educated youth are facing major problems of downgrading – that is taking jobs below their potential – at the beginning of their professional life. The Extension of General Education The French employment system, through public policies but also employers’ expectations, gives strong signals to young people and their families that they should extend their schooling as far as possible within the general education system. Among OECD countries, France, together

A life course perspective on the French social model

211

60 50 40 % 30 20 Labour force participation Men 15–24

10

Labour force participation Women 15–24 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

Source:

OECD (2006), and own calculations.

Figure 7.2

Labour force participation 15–24 years old, 1980–2005

with Belgium and Germany, has the highest schooling rate of young people (15–19 years old). More than 90 per cent of the pupils have 15 years of education, compared to 12 years in the other OECD countries. The training system in France remains, in spite of a growth of vocational schools, strongly influenced by the general educational system, with an increasing share of young people pursuing their study until the ‘baccalaureat’.4 In 2005 almost 70 per cent of a generation were staying on until the end of secondary school and 77.5 per cent of those passing the bac were choosing to enter tertiary education (Ministère de l’Education Nationale 2007). This societal convention, together with the government’s proactive educational policies, to a large extent explain the decline in labour force participation of young people from the mid 1970s to 1999 (see Figure 7.2). In 1980, 52 per cent of young men and 42 per cent of young women between 15 and 24 years old were active, but 25 years later the rates were only 38 per cent and 30 per cent. The proportion of French young people neither at school nor working is one of the lowest in the OECD countries, especially if we consider those between 15 and 19 years old. However, the decline in youth labour force participation seems to have halted over the last five years. This is partly due to stronger economic growth and the related improvement in employment opportunities during the second half of the 1990s.

212

The welfare state and life transitions

Differentiated Effects of the Extension of Schooling on Labour Market Integration An early entry into the labour market is very costly for the individual. Young people without any degree have fewer employment opportunities and a large majority of them recognise the potential cost through their decisions to extend their education beyond the compulsory schooling age. At the end of the 1970s more than 40 per cent of a cohort exited education with only a lower secondary school qualification or less but today this exit rate is less than 15 per cent (Giret et al. 2006). For these early school leavers, their first experience of the labour market is most often unemployment. The youth unemployment rate is also persistently high. Since the early 1980s, the unemployment rate of recent entrants (that is those who have been active for less than four years) has ranged between 15 and 25 per cent. Overall, the school-to-work transition has increasingly involved employment in non-standard or insecure jobs and, more generally, a succession of heterogeneous employment statuses and job positions (unemployment, non-standard jobs, training schemes, temporary work, and so on).That is, a specific life stage of ‘youth integration’ on the labour market has developed between the period of leaving school and accessing stable employment. In 2003, a longitudinal survey by the institute Cereq that follows young people entering the labour market estimated that this ‘transition time’ of youth integration lasts on average three years (Couppié et al. 2006). Educational attainment remains a good predictor of subsequent position in the labour market. Between the first and the seventh year of activity, people without a degree/diploma have an employment rate between 12 to 14 points lower than the rest of the same cohort. Furthermore, among the employed, a lower share of this group are employed on an open-ended contract; only 52 per cent of early school leavers without a degree have an open-ended contract seven years later, compared to 74 per cent of those with a degree in the same cohort. Well-educated young people experience a quicker integration into employment but they face, in return, a strong tendency towards downgrading, relative to their qualifications. This downgrading applies to a situation in which new entrants consider themselves to be overeducated in relation to the job requirements. This phenomenon can be observed from the early 1980s onwards: the demand for high-skilled jobs increased less rapidly than the number of graduates, implying that a significant share of well-educated young people are forced to accept jobs that pay lower than graduate wages and require lower than graduate qualifications. It has been estimated that between 20 to 30 per cent of ‘Generation 1998’5 are

A life course perspective on the French social model

213

expected to continue to feel themselves overeducated relative to their jobs even after three years of active participation (ibid.). In general, youth integration into the labour market is more difficult for females than for males. The female unemployment rate after three years of activity is higher and they are more likely to start their professional life in unstable employment. However, the generation who left the educational system in 2001 have had a rather different experience (Marchal et al. 2004); in 2004, the male and female unemployment rates of this group were equivalent, suggesting that young males were being affected more than females by the 2003 economic recession. The Institutionalisation of the School-to-Work Transition In view of the lengthening school-to-work transition, successive French governments have implemented a range of measures in order to help the young unemployed find a job. Many public active labour market programmes have been targeted towards young people, starting with the socalled socially useful work programmes initiated in 1984 and ending with the development of specific youth employment contracts created in 1997. There is a strong emphasis on wage subsidies and employment support for the young. In short, active labour market policy programmes targeted at young people provide a crucial quasi-structural component of the schoolto-work transition. Indeed, wage and employment subsidies targeted at young people have been playing an increasing role in the process of youth integration into the labour market (see Figure 7.3). In 1984 only 6.5 per cent of youth jobs were subsidised but nowadays more than one in four is publicly subsidised. In their first year of activity, 8 per cent of youngsters of Generation 1998 were participants in some kind of a programme, a share that only fell to 7 per cent some three years after becoming active in the labour market (ibid.). These public schemes to facilitate the school-to-work transition are aimed at compensating for the failings of the French educational system, in particular its failure to take into account employers’ expectations and requirements. Thus, these public schemes are intended to compensate for the weakness of young people’s occupational skills. To coordinate such youth programmes, specific youth work organisations have been created. More than 800 Missions Locales provide employment counselling to 900 000 youngsters between 16 and 25 years old every year. The counsellors are in charge of selecting youth programme participants. Since 1999 special programmes have been initiated focusing on the most vulnerable young people. Their objective is to institutionalise paths

214

The welfare state and life transitions

35 30 25 20 % 15 10 5

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

0

Source:

DARES (2007); INSEE (2006b).

Figure 7.3

Proportion of subsidised youth employment (less than 26 years old), 1974–2004 in France

into employment and provide youth work experts with the tools to offer better support. Youth Integration as a Family Responsibility By constantly raising the minimum school-leaving age, refusing young people access to the RMI (minimum welfare income) or the independence allowance, and extending the period of eligibility for child allowances (paid to parents) to the age of 21, the French tax and benefit system has reinforced the economic dependency of young people on their parents. In this context, the family is expected to support financially young adults’ living expenses, not only while they are studying but also during their extended period of job search. In practice, intergenerational transfers from parents and grandparents to young adults are quite high in France with 50 per cent of parents supporting young people after they leave the parental home. The main issue is whether it is preferable to help parents directly to pay the cost of ‘extended adolescence’, at the risk of trapping young people in a state of dependency, or whether public authorities should take measures to promote earlier economic independence for young people. In 2009, this debate was still open, and the various attempts to create a public benefit

A life course perspective on the French social model

215

system to support 16–25-year-olds have not been successful, despite numerous bills following the report by the French economic planning agency ‘Jeunesse, le devoir d’avenir’ (Commissariat Général du Plan 2001) and the creation of a Commission responsible for examining the feasibility of such benefits. At present, among young people no longer living with their parents, students are helped the most by their families (cash payments, financial contribution for rent and/or for food expenses). Referring to the ‘Jeunes et Carrières’ survey of 1997, on the basis of their own income 90 per cent of students would be below the poverty line but this falls to 20 per cent if transfers from parents are included (Robert-Bobée 2002). On the other hand, for young unemployed or non-working households, the situation is often more precarious: they have limited entitlement to unemployment benefits and are less frequently supported by their families. In France, the application of the intergenerational contract for young people under 25 is dependent upon family solidarity, not the state. The state is more generous with students. Students in higher education have reduced costs because of the low level of university fees. This can explain the low public interest in establishing a publicly subsidised student loan system in France. Moreover, the state provides a housing allowance for students in higher education. There is in fact increasing inequality between students and unemployed on the one hand, and between students in universities and those in the elite grandes écoles on the other hand. For example, the average public expenditure for one student in a Classe préparatoire aux grandes écoles was 13 560 euros in 2005 against 7210 euros for an average student at university (Ministère de l’Education Nationale 2007).

TRANSITIONS IN PRIME AGE AND THE DEVELOPMENT OF CAREERS The median age of first childbirth rose in France from 26.7 years in 1975 to 29.6 years in 2004. Educational attainment and employment status have become increasingly important in decisions with respect to private lives. In particular, maternity seems to be increasingly dependent upon women’s integration into the labour market (Bac et al. 2005). For the most recent cohorts it is not age but the median time that has elapsed since completing education that plays the major role in the timing of first births. This median time has increased from six to seven years for the generation born in 1948 to eight years for the generation born in 1967. On the other hand, childbirth has always had an impact on the mother’s professional life but this impact is different now from 30 years ago.

216

The welfare state and life transitions

Toward Freedom of Choice . . . for Women: the Public Strategy for Family–Work Balance In France, there is a potential clash between the concern to sustain a high birth rate and the development of women’s economic activity. Supporters of a pronatalist policy, influenced by Catholic social movements, have been in favour of the entire population sharing the economic burden of children whilst simultaneously striving to restrict married women’s activity (Chauvière 2000). However, only the first part of this strategy has succeeded as the resolution of this conflict has been for the state to intervene to support mothers in employment. In France, as elsewhere, the question of the family ‘model’ has always permeated policymaking and public debate. But perhaps more than elsewhere, there is a large dichotomy between the model of self-fulfilment through maternity and domestic responsibilities on the one hand, and the model of social and economic liberation through work on the other. French family policies have therefore always hovered between supporting one or other of these models of identity (Martin 1998; Letablier 2000). Moreover, the objectives of protecting children and maintaining mothers at work have been integrated into a family policy aimed at maintaining a generally high birth rate (Letablier 2000). While different governments resorted to the classic tools of generous maternity leave and part-time work tax incentives to facilitate family–work balance for women, it is in fact the development and institutionalisation of daycare and preschool programmes, first under the centre-right governments of the 1960s and 1970s but consolidated and expanded over the following decades (Morgan 2003), that has had the more significant impact. In this general context, the 1980s saw the emergence of a new phenomenon, with the issue of childcare becoming a central policy issue, and an increasing proportion of social welfare expenditure being devoted to it. During the 1980s having one or two children – even a young child – had little effect on women’s employment rate. Behind this issue, controversy grew over old arguments in France (is a woman’s place at home or at work?), although it was accompanied by a new argument: do women have the right to ‘choose’? It was on the basis of the idea of ‘freedom of choice’ that family and employment policies were seen to converge. It then became a question of ‘choosing’ (whether to work or not) and, if it was work, of ‘choosing’ a method of childcare that would ‘reconcile’ work and family life (Fagnani 2000). The emphasis in the 1980s was on the development of collective childcare services whereas, in the 1990s, it switched to the diversification of childcare choices which encouraged access to individual arrangements

A life course perspective on the French social model 45

42

42

42

2002

2003

2004

40

217

40

35 29.5

30 %

25 20 15 10 5 0

Source:

1994

2005

OECD (2006), and own calculations.

Figure 7.4

Inactivity rate of married/cohabiting mothers in France, 1994 and 2002–2005

for childcare – by a registered childminder who came to the parental home, through the ‘Aged’ and then ‘Afeama’ schemes,6 or by the mother herself by means of the Allocation Parentale d’Education (APE). The first two benefits took the form of tax deduction equivalent to the national insurance contributions for employing a childminder. The APE was a cash allowance that could be combined with unpaid parental leave or with part-time work.7 These provisions were severely criticised,8 notably for the negative effects of APE arrangements on mothers’ labour supply. Obviously family policies have a great impact on female’s choices. In fact, looking at inactivity rates, we can easily identify both the impact of the creation of the APE and the changes in legislation as there was a steep rise in inactivity between 1994 and 2002 for mothers of two children, with at least one under three years old, from under 30 per cent to 42 per cent (see Figure 7.4). Since 2000 reforms in this field have confirmed previous orientations. Indeed while the development of childcare (both public structure and private care assistants at parent’s home) is still a priority, parental leave schemes that tend to reduce women’s activity at the birth of a child have also been further developed. The reform of 2004 (called PAJE) is very typical of these ambiguities, since it extends the parental leave to the first child, and at the same time tries to develop diverse types of childcare.

218

The welfare state and life transitions

Female Pathways: Reduced Activity for Motherhood as a Transitory Phase Comparing employment patterns over the life course in 1980 and in 2005 (Figure 7.1), we find the major change is in the employment profile of women. Indeed the profile of men and women’s employment trajectories over the life course are increasingly similar. Women’s employment rate between 30 and 50 years old remains lower than men’s employment rate even though the full-time employment rate of mothers is still normally much higher then the part-time employment rate, except when there are three children or more than one under three (see Table 7.1). In contrast in several Northern European countries parttime employment is the dominant form of economic activity for mothers (Fagan and Warren 2001). Furthermore, the issue of family/work balance is still a women’s affair. Women are still in charge of the major part of the domestic tasks even when both spouses are working full-time: four hours per day against 2.15 for men (Ponthieux and Schreiber 2006). Moreover, almost 40 per cent of females who worked before the birth of a child report major changes in their working life (with regards to status, working time, work intensity or activity) compared to 6 per cent for males (Pailhé and Solaz 2006). The difference between the impact on males and females increases with the number of children: by the third child, 55 per cent of the mothers report significant changes while the situation of fathers is not further affected. Fathers are, however, more likely to adapt their pattern of working hours (without changing their global working time). However, the impact of children on women’s labour supply, even after the introduction of the APE, may still be characterised as transitory, at least regarding employment rates. In 2005, the employment rate of women with two children and the youngest under three years old is about 60 per cent but it rises to 84 per cent for women with two children in general (see Table 7.1). In other words, the inactivity of French mothers is highly reversible nowadays. Nevertheless, the always-necessary reconciliation between work and family is still borne by women and with the decline in employment opportunities and increased subsidies from the state (the APE) to encourage women now with a second and even a first child to remain at home, there has been a re-emergence or strengthening of a temporary transition phase, involving either ‘transitional part-time’ activity or ‘transitional inactivity’. Amongst mothers of two children with one under three years old only 30 per cent now work full time (against 87 per cent of fathers in the same situation). Part-time work is part of a

A life course perspective on the French social model

Table 7.1

219

Activity, employment and unemployment rates by family situation and number of children in France, 2005 Activity rate

Full time

Part time

Unemployed

Females Males Females Males Females Males Females Males Living as a couple Without children 1 child under 3 years old 2 children with 1 under 3 years old 3 children or more with 1 under 3 years old 1 child over 3 years old 2 children over 3 years old 3 children or more over 3 years old Single Without children 1 child or more All Note: Source:

75.7

91.4

46.3

82.8

22.8

3.3

6.6

5.3

74.4

84.2

51.4

74.2

16.5

4.3

6.5

5.7

80.2

96.5

54.1

86.6

16.1

2.7

10.0

7.1

59.8

96.3

29.9

86.7

25.6

3.8

4.4

5.9

37.1

96.4

15.9

84.7

17.0

2.7

4.2

8.9

81.1

91.2

51.5

83.4

23.1

3.3

6.4

4.6

83.9

95.9

47.9

89.8

29.7

2.1

6.2

3.9

68.2

94.8

30.6

85.1

29.3

3.7

8.3

6.0

79.5 77.6

82.8 82.4

53.9 55.6

67.5 66.9

15.0 13.4

5.1 5.2

10.6 8.6

10.1 10.3

82.1

86.3

51.6

74.7

17.1

4.0

13.3

7.6

76.5

89.8

47.9

79.9

21.1

3.7

7.5

6.2

Metropolitan France, persons aged between 15 and 59 years old. INSEE (2006c).

220

The welfare state and life transitions

private arrangement at certain stages in women’s life (Nicole-Drancourt 2004) but a significant share of these women do not stay in part-time jobs. Working part-time is not seen as a permanent employment state and if mothers who quit their jobs are asked about their intentions, only 5 per cent definitely do not intend to re-enter the labour market while a further 18 per cent do not know when they want to go back to work (Meda et al. 2003). Impact of Gender and Age on Social Mobility Social mobility during the employment career has increased since the 1980s (Monso 2006). Between 1998 and 2003, 20 per cent of workers moved from one occupational group to another compared to one in eight between 1980 and 1985. The mobility is mostly positive (from a lower to a higher social group) but downward mobility has also increased. Upward mobility primarily concerns young workers. Chances of mobility decrease systematically with the age of the individual but also vary by gender. Young men, especially, are able to compensate for their forced entry into jobs below their educational level while women experience less frequent promotions, with only one in eight females in low-skilled blue- or whitecollar jobs promoted between 1998 and 2003 against one in three of the men in the same occupational group. The ‘familial story’ and household composition matter for the job career. Here again males and females do not have the same destiny. Gadéa and Marry (2000) found a positive correlation between the number of children and the professional success of male engineers. For highly educated male workers at least, there is a kind of bonus linked to family size. Fathers are given more responsibility and achieve higher positions, the more they fit the breadwinner norm. Conversely, marriage and motherhood still penalise women in their careers. Not surprisingly, wages increase with age. Seniority remains a prevalent feature of the French wage-setting system in spite of the development of individualised wage systems. This is particularly true at the beginning of working life. Male employees aged 20–30 years old experienced an increase of 42 per cent in their wages between 1992 and 1998. The corresponding figure for those aged between 31 and 35 was only 24 per cent. Wage progression is therefore stronger in the early phase of the employment career and this is independent of occupational categories. Here again there is a significant large gender disparity with women enjoying much less rapid increases in their wages in the early part of their career (Dupray and Moullet 2005) and in fact their wage profile remaining much flatter than men’s over the life course.

A life course perspective on the French social model

221

50

45

40

35 % 30

25

All Men Women

20

19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07

15

Source:

Eurostat (2008).

Figure 7.5

Seniors’ employment rate in France, 1983–2007

FROM EMPLOYMENT TO RETIREMENT As shown by Figure 7.5, the employment rate of elderly workers (between 55 and 64) exhibits a U-shaped profile over the last 20 years: it declined dramatically between 1983 and 1999, where the trend is reversed (Figure 7.5). The current employment rate is higher than it used to be in 1983 (38.3 per cent in 2007), but it remains far behind the 50 per cent European Employment Strategy goal. According to Eurostat the average age for retirement remains under 60 (59.4 in 2007). This profile of seniors’ employment rate over time is especially clear for men over 55. As far as women are concerned their employment rate between 55 and 64 has increased over the last 20 years, as a result of a cohort effect. The difference between male and female employment rates in this age group has decreased and amounts to less than 5 percentage points in 2007. Again, this reveals the impact of a strong societal intergenerational arrangement, that has started to evolve in the last years.

222

The welfare state and life transitions

A Dramatic Drop in Seniors’ Activity Rate Between 1983 and 1999 The strong decrease in older workers’ employment rate might first be ascribed to an earlier withdrawal from the labour market. It results from two main phenomena. First, since 1981 the legal age of retirement has been 60, even if many people need to work longer in order to get a fullrate pension. Besides, the role of early retirement has been very important for the 55–59-year-olds. For men aged 55–59 years old, the activity rate dropped rapidly between 1982 and 1984 and has been stable since 1996. Early retirement is part of a major social arrangement between generations. It fulfils both employers’ wishes and workers’ expectations. In France this kind of arrangement has been favoured by public policies in the first half of the 1980s, when early retirement schemes were presented as a measure to reduce global unemployment as well as youth unemployment. Despite a reduction in public expenditures devoted to these programmes in the mid 1980s, the ‘culture’ of early retirement (Guillemard 2003; Courtioux and Erhel 2005) has remained present until the end of the 1990s. Since the pensions reform in 2003 general programmes have been suppressed and early retirement is targeted at people who have experienced hard working conditions (cessations anticipées d’activité de certains travailleurs salaries: CATS) or been exposed to dangerous substances (cessations d’activité des travailleurs de l’amiante: CAATA). Nevertheless, the French unemployment insurance regime still offers9 unemployed aged over 57 years and a half to be exempted from job search, in which case they keep receiving their unemployment benefits but are classified as inactive. Early retirement was more common for blue-collar workers and in some specific industries. The aim of early retirement also varied across industries. To illustrate, in construction early retirement has been mainly used as an adjustment tool over the business cycle, while in banking or insurance, early retirement has been essentially used to rejuvenate the workforce by recruiting younger people. Other reasons might explain seniors’ low activity rates. First, health problems are increasing with age, and are clearly a determinant of early withdrawals from the labour market. Early retirement programmes or job search exemptions are functional equivalents for long sickness leaves or disability pensions in other European countries. Besides, the role of this age group in providing care, for both grandchildren and older parents, must not be neglected. Indeed, the family, neighbours and friends still play an important role in helping an elderly person to stay at home. Twothirds of elderly dependents aged 60 or over live at home, in their own home or with the family. In 50 per cent of cases, the assistance they receive comes solely from relatives or friends and in 30 per cent of cases, elderly

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dependants receive both professional and family assistance (Dutheil 2001). For 90 per cent of them, non-professional care givers are members of the family and 66 per cent of personal care givers are women. Usually the spouse (50 per cent) or children (30 per cent) are involved in the provision of home care. Finally, the role of principal care giver is often filled by children outside of the labour force (daughters and daughters-in-law mainly). Half of them do not work and only 4 per cent have stopped their professional activity to devote their time to care-giving. Is a Career in France Still Possible After 50 Years Old? Reinforcing this low activity rate is a strong and persistent consensus against hiring seniors: one employer out of two confirms that they are reluctant to recruit people older than 50 even if they have a recruitment problem. Only one employer in four hired a worker over 50 in 2000 (Richet-Mastain and Brunet 2002). Even though employers report that they do appreciate older workers for their experience, their professional knowledge and their contribution to the working team, a majority of them believe that a high proportion of seniors in the company would have negative effects on individual efficiency and in particular on productivity relative to wages (Marioni 2005). Problems of adaptation to new technologies are considered as a major handicap for the seniors’ productivity. Besides, given the existence of seniority premiums in internal labour markets, there would be a gap between seniors’ productivity and their wages. But according to empirical studies this problem is overestimated by employers, and there is no global gap (Aubert and Crépon 2004). As a result seniors who become unemployed have a very low probability of returning to employment. Only 3 per cent of the seniors who were unemployed in 2000 had entered employment by 2001 in France: the probability of making a transition from unemployment to employment was thus very low, in comparison with the 25–54 age group (27 per cent), or with other countries (20 per cent in Denmark, 27 per cent in the UK).10 Despite a low average level of unemployment for 50–64-year-olds, the French labour market is characterised by a high long-term unemployment rate among seniors. Furthermore, seniors are more and more likely to be employed part time. Between 1984 and 1997 the proportion of men aged 55–59 in part-time work tripled (from 1.9 per cent to 5.5 per cent) and increased by almost 65 per cent for men older than 59 years old. The trend is striking even if male seniors working part-time remain a minority. This is not the case for women who are traditionally more prone to work parttime. Part-time jobs increased for this age group in the same proportion as in other age groups.

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40 34

35

33 31

30

28

25

22

% 20 15 10

7

5 0 Source:

15–24

25–39

40–49

50–59

over 60

Total

INSEE (2006a).

Figure 7.6

Training access by age in France, 2000

The seniors’ selective exclusion also appears with regards to training (see Figure 7.6). The incidence of training among older workers is significantly lower than among younger workers. This low incidence might be ascribed to both supply (employers’ attitude) and demand factors (employees’ behaviour). On the one hand, older workers are underrepresented in dynamic and high-tech industries where continuous on-the-job training requirement is higher. On the other hand, older workers’ incentives to invest in further training are low due to lower expected upward occupational and social mobility. Mainly they do not feel the need for training and employers are also not pushing them into training. This age effect on training participation seems to be independent of educational attainment (and consequently of social background). A Turning Point in Age Management? The Conseil d’analyse économique11 has suggested that the Lisbon agenda could provide the basis for a change in direction and the ‘reconstruction of an older workers’ labour market’. In 2000, more than a third of workers aged 50 and over were, in one way or another, not working and/or dispensed from obligations for job-seeking. This ‘generational fracture’ was criticised: no mechanisms were available to redistribute

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work between the young and the old (Culpepper et al. 2006). This situation was held to be endangering the symbol of the French intergenerational contact, that is, the prevailing pay-as-you-go pension system. Since the Lisbon summit, therefore, we have seen major attempts to rectify the situation in France. These attempts have built upon the notion of a ‘new life stage’ for ‘senior citizens’, termed ‘active retirement’. This concept has provided a common thread in French discussions on pensions12 and in the agreement on the first phase of the pension reform in 2003.13 It was reaffirmed in 2006 in the National Plan for Seniors’ Employment. In practice the reforms rely on three main tools: first, they redesign the social and financial incentive system in order to increase seniors’ labour supply (through pension reform, but also through the closure of early retirement schemes, and the forthcoming end of job search exemptions – DRE); second, they aim at changing employers’ behaviour through the introduction of a specific form of temporary labour contract for people aged over 57 and through a communication campaign; third, the share of seniors among the beneficiaries of targeted labour market policy has been increased since 2005. All these reforms are interesting and may, in the long run, serve as a springboard for considering a reorganisation of working hours depending on the life stage: old age may come to be regarded as a source of vulnerability in the labour market, in the same way as illness at any age or a disability.14 At the same time the policy of ‘getting older people back to work’ that is accompanying the pensions reform may assist in re-establishing the idea that an individual can be ‘employable’ after the age of 50! More generally, the French debate has recently introduced some more general considerations in terms of career and life course through the ‘flexicurity’ debate. The social partners are now insisting on the necessity to develop lifelong learning and security over life course transitions. The January 2008 law on ‘modernising the labour market’ develops a principle of transferability of training rights which follows this trend. Such reforms could also help integrating older age in a more general life course perspective. In practice, these reforms have not for the moment had a major impact on the French social compromise. A turning point in 2001 can be identified in the employment rate of older workers but this is in part reflecting a compositional effect relating to a decline in the proportion of over 60s with a lower employment rate (DARES 2007). After adjusting for these compositional effects, the employment rate of the group aged 55–64 only increased by one point between 2000 and 2005, mainly due to the increase of women’s participation in the labour market. Despite a decrease in early retirement beneficiaries, the number exempted from job search remains high: according to the Ministry of Labour (DARES), there were 55 000

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million 29

Job search exempted

28 27

Early retirement (full time)

26

Further training

25

Unemployment Active employment schemes, public or non market sector Active employment schemes, private sector

24 23 22

Regular employment

21

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

20

Source:

DARES (2007), annual estimated average stocks.

Figure 7.7

The French labour market, 1973–2006: employment, unemployment, labour market policies

persons in early retirement programmes in 2006 and more than 400 000 ‘seniors’ exempted from seeking jobs (see Figure 7.7). In this context there is a high probability that the current economic downturn reverses the trend in seniors’ employment rates, even if unemployment figures for January 2009 show unemployment growth concentrated on the youth. In the long run the pensions’ reform might lead to an increase in poverty rates for older people, since tightened contribution conditions might lead to lower pensions. This risk is higher for women, who are more likely than men to work part-time and to have discontinuous careers.15

CONCLUSIONS The longlasting slowdown of economic growth in France has resulted in a destabilisation of the labour market on the one hand, and a growth of employment policy on the other. The destabilisation of the labour market has been caused by the freezing of recruitment in response to economic difficulties. This helps explain the tendency in France for variations in employment trends by age. Young people and seniors are both seen as vulnerable groups on the labour market. These employment trends impact upon life course patterns and raise concerns about the long-run financial sustainability of the social security system. The extension of general education as a social response to youth unemployment raises the problem of

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how young people who are no longer adolescents are to be supported. At the other end of the spectrum, early retirement schemes that have deeply shaped employment trajectories over the two last decades are now seen as too hard a burden for the social security system to bear. The situation of women on the labour market and the role of so-called family policies appear ambiguous in France (Thévenon 2008). On the one hand, women’s employment rates are quite high, especially if measured in full-time equivalent, and will reach the Lisbon goal. On the other hand, women working full-time often declare that they have conciliation problems, and French policies still favour inactivity at the birth of a child, especially for low-educated women who have stronger financial incentives to withdraw from the labour market. President Sarkozy has recently announced a reform of parental leave that would become shorter (one year), include incentives for the father to take a part of the leave, and receive compensation that will be relative to the wage. If confirmed such a reform would make the French system closer to the Nordic model. But given the selectivity of the French labour market, the employment impact of such a leave remains unclear.

NOTES 1. 2. 3. 4. 5. 6. 7. 8.

9. 10. 11. 12.

Weakening of the normative framework of individual biographies and diversification of lifepaths (Lima 2008). This ‘exclusion’ is only one aspect of the place reserved for the young by the traditional principle of regulating generational competition on the labour market in France (Garrona and Ryan 1989). An idea that supported the argument to reduce the retirement age to 60 in France in 1982. Examination at the end of secondary education, a prerequisite to enter university or university colleges. The ‘Generation 1998’ is the cohort of young people who ended their studies in 1998. Child care in parents’ home. It should also be stressed that the APE is not associated with full job security on return. The right to return to an equivalent job is only guaranteed to employees with an openended contract and with at least one year of seniority. When access to the APE scheme was made possible for the birth of a second child, many mothers took advantage of it and, between 1994 and 1997, the employment rate of mothers with two children dropped from 69 to 53 per cent. Theoretically offered to all mothers and fathers as ‘choices’ made available to them, these measures actually led to the most-qualified working women employing a childminder in their homes to help with their double day of work, and encouraged the least-qualified working women to ‘return home to raise their children’ (Fagnani 2000). The government has announced the end of this measure by the end of 2010. Source: European Community Household Panel, Anxo and Erhel (2008). The Economic Analysis Board in charge of economic prospects. Particularly thanks to the COR, which is very characteristic of the importance the country attaches to these questions. The creation in 2000 of the Pensions Stewardship

228

13.

14. 15.

The welfare state and life transitions Council, the COR (a forum for analysis, forecasting and proposals) announced the closure of the first phase of the major pensions reform in France in 2003. The pension reform (or Fillon reform) which one of the flagship measures is the 40 years of contributions required to receive a full-rate pension in the public and private sector, with a ‘décote’ system. It has also seen the introduction of ‘active retirement’ initiatives, with provisions for part-time work and the option of combining employment and gradual retirement from the age of 55. Many different measures are similar to some re-integration programmes for cancer patients or the disabled. Even if parental leave is taken into account in the determination of the contribution period. But this leave often leads to difficulties in getting back to the labour market.

REFERENCES Anxo, D. and C. Erhel (2008), ‘Irréversibilité du temps, réversibilité des choix? Les fondements des “marchés transitionnels” en termes de trajectoires de vie’, Revue Française de Socio-Economie, 1, 199–219. Aubert, P. and B. Crépon (2004), ‘Âge, salaire et productivité: la productivité des salariés décline-t-elle en fin de carrière?’, Economie et Statistique, 368. Bac, C., F. Legendre, R. Mahieu and F. Thibault (2005), ‘Fécondité et âge de la fin d’études en France depuis 1975. L’évolution au fil des générations des facteurs traditionnels de la fécondité’, Recherches et Prévisions, 79, 21–35. Chauvière, Michel (2000), ‘Mobilisation Familiale et Intérêts Familiaux’, in Michel Chauvière, Michel Sassier, Brigitte Bouquet, Régis Allard and Bruno Ribes (eds), Les implicites de la politique familiale, Paris: Ed Dunod, pp. 75–86. Commissariat Général du Plan (2001), Jeunesse, le Devoir d’Avenir, Paris: La Documentation Française. Couppié, T., C. Gasquet and A. Lopez (2006), ‘Les sept premières années de vie active de la Génération 98. Entre insertion et débuts de carrière’, Bref Céreq, 234. Courtioux, P. and C. Erhel (2005), ‘Les politiques en faveur des seniors en Allemagne, en France, au Royaume-Uni et en Suède: quelles voies de réformes?’, Travail et Emploi, 102, 107–18. Culpepper, Pepper, Peter Hall and Bruno Palier (2006), La France en Mutation: 1980–2005, Paris: Presses de Sciences Po. DARES (2007), ‘Emploi et travail des séniors: des connaissances à l’action’, Document d’Etudes, 125. Dupray, A. and S. Moullet (2005), ‘Les salaires des hommes et des femmes. Des progressions particulièrement inégales en début de vie active’, Bref Céreq, 219. Dutheil, N. (2001), ‘Les aides et les aidants des personnes âgées’, Etudes et Résultats, 142. Elbaum, M. and O. Marchand (1994), ‘Emploi et chômage des jeunes: la spécificité française’, Travail et Emploi, 58, 111–21. Eurostat (2008), Labour Force Survey, Statistical Office of the European Communities. Fagan, Colette and Tracey Warren (2001), Gender Employment and Working Time Preferences in Europe, Dublin: European Foundation for Improvement of Living and Working Conditions.

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Fagnani, Jeanne (2000), Un Travail et des Enfants: Petits Arbitrage et Grands Dilemmes, Paris: Bayard Editions. Gadéa, C. and C. Marry (2000), ‘Les pères qui gagnent: descendance et réussite professionnelle des ingénieurs’, Travail, Genre et Société, 3, 109–35. Garonna, P. and P. Ryan (1989), ‘Le travail des jeunes, les relations professionnelles et les politiques sociales dans les économies avancées’, Formation Emploi, 25, 78–90. Giret, Jean-François, Emmanuelle Nauze-Fichet and Magda Tomasini (2006), ‘Le déclassement des jeunes sur le marché du travail’, in INSEE, Données Sociales, Paris: La Documentation française, pp. 307–14. Guillemard, Anne-Marie (2003), L’âge de l’emploi, Paris: Armand Colin. INSEE (2006a), Enquête Emploi, Paris: INSEE. INSEE (2006b), Enquête Emploi, Paris: INSEE, http://www.insee.fr/fr/themes/ tableau.asp?reg_id=0&ref_id=NATTEF03234, accessed 8 July 2009. INSEE (2006c), Enquête Emploi, Paris: INSEE, http://www.insee.fr/fr/themes/ tableau.asp?reg_id=0&ref_id=NATCCF03128, accessed 8 July 2009. Letablier, Marie-Thérèse (2000), ‘Famille et Emploi: une Comparaison Européenne’, in Michel Chauvière, Michel Sassier, Brigitte Bouquet, Régis Allard and Bruno Ribes (eds), Les Implicites de la Politique Familiale, Paris: Dunod, pp. 204–19. Lima, Léa (2008), ‘Le Temps de la Prime Insertion Professionnelle: un Nouvel Age de la Vie’, in Anne-Marie Guillemard (ed.), Où va la Protection Sociale?, Paris: PUF, pp. 49–67. Marchal, N., M. Molinari-Perrier and J.-C. Sigo (2004), ‘Génération 2001. S’insérer lorsque la conjoncture se dégrade’, Bref Céreq, 214. Marioni, P. (2005), ‘Accroître l’emploi des seniors: entre volontés et difficultés’, Premières Synthèses, 04.01. Martin, J. (1998), ‘Politique familiale et travail des femmes mariées en France. Perspective historique: 1942–1982’, Population, 6, 1119–54. Meda, D., M. Wierink and M.-O. Simon (2003), ‘Pourquoi certaines femmes s’arrêtent-elles de travailler à la naissance d’un enfant?’, Premières Informations Premières Synthèses, 29.02. Michon, F. (1995), ‘Le Chômage en France Tendances et Débats’, Rapport pour le Bureau International du Travail, Paris, SET-METIS. Ministère de l’Education Nationale (2007), Repères et références statistiques, Paris, Ministère de l’Education Nationale. Monso, O. (2006), ‘Changer de groupe social en cours de carrière. Davantage de mobilité depuis les années quatre-vingt’, INSEE Première, No. 1112. Morgan, K. (2003), ‘The politics of mothers’ employment’, World Politics, 55, 259–89. Nicole-Drancourt, Chantal (2004), ‘Les Usages Sociaux de l’Emploi à Temps Partiel dans les Trajectoires de Vie Contemporaines’, in Collectif Griot (eds), Figures du Temps, Paris: Ed. L’Harmattan, pp. 65–79. OECD (2006), Labour Market Statistics, Paris: OECD Stat Extract, http://stats. oecd.org/WBOS/index.aspx, accessed 30 April 2009. Pailhé, A. and A. Solaz (2006), ‘Vie professionnelle et naissance: la charge de la conciliation repose essentiellement sur les femmes’, Populations et Sociétés, 426. Ponthieux, Sophie and Amandie Schreiber (2006), ‘Dans les Couples de Salariés, la Répartition du Travail Domestique Reste Inégale’, in Données Sociales, Paris: INSEE, édition 2006, pp. 43–51.

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Richet-Mastain, L. and F. Brunet (2002), ‘L’âge des salariés joue surtout à l’embauche’, Premières Synthèses, 15 (3), DARES. Robert-Bobée, I. (2002), ‘Parmi les jeunes ne vivant plus chez leurs parents, les étudiants sont les plus aidés par leur famille’, INSEE Première, 826, INSEE. Thévenon, O. (2008), ‘Les politiques familiales de pays développés: des modèles contrastés’, Population et Sociétés, 448.

8.

‘La grande illusion’: how Italy’s ‘American dream’ turned sour* Annamaria Simonazzi and Paola Villa†

INTRODUCTION During the years of post-war growth the ‘American dream’ that each generation will do better than their parents had increasingly also become the expected norm in Italian society. Moreover, when major changes in the economy and in society at large called for an overhaul of the economic and welfare system, the answer was increasingly sought for in the ‘American model’, particularly by economists. Declining growth, demographic ageing and stricter fiscal orthodoxy deriving from EU membership challenged the completion of the construction of the Italian welfare regime. Wide-ranging flexibility, unaccompanied by adequate reforms in income support, left an increasing number of groups at risk of exclusion. Changes and reforms affected the timing and the pattern of the key life stages differently, depending on the individual’s place in the social structure as well as on institutional arrangements. In the dualist system of income maintenance characterising the Italian model of welfare, solidly rooted in the family (first section), the economic and institutional changes have produced increased inequality, economic insecurity and exclusion, and even real problems of social emergency in certain areas. Social policies have been slow to respond to these new challenges, doing little to assuage households’ anxiety. The failure of the Italian welfare regime to respond to the new needs and cover the new risks has resulted in families maintaining the predominant role in shaping the life chances of individuals. Families are expected to take care of children, unmarried young people, children’s new families and elderly parents. Thus, although inequality and exclusion have affected individuals differently at the various stages of the life course, a widespread and deep sentiment of insecurity has trickled down from the early phases of active life to permeate other dimensions of family life. The chapter examines how changes in three major areas – demographic trends, labour market regulation, society and welfare (education, gender, 231

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social policies) – have affected the various key life cycle stages. In order to account for the deep sentiment of insecurity pervading Italian households in the new century, the key life stage changes have to be analysed through their interaction within the family: young cohorts exiting school with their great expectations turning sour (second and third section), their parents staring helplessly as their children’s career perspectives take a turn for the worse (fourth section) and all facing up to a gloomy retirement age (fifth section). The result, we conclude, is that, as new needs and rising expectations have gone unmet, the wreck of Italian families’ great expectations has meant that even for Italian economists and policymakers the illusion of the ‘American model’ based on the supposed magical powers of the market has lost its shine. Evidence of the high costs and lack of sustainability of the model are reopening debates on re-regulation and the need for minimum safeguards.

THE ITALIAN FAMILISTIC WELFARE MODEL: CHALLENGES AND REFORMS1 The rapid growth of the post-war period deeply transformed the Italian economy, creating expectations of continuous growth. Even the difficulties experienced in the 1970s were perceived merely as a standstill caused by temporary shocks. The reforms enacted in that period in the field of employment, pensions, education and health, which were aimed at achieving a minimum standard of social protection, shaped the so-called ‘Southern model’ of welfare (Ferrera 1996). The regulatory framework of the labour market was constructed by gradually reinforcing the degree of protection granted by law to the ‘standard worker’ (an employee working full-time on an open-ended contract). The combined effect of the state regulatory system (with distinct rules according to the size of firms) and differences in union power created an accentuated dualism between large and small firms. In large firms, where protection was high, unions were also able to improve working conditions through local collective bargaining and to assure income maintenance in case of redundancy through the CIG (Cassa Integrazione Guadagni2); in small firms, where protection was lower, access to the CIG was much more limited, union organisation was weaker, there was no decentralised bargaining and management had greater scope for discretion. The welfare system did not – and still does not – provide universal safety nets. The system of social protection (employment protection and income maintenance schemes) covered only the core workers, that is, regular

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employees, working either in the public sector or in medium–large private firms, mostly located in the Centre-North of the country and employing prime-age men with a standard employment contract. In this dualistic system, the way to protect oneself (and one’s family members) was to gain access to the ‘cittadella del garantismo’, that is, to get a standard employment contract in the public sector or in a medium–large firm (Ferrera 1996). The weak segments of the labour force had to rely on their families for protection. The trend towards greater regulation and protection of labour peaked in the mid-1970s, giving way to a progressive deregulation of the labour market. This started in a mild way in the mid-1980s but intensified over the last 15 years, in parallel with the deterioration in the performance of the Italian economy. Job creation stagnated, leaving the employment rate (of the population aged 15–64) almost the same in 2003 (56 per cent) as in 1977 (55 per cent). The increase in the female employment rate – from 32.1 to 42.7 per cent, but still leaving Italy at the bottom among EU countries – mainly compensated for the fall in the male employment rate (from 77.6 to 69.3 per cent). The stated aim of promoting flexibility of the labour market was to ease the access of young people into employment. However, the way in which the flexibility was introduced was to maintain the standard of protection for the core workers, but allowing exceptions for the hiring of youngsters and/or unemployed. In short, regulatory reforms did not change the regulation on individual dismissals, but rather allowed bypassing it by the use of atypical contracts. The first measures date back to 1984, when workand-training contracts for hiring young unemployed were introduced (a fixed-term contract with reduced social contributions, a lower entry wage and no firing costs with respect to open-ended contracts). New working arrangements, such as freelance relations, recorded an exponential growth after the 1995 pension reform, when firms discovered the possibility of recruiting semi-autonomous workers, so-called ‘collaborators’. These are self-employed but work continuously for the firm without the firm having to make long-term commitments and offering opportunities for lower social contributions.3 After a creeping process of de-regulation, the big bang arrived with the Legge Treu, enacted in 1997, that introduced new atypical contractual arrangements (that is, temporary agency-work). In 2001, regulations were reformed, making it easier to hire employees on fixed-term contracts. Finally, the so-called Legge Biagi, enacted in 2003, further enlarged the variety of atypical contractual arrangements, while attempting to curb the indiscriminate resort to use of collaborators and freelancers by introducing more stringent rules. Regulatory reforms have prompted greater flexibility in working

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arrangements in relation both to hiring conditions (intensive use of fixedterm contracts as well as semi-autonomous workers) and entry wages, but have not provided income security for atypical workers. As in other EU countries, Italy implemented two-tier reforms of employment protection: flexibility was increased at the margin, changing the rules on hiring but leaving unchanged the rules on firing and income maintenance schemes for the core workers. The measures that favoured employment flexibility were directed almost exclusively toward new labour market entrants, thus establishing a new segmentation by cohort, with younger cohorts receiving lower income and less employment protection than older ones.

YOUNG, FLEXIBLE AND DISPOSABLE The cohorts entering active life in the 1990s, that is, those born in the 1970s and 1980s, are much smaller in size and with higher educational levels than those who entered in the 1970s and 1980s. These two factors are responsible for the quantitative and qualitative change in the labour supply by cohort. The declining birth rate since the mid-1960s and the increase in life expectancy have led to an ageing of the population that has been more pronounced than in the other EU countries. The number of 20-year-olds was 872 000 in 1981, over 1 million in 1991, but less than 700 000 in 2001, and is expected to fall to 500 000 around 2010. Changes in the population age structure are reflected in the size of inflows and outflows from active life: from 800 000 new entrants per year between the early 1960s and the late 1970s, to a peak of 950 000 in the 1980s, down to less than 600 000 people in 2005. Demographic factors lie behind the trends in youth employment and unemployment rates (Figure 8.1a and 8.1b). Since the mid-1970s, the baby boomer increase in labour supply has faced declining demand as macroeconomic conditions deteriorated. The exit of mature and middleaged workers – encouraged by early retirement schemes, up to the early 1980s – was not sufficient to make room for new entrants. Consequently, given an institutional framework privileging protection to the male breadwinner, the baby boomers turning up in the labour market faced a blocked entry. The ever longer queues of youngsters in search of first employment eventually served to swell the ranks of the long-term unemployed. The youth unemployment rate (15–24 years old) increased steadily up to 1997, when one out of three youngsters was unemployed (Figure 8.1b). Unemployment increased also amongst people aged 25–34, though

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80% 70% 60% 50% 40% 30% 20% 10%

ER15-24

ER25-34

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

0%

ER35-44

Source: Our elaboration on FGB–CNR–ISTAT, 1977–1996; ISTAT–RTFL, 1993–2003 (see Appendix).

Figure 8.1a

Employment rate by age group in Italy, 1977–2003

40% 35% 30% 25% 20% 15% 10% 5%

UR15-24

UR25-34

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

0%

UR35-44

Source: Our elaboration on FGB-CNR-ISTAT 1977–1996; ISTAT-RTFL 1993–2003 (see Appendix).

Figure 8.1b

Unemployment rate by age group in Italy, 1977–2003

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at a slower pace. These two age groups were also the first ones to be dumped in the economic recession of the early 1990s, when the Italian economy went through a spectacular process of labour shedding (with a net loss of 861 000 jobs, 3.3 per cent of total employment, from the first quarter of 1992 to the third quarter of 1993) (Brandolini et al. 2007, p. 31). Youth unemployment has decreased slightly since the late 1990s (Figure 8.1b), in spite of retirement policies aimed at delaying retirement of older cohorts. Has flexibility helped by improving the position of the youngsters (that is, easing their access into employment), as it is often argued? A look at employment rates in the period 1977–2003 invites caution (Figure 8.1a). The employment rate for youngsters (aged 15–24) remains very low and is even decreasing; for people aged 25–34 there is no improvement (fluctuating around 65 per cent). It is only for people aged 35–44 where an increase in the employment rate is recorded, mostly due to the increasing participation of young women. In short, the reduction in youth unemployment rates seems to be more the effect of the reduced supply of new entrants (because of the decreasing size of the new cohorts and their increased participation in education) to some extent mitigated by the increasing female participation, than the supposedly beneficial effect of de-regulation policies (Reyneri 2004; Facchini and Villa 2005). Young and More Educated With the improvement in living standards and the reduction in the number of children per family, Italian parents invested increasingly in the education of their children. Starting from a low point, Italy has experienced a significant increase in educational levels over the last 30 years (Table 8.1). The population share with upper secondary education rose from 6.7 to 26.1 per cent between 1971 and 2001, sufficient to close the gap with other EU countries. However, although the share with tertiary education rose from 1.8 to 6.5 per cent over the same period, Italy still falls far behind in tertiary education (Villa 2005, fig. 3, p. 26). High drop-out rates from secondary education, lower transition rates to tertiary education, high drop-out rates and long duration in university, contribute to keeping the gap wide open with respect to other EU countries. Parental education is by far the most relevant factor in conditioning both educational achievements and the transition into good jobs. The high correlation between educational participation of young people and parental educational attainment is responsible for the persistence of social stratification through the schooling system (Schizzerotto 2002; Checchi 2003). The family also retains a fundamental role in helping children enter

How Italy’s ‘American dream’ turned sour

Table 8.1

237

Participation in secondary and tertiary education by sex in Italy, 1970/71–2003/04 1970/71

1980/81

1990/91

2000/01

2003/04

Students obtaining the upper secondary diploma (% of youngsters 19 years old) M 34.6 41.0 47.4 64.1 – F 26.1 37.6 53.7 74.7 – Students enrolled in universities (% of youngsters 19–25 years old) M 14.8 20.5 21.0 28.6 35.5 F 9.2 16.0 20.8 37.7 43.7 Students obtaining an ordinary university degree (% of youngsters 25 years old) M 9.2 10.2 9.1 15.0 18.9 F 7.2 7.9 9.1 19.3 26.9 Source:

Istat, ‘Istruzione’, in Annuario Statistico Italiano (various issues).

the labour market, by introducing them into good networks, finding good jobs, as well as providing support in their long search for better opportunities. The crucial role of these factors – given the lack of an effective public employment service – helps to explain the low intergenerational social mobility recorded in Italy compared with other European countries. With respect to investment in education, the most spectacular change has been recorded by cohorts of young females. Over the last three decades, Italian women have closed the gender gap in education and overtaken men (see Table 8.1). Moreover, their educational performance is systematically better: on average, women complete their educational courses in a shorter time and earn higher marks (Bettio and Villa 1999). Higher education has brought with it not only more investment in human capital, but also emancipation from traditional cultural values and higher aspirations with regard to work and lifestyles, shaping the identity of Italian women around paid work. The younger cohorts of women, those with higher educational levels, have been showing an increasing propensity to enter the labour market. Thus, the growth in the overall female participation is mostly due to a cohort effect: the new cohorts enter active life in increasing numbers, with higher education and at an older age. In 1977, only one in four women (aged 15–64) were in employment, in 2003 it was one in three. Young women invest in education in order to secure good employment prospects, they postpone motherhood until they gain access to a decent job and enter employment with the idea of sticking to it for life. Yet, despite the noticeable improvement in their educational level and their better educational performance they still face greater difficulties, with respect to young men, in entering active life and gaining access to a secure job.

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Young and more Precarious Though trends in youth unemployment reversed towards the end of the 1990s, unemployment remains a problem of the young population. Youngsters (aged 15–24) still experience long-term unemployment in their transition from education to working life, recording unemployment rates around five times that of prime age workers (aged 35–44) (see Figure 8.1b). Moreover, when they succeed in entering employment, this is by and large in atypical employment, that is, through fixed-term or other forms of atypical contracts, all characterised by less security (in terms of prospects of employment), lower protection (against illness, unemployment, maternity) and lower earnings. Though it is difficult to estimate the growth in precarious employment status,4 it is widely acknowledged that this development affects an increasing share of youngsters. Mandrone and Massarelli (2007) estimate precarious employment status using a broad definition based on adding up everyone employed under the various typologies of atypical contracts, including those currently unemployed who had previously been in atypical contracts. On this basis, workers in precarious employment status accounted for 14.7 per cent of the total labour force in 2005, with young people taking the lion’s share. The over-representation of youngsters among this group is confirmed by data on agency work, collaborators and, in particular, fixed-term contracts. In 2005, 37 per cent of those aged 15–24 were found to be on fixed-term contracts, compared to 12.3 per cent for all in employment. This three times higher share among youngsters is due, by and large, to the fact that firms use these contractual arrangements as a screening device for hiring: 50 per cent of first entrants are on a fixedterm contract (Istat 2006, tab. 4, p. 14). Conversely, the share of young people in standard employment contracts is particularly low. Atypical employment has detrimental effects on training, income security and social protection. This is the case for all forms of atypical employment, though to different degrees. This is certainly the case for collaborators and freelance workers. After an initial attempt at extending some pension rights to collaborators (Law 335/1995), Biagi’s law (enacted in 2003) turned to simply limiting their use. As a consequence, collaborators do not enjoy most of the rights granted to standard employees: minimum wage; Christmas bonus; severance pay; rules for holidays, leave and in cases of illness; maternity benefits and parental leave; the right for trade union actions and training rights. Moreover, social security contributions and pension benefits are lower than those for standard employees, making their lifetime outlook even worse.5 In short, labour market reforms, focused on job creation through

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deregulation without the reform of the unemployment benefit schemes, put the burden of flexibility on the shoulders of the most vulnerable sections of the labour force. Because of the interaction between work status and social rights, atypical arrangements in the labour market (that is, precarious employment contracts) have a negative effect on social citizenship. Young and Poorer Atypical workers’ annual income is much lower than that earned by a permanent, typical worker. The wage premium for someone on a permanent contract is about 20 per cent relative to a temporary worker and 34 per cent for a collaborator (Mandrone and Massarelli 2007). Entry wages are low and have been declining since the mid 1990s, widening the wage gap by age. Rosolia and Torrini (2007) – drawing on the Bank of Italy ‘Survey on Households Income and Wealth’ (SHIW) – estimate that entry wages grew throughout the 1980s, then declined in the mid 1990s, returning to the average level recorded in the late 1970s and remained fairly stable thereafter, at a level which is 30 per cent lower than in the late 1980s. They also show, using administrative records, that lower entry wages for the younger cohorts are not compensated by faster career paths (that is, age profiles are becoming flatter). This helps to explain the evolution of wage differentials between the under 25s and the over 45s which moved in favour of older workers (Contini 2005). Wages and employment conditions have not adjusted to reward the higher investment in human capital of the young generations. The weak institutional linkage between the educational and vocational training systems and the labour market, together with low incentives for firms to invest in training for temporary workers, is an important explanatory factor. Vocational training has progressively developed into an inferior ‘Brate’, semi-academic system, which means that skills are acquired mainly on the job (Pisati and Schizzerotto 2004). If firms value work experience more than general education, they have little incentive to hire school leavers when applicants with work experience are readily available. It has also been argued that an excess supply of graduates, deriving from a mismatch between demand and supply for skilled labour, due to the pattern of specialisation of the Italian economy, might have contributed to reducing the premium for education (Naticchioni and Lucidi 2005, pp. 52–3). As a matter of fact, the most educated are over-represented in the atypical typologies: they make up 30 per cent of collaborators, but only 14 per cent of permanent employment positions. Collaborators are mainly concentrated in the services, and in the high- and medium-qualified occupations (technicians, white collars, intellectuals and researchers, qualified

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professionals), suggesting that atypical contracts are mostly used by firms to hire (at least temporarily) qualified young people on the cheap (Muehlberger and Pasqua 2006, tab. 1). Thus young people in Italy have become simultaneously better educated, more insecure and poorer. This combines to significantly delays in transition into full adult independence as we describe further in the next section.

PORTS OF ENTRY INTO STANDARD EMPLOYMENT? The main argument in favour of deregulation of the labour market rested on the axiom that a bad job is better than no job since, once in, it would be easier to move to more stable jobs. The ‘stepping stone’ hypothesis has been put forward and tested by many researchers. In the Italian case, a most influential study (Ichino et al. 2003) found that a temporary job can increase the probability of transition to a stable job by 10–14 per cent compared to people not having such an experience (controlling for individual and socioeconomic characteristics). The reason for this positive effect relates to signalling and selection effects. However, while it is certainly true that, for a high share of young people, precarious contracts are ports of entry into stable and secure employment, for an increasing minority, particularly those in the South, atypical employment has become a trap from which it is difficult to exit. This argument is supported by evidence on the transition of students to working life three years after completion of educational courses (that is, when the transitory phase should be over): in 2004, only 43.3 per cent of graduates from secondary school and 42.8 per cent of graduates from university (having completed education in 2001) held a standard employment contract (Table 8.2). Several studies have found evidence of an increasing probability of entrapment in precariousness for younger cohorts (Barbieri and Scherer 2005; Muehlberger and Pasqua 2006; Mandrone and Massarelli 2007). Further there is no evidence to support the hypothesis that a high turnover across various atypical jobs is equally distributed among workers, nor that it might favour the matching between demand and supply, eventually favouring efficiency. On the contrary, the more one moves between atypical jobs, the more likely it is that one becomes entrapped. University education increases the probability of turnover across atypical jobs. Women have a lower probability of moving to a stable job and the highest risk of exiting from the labour market or entering into unemployment. These results seem also to suggest that – contrary to the essence of the

How Italy’s ‘American dream’ turned sour

Table 8.2

241

The transition to working life of high school and university graduates three years after completion of educational courses in Italy (%)

High school/University graduates having completed education in 2001 by professional status in 2004 (a) Employed Employed in a job started after graduation Unemployed Students High school/University graduates (in 2001) in employment in 2004 by employment contract (b) Employees, indeterminate duration contracts Employees, fixed-term contracts with a training content Employees, fixed-term contracts In employment, with other type of fixed-term contracts Autonomous workers ‘co.co.co’ ‘Prestatori d’opera occasionale’ Working without a contract

High school graduates

University graduates

47.1 – 25.7 34.2

74.0 62.2 12.6 6.0

43.3 14.0

42.8 3.9

5.9 7.2

8.5 6.3

8.0 9.8 2.9 8.9

19.0 15.1 4.0 0.4

Notes: (a) The difference to 100 is due to persons not in active life (inactive). (b) For graduates, data refer to employed graduates having started a job after graduation. Source: Istat, ‘Indagine 2004 sui percorsi di studio e di lavoro dei diplomati del 2001’, and ‘Indagine 2004 sull’inserimento professionale dei laureati del 2001’ in Istat (2005b, pp. 195–9).

labour market policy doctrine favouring entry at any cost to reduce risks of long-term unemployment and the consequent depletion of human capital – it can be more rewarding to wait or queue for a job, while in the shelter of one’s family, than to accept any job. The implications in terms of social equity are obvious: those families that cannot afford to support their members while searching for a good job will be discriminated against, and their children will lack the opportunities to make a transition to a good job. To sum up, young people now face two problems in entering active life: the old problem represented by the difficulties in the transition from school to work as testified by the high youth unemployment rates and the

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very low youth employment rates, and the new one represented by the increased precariousness of employment. Difficulties in making the transition to a regular job result in an extended period of mobility, which means passing through extended spells of unemployment or inactivity. In fact between 1994 and 2003, the age of high mobility (from employment into unemployment or inactivity) has moved forward for the younger cohorts from the modal value of 22–23 years to 28–30 years (Simonazzi and Villa 2007, fig. 5, p. 38). Furthermore, the lack of security and low pay for young people means that they have to continue to rely on their family for support. The housing market has also contributed to increasing the difficulties faced by young people in their transition to adulthood. Traditionally, home ownership is preferred to tenancy in Italy and the changes in the housing market over the last 15 years have reinforced this pattern, with a further increase in the already large share of home ownership, further limiting the supply of houses to rent. While homeowners’ wealth has increased, housing costs – whether in the form of mortgages or rents – for those seeking their own accommodation have risen. These higher housing costs have a major impact on the young (Berloffa and Villa 2007) such that it is impossible for young people, who only enter employment later than in other EU countries and even then face low and insecure income, to rent or buy a house without family support. The consequence is long cohabitation with the family and delayed formation of a new family (Facchini and Villa 2005). The already high age at which young Italians leave the parental home increased significantly in the period 1993–2003. At present, over 60 per cent of children aged 18–34 are living with their parents (Table 8.3). While the group aged less than 25 show virtually no change over the period, there is a clear upward trend Table 8.3

Young adults living in the parental home by age group and sex, 1993 and 2003 in Italy (%) 1993

M F MF

2003

20–24

25–29

30–34

All (18–34)

20–24

25–29

30–34

All (18–34)

90.9 78.9 85.0

60.5 36.8 49.0

24.9 12.2 18.5

64.9 48.9 56.5

92.3 83.7 87.9

70.5 51.7 61.0

37.4 21.4 29.5

66.8 53.6 60.2

Source: Istat, ‘Indagini multiscopo sulle famiglie. Famiglia, soggetti sociali e condizione dell’infanzia’, in Istat (2005a, Ch. 4, p. 245).

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for young people aged 25–29 and 30–34. Even at an age when family life (including the decision to have children) is usually planned young people in Italy are still facing instability and precariousness. In the Italian familistic welfare regime, the economic insecurity that the young adults are experiencing at present, as well as their subjective perception of insecurity for the future, are reinforcing the traditional protective role played by the family. Young adults stay even longer in the parental home, receiving support both in their search for a stable and secure job and in finding affordable accommodation in case of marriage. Individual insecurity translates into a social issue, with important fall-out effects on fertility and overall economic sustainability.

PRIME AGE The Protected and the Excluded Partial and selective labour market reforms have largely spared core workers in their prime, while professional skills and on-the-job qualifications, still highly valued by firms, have shielded experienced workers. Research on workers’ mobility (Contini and Trivellato 2005a) shows the coexistence of a high rate of long tenures and a very high mobility of workers (between employment, unemployment and inactivity, as well as among jobs in different firms). This can be explained on the basis of a dichotomy between the two patterns of employment that make up the aggregate index: movers and stayers. Young age groups make up the bulk of the so-called ‘gross worker turnover’ (Trivellato et al. 2005, tab. 7.4, pp. 300–301), but permanent movers can be found also among prime age and older age groups. They include females, workers with low education, employees in small firms or in the low-skilled stages of production, in traditional reservoirs of irregular labour (agriculture, construction, trade, domestic services) and/or with a high incidence of migrant labour. These mobile workers experience intermittent spells of unemployment often as long as their spells in employment, even longer in the case of women. Because of the severe deficiencies in training and lack of effective active labour market policies, they endure loss of human and social capital, and isolation. With new technologies permeating all fields of economic activity and competition from low-cost countries threatening the most unskilled labour-intensive stages of the ‘made in Italy’ industries, even prime age workers in traditionally protected sectors or areas are no longer shielded against the event of lay-offs and unemployment. Public employment remains the only bastion of employment protection.

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Table 8.4

The labour market performance by geographical area in Italy, 2004 Italy

NorthWest

NorthEast

Employment rate (%) MF, 15–64 57.4 64.4 65.8 M, 15–64 69.7 74.4 75.8 F, 15–64 45.2 54.3 55.7 Unemployment rate (%) 8.0 4.5 3.9 Unemployment rate by gender and age group (%) M, 15–34 11.3 5.8 4.1 M, 35 and over 3.7 2.1 1.7 F, 15–34 16.7 8.8 8.5 F, 35 years and over 6.6 4.4 4.0 Unemployment rate by education level (%) No degree/ primary 10.0 6.1 4.6 school degree Middle school certificate 9.5 5.5 4.5 High school certificate 7.3 4.0 3.3 University degree 5.5 2.8 3.7 Unemployed persons by position in the family (% distribution) Single 4.8 8.7 6.6 Mother/Father 36.5 35.6 36.8 Child 49.3 40.9 41.2 Partner 7.1 12.0 12.1 Other 2.3 2.8 3.3 Source:

Centre

South

60.9 71.9 50.2 6.5

46.1 61.8 30.7 15.0

8.8 3.0 14.1 5.6

21.1 6.8 32.4 12.1

6.5

16.1

7.6 6.4 5.0

17.1 14.5 9.7

4.4 36.3 47.8 8.7 2.9

3.5 36.8 53.4 4.5 1.8

Istat (2005c), Forze di lavoro. Media 2004, Rome.

These differences between protected and excluded workers are magnified by the persistence of the North–South divide. All indicators testify to the severe deterioration in the relative labour market conditions in Southern regions and the increasing gap between the two macro areas (Table 8.4). In 2004 the overall employment rate in the South was 46.1 per cent, 19.7 percentage points lower than in the North-East. While the male rate, at 61.8 per cent, was ‘only’ 14 points below the rate in the North-East, the female employment rate, at 30.7 per cent, showed a gap of 20 percentage points. The Centre-North and the South experienced diverging trends between 1977 and 2003, increasing the gap in all labour market indicators, especially female participation6 and unemployment. The unemployment rate in the South is twice the Italian average and almost four times that in the North-East. The stalemate in economic growth impacted especially on

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the young, with first job seekers facing even greater difficulties than their counterparts living in the Centre-North: the share of children among the unemployed (living at home with their parents) is 53 per cent in the South, as against 41 per cent in the North. The relative position of first job seekers, the youngsters in general and women in particular, is very different in the two parts of the country. But regular employment is scarce also for prime age males in the Mezzogiorno. The South accounts for 38 per cent of the population, but 28 per cent of employment and 60 per cent of unemployment; it also accounts for the largest share of families with a head of household who is unemployed and the lowest percentage of dual-earner families. Given the structure of social protection in Italy, with the family acting as a ‘social clearing house’ (Ferrera 1996, p. 21), having at least one member within the primary segment (that is, employed in the public sector or in a medium–large company) makes the difference in mitigating risks of poverty and social exclusion. No wonder that the South accounts for the largest part of the families in poverty (Morlicchio and Pugliese 2004, p. 191). This is why employment conditions in the South make for a situation that amounts to a real social emergency. Bread and Roses? The rules governing the labour market and the structure of society have changed considerably in recent decades, yet the labour market and, even more importantly, the welfare system are still centred around the male breadwinner, working full-time throughout working age. Italian women still face great difficulties first in entering employment, then in balancing family responsibilities with paid work (Simonazzi 2006). The low female employment rate in Italy, both in absolute terms and in comparison with the other European countries, reflects this situation. Education has represented a powerful factor driving female participation and attachment to waged work, as noted in the second section. In Italy, female employment is characterised by an under-representation of the least educated and an over-representation of the highest educated, a feature more pronounced among the younger cohorts. The low share of poorly educated women among the working female population compared to other EU countries reflects the lack of job opportunities, greater difficulties in reconciliation (due also to the features of unskilled jobs) and low economic incentives for second earners (as a combined result of low earnings and high reconciliation costs). Education also affects the pattern of employment interruptions for mothers. Among women aged 20–39, the highest-educated mothers of

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young children display a very high employment rate (over 80 per cent), which is only a few percentage points lower than their childless counterparts. The least-educated childless women (in the same age group) record a much lower employment rate (around 42 per cent). It is among the leasteducated women that motherhood (as well as marriage) continues to have a marked negative impact on participation (Bettio and Villa 1999). Thus, lack of education restrains female participation more than motherhood. With education weakening the impact of motherhood, strong attachment to the labour market has been the feature of the new cohorts of women entering active life. While education has acted as a powerful push factor favouring female employment, the persistence of a labour market still moulded on the traditional male breadwinner has acted as a check on its expansion. In spite of their better educational performance, young women encounter greater difficulties in entering employment and gaining access to good jobs. The female unemployment rate for young people is higher (see Table 8.4), young women are over-represented in all types of atypical employment (fixed-term contracts and all forms of semi-autonomous employment), they are at higher risk of losing their job and their earnings are systematically lower.7 Among collaborators, for instance, women are on average more educated than men: a third of female collaborators are university graduates compared to a quarter of male collaborators (Muehlberger and Pasqua 2006). Thus, the gains achieved by women in education have not been matched by equivalent gains in terms of employment or job quality. The incapacity to reform the familistic welfare system or to change the Italian culture towards a better balance of work and family represents a most formidable obstacle to the inclusion of women. In spite of quite advanced legislation on parental leave, the only two concrete solutions for reconciliation are represented by a resort to the extended family for help in care responsibilities (parents and grandparents) and, increasingly, part-time work. However, firms are reluctant to offer part-time jobs, especially when collaborators offer a cheaper way of combining women’s demand for part-time work and firms’ search to reduce costs. According to Muehlberger and Pasqua (2006, pp. 11–12), 72 per cent of collaborators working part-time are women (84 per cent among employees): while 43 per cent of them decided to work part-time to reconcile work and care, another 47 per cent did so because they could not find a full-time job. In the Italian welfare system, almost exclusive reliance on cash benefits and transfers and neglect of services provision – child and elderly care, and other publicly-provided services – has favoured the flourishing of second best market solutions, the cheapest ones relying on a booming underground economy (Simonazzi 2008). Concern over the need to

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provide long-term care for an ageing population, for instance, has stimulated a search for new solutions able to ensure financial viability and a better balance between demand and supply of care (Bettio et al. 2006). With management of care overwhelmingly entrusted to the family, elderly care has attracted large flows of care migrants, ushering in a new division of labour among family carers (mainly women), female immigrants and skilled native workers. A complex segmentation of the market along gender and ethnic lines has thus arisen from an abundant supply of cheap labour combined with a limited supply of specialised public services, raising issues of social equity and long-term sustainability. Income Policies, Wages and Inequality Two tripartite income policy agreements, in 1992 and 1993, abolished the wage indexation mechanism (scala mobile), replaced it with the government’s target inflation – a new device established to adjust money wages to inflation – and reformed the national collective bargaining system. These institutional changes stopped the wage inflation spiral, though at the cost of a fall in real wages,8 and set in a long period of wage moderation (Simonazzi et al. 2009). Another effect of these tripartite agreements was the opening up of wage differentials. The distribution of earnings, which had narrowed significantly from the late 1970s until the end of the 1980s, widened suddenly in the 1990s due to the changes in the wage–age profile. As explained in the second section, labour market reforms lowered entry wages, while tripartite agreements drastically flattened the progression of pay, thereby introducing yet another element of inequality between those employed before the agreements, who could benefit from regular pay progression over their career, and those entering after the agreements, whose wage profile remained flat at the lower entry level (Contini and Trivellato 2005b; Rosolia and Torrini 2007). With real wages of standard employees stalling, the capacity of the family to defend its living standards has come to rely more and more on the pooling of multiple earnings. The prime age cohort (people in their 50s) – the only generation to have fully benefited from the brief season of employment protection – has been severely affected by the trend in real wages, right at the time when it has had to cope with the insecurity caused by the increased precariousness and casualisation of opportunities for their grown-up children, fears that pension reforms will reduce their future benefits, and of the increasing risk of skyrocketing costs in case of loss of self-sufficiency in their old age. Greater vulnerability at these various levels – in the job, in family income, and in the macroeconomy – affects

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future perspectives and can explain the sentiment of increasing poverty and insecurity also shared by households that still enjoy the privilege of stable employment and fairly secure pension rights. As acutely observed by Castronovo (2004, p. 104): The malaise of the middle class not only stems from a fall in its purchasing power and a loss of part of its accumulated savings, or from the difficulty of those in the lower ranges to make ends meet with the modest income they receive. It is also the outcome of the disillusionment and frustration generated by the uncertainty of their children’s future and bleak labour prospects.

Anxiety over the future affects savings and accumulation of assets, to make up for the huge present and prospective impoverishment of younger generations, and explains the widespread common sentiment of household impoverishment that is not supported in statistical evidence. Estimates based on the Bank of Italy’s survey (SHIW) reveal a surprising stability of income inequality in the period 1993–2004 (after the sharp increase amid the 1991–92 recession). Several factors can be at work to account for this apparent inconsistency. First, behind the apparent stability of aggregate household income inequality (and poverty rates), the deceleration of income growth experienced in the last decade might have affected differently distinct subgroups of households (Boeri and Brandolini 2004). Berloffa and Villa’s (2007) investigation, based on the decomposition by ‘cohorts of households’, as defined by the age of the household’s head, reveals significant differences in income dynamics across households, with younger ones losing ground to older ones. Second, the pooling of incomes of grown-up children, co-residing in their parents’ home because of low pay or precarious jobs, may actually distort the unit of analysis, leading to an underestimation of the risk of poverty: while living in a multipleearners’ family can ensure a comfortable living, independence could entail falling into poverty.

PUSH AND PULL FACTORS IN ELDERLY EMPLOYMENT Italy has one of the lowest participation rates for older workers, particularly for females. Access to early retirement schemes has certainly played a role: able workers in their 50s were allowed (or even encouraged) to exit the labour market (often to re-enter the grey market due to a legislation that restrained the possibility of having a dependent job once retired). In the 1980s early retirement (before 55) accounted for about 20 per cent of new male pensioners. By creating uncertainty about future pension rights,

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announcements of reforms caused people to flee from employment as soon as a possibility opened up. However, in spite of the role played by early retirement, the lower participation of the older people is mainly the result of developments over the whole life cycle, at key labour market transitions – in the case of women, first and foremost, the life cycle decision not to participate in the labour market. In recent years the share of mature workers (aged 52–64) in total employment (aged 15–64) has been on the rise: from 14.6 per cent in 1997 to 16.2 per cent in 2003. Demographic trends and pension reforms account for this trend. Thus, a modest increase in the employment rate of workers aged 52–64 was recorded in recent years, due partly to a positive intergenerational turnover (that is, the new cohorts have slightly higher employment rates), partly to the reduction in exit rates (almost entirely due to higher retirement ages) (Banca d’Italia 2003, pp. 48–9). The combination of an ageing population and a generous pension scheme developed in the years of high growth severely strained public finances. The pension reforms undertaken in the 1990s9 in order to curb the share of pension expenditure in GDP worked on two fronts: to reduce the number of pensioners by lengthening working life and delaying the retirement age10 and to reduce pension benefits through a gradual shift from a defined benefit scheme to a notional defined-contribution scheme. The reforms modified three key factors: (i) benefit computational rules (from earnings-related to benefit-related schemes); (ii) indexation rules (benefits are no longer indexed to real wages but to GDP growth); and (iii) retirement age and eligibility criteria (defined on an actuarial basis). Hence, pension reforms have reduced expectations concerning the future level of benefits. Under the earnings-related scheme (pre-1992 reform) a representative employee, retiring at the age of 60 (with 37 years of contribution) was expected to have a replacement rate of around 75 per cent. Under the contribution-related scheme (after-1995 reform) the same individual is expected to have a replacement rate of around 58 per cent (if an employee) and 35 per cent (if self-employed) (Berloffa and Villa 2007). But the implementation of the reforms has been gradual, with a very long transitional period. While workers with contributory records equal to or exceeding 18 years at the end of 1995 have their pensions calculated with the old defined-benefit system and still enjoy seniority pensions, workers having entered the labour market before the end of 1995, but with less than 18 years of payment, have their pensions calculated in part with the old and in part with the new system. Only new entrants from 1996 will have their pensions entirely computed according to the new notional defined-contribution scheme, with no entitlement to seniority pensions. The legal retirement age differs accordingly.11 The coexistence, at present,

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The welfare state and life transitions

of different pension regimes leads to a striking intergenerational inequity. The social contributions of the younger cohorts finance the generous pension benefits of the older cohorts, while they have to save to complement their future meagre statutory pension benefits with supplementary provisions. The cross-generation dualism created by the reforms in terms of pension entitlements should not overshadow the important differences existing within the generation of the ‘protected’. Within this age group, there is still a high share of elderly workers who have gone through troubled periods in their working life: self-employed active in traditional sectors (trades, crafts and agriculture, construction, domestic services) who have experienced precarious or irregular employment, and who are highly vulnerable because of the insufficient coverage of the safety nets. But even among employees, one should reconsider the common stereotype of a smooth transition from lifetime jobs to retirement. As argued by Contini and Leonbruni (2005), these linear paths are a prerogative of public employees and a little over one half of today’s private employees. The remaining half are workers whose end of career is marked by irregular patterns of labour market activity that seriously hinder their current earnings and pensions: elderly workers employed in small firms, experiencing irregular patterns of employment and long spells of unemployment, workers in the South; and women having opted for household tasks and thereby withdrawing at an early age from the labour market. Contini and Leonbruni estimated12 that while the median final salary of individuals who transit directly from a longlasting dependent job to a pension (46 per cent of cases) was 24 200 euros per year in 1999 and the pension 15 000 euros, the same figures for paths identified as the most fragmented (21 per cent of cases) amount to about 17 000 and 10 000 euros, respectively. The Italian reality of ‘bumpy end-of-career routes’, combined with the lack of a universalistic welfare system, calls for measures to ease the transition to retirement for all those workers that, because of their work history, could face real hardships in the last part of their life.13 Elderly women are especially at risk of poverty. They represent 53 per cent of pensioners, but account for only 44 per cent of total expenditure (Istat 2007). Over 30 per cent of retired women earn a social pension (below 500 euros), as against 18 per cent of retired men. Lower social security contributions, due to lower pay and fragmented work careers, add up to an average pension that is only slightly more than half the average male pension. To conclude, the interaction between the labour market policies and the pension reforms have extended insecurity through life until old age. The shift to a more stringent pension system, with benefits based on

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contributions paid in working life, associated with the increasing precariousness in employment will make it impossible for atypical workers to provide for a decent pension at retirement. Pension and labour market reforms have superimposed a new dualism on an already dualistic structure. This has led to even further deterioration in the social citizenship afforded to the more vulnerable workers: women, the unskilled, the young cohorts.

CONCLUDING REMARKS: BACK TO THE FAMILY? Expressions like ‘household impoverishment’ and ‘crisis of the middle class’ have featured prominently in the recent public debate in Italy, echoing a similar concern on the other side of the Atlantic.14 We have argued that the widespread sentiment of insecurity may be related to the disillusionment and frustration generated by the uncertainty and bleak prospects facing younger cohorts. This frustration has been passed on to their families: their parents had entered adulthood at the climax of a period of reforms making for a dualistic but extremely generous system of social protection. For both insiders and outsiders the benefits were seen not as a privilege but as a right, that they believed had been gained once and for all, and that could be transmitted to their children. The wave of precariousness and social instability is to a large extent the result of policy actions inspired by the ‘American model’: the great illusion that a more market-based system could respond better to the new challenges. The failure of the Italian welfare regime to respond to the new needs and cover the new risks has resulted in families maintaining the predominant role in shaping the life chances of individuals. Families are expected to take care of children, unmarried young people, children’s new families and elderly parents. The cohorts now in their 50s are still privileged: they have not been affected directly by the rise in precariousness and they can still depend on good pensions. Besides, they might be the last ones to be able to take advantage of intergenerational ‘transfer of time’ for care. They have used this rent to assuage the insecurity of their grown-up children. For the future, however, lower pensions and higher costs for elderly care, depletion of supply of family care (fewer children, dual-earning families) and increased longevity imply gloomy prospects for the inter-temporal allocation of time and income and intergenerational transfers. In 20–30 years the young cohorts will reach retirement age with pension benefits below social assistance allowances. How will they be able to provide the resources required to support their older and younger cohorts?

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Increasing awareness of the short-term costs and long-term unsustainability of this model is producing disillusionment with the magical powers of the market even among economists: proposals for re-regulation and the introduction of minimum safeguards to promote flexicurity are beginning to surface again.

NOTES *

We wish to thank participants in the Dynamo Project for useful comments and Emanuela Di Falco for the excellent research assistance. † With the collaboration of Emanuela Di Falco who did the necessary statistical reconstruction of labour market indicators from 1977 to 2003 (on the basis of labour force survey data, collected by Istat). See the Methodological Appendix for a synthetic description of the approach adopted in order to provide the homogeneous time series. 1. We refer to Simonazzi et al. (2009) for a more detailed analysis of the making of the Italian social model. 2. The CIG is a national fund financed by the state and by contributions of employers and employees. In essence, it is a system of subsidised labour hoarding: the laid-off workers maintain their formal employment status and receive a generous wage subsidy. 3. The distinction between collaborators – that is the self-employed who have a close and continuous relationship with a single company – and a broader category of selfemployed has been codified by the 1995 pension reform which introduced employer obligations to pay social contributions on ‘collaborators’ and by a new fund opened by INPS (so called ‘gestione separata’). It is not possible to say whether these laws encouraged the growth of this new typology, or simply made it visible. 4. One reason for this difficulty has to do with definitions: since precarious workers move much more between employment and unemployment, they may be counted in or out of atypical jobs depending on the time of the survey. However, to be in (precarious) employment or in unemployment does not fundamentally change their status of precariousness. 5. Even after the raise approved in the Finance Law for 2007, social security contributions for collaborators are still almost one third lower than for standard employees (23 versus 33 per cent). 6. According to Istat (RTFL, see Appendix), between 1977 and 2003 female participation increased significantly in the Centre-North (by 10 percentage points) but negligibly in the South (only 1.7 percentage points). 7. Inps data on collaborators and freelance workers for 2004 show that women’s average annual income was about half that of men: 9 150 euros as against 18 050 euros (Cazzola 2006, tab. 3). 8. The target inflation systematically underestimated actual inflation, so that in 2004 the average real wage was 2.9 per cent lower than in 1992 while the aggregate wage share plummeted (Brandolini et al. 2007). 9. The main normative interventions are D. lgs. 30 December 1992, no. 503 (Riforma Amato), and the laws 24 December 1993, no. 537; 23 December 1994, no. 724; 8 August 1995, no. 335 (Riforma Dini); and 27 December 1997, no. 449 (Riforma Prodi); finally, law 23 August 2004, no. 243 (Riforma Maroni). 10. Since 1994 the average age of retirement in the private sector started to increase (by 1.2 years between 1994 and 2001). 11. Under the new system, retirement will be possible between the ages of 57 and 65. At present, for workers still enjoying earning-related pensions, entitlement to the

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12. 13. 14.

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old-age pension is acquired at age 65 for men (60 for women) and entitlement to the seniority pensions is acquired at age 57 with 35 years of contributions or at any age with 38 years of contributions. Recent estimates put the average retirement age at 60 years. The data are taken from ‘Estratti Conto’ of Inps, an archive that summarizes the accrued contributions and benefits received by workers in the Italian private sectors. According to Istat (2007), in 2006, 30 per cent of all pensioners earned a pension between 500 and 999 euros per month and 25 per cent earned a social pension (below 500 euros per month). See the Pew Charitable Trust (2007) on the fall of the American dream in the US.

REFERENCES Banca d’Italia (2003), ‘Composizione per età dell’occupazione e normativa previdenziale negli ultimi dieci anni’, Bollettino Economico, (41), 48–9. Barbieri, P. and F. Scherer (2005), ‘Le conseguenze sociali della flessibilizzazione del mercato del lavoro in Italia’, Stato e Mercato, (74), 291–321. Battistoni, L., M. Centra and M. Sorcioni (2006), ‘Nuove generazioni al lavoro’, Quaderni spinn, 18. Berloffa, Gabriella and Paola Villa (2007), ‘Inequality across Cohorts of Households: Evidence from Italy’, Dipartimento di Economia, Università degli Studi di Trento, Discussion Paper 11. Bettio, F. and P. Villa (1999), ‘To what extent does it pay to be better educated? Education and market work for women in Italy’, South European Society and Politics, 4 (2), 150–70. Bettio, F., A. Simonazzi and P. Villa (2006), ‘Change in care regimes and female migration: the “care drain” in the Mediterranean’, Journal of European Social Policy, 16 (3), 271–85. Boeri, T. and A. Brandolini (2004), ‘The age of discontent: Italian households at the beginning of the decade’, Giornale degli Economisti e Annali di Economia, 63 (3–4), 449–87. Brandolini, Andrea, Piero Casadio, Piero Cipollone, Marco Magnani, Alfonso Rosolia and Roberto Torrini (2007), ‘Employment Growth in Italy in the 1990s: Institutional Arrangements and Market Forces’, in Nicola Acocella and Riccardo Leoni (eds), Social Pacts, Employment and Growth, Heidelberg: Physica-Verlag, pp. 31–68. Castronovo, Valerio (2004), Le Paure degli Italiani, Milano: Rizzoli. Cazzola, G. (2006), ‘Le cifre della precarietà’, Il Mulino, (5), 857–69. Checchi, Daniele (2003), ‘The Italian Educational System: Family Background and Social Stratification’, University of Milan (mimeo). Contini, B. (2005), ‘Invecchiamento e precarizzazione giovanile nell’occupazione italiana: è possibile una chiave di lettura unificata?’, Rivista di Politica Economica, March–April, 323–35. Contini, Bruno and Roberto Leonbruni (2005), From work to retirement: a tale of bumpy routes, LABORatorio R. Revelli, Centre for Employment Studies, Moncalieri. Contini, Bruno and Ugo Trivellato (eds) (2005a), Eppur si muove, Bologna: Il Mulino. Contini, Bruno and Ugo Trivellato (2005b), ‘Dinamiche e Persistenze nel Mercato

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del Lavoro Italiano: una Sintesi’, in Bruno Contini and Ugo Trivellato (eds), Eppur si muove, Bologna: Il Mulino, pp. 13–84. Facchini, Carla and Paola Villa (2005), ‘La Lenta Transizione alla Vita Adulta in Italia’, in Carla Facchini (ed.), Diventare Adulti. Vincoli Economici e Strategie Familiari, Milano: Guerini Scientifica, pp. 61–104. Ferrera, M. (1996), ‘The “southern model” of welfare in social Europe’, Journal of European Social Policy, 6 (1), 17–37. Ichino, Andrea, Fabrizia Mealli and Tommaso Nannicini (2003), ‘Il Lavoro Interinale in Italia. Trappola del Precariato o Trampolino verso un Impiego Stabile?’, European University Institute (mimeo). Istat (2005a),‘Le trasformazioni familiari’, in Rapporto Annuale 2004, Capitolo 4, Roma, pp. 237–314. Istat (2005b), ‘L’inserimento professionale dei giovani’, in Rapporto Annuale 2004, Capitolo 3, Roma, pp. 194–203. Istat (2005c), Forze di Lavoro. Medina 2004, Rome. Istat (2006), ‘I giovani e il mercato del lavoro’, in Rapporto Annuale 2005, Capitolo 4, Roma, pp. 178–89. Istat (2007), Trattamenti Pensionistici e Beneficiari al 31 Dicembre 2006, Roma. Mandrone, Emiliano and Nicola Massarelli (2007), ‘Quanti sono i Lavoratori Precari’, www.lavoce.info, accessed 21 January 2009. Morlicchio, E. and E. Pugliese (2004), ‘Il modello italiano di povertà’, Economia & Lavoro, 38 (2–3), 183–202. Muehlberger, U. and S. Pasqua (2006), ‘The “continuous collaborators” in Italy. Hybrids between employment and self-employment?’, Child, 10. Naticchioni, Paolo and Federico Lucidi (2005), ‘The Italian Report’, FGB and Dynamo WP, Rome, www.dynamoproject.eu, accessed 21 January 2009. Pew Charitable Trust (2007), ‘Economic Mobility: Is the American Dream Alive and Well?’ Economic Mobility Project. Pisati, Maurizio and Antonio Schizzerotto (2004), ‘The Italian Mobility Regime: 1985–1997’, in Richard Breen (ed.), Social Mobility in Europe, Oxford: Oxford University Press, pp. 149–74. Reyneri, Emilio (2004), ‘La Resistibile Ascesa dei Lavori Instabili in Italia’, in Antonio Cocozza, Franco Liso and Fabio Neri (eds), Il ‘Nuovo’ nel Mercato del Lavoro. Analisi comparativa tra Francia, Germania e Spagna, Roma: Luiss University Press, pp. 1087–98. Rosolia, A. and R. Torrini (2007), ‘The generation gap: relative earnings of young and old workers in Italy’, Bank of Italy, Temi di Discussione, 639. Schizzerotto, Antonio (ed.) (2002), Vite Ineguali, Bologna: Il Mulino. Simonazzi, Annamaria (ed.) (2006), Questioni di Genere, Questioni di Politica. Trasformazioni Economiche e Sociali in una Prospettiva di Genere, Roma: Carocci. Simonazzi, A. (2008), ‘Care regimes and national employment models’, Cambridge Journal of Economics, 10, 1–22. Simonazzi, Annamaria and Paola Villa (2007), ‘Le Stagioni della Vita Lavorativa’, in Paola Villa (ed.), Generazioni Flessibili, Roma: Carocci, pp. 25–51. Simonazzi, Annamaria, Paola Villa, Federico Lucidi and Paolo Naticchioni (2009), ‘Continuity and Change in the Italian Model’, in Gerhard Bosch, Steffen Lehndorff and Jill Rubery (eds), European Employment Models in Flux. A Comparison of Institutional Change in Nine European Countries, London: Palgrave, Macmillan.

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Trivellato, Ugo, Adriano Paggiaro, Roberto Leonbruni and Simona Rosati (2005), ‘La Dinamica Recente della Mobilità dei Lavoratori, 1998–2003’, in Bruno Contini and Ugo Trivellato (eds), La Dinamica Recente della Mobilità dei Lavoratori, 1998–2003, pp. 271–323. Villa, Paola (2005), ‘La Lenta Transizione alla Vita Adulta nei Paesi dell’Unione Europea’, in Carla Facchini (ed.), Diventare adulti. Vincoli Economici e Strategie Familiari, Milano: Guerini Scientifica, pp. 21–60.

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METHODOLOGICAL APPENDIX By Emanuela di Falco To study changes in the timing and patterns of the key life stages over the past three decades we have had to use first a labour market data set from 1977 to 1996 constructed jointly by the FGB (Fondazione Giacomo Brodolini) with CNR (Consiglio Nazionale delle Ricerche) and Istat referred to as ‘FGB–CNR–ISTAT’ – available on the AIEL (Associazione Italiana Economisti del Lavoro) website.1 To combine this with Istat labour force survey data (RTFL) for the period 1993–2003 we have had to adjust for a break in 1997 by analysing the 1993–96 period which is common to both series. This required a disaggregated analysis by age and gender to calculate correction coefficients for each age and year in order to construct a combined series from 1977 to 2003. The transition matrix is based on a panel constructed by Isfol (Istituto per lo Sviluppo della Formazione Professionale dei Lavoratori) and based on the ISTAT– RTFL data (Centra et al. 2001). Entry into employment relates to individuals aged 15–64, who declare themselves in search or inactivity status in the year t and declare themselves employed in the year t + 1; exit from the labour market relates to individuals aged 16–64, who declare themselves in the labour force in the year t but not in the labour force in the following year. We thank Isfol for providing data and help. Statistical Sources Centra M., A.R. Discenza and E. Rustichelli (eds) (2001), ‘Strumenti per le analisi di flusso nel mercato del lavoro. Una procedura per la ricostruzione della struttura longitudinale della rilevazione trimestrale Istat sulle forze di lavoro’, Monografie sul mercato del lavoro e le politiche per l’impiego, n. 2. Fondazione G. Brodolini–CNR–ISTAT, Series on employment based on RTFL 1977–2003 as updated by ISFOL, in Battistoni, Centra and Sorcioni (2006, p. 30).

NOTE 1. Associazione Italiana Economisti del Lavoro, www.aiel.it/base_dati1.htm, www.aiel.it/ base_dati2.htm, accessed 21 January 2009.

9.

Life stage transitions and the stillcritical role of the family in Greece Maria Karamessini

INTRODUCTION The Greek social model of the post-war decades can be seen as a variant of what has been defined in comparative research literature as the Southern European social model (Ferrera 1996; Petmesidou 1996; Mingione 2002 and Karamessini 2008a). Until the mid 1970s the Greek model was characterized by ● ●

●

●

●

High rates of self-employment and rural employment and incomplete proletarianization of the working class; Pronounced labour market segmentation due to (a) large discrepancies in formal employment protection and social security rights between the public and private sector as well as between white- and blue-collar employees, (b) direct wage discrimination against women workers in the private sector, that is lower wage rates for the same work, and (c) widespread informal work; General orientation of secondary education, underdevelopment of technical education and vocational training, and elitist higher education; Underdevelopment of the welfare state and heavy reliance on the extended family for protection against risks, and on its female members for the provision of care; Strong male-bias in the social protection system, gaps in social security coverage, residual unemployment insurance and social assistance, highly fragmented and inadequate healthcare, total lack of social care services.

During the same period the life course employment patterns of the labour force differed greatly by sex, educational level and sector of employment. Irrespective of educational attainment and sector of employment, men had continuous employment patterns. Their legal retirement 257

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age in the private sector was 65 years, but workers in mining and manufacturing occupations classified as ‘arduous or unhygienic’ could retire at the age of 60 with full pensions. In the mid 1970s, these workers represented one third of all private sector employees (KEPE 1976). In the civil service, local administration, public utilities and banking, access to full pensions was possible at the age of 56 after 35 years of service, and actual retirement of male employees took place between 56 and 60 years. Women’s labour force participation peaked before marriage and followed a downward trend afterwards. Lifelong inactivity after marriage was the ‘privilege’ mainly of the spouses of employers, professionals and white-collar workers since all peasants and many working class women used to work intermittently or for longer periods even after marriage as unpaid workers in family farms/businesses or as wage earners in the formal or informal sector. Most of these women were unable to establish the right to an independent pension at the age of retirement. Until the 1980s only a minority of high-educated women absorbed in the public sector and banking had continuous employment patterns, but most of them made use of early retirement schemes and retired in their 40s after 15 or 25 years of service with reduced pensions. Even including unpaid family workers, from the 1950s to the 1970s the participation rates for women in the labour force were only about 30 per cent for those aged 40–49, falling to 25 per cent, 22 per cent and 17 per cent for those aged 50–54, 55–59 and 60–64 respectively. Since the mid 1970s a number of new phenomena have gradually eroded these patterns of employment. On the one hand the rise in unemployment and employment precariousness made both the transitions of youth from education to work and career and that of women returning to work after an interruption of activity uncertain, risky and protracted. At the same time, the spectacular rise in female education attainment levels increased the share of women with continuous activity patterns. Additionally, deindustrialization through plant closures and restructuring, disrupted employment stability in prime age and made transition to retirement more risky. Finally, the pension reforms of the 1990s and 2000s delayed retirement for more recent cohorts of labour market entrants. During the same period the traditional social model, as described above, changed radically. Employee rights, working conditions, social security and healthcare were extended and improved and the education and training systems reformed while access to secondary and tertiary education expanded, and active labour market policy and social care services developed. Conversely, social assistance and unemployment insurance remained residual. Given the modification of life course employment patterns over the past

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decades, in this chapter we examine the adequacy of the current Greek social model and its recent changes in their capacity to (a) provide to individuals opportunities for progress and protection against risks during employment-related transitions and (b) reduce inequalities in life chances by gender, age, class and ethnicity by organizing horizontal, vertical and intergenerational social solidarity. The life course transitions that will be studied in the following sections of this chapter are the transition from education to work; the subsequent transition from first labour market entry to career and independent living; transitions in prime age associated with family formation and job change; and, finally, the transition from employment to retirement. In the concluding section we outline the changes in the distribution of risks within the Greek social model and assess the extent to which it ensures social solidarity and cohesion and promotes opportunities during employment-related transitions.

TRANSITION FROM EDUCATION TO WORK Greek society has historically expressed a very high demand for education and a strong distaste for manual work (Tsoukalas 1987). These are explained by the relative abundance of the middle classes ever since the foundation of the Greek state in 1830. Education has constituted the main channel for upward social and occupational mobility of both the middle and working classes. An OECD study (1965, cited by Tsoukalas 1987, p. 98) revealed that in the early 1960s Greece displayed the highest share of secondary education graduates in the population among all European OECD countries while its share of students in technical and vocational schools was the lowest. In fact, in the post-war decades vocational education and training was mainly delivered through the apprenticeship system and a few technical schools for adults (Konstantinopoulos 1993). Although the formal apprenticeship system – combining vocational education in special schools with on-thejob training in firms – expanded in the 1960s to accompany the acceleration of industrialization and meet the growing needs of manufacturing for skilled labour, it never acquired significant dimensions relative to informal on-the-job apprenticeships. The Greek education system underwent radical reform, especially in the second half of the 1970s. Compulsory education was extended from six to nine years and secondary education divided into a lower and an upper tier; a technical-vocational strand was created in upper-secondary education next to the general strand and post-secondary technical education was also

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established for the first time. These post-secondary schools for technicians were later transformed into Higher Technological Education Institutes (TEI) as part of the 1980s expansion of higher education. In the 1990s the vocational strand of upper-secondary education was upgraded, a new system of post-secondary initial training was created and the delivery of continuing training was reorganized while, in the 2000s, unsuccessful efforts were made to link continuing with initial training. The reforms of the 1970s were in response to social demands for more education from a society that had become wealthier and needed, after three decades of fast growth, a better trained workforce. By contrast, reforms in the 1980s and 1990s were aimed at addressing the problem of youth unemployment. In the early 1980s the economy entered a phase of prolonged stagnation and deindustrialization that lasted until the mid 1990s. In the urban and semi-urban areas youth unemployment climbed from 4.2 per cent in 1974 to 28.3 per cent in 1983. It then stabilized but started to escalate again with the 1990–93 recession. By 1999 the unemployment rate of those aged 15–24 (31.9 per cent) was the highest in the EU-15 and that of the 25–29-year-olds reached the alarming height of 17.8 per cent. By 2007 these rates had fallen to 22.9 per cent and 14.2 per cent respectively, but Greece still had the highest youth unemployment rate in the EU-27. The dramatic rise in youth unemployment in the 1980s and 1990s amplified social demand for education. Enrolment rates in upper-secondary education increased sharply while the number entering higher education more than tripled between 1974 and 1985 and doubled between 1993 and 2000. Nonetheless, social demand for higher education was only partly satisfied, as revealed by massive student emigration1 and, recently, by the great number of enrolments in private educational institutions franchised by foreign universities. In 2006, the net enrolment rate in tertiary education of the 20-year-olds was the highest among OECD countries (74 per cent); yet, in the same year, the rate of the population aged 25–34 having attained tertiary education (27 per cent) was the tenth lowest (OECD 2008). The discrepancy can be explained by time-lag effects and drop-out phenomena. Transition from education to work starts in Greece after the completion of studies, since 97.6 per cent of young Greeks in education aged 15–19 and 91.1 per cent of those aged 20–24 do not participate in the labour force; the respective OECD average rates are 77.8 per cent and 63.6 per cent (Table 9.1). We can distinguish three main pathways. The first, accounting for roughly 15 per cent of a cohort, is taken by those who have at most completed compulsory education. The second pathway, accounting for roughly 30 per cent of a cohort, is that of upper-secondary education graduates who leave school at the age of 18 and do not go on to higher education. The third pathway, accounting for the remaining

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Table 9.1

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Enrolment in education and labour market status of youth in Greece (distribution %) Greece

OECD average

Youth population aged 15–19 in/not in education by labour market status (2003) In education Employed 1.3 1.5 11.3 13.8 Unemployed 0.4 0.5 1.7 2.1 Not in the labour 82.6 97.6 63.9 77.8 force In work-study 4.9 6.0 programmes All in education 84.3 100 82.1 100 Not in education Employed 6.7 42.7 9.5 53.1 Unemployed 2.8 17.8 2.7 15.4 Not in the labour 6.3 41.4 5.1 28.5 force All not in education 15.7 100 17.9 100 All aged 15–19 100 100 Youth population aged 20-24 in/not in education by labour market status (2003) In education Employed 2.7 6.9 10.7 27.5 Unemployed 0.8 2.0 1.4 3.5 Not in the labour 35.2 91.1 24.6 63.6 force In work-study 1.7 4.4 programmes All in education 38.6 100 38.7 100 Not in education Employed 39.9 65.0 44.6 72.7 Unemployed 13.0 21.2 7.4 12.0 Not in the labour 8.5 13.8 8.8 14.3 force All not in education 61.4 100 61.3 100 All aged 20–24 100 100 Source:

OECD (2005).

55 per cent, is followed by the graduates of higher education. According to a recent survey, 91.8 per cent of active university students have completed their studies by the age of 25 (Karamessini 2008b) but TEI students graduate about two years earlier on average.

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The individuals that engage in each pathway may take different routes. Early school leavers who have not completed compulsory education may attend evening schools while working if aged 14–18 or go to ‘secondchance’ schools if aged 18–30. Early school-leavers who have completed compulsory education may permanently join the labour market or work for some years and then return to education, to attend upper-secondary schools. All types of schools mentioned above are public and tuition-free. Moreover, free of charge support classes have operated since 1997 in all public primary and secondary schools to help students improve their school performance and combat early school leaving. Transition from upper-secondary education to work differs according to the stream followed. A survey (Paleocrassas et al. 2002) has shown that the duration of unemployment before getting the first job after graduation was one month for the graduates of the technical-vocational stream versus twelve months for those of the general stream. Although more successful as regards immediate labour market entry, the technical-vocational stream is less popular than the general because the latter provides better preparation for higher education and, until recently, exclusive access to university. Around 85 per cent of the pupils graduating from the general stream in 2001 against 15 per cent of those graduating from the technical-vocational stream continued their studies in higher education (Pedagogical Institute 2008). The technical-vocational stream of upper-secondary education is thus in practice followed by individuals with low performance in compulsory education and poor family resources that compel them to take a shorter route to the labour market. In European comparisons, Greece belongs to the EU-25 countries with the lowest share of students in vocational courses at ISCED level three (Andrén and Schmidt 2005). Given their lack of occupation-specific skills, half of the graduates of the general stream of upper-secondary education that do not enter tertiary education enrol in the Vocational Training Institutes (IEK). IEK are also open to technical-vocational stream graduates and a reasonably high proportion (20 per cent of the 2001 cohort in the six years after graduating) have been found to have attended IEK to upgrade their skills and qualifications (Pedagogical Institute 2008). IEK students may take national exams to obtain a national qualifications certificate. Enrolments in the initial training system are equally shared between public and private IEK. The former charge lower tuition fees than the latter while their students with low family income are also entitled to fee waivers. Higher education is the longest route to employment but has for long been regarded as the best way to guarantee quick access to jobs of decent quality with career prospects. The gradual rise in unemployment and employment precariousness among higher education graduates has led

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to a great disillusionment about the capacity of higher education to fulfil this role. Today, their risk of unemployment is much higher than among those of lower education levels in both the 20–24 and 25–29 age groups. Consequently, although the different levels of education still give access to jobs of different social status and prestige, it has become evident that young people of all education levels face similar difficulties in making their transition from education to work. The same conclusion can be drawn from estimates of the average duration of transition from education to the first important job of young people who had completed their studies in 1996–99. The duration was the shortest for university and lower secondary education graduates (16.5 months) and the longest for upper secondary education graduates (21 months) but these differences in average duration were relatively small (Karamessini and Kornelakis 2005). The problems of access to employment faced by higher education graduates have already generated a large demand for postgraduate studies. The number of postgraduate students passed from about 2000 in 1993 to about 69 000 in 2005–06. In 2005, 40.4 per cent of university graduates of the years 1998–2000 had completed or were undertaking Masters courses (Karamessini 2008b). This means that the Bachelor plus Masters route has become established as a new and distinctive pathway from higher education to work. Traditional educational fetishism linked to upward social mobility aspirations has thus been extended to the extremes because of the growing insecurity of young people and their families. According to the Greek Constitution, tertiary education has to be offered exclusively by public entities. However, many private organizations claiming to offer higher education services and degrees under franchising agreements with foreign universities have begun to operate in Greece over the past 15 years and a recent law has regulated their operation. In public institutions there are no tuition fees for undergraduate studies and books are provided to students for free. For postgraduate studies, the decision whether to charge fees or not depends on the department or institution that provides the course. On the other hand, there are no state scholarships at the undergraduate level while a small proportion of postgraduate students receive a state scholarship. Additionally the state has invested very limited funds in the housing of students. But the state takes in charge over half of the interests of the student loans provided by banks. Despite the absence of tuition fees, tertiary education in Greece entails many ‘hidden costs’ for students and their families. The family pays for the private preparatory courses that candidates for higher education attend to be fully prepared for their General Examinations. Secondly, the family is expected to fully cover the maintenance costs of students while in education. These rise significantly when students have to move to another

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town to study. Students from low-income households may contribute to the maintenance costs by working during their studies but only a very small portion of the student population aged 20–24 is employed (6.9 per cent) or looking for a job (2 per cent) (Table 9.1). Psacharopoulos and Papakonstantinou (2005) have shown that families spend more than what the state spends per student with rent accounting for 60 per cent of total private expenditure. A housing allowance of 1000 euros per annum, introduced recently to assist the numerous families with children studying away from home, covers only a small part of these expenses. Other policy measures include tax credits for families with children enrolled in education and tax exemption for preparatory school fees and for rent when children study away from home. However, all these tax cuts and allowances are universal and thus benefit disproportionally high income families. State support for the transition of young people from education to work also takes the form of traineeship schemes and career counselling in educational institutions, and active labour market programmes provided by the Manpower Employment Organization (OAED). The ‘Work experience acquisition programme’ (STAGE) is designed for new labour market entrants aged 18–30 and graduates from all post-compulsory education levels. Placements last six months but employers are obliged to continue employing the subsidized worker for another 6–12 months. The ‘Special programme to promote employment for young unemployed’ subsidizes firms for 21 months if they create new jobs, hire for these jobs young people aged 18–30 and retain them in employment for at least three more months. The young unemployed may also participate in the ‘New freelance professionals programme’, if they wish to become self-employed, or in the ‘New jobs programme’ which subsidizes firms to create new jobs. They also have access to continuing training provided by the Vocational Training Centres (KEK) and receive training allowances by OAED. In recent years OAED has also developed individualized assistance services. Nevertheless, in mid 2004, 80 per cent of the young unemployed had not received counselling and job-search assistance six months after becoming unemployed while 81.6 per cent of them had not been offered any form of new start, whether a job, training, work experience, or another employability measure (Greek Republic – Ministry of Labour and Social Protection 2004). It is thus no surprise that the young unemployed still resort to informal networks, political connections and acquaintances rather than to OAED in order to find a job. With respect to passive measures, all unemployed aged 18–29 have free access to healthcare while primo-entrants aged 20–29 are entitled to an 80 euros monthly allowance for five months after one year of unemployment. The amount of the allowance is ridiculous and few young people apply to

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get it. The family is thus still the only provider of income to young people during their unemployment spells. Changes related to the transition from education to work and the responses of the Greek social model can be summarized as follows. The growing aspirations of medium- and low-income families for upward social mobility and the rise in youth unemployment after 1974 have generated a large social demand for more education and reduced activity rates among youth, first in the 15–19 age group and, since the beginning of the 2000s, in the 20–24 age group. The state has responded to this social demand by expanding access to public upper-secondary and tertiary education but without a proportional increase in public spending. These contradictions have led to the following paradox: Greece can be classified among the OECD countries with the most extended mass higher education but also among those with the lowest public expenditure per student and the highest share of students abroad. At the same time, the youth unemployment rate is the third highest in the EU-27 and it increases with the rise of the education attainment level instead of decreasing. The state has also intervened through: (a) the running of public schools targeted to lower secondary education drop-outs and the organization of support classes in schools to prevent early school leaving; (b) the creation of an accredited initial vocational training system for upper-secondary education graduates, giving access to national qualification certificates; and (c) the implementation of active labour market schemes for youth, although the penetration rate of these is very low. The high cost of private preparatory courses for entry into higher education, the lack of scholarships for higher education students from low-income families, the long duration of the transition from education to the first important job for graduates of all education levels and the ridiculously low level and short duration of assistance to young unemployed, place a great financial burden on the families in this crucial phase of their children’s life. However, this family burden has not led to students entering employment. Indeed, while until the late 1970s many students worked continuously and full-time during much of their studies and delayed graduation, today the overwhelming majority of higher education students do not work and graduate with a shorter delay.

TRANSITIONS TO CAREER AND INDEPENDENT LIVING Transitions to career and independent living have become more uncertain, discontinuous and protracted in recent decades due to a series of factors. First, employment precariousness has made young people’s access to decent

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jobs and career prospects more difficult. Second, minimum wages are inadequate for independent living. Third, growing competition in the market has reduced young people’s chances of successful engagement in selfemployment. Fourth, improvements in educational attainment, along with the rise in living standards, has created greater aspirations for quality jobs among young people and has increased the number and duration of unemployment spells. Fifth, changes in young women’s priorities and choices concerning motherhood and career, and in youth cultures, have retarded the leaving of the parental home. In the mid-1980s the rate of co-residence of men aged 25–29 with their parents was around 50 per cent but by 2002 it had reached 70 per cent (Becker et al. 2005). Over the same period, the mean age of women at first marriage rose from 24.6 years to 27.3 years and of men from 28.7 to 31 years. Marriage is still the crucial event determining definitive departure from the parental home for both sexes in Greece. Youth unemployment increased dramatically in the 1990s while in the 2000s it declined. However, in 2006 the unemployment rate was still extremely high and the gender gap was huge: 15.4 per cent for men and 32.9 per cent for women in the 20–24 age group and 9.8 per cent for men and 19 per cent for women among 25–29-year-olds. In addition, the incidence of temporary and part-time work increased substantially while that of selfemployment declined among those aged 20–29. All these developments increased uncertainty about career prospects among youth and extended the period between the first job and the access to a decent job or a career path. In 2005, six years after their graduation in 1999 and entry into the labour market, 32 per cent of university and 29 per cent of higher technological education graduates were either unemployed or holding temporary jobs. The respective rates for upper-secondary and lower-secondary education graduates of the same year were 66.4 per cent and 52.5 per cent (Karamessini 2006). Differences by gender were also important, especially between secondary education graduates, reflected in higher incidence of unemployment and employment precariousness as well as greater discouragement and lower activity rates among women. It follows that getting a job that opens career prospects takes much more time today than in the past for high-educated young people and for women even more so. For the overwhelming majority of medium- and low-educated youth their problem is a more elementary one: that of access to a decent job. A decent job entails first of all a living wage. In Greece there are 20 different levels of the minimum wage set according to the family and professional status and work experience. The level of minimum wages for workers with no or short work experience, like young labour force participants, are clearly insufficient to cover living costs, especially when

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accommodation is rented. Living independently from parents for youth thus depends not only on employment security but also on co-residence with a partner also working and/or home ownership. Using ECHP data, Iacovou (2001) estimated that, in the mid 1990s, 62.7 per cent of men and 79 per cent of women aged 18–35 who left home for non-educational purposes in Greece, did so to live with a partner. Moreover, 47.3 per cent of men and 48 per cent of women nest-leavers moved to their own homes. The share of home-owners among nest-leavers was much lower than in all the other Southern European countries and Ireland, and higher than in the remaining EU countries. However, in the absence of public housing available to young people in Greece,2 the share of nest-leavers moving to private rented accommodation was the fourth highest among the 13 EU-15 countries included in the ECHP.3 The share of private sector tenants was 52.7 per cent among male nest-leavers and 52 per cent among female. Until 1997 annual rent increases were decided by the state in line with inflation. Since then the rents in new leasing contracts are set by individual negotiation between the owner and the tenant. The law provides that annual increases of rents rise by 75 per cent of the consumer price index if not decided otherwise by the parties. Rents have been rising since 1999 at a higher pace than consumer prices. This delays the decision of young couples who have no access to a home of their own to quit the parental home and live together until one or both partners get a stable job and their wages are high enough to meet living costs. When young people in the mid 1990s left the parental home for a home of their own this represented a process of property transfer in the middle and upper classes from parents to children at or before marriage. Few young people take loans to buy a flat or a house. In 2005, while 38 per cent of household members aged 25 and over had a housing loan, the share was only 9.2 per cent among household members aged 18–24 (Bank of Greece 2006). This process has recently become more difficult as house prices have been rising dramatically since the mid 1990s (Table 9.2). House price inflation is due to the explosion of demand for a number of reasons: an impressive fall in the interest rates of loans from 1996 to 2003, aggressive borrowing policy from banks, a fall in the returns from savings and financial assets after the collapse of the stock market in 1999 and high growth rates in the 2000s (Himoniti-Terroviti 2005; Balomenos and Palaskas 2006). House price inflation has generated rent inflation since 1999 (Table 9.2). These developments have sharpened class divisions. The middle classes have gained easier access to housing and invested in real estate for themselves and their children while lower classes have seen a greater proportion of their wages being used to pay rents with their children obliged to remain longer in the parental home.

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Table 9.2

House prices, rents and cost of living in Greece Variation across period (%)

House prices Rents Consumer prices Source:

1994–1997

1997–1999

1999–2004

1994–2004

31.4 20.8 24.3

24.5 6.9 7.6

55.3 24.3 17.3

154.1 60.5 56.9

Elaboration of data from the Bank of Greece.

However, as in Italy (Saraceno 2000), delayed transition to independent leaving is not only the outcome of growing difficulties and constraints. It also constitutes a short- or medium-term strategy of a large share of young people of both sexes that permits higher levels of consumption and an easier life,4 the possibility of saving and, above all, of developing well-aimed strategies in education, training and in patterns of entry into the labour market since they can afford to choose and to experiment with various solutions. Additionally, high female unemployment and the aspirations of well-educated young women for relationships of equality with men induce them to postpone marriage and family formation and stay at the parental home until they find a stable job. The protracted transition of youth from first entry into the labour market to a decent job, a career and independent living involves high financial costs for families supporting their offspring sometimes until their mid 30s. Given low wages and the low rate of young unemployed receiving unemployment benefits or participating in active labour market schemes, young people receive a huge amount of income transfers from their parents during the transition period and the transfer of house property at marriage or when they decide to leave home.

PRIME AGE TRANSITIONS In this section we examine two types of transitions taking place in prime age: first, changes in jobs and careers; second, changes in activity status. Changes in Jobs and Careers According to the latest OECD online data for European member states, Greece belongs to the group of countries with relatively long job tenure along with Italy, Portugal, Germany, Sweden and the Netherlands.5

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Moreover, the average years of tenure increased from 9.2 to 10.3 between 1992 and 2005. Prime age dependent workers have positively contributed to this trend. Job stability is highly valued by Greek wage earners and is identified with employment security. This can be largely attributed to the deficiencies of the unemployment compensation system and the low penetration of ALMP schemes among the unemployed. It also explains the low rate of voluntary changes of employer in prime age since the early 1980s when unemployment rose sharply. Job stability has also traditionally matched employer preferences due to (a) the underdevelopment of vocational education, (b) the importance of informal apprenticeships in SMEs and of on-the-job training in large firms for the acquisition of vocational skills, and (c) the high propensity of skilled manual employees to enter selfemployment or start their own business. It is thus no surprise that, since blue-collar employees have always enjoyed low protection from dismissals and recourse to fixed-term contracts has been easy in Greece, job tenure was and still is relatively high by international standards. Employer retention practices are thus crucial for understanding the low labour turnover in Greek firms. They are even more so, given that collective bargaining has historically served the formation and maintenance of occupational labour markets by encouraging inter-firm mobility through seniority premia for accumulation of work experience in a particular occupation rather than within a particular firm. Occupational labour markets have in fact been gradually replaced over recent decades by internal labour markets in large firms. Not only inter-firm but also occupational and sector mobility are limited in Greece. Wage premia for work experience in a particular occupation and/or sector inhibit employees from starting a career in a different occupation or sector. Moreover, most sectors and occupations possess a special mandatory insurance scheme providing employees with supplementary pensions on top of their main pension. Change of occupation/ sector entails loss of entitlements. Additionally, license to practice systems for several professions, strong links between qualifications and job grade in the public sector and limited retraining opportunities during the life course further restrict occupational mobility.6 Last but not least, business start-up has become more risky than in the past, especially since the early 1990s, due to growing competition in the market. Consequently, the propensity to start a new career as self-employed in prime age after having worked several years as an employee has dropped. As for geographical mobility, this is limited in prime age because of the increasing share of dual-earner households among younger generations and the very high rate of home ownership, which has been continuously

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rising in the past decade due to the fall of interest rates and the explosion of housing loans. Changes in Activity Status Changes in activity status in prime age can be divided into those related and those unrelated to parenthood. The following subsections describe these two main categories of transitions. Transitions related to parenthood In the post-war Greek social model marriage was the first crucial lifecycle event for generating changes in the activity status of women. Conversely, marriage urged men onto greater employment continuity in their role as breadwinners. Marriage involved a more or less permanent interruption of paid employment and lifelong inactivity among low/medium-educated women. Nevertheless, most peasants and many working-class women used to work after marriage during the intervals between births and once the children were older. At the other extreme, a small minority of higheducated women worked continuously in the public sector and banking, regardless of marriage or motherhood. In the 1980s, the dominant female participation pattern started changing due to women’s spectacular progress in educational attainment. By the 1990s the majority of young women entering the labour market for the first time had no intention of stopping working after marriage. But the difficulties in reconciling childcare and work in the private sector of the economy continued to pose dilemmas for young mothers. Motherhood thus became gradually the main cause of women’s transitions from employment to inactivity and from inactivity to employment. A great proportion of these transitions take place today in prime age since the mean age of women at childbearing is around 30 years (29.5 in 2003, up from 27.8 in 1993). Fathers are still today not concerned by transitions related to parenthood. In the traditional Greek social model that could be regarded as familialist, state support for parenthood was residual as the family had the legal and moral obligation to cater for its dependent members. The state intervened to protect children only in the absence of the father or both parents (orphans) and in case of poverty (poor minors). Child benefits were very low and paid to working parents by the employer or social security. The state also intervened to protect motherhood by granting special rights to working women. Legislation dating from 1920 prohibited dismissal during maternity leave, set at 12 weeks from this early date. However, it was only in the 1980s that bans on dismissal of a woman during pregnancy (1980)

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and on refusal to hire a woman due to pregnancy or dismissal after confinement (1984) was achieved. Maternity leave in the private sector was partially compensated – full pay was provided after 1977 – and public childcare services were almost non-existent. The 1980s saw the first policy measures for the ‘reconciliation’ of work and the caring duties of parents (not only mothers). The duration of maternity leave was extended and new leaves were established. Only two of the new leaves were fully paid and thus taken up by working parents. These were the reduced daily working hours in the public sector for mothers with children less than four years old; and the leave for school visits for all working parents with children up to 16 years old. Neither of these leaves has altered transitions due to parenthood. In the same decade child credits were introduced in taxation and public childcare services started expanding. The leave regime was radically improved in the 1990s and 2000s. The duration of maternity leave was extended several times, a fully paid but short paternity leave was introduced and mothers working in the private sector were granted the right (transferable to fathers) to reduced daily working hours for 30 months after the expiration of maternity leave. In 1999, during a revision of the Civil Servants’ Code, a nine-month paid maternal childminding leave after maternity leave was introduced as an alternative to the entitlement of mothers to reduced daily working time. The 2007 revision of the Civil Servants’ Code established the right of the father to leave entitlements if the mother does not make use of them. Finally, a 2008 law granted to working mothers in the private sector the entitlement to a fully insured six-month childminding leave after the maternity leave. During the leave mothers will receive a monthly benefit equal to the minimum salary set by the National General Collective Agreement. The employment rates of women aged 25–49 rose from 41 per cent in 1983 to 63 per cent in 2007 and female employment patterns have become more continuous over the last decades. This cannot, though, be attributed to the improvement of leaves for childcare reasons, since until recently continuous leaves were unpaid and limited in duration. Moreover, women in the public sector already had continuous employment patterns, and the enforceability of the right of working parents in the private sector to reduced daily working hours for childcare reasons was problematic. The availability of affordable and quality childcare services certainly reduces female transitions from employment to inactivity due to parenthood. The adoption of the European Employment Strategy in 1997, along with an employment policy guideline urging EU member states to design and implement measures of reconciliation of work and family life, coincided with the launching in Greece of an active reconciliation policy whose

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main components were (a) the creation of new public nurseries, crèches and after-school centres and (b) the extension of the operating hours and schedules of public nurseries, kindergartens and schools. Notwithstanding progress in the provision of social care services in Greece in the past decade, EU-SILC data show (European Commission 2008) that, in 2006, only 10 per cent of the children aged 0–2 and 61 per cent of those aged 3–6 were covered by daycare centres and centre-based services. In the same year 41 per cent of the children aged 0–2 and 18 per cent of those aged 3–6 were cared for only by their parents while grandparents, relatives, friends and childminders took care of 54 per cent of children in the first age group and 40 per cent in the second age group. Moving from full-time to part-time work is another way to cope with caring responsibilities while remaining in employment, but it is not an option favoured by or available to many parents in Greece, since wages are very low and work organization in SMEs rather inflexible. This is why the part-time rate in Greece is today the lowest in the EU (1.1 per cent among male and 4.7 per cent among female employees in 2007) and its level has hardly changed in the past 20 years. As for ‘parent-friendly’ working time flexibility, reduced daily working hours in the private and public sectors for parents with very young children (childcare leave) and flexible arrival and departure hours in the public sector (flexi-time) are the major flexible working time arrangements available to Greek employees. In reality, these are effective only in the public sector due to problems of enforceability in the private sector. There is strong discrimination against employing women in the Greek labour market due to the costs of motherhood for firms, especially SMEs – contribution to compensation during maternity leave, full payment of childcare leave and replacement costs during absence – and the prejudice of employers concerning the performance of mothers. If one adds strong age discrimination at recruitment to gender discrimination, this means that it is almost impossible for women returnees to find a job after the age of 40. In recent years several job creation schemes have been developed targeting mothers with children, single-parent families and returners to the labour market after an absence due to family responsibilities. Some of them use subsidies to compensate for the actual or presumed costs of motherhood to employers while others offer temporary part-time jobs to mothers in the public sector. Transitions unrelated to parenthood Transitions in prime age from employment to inactivity/unemployment are not necessarily related to parenthood. They may be the outcome of firings or job instability among vulnerable labour force groups. The opposite

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transitions from inactivity/unemployment to employment depend on job opportunities, the institutional features of the labour market and employment policy. Unemployment rates are rough indicators of the risks involved in these transitions since they reflect both job losses and insufficient job creation. In Greece, the male unemployment rate in the 30–44 age class rose from 2.7 per cent in 1990 to 5.5 per cent in 2000, and the female rate from 7.8 to 14.1 per cent respectively. In the 2000s both rates declined but in 2006 the female rate was still 12.4 per cent when the male was only 4.4 per cent. It follows that the risks of transitions in prime age became greater in the 1990s and slightly decreased in the 2000s. The gender gap in unemployment rates and its trend since the early 1990s mainly reflect strong gender and age discrimination at recruitment in combination with higher incidence of transitions in and out of employment in prime age among low- and medium-educated women due to caring responsibilities. Strong age discrimination at recruitment is explained by employers’ expectations for lower returns on investments in firm-specific training and by contractual premia incorporated in minimum wages and associated with work experience in an occupation and/or sector. These premia raise the entry wages of older relative to younger workers for the same job in the same firm. As indicated by the unemployment rates, age discrimination entails high risks in prime age in case of loss of employment or career breaks, especially for early school leavers and upper secondary graduates of both sexes without further training, and women with non-university higher education. If the members of these groups become unemployed, they may opt for or move between peripheral jobs, informal work, longterm unemployment and temporary or permanent inactivity. The prime age unemployed have access to unemployment benefits provided that they have established a minimum contribution record. However, compensation remains residual, although the reform of the Greek unemployment insurance system in the mid 1980s eased eligibility to benefits and gave seasonal workers access to compensation for inactivity/unemployment during the low season. The income replacement rate of unemployment benefits is very low (55 per cent in 2007) while the duration of benefits depends on the contribution record but does not exceed 12 months. Assistance allowances granted after the end of benefits are means-tested, their amount is very low and they last two months. The low amount and short duration of benefits and allowances put pressure on the unemployed to look for a job and shorten the period of job search. Additionally, in 2000, in-work benefits were introduced by law for the unemployed on benefits who wish to take up part-time jobs. It was a

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measure meant to make part-time work attractive to unemployed men. The same law provided for a premium of 7.5 per cent on the pay of parttimers receiving the minimum hourly wage and working less than four hours daily. The measure aimed to make short part-time work acceptable to unemployed/inactive women. Apart from these two make-work-pay measures, a number of ALMP schemes promoting the employment of the unemployed/inactive of prime age (subsidized jobs, continuous training and counselling) were developed in the 1990s and 2000s. Further, to ease the problems caused by the closure, restructuring, privatization or relocation of big industrial firms, all governments implemented special packages of measures including higher job subsidies and integrated actions for those made redundant. However, the penetration of such measures to the target populations has been low, since expenditure on ALMP, excluding that on public employment services, as a percentage of GDP has never surpassed 0.3 per cent in the past two decades (European Commission 2006a). In 2004, this percentage was the lowest among the countries of the former EU-15 along with that of the UK (0.2 per cent). In the same year, the unemployment rate in Greece rose to 10.5 per cent compared to 4.7 per cent in the UK.

TRANSITION FROM EMPLOYMENT TO RETIREMENT The transition from employment to retirement in Greece concerns today the overwhelming majority of the male population and about half of the female population in the cohorts that are currently aged 50 and over. The other half of the female population may either have never worked or have had only a short employment/contribution record, remaining inactive for a long time before the legal age of retirement (60 years). In agriculture, both women and men receive independent non-contributory pensions after the age of 65. According to data on self-reported labour market status collected in 2004 by the SHARE survey, 8.6 per cent of all men have retired before reaching 55 years of age and most of them at age 65. Only 3 per cent of all men aged 65 or more work. Women retire earlier than men on average: 35 per cent of employed women aged 50–54 retire before reaching 55 years, 30 per cent before 60 years and the remaining before 65. Almost no woman aged 65 or more works (Brugiavini et al. 2005, Table 5A.3, p. 27). However, the transition from employment to retirement is more gradual, since many of the self-reported retired men and women work. The rates for the 50–54, 55–59, 60–64 and 65–69 age classes are 43.4, 30.1, 30.1 and

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17.2 per cent respectively (Blanchet et al. 2005). In Greece it is possible to combine work and pension receipt as long as earnings are below 700 euros. Many pensioners exceeding this limit work informally. Low pensions are a stimulus for working after retirement; 70 per cent of all pensioners of the main employee pension fund (IKA) receive the minimum pension which is set at 70 per cent of the minimum wage of a married full-time employee. Rural pensioners of the farmers’ fund (OGA) and all uninsured people over 65 receive an even lower non-contributory basic pension. It is thus no surprise that the poverty rate of people aged 65 years and over in Greece rose in 2003 to 28 per cent (European Commission 2006b). A non-contributory means-tested pension supplement (EKAS) was introduced in 1996 to combat poverty among low-income pensioners over 60 in urban areas. Retired farmers were excluded from this scheme, but in 1998 a contributory scheme was initiated in OGA, which will eventually provide farmers with a full pension replacement rate of 50–70 per cent. Income poverty of pensioners is mitigated by the access of old people to home ownership or rent-free accommodation. In 2004, only 9.6 per cent of those aged 60–69, 6.8 per cent of those aged 70–79 and 4.2 per cent of those 80 years and over were tenants. The respective rates of homewners were 85.6, 84.6 and 80.5 per cent. The remainder were living in rent-free accommodation (Kohli et al. 2005). The institutional arrangements of the pension system affect retirement behaviour by making particular routes to retirement more or less attractive for the future retirees. The Greek pension system was designed on the basis of the male breadwinner/female carer family model and was extremely fragmented. It included a multitude of funds and schemes for main and supplementary pensions and end-of-service allowances. The retirement age of women was lower than that of men, while married women and mothers were entitled to special early retirement schemes. The stringency of the qualifying conditions and generosity of benefits differed among funds. Differences mainly followed the public/private and liberal professions/other self-employed divides. From the distribution of the new pensioners of IKA in 2006 by scheme (OECD 2007, p. 72), it appears that only 16 per cent of men and 30 per cent of women retire on a full pension at the normal retirement age (65 and 60 years respectively); 84 per cent of men and 70 per cent of women retire early through a variety of early retirement schemes or under the disability scheme. Consequently, the effective retirement age is lower than the statutory one. According to estimates by the European Commission for 2005, the age at which 50 per cent of those economically active at the age of 50 exit the labour force is 61.7 for men and 58.4 for women. The old-age scheme most frequently used by men is the one corresponding to

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occupations classified as ‘arduous or unhygienic’, incorporating 40 per cent of all male employees, while 17 per cent of female employees opt for early retirement on reduced pensions. The share of new IKA retirees retiring under conditions of disability is quite high but not exceptional compared with some OECD countries. The deficits that appeared in many pension funds, particularly those of IKA, the high rates of employer and employee contributions, and the rising ratio of pensioners to insured led in 1992 to a reform of the pension system aiming at enhancing its financial sustainability without incurring a very high cost on public finance or causing an uncontrollable increase in the high public debt. The reform: (a) equalized the retirement age of women with that of men (65 years); (b) lowered the replacement rates of pensions (from 80 per cent to 60 per cent) for those insured after 31 December 1992; (c) abolished the early retirement scheme for married women in the public sector and set more restrictive conditions for the early retirement of mothers with underage children; and (d) provided for the convergence of the retirement age and qualifying conditions between the public and private sector. The next reform took place in 2002. It reduced divergences between those insured under the old (before 1993) and new (after 1992) regimes by planning the convergence of both regimes to a common replacement rate of 70 per cent by 2017; it provided for an accrual of 3 per cent per year if people work after age 65 and up to 67, implying a maximum replacement rate of 76 per cent; it extended the insurance period for retirement without an age threshold from 35 to 37 years; it granted insurance time credits for each child to mothers (transferable to fathers) to fulfil the minimum requirements for being entitled to a pension; it provided for a process of revision of the list of ‘arduous and unhygienic’ occupations or tasks; it made the unification of funds compulsory; and it established the institutional framework for the development of second pillar occupational funds. The last reform of 2008 increased the legal age of retirement of mothers with underage children from 50 to 55 and the retirement age of those with an insurance record of 35 years from 58 to 60. Furthermore, the rate of reduction of pensions for each year of early retirement was raised from 4.5 to 6 per cent while the accrual for each year in employment after age 65 and up to 67 was raised from 3 to 3.3 per cent. Both reforms attempted to delay exit from employment and increase the employment rate of older workers, especially that of older women. In fact, between 1992 and 2007, the employment rate of men aged 50–64 rose from 66.7 per cent to 69.3 per cent and the respective rate for women from 26 per cent to 34.8 per cent. However, it is difficult to disentangle the effect

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of the reforms on the female employment rate from the generation effect, operating through the impact on the female activity rate of the higher educational attainment of more recent cohorts of women. The transition from employment to retirement may be more complicated, passing through unemployment. The restructuring or closure of big industrial plants in the 1990s and 2000s caused redundancies, especially among male workers. The unions were particularly sensitive to the problem of older workers who were close to retirement but did not have the required insurance record to be entitled to a pension and who would find re-employment difficult. In recent years a special public scheme has provided funds (LAEK) for the payment of the contributions that correspond to the missing insurance period for such workers.

CHANGES IN THE DISTRIBUTION OF RISKS AND ADEQUACY OF THE SOCIAL MODEL IN DEALING WITH TRANSITIONS IN AND OUT OF EMPLOYMENT In this section we assess the adequacy of the Greek social model in dealing with transitions in and out of employment by studying the degree of social solidarity and cohesion it ensures and the opportunities for progress it provides given the changes that have occurred in the last decades in the distribution of risks during transitions among social groups and generations. Younger generations are the greatest victims of these changes since the rise of unemployment and employment precariousness, the widening of the gap between the minimum and average wage, and the boom in house prices and rents have increased the risk of poverty and poor working conditions and employment prospects for long periods after leaving education. The same changes are responsible for the unfulfilled career expectations of large numbers of young people in spite of the great increase in their qualifications, the delay in leaving the parental home and in making decisions on family formation and the persistence of economic dependence on parents until a late age. The cohorts born in the 1960s were the first to face the rise of unemployment and temporary employment in the late 1970s and early 1980s. But they were also the first to benefit from the spectacular increase in entry to higher education while their aspirations to decent jobs and careers were fulfilled by sizeable job creation in the public sector during the 1980s. However, the income replacement rates of their pensions will be less than those of older generations. The cohorts born in the 1970s and later faced the dramatic deterioration

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of the labour market for youth in the 1990s and the persistence of high unemployment and employment precariousness in the 2000s. The substantial opening of higher education to these cohorts was not matched by a proportional rise in employment opportunities and led to high unemployment rates among graduates. These cohorts will also have to work longer and until a later age to become entitled to lower income replacement by pensions than previous cohorts. More education may put at a disadvantage young people with less education when employment opportunities are scarce. A number of education/training policy measures were taken in the 1990s and 2000s to create transition paths for the low- and medium-educated. These measures – in conjunction with ALMP schemes – have curbed the rate of early school leaving, increased the rate of upper-secondary education graduates who receive post-secondary vocational training, and contributed to the narrowing or inversion of the gap in youth unemployment rates between the low- and medium- and the high-educated. Today differences in educational attainment do not substantially differentiate – and not always in the expected way – the risk of unemployment among the 20–29-year-olds. In 2005 the risk in the 25–29 age class was the highest among university graduates. More education also delays labour market entry and entails additional private costs. These are particularly heavy for low- and medium-income families and universal tax credits and allowances benefit disproportionally high-income families. Social class and ethnicity are very important determinants of the choice of educational track and the corresponding route from education to work. They also affect the way risks are faced during transitions to independent living and in prime age. Early school leavers and followers of the vocational track in upper-secondary education come from the native working class and increasingly from the migrant population that has settled in Greece since the beginning of the 1990s. Economic independence is very difficult for both groups due to the low wages in the jobs available to them, their low probability of receiving a home of their own through family property transfer and the dramatic rise of rents since the late 1990s. In this context family solidarity is crucial against the risk of poverty in prime age due to unemployment, job instability and inactivity related to childrearing or to discouragement because of lack of employment opportunities. Informal work is also widespread among these groups, contributing to a thriving underground economy and the reproduction of labour market segmentation. Gender is the most important determinant of inequality in the risks of job instability and poverty during the transition from education to work and in the likelihood of access to decent jobs and careers. The stability and

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large size of the gender gaps in these risks and opportunities in the face of the better educational performance of girls since the beginning of the 1990s are indicative of public policy failure in combating discrimination against women in the labour market. The latter is even more pronounced in prime age when women quit the labour force to give birth and raise their children and then want to return to employment. The risks of income loss and unemployment for women due to transitions related to parenthood depend not only on employer recruitment practices but also on the leave regime and the availability of affordable and quality childcare services. Only a decade ago the Greek state initiated an active ‘reconciliation policy’ consisting in the extension and improvement of childcare services and leaves. This was a belated response to the challenge of increasing activity rates among mothers, which has not yet led to adequate coverage rates and high quality of services. The gaps in childcare had been filled in the past and are still filled by working parents through the mobilization of grandparents and market services. The reforms of the pension system have greatly affected the transition of women to retirement: (a) by increasing the legal age of retirement for the cohorts of women born in the 1970s or later, and (b) by eliminating or making more restrictive qualifying conditions for women born in the 1960s or later for the early retirement schemes for married women and mothers with underage children. The expected outcome will be a later average age of retirement for women belonging to these cohorts. Old age increases the risk of poverty in Greece since the majority of farmers or private sector workers receive very low pensions which are below the poverty line. In spite of the introduction of a non-contributory pension supplement for poor pensioners over 60 in 1996, and several revisions of the basic non-contributory pension granted to farmers and uninsured people over 65 over the last decade, old age is still a major determinant of poverty. Because of the absence of a universal basic pension, there are large inequalities in the level of minimum pensions enjoyed by different occupational groups. The failure of the state to combat poverty in old age in recent decades makes family solidarity and financial transfers from children to parents indispensable among very large strata of the population. The Greek social model ensures a high degree of social cohesion and intergenerational support through: 1.

An education system that gives access to higher education as well as the opportunity for upward social mobility not only to the offspring of upper/middle classes but also to those of farmers and the working class.

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Strong family support to dependent family members, filling the gaps of the welfare state in the fields of education, training, unemployment insurance, employment policy, social care, pensions and social assistance.

On the other hand, social cohesion is systematically undermined by immigration policy. All amnesties and immigration laws since 1998 have each time allowed only a part of the migrant population to regularize its residence and employment and have never encouraged the permanent residence of those legalized. Still today, 17 years after the first massive inflow of undocumented migrants in the country, immigrants in Greece live in an insecure and precarious situation. The most important inadequacies of the Greek social model in dealing efficiently and equitably with individual risks and negative social outcomes of transitions are the following: 1.

2.

3. 4.

5. 6.

Upward social mobility through higher education is eroded by the high unemployment rates and the uncertain career prospects of most graduates; The rise in the educational attainment level, the underfunding of education by the state, and the delay of transition to independent living due to youth unemployment are a major financial drain on low- and medium-income families; Gender inequalities in paid work are huge and discrimination against women in the labour market remains very strong; The efficiency of protection against risks during life course transitions is crucially dependent on the resources of the family and the degree of protection differs considerably between social classes; Care responsibilities are unequally shared between women and men and overburden working women; The key role of the family in social reproduction in a context of youth unemployment has led to a dramatic fall in fertility.

In conclusion, over the last decades the state has vastly increased enrolments in higher education and become more active in the fields of employment policy, training and ‘reconciliation’ policy. It has also tried to mend the social safety-net regarding pensions and take over part of private expenditure on education. These changes have modified the social model only at the margin. The family still plays the central role in providing its members with protection against the risks of poverty and opportunities for progress during life course transitions. Familialism thus remains a basic feature of the Greek social model.

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NOTES 1. The number of Greek students abroad varied between 8000 and 12 000 in the 1960s, between 14 000 and 30 000 in the 1970s, and between 38 000 and 54 000 from 1990 to 1998 (Magoula 2003). In 2004, their number was equal to 7.3 per cent of Greek students at home. 2. Public housing is accessible only to insured employees through the Workers’ Housing Organisation through loans provided in much more favourable terms than those prevailing in the private real estate market (low interest rates and very long reimbursement period). 3. The countries missing were Sweden and Luxembourg. 4. In a survey carried out in 2001 (Eurobarometer 2001), 71.6 per cent of young Greeks aged 18–24 answered that they cannot afford to move out, while 43.3 per cent replied that ‘young people today want all the comforts without having to bear all the responsibilities’ to the question asking for the reasons why young people tend to live with their parents longer than they used to. 5. The European countries with the longest job tenure are France, Belgium and Luxembourg. 6. In 2005, 4.8 per cent of those aged 25–34, 1.1 per cent of those aged 35–44 and 0.7 per cent of those aged 45–54 were in education or training. These were the lowest rates in the EU-25.

REFERENCES (G) = in Greek Andrén, Birgitta and Pascal Schmidt (2005), ‘Education in Europe – Key Statistics 2002–2003’, Statistics in Focus, Population and Social Conditions, 10/2005, Eurostat. Balomenos, Panayiotis and Theodossios Palaskas (2006), ‘The role of real estate in the domestic economy and prerequisites for its further development’, Economic Issues No. 16, Athens: IOBE. (G) Bank of Greece (2006), ‘Borrowing and financial wedge on households: survey at the household level’, Chapter VI (annex) of the Report of the Governor, Athens, 239–60. (G) Becker, Sascha O., Samuel Bentolila, Ana Fernandes and Andrea Ichino (2005), ‘Youth Emancipation and Perceived Job Insecurity of Parents and Children’, IZA Discussion Paper No. 1836, Bonn: Institute for the Study of Labor. Blanchet, Didier, Agar Brugiavini and Roberta Rainato (2005), ‘Pathways to Retirement’, in Axel Börsch-Supan, Agar Brugiavini, Hendrik Jürges, Johan Mackenbach, Johannes Siegrist and Guglielmo Weber (eds), Health, Ageing and Retirement in Europe, Manheim: Manheim Research Institute for the Economics of Aging, pp. 246–52. Brugiavini, Agar, Enrica Croda and Franco Mariuzzo (2005), ‘Labour Force Participation of the Elderly: Unused Capacity?’ in Axel Börsch-Supan, Agar Brugiavini, Hendrik Jürges, Johan Mackenbach, Johannes Siegrist and Guglielmo Weber (eds), Health, Ageing and Retirement in Europe, Manheim: Manheim Research Institute for the Economics of Aging, pp. 236–40. Eurobarometer (2001), Special Survey No. 151 ‘Young Europeans in 2001’, Wave

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55.1, http://ec.europa.eu/public_opinion/archives/eb_special_en.htm, accessed 22 January 2009. European Commission (2006a), ‘Effective European Active Labour Market Policies’, Employment in Europe 2006, Luxembourg: Office for Official Publications of the European Communities, pp. 119–72. European Commission (2006b), Adequate and Sustainable Pensions. Synthesis Report 2006, Luxembourg: Office for Official Publications of the European Communities. European Commission (2008), ‘Indicators for Monitoring the Employment Guidelines Including Indicators for Additional Employment Analysis: 2008 compendium’, http://ec.europa.eu/social/main.jsp?catId=477&langId=en, accessed 22 January 2009. Ferrera, M. (1996), ‘The “southern model” of welfare in social Europe’, Journal of European Social Policy, 6 (1), 17–37. Greek Republic – Ministry of Labour and Social Protection (2004), ‘National Action Plan for Employment 2004’, http://ec.europa.eu/employment_social/ employment_strategy/nap_2004/nap2004el_en.pdf, accessed 22 January 2009. Himoniti-Terroviti, Stella (2005), ‘Developments in the Housing Market’, Reports 43, Athens: KEPE. (G) Iacovou, Maria (2001), ‘Leaving Home in the European Union’, Working Papers of the Institute for Social and Economic Research, paper 2001-18, Colchester: University of Essex. Karamessini, Maria (2006), ‘From education to paid employment: empirical investigation of the labour market integration of young people in Greece’, Social Development and Social Cohesion, 1 (1), 67–84. (G) Karamessini, Maria (2008a), ‘Continuity and change in the southern European social model’, International Labour Review, 147 (1), 43–70. Karamessini, Maria (2008b), The Absorption of University Graduates in the Labour Market, Athens: Network of the Careers Offices of the Greek Universities and Dionicos. (G) Karamessini, Maria and Andreas Kornelakis (2005), ‘From Education to the First Important Job of University Graduates and Work Experience through STAGE’, in Apostolos Dedousopoulos, Yiannis Kouzis, Xanthi Petrinioti and Savvas Robolis (eds), Labour 2005, Athens: Institute for Urban Environment and Human Resources, Panteion University, pp. 307–18. (G) KEPE (1976), ‘Development Programme 1976–80. Social Security’, Report 22, Athens: Centre of Planning and Economic Research. Kohli, Martin, Harald Künenmund and Tanja Zähle (2005), ‘Housing and Living Arrangements’, in Axel Börsch-Supan, Agar Brugiavini, Hendrik Jürges, Johan Mackenbach, Johannes Siegrist and Guglielmo Weber (eds), Health, Ageing and Retirement in Europe, Manheim: Manheim Research Institute for the Economics of Aging, pp. 41–7. Konstantinopoulos, Christos (1993), Institutions and Agencies for Combating Unemployment in Greece (1920–1992), Athens: Manpower Employment Organisation. (G) Magoula, Theoharoula (2003), ‘Demand of Greeks for Higher Education Services Abroad’, in Dimitrios G. Tsaoussis (ed.), From Internationalization of Universities to Globalization of Education, Athens: Gutenberg and KEKMOKOP, pp. 491– 518. (G)

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Mingione, Enzo (2002), ‘Labour Market Segmentation and Informal Work’, in Heather D. Gibson (ed.), Economic Transformation, Democratization and Integration into the European Union. Southern Europe in Comparative Perspective, Basingstoke, Hampshire: Palgrave, pp. 149–92. OECD (2005), Education at a Glance 2005, Paris. OECD (2007), ‘Greece 2007’, OECD Economic Surveys, Paris. OECD (2008), Education at a Glance 2008, Paris. Paleocrassas, S., P. Rousseas and V. Vretakou (2002), ‘Upper secondary curriculum options and labour market performance: evidence from a graduates survey in Greece’, Journal of Vocational Education and Training, 54 (2), 295–304. Pedagogical Institute (2008), Survey on the Employment of Upper-Secondary Education Graduates, Athens: Ministry of National Education and Religions. Petmesidou, M. (1996), ‘Social protection in Southern Europe: trends and prospects’, Journal of Area Studies, 9, 95–125. Psacharopoulos, G. and G. Papakonstantinou (2005) ‘The real university cost in a “free” higher education country’, Economics of Education Review, 24 (1), 103–8. Saraceno, C. (2000), ‘Being young in Italy: the paradoxes of a familistic society’, European Journal of Social Quality, 2 (2), 120–32. Tsoukalas, Konstantinos (1987), State, Society and Work in Post-war Greece, 2nd edition, Athens: Themelio. (G)

10.

The uncertain path from the Mediterranean welfare model in Spain Fausto Miguélez and Albert Recio1

FROM THE MEDITERRANEAN MODEL TO A SOCIAL MODEL IN TRANSITION In the last 30 years in Spain significant changes have occurred in the range and form of those institutions that both regulate and support the life course of individuals, notably the family, the social protection system and the labour market. Spain traditionally has been regarded as an example of the Mediterranean welfare regime (Ferrera 1995, 1996; Petmesidou 1996), whose main characteristic was a strong gender differentiation that affected social life as a whole. In employment terms, this involved the predominance of the breadwinner–housewife model, with low participation rates for women in the labour market (with the exception of some industrial regions such as Catalonia). In reproductive terms, it was reflected in a traditional division of labour where women worked predominantly at home and the vast majority of social help was provided within the family. In other words, there was little development of public services and families (that is their female members) were the almost exclusive source of life care outside of the health services. The low level of public services also affected the educational and vocational training systems. In fact, Spain did not have a unified educational system until 1970. Until then, for the majority, school life was limited to primary education, whereas secondary and higher education were considered to be for the training of elites. Secondary education was mainly carried out by private schools, most of them linked to the Catholic church. Vocational training was provided primarily in the workplace. However, to meet the training needs generated by industrialisation in the 1950s and 1960s, some vocational schools linked to large companies were set up and some short-duration apprenticeship schemes provided skills for the major industries. In short, it was a society with a low educational level, in 284

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which higher education was associated with high social status and access to opportunities for social mobility. The legitimising role of the Catholic church was vital in this context. It was a pillar of society that promoted the traditional family (and gender divisions) and influenced the educational system. The Spanish version of the Mediterranean model showed a certain degree of internal coherence. The low provision of public services reinforced the importance of the family as a provider of services (and the domestic role of women); the separation of spheres allowed for a model based on the subjection of the family as an institution to the demands of the productive sphere; the education system provided for a very hierarchical labour market with little need to increase productivity; and the low level of development of the public sector and the dominance of small businesses meant there was not a high demand for a large educated labour force. This model has now ceased to be applicable to Spain. The changes over the last 30 years have been driven both by factors that lie outside the model and by internal forces that have revealed the contradictions and tensions generated by the traditional model for everyday life. The traditional model was structured around a political system based on a dictatorship which was finally rejected by the Spanish people. The capitalist model based on mass consumption that was subsequently implemented led to pressures on the traditional institutions. Social aspirations – for equality, material wellbeing, democratic rights, and comparisons with ‘Europe’ as a role model – as well as real processes (for example changes in the production model, European integration and demographic changes) led to institutional transformations and new social demands. These changes cannot be understood as simply marking a transition between alternative models. The historical processes at play are extremely complex, reflecting the need for compromises between employers’ organisations, trade unions, organised social movements, experts and politicians in order for there to be scope to develop clear proposals for reform. At the same time the process is characterised by a certain degree of inertia. Contradictory processes are in fact at work in Spain. On the one hand the Spanish Socialist Party (PSOE) (the party that has been in power the longest since the transition to democracy) has responded to the social demands to establish a social-democratic model, and on the other hand the economic powers (and sometimes even senior civil servants) have pressed for neoliberal reforms. Meanwhile, the norms and values that give the family a central role in social life also remained strong. That is why the current Spanish model fails to match either the ideal types suggested by authors like Esping Andersen (1999), Katrougalos and Lazaridis (2003) or

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the above-mentioned Mediterranean model. In the last 30 years a complex evolution has characterised the transition to a new social model. When analysing the forces determining this complex evolution, we should not restrict ourselves to the logic of local institutions and the domestic sphere. The transformation of the production system has not only led to the internationalisation of the Spanish economy but has also had a major impact on all capitalist economies. The productive reorganisation associated with the new forms of ‘flexible management’ of production and geographic mobility is undoubtedly influencing both institutional policies and forms of employment. The combined effects of these contradictory forces – demands for equality (the expansion of public services, changes in gender relations) and neo-liberal reforms (deregulation of the labour market, limitation of the public space) – have led to a hybrid model. This new model combines some features of the old Mediterranean model with elements of the social democratic and liberal models. This is the specificity of current Spanish society. It is also a model in which old class and gender differences have declined and given way to new types of labour and social segmentation. All this has played an important role in shaping the life course in Spain.

ANALYSING THE KEY CHANGES IN THE VARIOUS PHASES OF LIFE From Education to the First Job Education has been compulsory until the age of 16 and free in Spain since the Socialist government’s General Education System Plan of 1990. It is free in both public and private schools thanks to the ‘financial agreement’ that the majority of private schools have with the state. It remains free, although not compulsory, until the age of 18, which is increasingly seen as the minimum age for achieving an adequate suitable basic education. The last two years include higher secondary education and medium level vocational training. Despite the changes since 1970, a key characteristic of the Spanish model is still the high proportion of those leaving school before the age of 18, which is usually referred to as early school leaving. A by no means small proportion of these students leave before the age of 16, particularly in the outlying neighbourhoods of large cities. Despite the decline in the drop-out rate, from 40 per cent in 1992 to 30 per cent in 2006 (OECD 2006), Spain remains at the bottom of the EU and OECD countries in recent years on this measure, which means that the country has a labour

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force with less education and a less appropriate foundation for receiving the lifelong training that the new changes will require (Sanchis 1991). This insufficient education is an obstacle to the integration of young people in stable, high-skilled jobs. The main reasons may be the lack of a relationship between medium-level education and employment and the low social prestige accorded to vocational training and trades. However, another important factor is the fact that much of the employment created in recent years is of low quality and low skill, meaning that many young people decide to move into the workplace at the age of 16, albeit on precarious contracts. This may often be a good way of supplementing low family incomes and an incentive to consumption, but young people still find it very difficult to become independent, as we will see below. Tourism, construction, and some services that are the core sectors in the recent economic growth require a low-skilled labour force. Thus, the absence of social awareness of the importance of a completed basic education is combined with a production system that offers many employment opportunities to those without formal qualifications. This early school leaving is particularly prevalent among males. The longer female enrolment within the education system is a major social change and may to a large extent explain the transformations that have taken place in gender relations (at work and in the family). Another interesting aspect is the quality of the compulsory education system. Spain has a dual school system, composed of a public school sector that is particularly aimed at working class and rural areas and a private sector (financed publicly) aimed at the middle classes. Early school leaving is particularly prevalent in the public sector, where social background is combined with problems of inadequate financing, too many students per classroom and instability among the teaching staff. The arrival en masse of immigrants has pushed Spaniards into private schools, reinforcing the duality of the educational system and the marginalisation of the public sector (Bonal et al. 2004). There is a general problem of insufficient spending on education and a problem of social differentiation which explains the high level of early school leaving among young working-class people and the children of immigrants. In the non-compulsory levels of education, Spain has two main characteristics: the low proportion of those taking higher secondary education or medium and higher level vocational training, and the very high proportion of university entrants in comparison with other EU countries.2 In other words, there is a strong polarisation towards the extremes of the educational structure, which only partly matches the employment model. The low percentage in levels three and four can be explained by the low skill level demanded by the production model and by the lack of

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social awareness of the importance of intermediate academic or vocational qualifications. The high percentage in levels five and six is due to the supposed social prestige and high status of university education. There is a widespread belief that the higher the level of education, the easier it is to find employment, though the wage premium for education is not very high in the case of Spain (OECD 2006). University enrolment was also fostered by the difficulty of finding employment throughout the 1990s, and by the low cost of university fees3 and the multiplication of universities throughout the country in the last two decades. However, the number of new university admissions has fallen since 2000, due to the lower density of the current cohorts and the increase in employment opportunities. In comparison with other countries, the Spanish education system is not very efficient. Reading skills and mathematical education in Spain are the lowest in the OECD, according to the PISA reports. The level of graduates in science and technology is also below that of the EU-15, although progress in this field has been very significant in recent years. Finally, the proportion of people aged between 25 and 64 enrolled in continuing adult training was 5.6 per cent in 2005, compared with the EU-15 average of 12 per cent. One major obstacle is the low level of investment in Spain in public education, at 4.23 per cent of GDP compared to 5.06 per cent on average for the EU-25 (Eurostat 2005). Moreover, Spain invested more as a percentage of GDP ten years ago than now, despite the major economic and social changes over this past decade. Therein lies one of the major differences between Spain and the EU in terms of the employment model and potential future well-being. The low level of funding is evident at the university level where only 0.9 per cent of GDP was spent in 2004, significantly below the EU-27 average and far below that of the Nordic countries. The 2001 Universities Law laid down clear guidelines on the internal organisation of universities and the promotion of teaching staff, but the People’s Party government that introduced it made no reference to new financing.4 The policy of student grants in Spain is also very weak compared to the EU trend, though it has improved somewhat in recent years. Nevertheless, Spanish universities are currently undergoing a major process of modernisation, due particularly to the improvement of the situation of teaching staff and the fact that many of them have studied in other European and US universities and have entered international research networks. These deficiencies in the Spanish educational system are clearly reflected in the patterns of integration of young people in employment. Until the mid 1990s, the employment system offered few opportunities for the young. While the overall unemployment rate was 24 per cent, it was 52 per cent for the 16–19 age bracket and 42 per cent for the 20–24 age bracket.

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Ten years later, in 2005, while the overall unemployment rate was 10 per cent, it was 30 per cent among young people, still above the EU average. Failure to find an appropriate or satisfactory job led many middle class young people to continue studying, particularly in university third cycles (master’s degrees, postgraduate courses and doctorates). Spanish employment has been expanding at a rate far higher than the EU average since 1996, and this has increased opportunities for young people. Entry into employment takes place early in Spain. According to recent data (Cachón 2005), 83 per cent of young people had their first job before they were 20 years old.5 It is young people, mostly from the working class and with only the first two educational levels that are most likely to secure a first job early in line with traditional patterns of labour market entry. Those with higher education, in contrast, enter employment later, with a modal entry point between 21 and 24. Sometimes these jobs are part-time or combined with other activities such as work placement and internships, particularly among young people from the middle classes. Some active labour market policy programmes targeted toward working class young people are also improving integration in the labour market (for instance, the so-called ‘workshop schools’, very successful in some medium-sized cities). In general, training programmes are used by young unemployed workers much more than by adults, with a larger proportion of female participants. After completing their education, young people tend to find their first job primarily through personal channels, friends and relatives (almost 45 per cent) and by direct contact with companies (35 per cent), with very little involvement by intermediate bodies, whether public (3.3 per cent) or private (2 per cent). This means that young people whose family or friends have better information or more contacts can obtain better jobs or jobs which can provide useful experience for a subsequent job. The strong influence of relatives and/or friends is very important and is explained by the inefficiency of the intermediary mechanisms in the labour market. Employment rates do improve with level of education, once one takes into account the age of completion of studies. Moreover, although the employment rates for those with a completed vocational and secondary technical education is lower than for university graduates, particularly after completing studies at age 19–24 years old, the employment rates for this group do improve as they gain experience in the labour market and exceed those without even this level of education. The level of education is therefore important in obtaining employment, but many young people complain that the kind of jobs they find have little to do with their formal qualifications (QUIT 2000; Cachón 2005). Once more, the rules are imposed by an employment model in which little qualification is required.

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30000 25000 20000 15000 10000 5000 0 Total

>25 years

25–34 Total

Source:

35–44 Men

45–54

≤55

Women

Own elaboration based on INE (2006b).

Figure 10.1

Average annual wages of dependent employees by age group and sex in Spain, 2005 (€)

The type of first job is the big issue today. It tends to be a temporary job,6 of short duration and with a low salary. According to INE7 figures, the average pay of young people in the 20–24 age bracket was equivalent to 45 per cent of the average wage for all ages in 1995. In 2005 it had risen to 70 per cent of the average wage, with great differences between men and women (Figure 10.1), although gender inequality was even higher in the other age brackets. The reasons for this great change in favour of young workers in only a decade are that many of them are now working full-time, whereas ten years ago they were part-timers, and some of them may have moved into better paid industries. However, young people often have periods of employment followed by periods of unemployment, with few career and professional opportunities and few opportunities for accumulating resources for when they leave the family home. Another important consideration is that in 2005 the overall average salary level had fallen in comparison with 2002, due to the massive presence of badly paid immigrant workers.8 Opportunities for higher education and to develop a specialism, thereby improving long-term employment prospects, remain strongly linked to the family situation, not because of university fees which remain low, but due to differences in the ability of families to support young persons with no income9 while they continue to study full-time.

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The late emancipation of young people is also explained by the expansion of temporary jobs with low skills and poor pay. In early 2004, only 10 per cent of young people between 18 and 29 years old were independent, while 50 per cent of those between 30 and 34 continued to live in the family home (Observatorio Joven de la Vivienda 2004). Though in 2006–07 this proportion was not so high thanks to some improvements in housing policies aimed at young people,10 the situation remains largely the same. Families pay for food and accommodation, and support young people during periods of unemployment. This is a very important factor for understanding that social cohesion still prevails despite such a badly structured labour market. From the First Job to the Career This phase of moving from first job into a relatively stable career has been extended greatly to the age of 30–35, and even longer, through a ‘long youth employment’ which does not necessarily provide for better vocational training due to the ‘poor jobs’ in which they are usually employed. Job instability or insecurity is a basic feature of this phase of life. In order to understand the life course in Spain today it is very important to consider the long transition that this phase involves. A recent qualitative study (CCOO 2004) makes a distinction between at least three groups of young people engaged in precarious employment. The first group is composed of those with low qualification levels, generally from poor social backgrounds, for whom job insecurity makes it difficult to gain access to a career and a sufficient wage, and to enter the housing market. These young people feel that instability has become a central feature of the labour market and a barrier to their professional career. As a consequence, their social identity is based less on work and more on friendship networks. The second group is made up of those with a medium–high level of training whose jobs do not match their qualifications. Unlike the first group, they tend to conceive their precarious situation as unfair and temporary, which makes their social identity ambivalent. Work may be the source of their identity in the future, although at present there are other more powerful aspects in their lives. The third group is satisfied with the world of work, and consider themselves privileged because their profession matches their training, although their situation is currently precarious due to the type of jobs they have. That is why they see improving the terms of their employment as the way out of precariousness, which means ceasing to be a temporary worker and becoming a stable worker in the civil service or in a large company. Work and profession are key factors in the social identification of this group.

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As we have mentioned several times, the first explanation for this difficult transition lies in the employment model that has formed the basis for the integration of the Spanish economy into the European and international economy for more than two decades. The high rate of temporary employment has spread from the private sector, where it is more than 30 per cent, to the public sector. In the latter, it has reached 22.8 per cent in areas like health and teaching, affecting women and young people in particular (CES 2006). This deterioration took place in the period in which the conservative People’s Party was in power. The current Socialist government has started to reverse the situation, albeit slowly. The tripartite social agreements11 on the labour market of 1997 and 2006 tried to solve the problem by reducing temporary employment and lengthening the period of employment, particularly among young people, mainly through subsidies to companies offering them stable jobs. The positive effects of the 1997 agreements ended when these subsidies stopped in 2001. It will only be possible to evaluate the 2006 agreements in 2010, when the scheduled period ends. However, some features linked to collective bargaining and the involvement of the social partners suggest more permanent effects in terms of job security, though subsidies remain a basic feature. The transition from the first job to the trade or profession is too long, not very consistent and excessively subject to rotation from one job to another (50 per cent of temporary contracts last less than one month), thus offering little chance of success for many young people. Obviously, a reasonable amount of flexibility and change can be enriching, but some workers may never obtain a stable profession. Spain is therefore on the edge of a radical change in the model. Indeed, a decomposition of the incidence of temporary employment contracts by age groups reveals that a large proportion of workers – larger now than ten years ago – are still in unstable jobs at the age of 39, in some kind of ‘permanent instability’. This is particularly true for women. This could mean low salaries for a long period of their lives and therefore low pensions as well at the end of their working lives, and the danger of instability in their personal and family lives. The risk of a breakdown in social cohesion arises because the original family model is no longer efficient. Of course, this is not the case for everybody: some young people in the second group and most in the third group, albeit with some delay compared with the past, are consolidating their professions in the civil service and in large companies belonging to leading sectors of industry and services. The long transition from first job to career for many young people has long-term consequences that can be described as ‘occupational inconsistency’. Due to the taking of successive jobs, the workers often fail to

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build up a consistent skills apprenticeship. Furthermore, their low wages make it difficult to enter the housing market on their own or with another person, thus hindering their personal independence. The pay of many young people aged under 30 is far below the Spanish average, and for young women it is 20 per cent lower (Figure 10.1). Wages have increased by at most the equivalent of the retail price index, between 3 and 4 per cent per year, in the last eight years. In the same period the price of purchasing a home in Spain has increased by 150 per cent and rents have increased by 100 per cent. Although personal finance facilities are much better than ten years ago, which explains the spectacular increase in mortgages, the price of housing has an unsustainable relationship with the salaries of young people (Jurado 2007). Since 2000, the cost of housing has been gradually moving away from an economically acceptable level, which is usually around 30 per cent of income. In fact, in late 2004 the proportion of young people’s salaries spent on housing (Observatorio Joven de la Vivienda 2004) for a 25-year mortgage,12 broken down by age groups, was as follows: 70 per cent for people aged 18–24, 55 per cent for people aged 25–29 and 48 per cent for people aged 30–34. The rise in houses prices continued in 2005 and 2006 and only slowed down in 2007. Until 2005, there were no housing policies aimed at young people. Since then, the central government and some regional governments have launched specific programmes, which have so far had limited effects. Many experts criticise them because they are limited to subsidising part of the rent or part of the initial payment for purchase, but fail to act on the market to reduce the cost of the homes produced. As a result, the option left to young people, after delaying their emancipation by many years, is to purchase mortgages using a very high proportion of their salary for 30 years or to obtain financial help from their family when this is possible. In the former case, this debt may have negative effects on other aspects of material well-being, and also leads to geographical immobility at a time when the market demands high levels of mobility (or alternatively, having to add several hours’ commuting to the working day). Some families help their offspring with savings prior to purchasing or with the expenses of everyday life during the first few years,13 or act as guarantors when their offspring decide to ask for a mortgage. This all means delaying independent life, and clearly shows that the family is still a cushion for social tensions. Very important aspects to analyse in this second stage of the life course are the ideas and attitudes of young people towards work. Let us return to the three types of young people we considered earlier. Many in the first group no longer assume that work will be ‘permanent and lifelong’

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and consider medium-duration temporary contracts (between one and three years long) to be a ‘good job’. These young people will probably be forced to construct a lifestyle combining precarious work with unemployment benefit or family help, will have a level of material consumption that is much lower than that of their parents, and will have a very passive kind of social cohesion. The second type – those who having studied but cannot find a job in accordance with their expectations – believe in a stable employment model and hope that their current situation is temporary. However, the figures show that this group is increasing and that their instability is less temporary than they expect. This is where the real risk of a breakdown in cohesion lies, when they come to think that society does not give them what they are entitled to. To a certain extent, what some have called the culture of precariousness is on the increase in society as the idea spreads that instability is part of life (VV.AA. 2007). Obviously, there is also the integrated group: those who thanks to the support of their family or their particularly favourable standard of education manage to position themselves in medium–high and secure sectors of employment such as the civil service, stable companies and self-employment in the technology- or service-based society. Active social cohesion can be observed here, among those who assume that society is by nature unequal. If we look once again at the relationship between training, employment and social integration during this stage, we have the following image. The career aspirations of many young people appear to change (Casal 2004) due to difficulties in consolidating a profession or a career in line with their education, according to the traditional model. Many young graduates work as clerks in the public sector or in large companies, mostly using two types of skills that were probably not central to their studies: languages and computer skills (QUIT 2000). Others, with the same standard of education or secondary post-compulsory education, work in professions or trades that in general are learned after attaining these educational levels – as painters, designers, managers of services and human resources managers in small service companies. In other words, education is increasingly conceived as the basis on which a new system of professions is being built. However, the group which never manages to attain a trade or profession but instead is forced to change repeatedly is increasing. This objective difficulty goes a long way towards explaining the limited aspirations expressed by many young people, and brings with it the risk of social exclusion (Tezanos 1999). Career and Non-Career Paths at the Prime Age The high unemployment rates of the last 20 years have forced many Spanish workers to combine periods of employment with periods of

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unemployment or to change their company or sector and therefore their profession or occupation. For workers aged 45 years old or over who have spent their working lives in sectors of industry with little flexibility, these breaks with the past may have led to the beginning of a period of underemployment combined with periods on benefit. This outlook clearly shows the vital role of passive policies (unemployment benefit) and active policies (training and mediation) in their life courses. For women, the situation may have been even more dramatic. During this period their employment rate has increased less than their real participation rate, meaning that they have suffered more from unemployment. However, in many cases they have also had to combine two jobs – in the labour market and at home – as work–life balance policies were barely developed, as we will see below. The current unemployment protection policy originates in the Basic Employment Law of 1980. Social pressure led to an increase in unemployment benefit after 1988, but this trend ended with the reform of 1992. There was then a heavy fall in the number of the unemployed who received benefit, from 67.2 per cent in 1993 to 49 per cent in 1998, although there was subsequently a slight upturn (linked to the increase in employment) to around 60 per cent in 2004. The reform entailed stricter conditions regarding access to benefit and the amount paid. The gross average amount in 2004, 20.03 euros per day, was heavily determined by age and sex (less for women than men, and less for younger than older people) according to their different employment records. The maximum period for receiving unemployment benefit is two years, unless the person concerned is in an age group entitled to the much lower social assistance after these two years, including those older than 45 with dependent families, who are most difficult to integrate in the labour market. In this case, the benefit is limited to 60 per cent of the minimum wage, one of the lowest in the EU (Recio 2006). The low level of coverage and the low amount of unemployment benefit make survival difficult for unemployed adults. They are in theory obliged to accept any job, possibly those that do not correspond to their formal qualification. The cutback in passive employment policies and the expansion of active labour market policy (ALMP) programmes are along the lines suggested by the EU in the Treaty of Amsterdam (Alujas 2003, 2004); in 2004 together they accounted for 0.55 per cent of GDP, compared to 0.63 per cent in the EU-15 (Eurostat 2006). In spite of this, the structure of these policies differs from the trend within the EU-15; the replacement of unstable employment with stable employment, through subsidies to companies, tends to predominate over policies increasing workers’ employability (job experience schemes and labour market training). Policies aimed at consolidating mediation services and support for young people and the disabled

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remain very weak. The contradiction inherent in subsidies to companies lies in that their effect tends to decline once the subsidies end and then, according to empirical evidence, a higher temporary employment rate and higher unemployment return. With respect to job training, unemployed job seekers taking occupational training courses have numbered between 200 000 and 300 000 per year in recent years. As 60 per cent of participants are aged between 18 and 29, people in the middle of their working life are less targeted. However, a significant proportion of trainees – ranging between 12 per cent and 20 per cent – have a lower educational level than that of compulsory education, and the figure is much higher if those who left school before 18 are included. In other words, job training is based on a weak formal educational foundation for many workers, with consequences for training efficiency. In fact it is difficult to assess the efficiency of this training in creating or maintaining employment as there are insufficient empirical studies or even suitable indicators to identify whether those taking courses have found and kept jobs. We can only know whether they obtained a job six months after taking the courses, but not whether they kept it. Let us start with the general hypothesis that the higher a person’s level of education, the easier it will be for him or her to find and keep a job. However, this requires two conditions to be fulfilled: firstly, that the production system wishes to use a labour force that is more highly trained than that leaving the education system, and secondly, that implemented vocational training programmes are of good quality. The former does not seem to hold true for large sectors of the Spanish economy, and the latter is open to doubt, not because of the contents of programmes, but because of the management of the resources by the training institutions. One thing does seem obvious: the closer the management of training comes to the needs of the labour market (that is, when it is managed at a local level based on cooperation between the government and social partners), the higher the efficiency of job training. A recent report by the Economic and Social Council (CES 2006)14 plays down the real effectiveness of occupational training, by making clear the positive correlation between success (obtaining employment) and the educational level of the participants more than between success and participating in training courses. Nevertheless, it accepts that there is some efficiency, as the long-term unemployed who have participated have some employability advantages compared to those who have not. In fact, several variables may be involved here in addition to the educational level. In recent years, these active labour market policies have had considerable local significance due to the large sums provided by European funds. These have given rise to some degree of development of local employment

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policies in various fields such as outreach services, dependency services, and environmental, cultural and local tourism policies. Employment agreements of a local or regional nature have also been quite important and in general have been covered by the European Social Fund. These agreements have increased the role played by local actors. They have also led to an increased belief in the idea of endogenous development and to the conviction that employment policies must nowadays necessarily include local actors. They have probably been less successful in creating employment, although they have laid the foundations for subsequent initiatives in developing employment in the new economy. The persistence of gender inequalities is especially acute in prime age, despite the great expansion of female adult employment. Women obtain more unstable jobs and lower pay (Figure 10.1) than men. Furthermore, since 2002 average pay has gone down as a consequence of the massive integration of women and immigrants, with lower salaries, in the labour market. However, more women than men have been registering at universities in the last few years, indicating their intention to be at the same level as men in the labour market. The central feature is the persistence of strong gender inequality in domestic work and the non-existence or insufficiency of a universal public care service. This particularly affects pre-school education (0–3 years old) and care for the elderly or seriously disabled, but also other related fields, such as school hours. All research continues to suggest that the time women spend on housework and care on a weekly basis is much higher than that spent by men. This difference leads to a greater female total workload, particularly in Mediterranean countries such as Spain and Italy with a long family tradition. In short, it is a distribution of the total workload which continues to deprive women of opportunities in the market. Parental leave – now 16 weeks for women plus 2 weeks for men – and some childcare facilities in the public sector have improved slightly since 2004, when the Socialist Party came to power. The absence of a universal care service leads in many cases to the premature withdrawal of women from employment; in some cases the withdrawal is temporary, although difficulty may be experienced in returning to former occupations, but in other cases it is permanent. In some cases women stay in employment but this requires their acceptance of a huge overload of work. Either of these outcomes affects women’s living conditions and their opportunities for a career compared to those of men.15 Nevertheless, there are two reasons for the significant inclusion of women in employment: the desire for participation and autonomy and the impossibility of covering the family budget with only one income. In fact, there were no child allowances in Spain until two years ago16 and family transfers are very low in comparison with the EU average. In many cases this

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means an enormous workload for women, though they sometimes resort to assistance from other women in the family (mothers and sisters) to cover housework needs. Many middle-income families have started to use the services of immigrant women, who are frequently illegal residents, to solve the problems of care for dependants or housework, thus increasing the segmentation of employment (Pajares 2002; Parella 2005). Women working part-time did not increase in number until 2002.17 The subsequent increase is due to changes in regulation, but is not so significant to be an indicator of improved reconciliation in Spain. The difficulties of balancing market work and family commitments have created new social demands requiring new social policies. The transposition to law of the EU Directive on ‘reconciliation’ in 1999 has had little effect, mainly due to the restrictive nature of its wording: a clause allows companies to implement it in the way that suits them best, which may not suit their workers or may arouse suspicions among other workers: ‘workers may exercise their right to reconciliation, providing that this does not affect the company’s operations or the interests of other workers’. Collective bargaining has also failed to make much progress beyond the legal requirements, as some research states (QUIT 2007). The problems lie in both the weakness of social policies (lack of public nurseries and/ or support for adult dependants) and the fact that those who could consider reducing their time at work in order to foster work–life balance are often very low paid. Only those in the Civil Service seem able to take up reconciliation options.18 The recent approval of two new laws – the Law on Equality between Men and Women and the Personal Autonomy Law, whereby elderly people living with their children may still be eligible for state support for their care needs – should in principle promote gender equality through new policies for improving reconciliation and for making care policies universal.19 However, the budget limitations applied to these laws raise doubts about their scope and the type of jobs they will create.20 There is also a significant differentiation between men and women in employment conditions: the average pay of men exceeds the average pay of women by 30 per cent for adults (a relationship that includes differences due to sectors, categories, hours worked, and responsibility). In the civil service, where there are theoretically equal opportunities, women hold fewer high-level posts because they often ‘decide not to apply’ for them as they require more work than their other domestic responsibilities allow them to take on. However, in reality employment in the civil service accentuates the internal differences among women. According to the Bank of Spain studies department, women earn 57.7 per cent more per hour in the civil service than in the private sector. Finally, illegal work, an important element in the Spanish labour

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market, affects women in particular.21 Various studies have estimated its size since the mid 1980s, and have noted a slight downward trend, even if the percentage remains relatively high. One reason why there are many more women than men in this situation is that illegal work is mainly in feminised occupations, such as domestic service, hotels and catering and small shops. There are also demographic aspects of the current situation to be considered. Firstly, the massive inclusion of women in the labour market has affected maternity. The average age at which women have their first child increased from 25 years in 1980 to 31 years in 2006, slightly higher than the European average. The fertility rate has fallen from 1.64 children per woman in 1985 to 1.25 today, below almost all countries in the EU.22 In 2004 and 2005 fertility may have begun to change somewhat due to the high proportion of immigrants at a reproductive age, who tend to have more children than Spanish citizens and to have them earlier. There is also a change in the family model, with an increase in divorces, single adults and single-parent families. In some cases this may help with work, as it entails not having to undertake ‘care’ work. However, single-parent families (particularly when the single parent is a woman) have serious problems combining care and wage work to obtain a suitable level of income, due to low female salaries and the lack of public support policies. A new factor with implications for life course employment patterns is large-scale immigration, which in late 2006 accounted for 10 per cent of the employed population. Immigrants are occupying sectors that Spaniards are leaving due to their low pay or poor conditions or prestige, such as construction, hotels and catering, agriculture and domestic service. The result is the creation of opportunities for some upward mobility for young Spaniards and the opening up of opportunities for the entry of women into the labour market. However, it also limits the increase in wages, not only in these sectors but in the system as a whole,23 because many of the jobs created in these years are low salary jobs. It could also create situations of social tension if an economic recession takes place. From Employment to Retirement The social dimension to the employment model is obvious in the period after retirement from work. The three main requirements are sufficient income from retirement pensions, adequate healthcare, and support in daily life activities when people are not fully able to care for themselves. Spain’s total expenditure on social protection was about 20 per cent of GDP in 2005 (compared to 22.8 per cent in 1994), considerably below the EU-15 average of almost 28 per cent (26.3 per cent in 1991) and even that

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Table 10.1

EU-27 EU-15 Germany Greece Spain France Italy Hungary Sweden United Kingdom Source:

Social protection benefits in Spain (% of GDP) 1991

1992

1994

1996

2001

2002

2004

2005

– – 24.8 20.5 20.6 26.5 23.4 – 33.8 24.4

– – 26.2 20.6 21.8 27.2 24.4 – 36.6 26.5

– – 27.8 22.1 22.8 30.2 25.3 – 36.5 28.5

– 27.9 28.3 19.7 20.9 29.1 23.4 – 33.2 26.6

– 27.1 28.3 19.7 20.9 29.1 23.4 – 33.2 26.6

– 27.4 28.9 23.2 19.8 28.5 24.4 19.9 31.1 25.4

– 27.7 28.5 22.9 20.2 29.4 25.1 20.3 31.5 25.8

27.2 27.8 28.4 23.5 20.3 29.6 25.5 21.4 30.9 26.3

Eurostat (2008).

of the EU-25 at 27 per cent. Spain is therefore lagging further and further behind, despite its economic expansion.24 The State is thus making a below average contribution to improving opportunities for those citizens who are at some disadvantage in looking after themselves. The main area of expenditure is pensions, with retirement plus invalidity pensions accounting for 47.2 per cent of the total in 2006. Healthcare is the second main area of expenditure, accounting for 29.3 per cent in 2006. Spain spent 8.8 per cent of GDP on pensions in 2006 (9.4 per cent in 1991), while the EU-15 spent 12.1 per cent in the same year (12 per cent in 1991) and the EU-25 spent 12.0 per cent (according to Eurostat data). Two reasons could account for such a difference: either the proportion of the population at an age to receive these benefits was lower or the benefits were less. The first reason may have been true in 1991, but Spain currently has similar ageing rates to those of the EU, so the second reason is more significant. There is in fact widespread coverage of the pension system for all those who have worked and paid Social Security contributions, which are supplemented if they live with a spouse or partner who has not worked. Welfare pensions from the general state budgets are provided for those who have not contributed. The official retirement age is 65, with a requirement of 35 years of work to receive a full pension. However, the average age of retirement is currently lower, due to the effect of those taking early retirement – 30 per cent do so before they are 60 years old. In 2003, the average retirement age in Spain was 61.6, which was only lower than that of Denmark, Greece, Ireland, Portugal, Sweden and the United Kingdom,

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with the EU-15 average being 61.7 years and the EU-25 average 60.5 years. Voluntary retirement is possible at the age of 60 with the loss of 8 per cent of pension for every year that retirement is brought forward. In recent years, there have been massive early retirement campaigns in large companies (especially in public services, banks and large industrial companies) by means of collective agreements which guarantee acceptable pensions through additional contributions by companies (although part is paid by public funds). Employees in small companies do not usually have access to these measures. The unemployed aged over 50 who have used up their entitlement to benefit receive a payment until retirement equivalent to two-thirds of the minimum wage. The income replacement rate of retired workers differs according to the sector and industry in which they spent their working life. The number of beneficiaries of pensions was just over 8m at the end of 2004 compared to a total workforce of 18.25m. Due to the gender composition of the employed population that is retiring, men predominate, accounting for 66.5 per cent of retirement pensions and 69 per cent of permanent disability pensions. On the other hand, 93.23 per cent of those receiving widowhood pensions are women, who are also predominant in welfare pensions. This pensions structure shows that women aged over 65 remain in a subordinate economic position, either because they depend on their husband’s pension or because their own pensions are frequently welfare pensions. A key factor is the amount paid as pensions, given that for many people stopping work and receiving a pension can lead to a loss of wellbeing. The average salary in 2005 was 1330 euros per month while the average pension in the same year was 608 euros per month.25 Two-fifths of pensioners received under 450 euros per month and only 20 per cent received more than 900 euros per month. Low pensions are clearly below the poverty line.26 They have certainly increased in recent years to a greater extent than prices and salaries, but considering their low starting point, it is no exaggeration to say that Spanish retired people should for the most part be regarded as poor, as shown by all studies on the subject. Turning to the second requirement for retirement, healthcare, we note that public health coverage is universal and at its basic level even covers immigrants if they have a stable place of residence. Healthcare is also technologically advanced, but its shortcomings include a lack of specialists and long waiting lists for surgical operations. The third area – support for daily activities – has traditionally been provided primarily within the family. Many retired people, as they get older, face additional costs arising from their dependence on support – through residential homes or support in the

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home and these costs cannot be covered by current pensions. Until now they have been covered with the help of their families, but from now on they will be covered by the State thanks to the Personal Autonomy Law, if it allocates enough funding. Precisely one of the criticisms made of this Law, theoretically aimed at giving universal coverage, is the low budget that has been approved until 2015.

CONCLUSIONS Some changes that have occurred over recent decades are contributing to the new model which is orienting the life course in Spain. The most important change is the significant increase in female participation in the labour market (more than 20 percentage points in the last 30 years). This is a step forward, but one with insufficient effects on work–life balance, because many women coordinate their job with their domestic ‘obligations’, making a ‘double working day’. As a consequence, and also maybe as a cause, many of them only obtain and retain poor and unstable jobs, more and more frequently part-time, with no prospects of promotion, low salaries and low skilled. Of course, they have succeeded in entering the labour market, but in a subordinate position, with some exceptions such as those in the civil service. The structure of the family has obviously changed, but changes are not so important in terms of family member’s status. The reasons in this case are also cultural but mainly economic. Let us take the access of young people to the society as an example. They only get a ‘decent job’ very late. Many of them still have a poor job when they are 39, so their social insertion as independent people is increasingly difficult. Family support maintains social cohesion when individual opportunities through the market fail. Such support is provided throughout the four life stages that we have taken into consideration. During the first stage, the young family members are taken care of while they look for a first job; in the next stage, the family helps the young person towards independence, a step towards adult life that is being constantly delayed. After that, cohabitant or married male workers rely on the domestic work done by women, who occupy less stable jobs. Finally, in the last stage the family has a dual role: children may supplement their parents’ low pensions or else, more frequently, take care of the older generation’s dependency needs. The older generations help with the care of their grandchildren, and increasingly provide their offspring with financial help because of the prevailing low wages and the conditions in the housing market. Obviously, this is a profile of working-class families and to an increasing extent middle-class families. However, if strong and

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effective corrections in the labour market aimed at enhancing employment stability are not made, in a few years even the family may not be able to guarantee social cohesion. Of course, the state is also playing a part in social cohesion. In some ways, this role seems to have improved in recent years, but in others it seems to have worsened, with Spain a long way behind the other European countries, except for Greece and Portugal. Spain is still lagging behind in social expenditures, which is 8 percentage points lower than the EU average (20 per cent of GDP compared to 28 per cent in the EU). There is a universalistic health care system, but with some degrees of inefficiency, particularly in terms of waiting lists in some services. The educational system, although extensive at the university level, is still lacking in quality. Pensions are almost the lowest of the EU-15. The recent Personal Autonomy Law is being implemented too slowly and with poor financial resources.27 There is also a great inconsistency in the market system, coming from its neo-liberal orientation: while employment flexibility has increased and labour costs have been reduced compared to costs as a whole, the cost of living and the prices of essential goods like housing have continued to rise. The result is an increase in poverty and the deterioration of working conditions (such as the increase in working hours). According to Eurostat (2009) between 18 and 19 per cent of Spanish households have been in poverty in the last ten years. The reasons are low wages and low pensions, juxtaposed with an increase in prices which has always been above 3 per cent in this period. Proportionally, women are slightly above men in this situation, as are young people and people over the age of 65. This is a vicious circle that may be a decisive factor in social segmentation. The greatest contradiction is that employment has been increasing very quickly in recent years (six million new jobs in ten years) and GDP per capita is also obviously increasing, although with very unequal distribution. Meanwhile, enormous gaps between social segments have been opening in terms of income and wellbeing. Social and public policies might be the bridge between these segments, but so far they have clearly been insufficient or inefficient. The tensions between the employment model and the social model have not been resolved by social policies. In this respect, eight years of conservative government led to a move away from the relative improvements that had taken place during the previous decade (Navarro 2002). The new Socialist government has moved towards an improved social model, but very slowly, because a neo-liberal economic model still prevails. The government has not dared to change the current tax system or to remove hidden helping hands to business, and its fear of a public deficit keeps financing away from social reforms that are fair and necessary.28

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The costs of such an insufficient welfare state are met by only one part of society, wage-earners, and by one social institution, the family. The overall distribution of income between labour and capital has been in favour of the latter for a long time. Among taxpayer groups including salaried workers, professionals, self-employed and managers, the average contribution per taxpayer is usually somewhat higher in the first group than in the others. As a consequence of the current model on the life course, some people – particularly women and young people – remain in a subordinate position in employment and in life opportunities, and their increased participation in the labour market is thus not efficient. A change may have been brought about in recent years by massive immigration, and some native workers have improved their opportunities because immigrants have taken the lower status positions in the labour market. Therefore, Spain is far from being an inclusive society for many of them. In short, our hypothesis that a hybrid model provides the best framework to analyse the life course in Spain is strongly confirmed. Although some important features of the old Mediterranean model remain, the practice of confining women to the domestic sphere has been seriously eroded. The public sector has grown and – at least in theory – it includes projects aimed at setting up a social democratic model, even if it is still a long way from this goal in its specific application and its level of development. Among other reasons, this weak development is because of the influence of neoliberal beliefs that it is necessary to seriously restrict public spending and reduce taxes. The family remains crucial in many aspects of the social model, but fails to receive due support from the state. The old powers and structures continue to influence the educational model and the systems for dealing with inequalities. Even the progress made in some areas, such as the erosion of the gender divide, has not come without costs. The massive immigration of the last ten years has influenced both the labour market and the organisation of care and domestic activities by providing a cheap labour force for these tasks. Some women and families have been able to benefit from that, but the outcome is the adding of a new factor of segmentation to society.

NOTES 1. 2.

Other researchers who participated in the research on life course are I. Olivares, D. Muntanyola, S. Navarro and C. Recio. In 2005, 20.2 per cent of Spanish young people had university level education (Germany 13.6 per cent, France 14.7 per cent); conversely, just 12.5 per cent had high level secondary education (Germany 17.0 per cent, France 18.1 per cent). Eurostat, Statistics in Focus (Education and Training data).

The uncertain path from the Mediterranean welfare model in Spain 3. 4. 5. 6.

7. 8. 9. 10. 11. 12. 13. 14. 15.

16. 17. 18. 19.

305

Fees in public universities in 2005 were between 700 euros and 900 euros a year according to the curricula. Elegibility for grants is related to household income if the student lives in the parents’ home. No substantial change was made in this aspect by the 2006 reform (PSOE government), although some autonomy has been returned to universities. Distributed as follows: 12 per cent before 16, 26 per cent at 16, 35 per cent at 17 and 53 per cent at 18. In 2007 the rate of temporary employment was 31 per cent, but with strong differences according to age: for instance, 80 per cent between 16 and 19 years old, 43 per cent between 25 and 29 years old (source INE, Encuesta Población Activa). Of these, 32.7 per cent of women have temporary jobs compared to 29.6 per cent of men, with a tendency for the share in temporary jobs to increase with age for women. INE (2006b), National Statistics Institute, Encuesta de Estructura Salarial. The number of immigrant workers was 1 069 900 in 2002 and 2 191 200 in 2005. The policy of grants, which in Spain has improved somewhat in recent years, remains very weak compared with the rest of Europe. Though tuition fees are low, many young people have insufficient means to attend university without working. The first Zapatero government, 2004–08, approved a rent aid of 210 euros/month directed at young people under 30. Agreements reached between the employer’s organisation (CEOE) and the trade unions (CCOO, UGT) in 1977 and 2006 and subsequently accepted by the government and parliament. During the period 2004–2007, 40-year mortgages have appeared and some 50-year mortgages are starting to appear. In other words, many young people will have to continue paying for their home until after they retire. For example, there are cases of young people who eat in their parents’ home during the week and of parents paying other expenses. The CES is an advisory council to the government on economic, employment and social matters, in which trade unions, employers’ and consumers’ associations are represented, as well as the government itself. The Personal Autonomy Law, which was approved in 2006 and will come into force between 2007 and 2015, may change this situation, because it will increase the public funding allocated to this area. However, it will take several years before it has any effect on the life course and this will depend on the total funding allocated to it. This allowance is now 100 euros per month until the child is two years old. As of June 2007 every family having a baby receives 2500 euros. Until 2002, part-time employment for women was 16.8 per cent, almost the same as in 1976. In 2006 this percentage had risen to 23.2. For civil servants the CONCILIA plan, approved in 2005, lengthens maternity leave, introduces paternity leave and facilitates the reduction of the working day and leave of absence to care for children under the age of 12. Key proposals in the Law on Equality: ●

● ●

Companies over 250 employees have an incentive to make ‘Equality Plans’ in order to ensure employment, promotion, training, salaries and working time are provided on equal terms by gender; Measures to promote access to public employment in conditions of equality; Increase of maternity leave, ten days of paternity leave, opportunities for unpaid reduction of working time until the child is eight years old.

Key proposal in the Law on Personal Autonomy: ●

Families having a member without sufficient personal autonomy receive paid care hours or an adult member of the family can be eligible for a job to care for his/her relative.

306 20. 21. 22. 23. 24. 25. 26. 27. 28.

The welfare state and life transitions Several of the ‘social laws’ passed in the last few years also have insufficient financial support. A recent study carried out using samples (Centro de Estudios Económicos Tomillo 2005) shows that 17 per cent of women work without being registered with the Social Security system. Child allowance has existed since 2004, but is very low and is only paid until the child is three years old. Other family benefits are also very low. There is a separate and individualised income tax deduction of 1500 euros per child. According to recent research (INE 2006a), those earning wages below 1200 euros are 83 per cent immigrants and 57 per cent native population but those earning above 1200 euros are 16.4 per cent immigrants and 42 per cent native population. If we consider this in terms of expenditure on social protection per inhabitant, the differences are even clearer, as Spain spent 2835 euros in 2002 while the EU-15 average expenditure was 5606 euros and that of the EU-25 was 4686 euros (2001). In 2007 this average pension is 674 euros/month, far from the average salary and being still one of the lowest in EU-15. The lowest pensions in Spain are widow pensions (in 2007 these were 498.3 euros/month compared to the 760 euros/month retirement pensions). Once more it demonstrates a stronger risk for women of poverty. A person totally dependent receives, besides his/her pension, from 400 euros to 600 euros per month. In the last revision of this chapter, September 2008, the new economic crisis is threatening some of the promised improvements because of the public resources shortage expected for 2009.

REFERENCES Alujas Ruiz, Joan A. (2003), Políticas activas de mercado de trabajo en España: situación en el contexto europeo, Madrid: Consejo Económico y Social. Alujas Ruiz, J. (2004), ‘La política de fomento del empleo: eje fundamental de las políticas activas del mercado de trabajo en España’, Revista del Ministerio de Trabajo y Asuntos Sociales, 51, 15–29. Bonal, Xavier, Xavier Rambla and Marc Ajenjo (2004), Les Desigualtats Territorials en l’Ensenyament a Catalunya, Barcelona: Mediterrània. Cachón, Lorenzo (2005), Informe sobre Juventud en España 2004, Madrid: Instituto de la Juventud. Casal, Joaquim (2004), Enquesta als Joves de Catalunya, 2002: Itineraris Educatius, Laborals i Familiars, Barcelona: Entitat Autònoma del Diari Oficial i de Publicacions. CCOO (2004), Jóvenes: la nueva precariedad laboral, Cuadernos de Información Sindical 54, Madrid: Confederación Sindical de CCOO. Centro de Estudios Económicos Tomillo (2005), La Presencia de las Mujeres en el Empleo Irregular, Madrid: Instituto de la Mujer. Ministerio de Trabajo y Asuntos Sociales. CES (2006), Economia, Trabajo y Sociedad: Memoria sobre la Situación socioeconómica y laboral de España, 2005, Madrid: Consejo Económico y Social. Esping-Andersen, Gøsta (1999), Social Foundations of Postindustrial Economies, Oxford: Oxford University Press. Eurostat (2005), Statistical Office of the European Communities – Spending on Human Resources, http://epp.eurostat.ec.europa.eu/portal/page?_pageid=109

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0,30070682,1090_33076576&_dad=portal&_schema=PORTAL, accessed 28 January 2009. Eurostat (2006), Statistical Office of the European Communities – Education statistics, http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1090,30070682,1090 _33076576&_dad=portal&_schema=PORTAL, accessed 28 January 2009. Eurostat (2008), Income, Social Inclusion and Living Conditions (EU-SILC), Eurostat Statistics Database, http://epp.eurostat.ec.europa.eu/tgm/table.do? tab=table&init=1&plugin=1&language=en&pcode=tps00103, accessed 27 July 2010. Eurostat (2009), Income, Social Inclusion and Living Conditions (EU-SILC), Eurostat Statistics Database, http://epp.eurostat.ec.europa.eu/tgm/table.do? tab=table&init=1&plugin=1&language=en&pcode=tsdsc240, accessed 27 July 2010. Ferrera, Maurizio (1995), ‘Los Estados del Bienestar del Sur en la Europa Social’, in Sebastià Sarasa and Luis Moreno (eds), El Estado del Bienestar en la Europa del Sur, Madrid: CSIC, pp. 85–112. Ferrera, M. (1996), ‘The southern model of welfare in social Europe’, Journal of European Social Policy, 6 (1), 17–37. INE, National Statistics Institute (2006a), Survey on Quality of Life and Work. INE, National Statistics Institute (2006b), Wage Structure Survey – 2006, www. ine.es/inebmenu/mnu_mercalab.htm, accessed 28 January 2009. INE, National Statistics Institute (2007), Encuesta Población Activa. Jurado, T. (2007), ‘La precariedad temporal-salarial y sus efectos sobre la formación familiar’, Sociedad y Utopía. Revista de Ciencias Sociales, 29, 367–404. Katrougalos, George S. and Gabriella Lazaridis (2003), Southern European Welfare States. Problems, Challenges and Prospects, Basingstoke, Hampshire: Palgrave Macmillan. Navarro, Vicenç (2002), Bienestar Insuficiente, Democracia Incompleta: sobre lo que no se habla en Nuestro País, Barcelona: Anagrama. Observatorio Joven de la Vivienda en España nº 8, Tercer trimestre 2004. Consejo de la Juventud de España. OECD (2006), Education at a Glance. Pajares, Miguel (2002), La Inserción Laboral de las Personas Inmigradas, Barcelona: CERES. Parella, S. (2005), ‘La interacción entre clase social, género y etnia’, Mientras Tanto, 93, 93–9. Petmesidou, M. (1996), ‘Social protection in Southern Europe: trends and prospects’, Journal of Area Studies, 9, 95–125. QUIT - Grup d’Estudis Sociològics sobre la Vida Quotidiana i el Treball (2000), ¿Sirve la formación para el empleo?, Madrid: Consejo Económico y Social. QUIT (2007), ‘Conciliación y Negociación Colectiva’, issue of the journal papers from Papers Revista de Sociologia devoted to work–life balance in collective bargaining, nº 83. Recio, Albert (2006), ‘The Statutory Minimum Wage in Spain’, in Thorsten Schulten, Reinhard Bispinck and Claus Schäfer (eds), Minimum Wages in Europe, Brussels: European Trade Union Institute for Research, Education and Safety (ETUI-REHS), pp. 151–75. Sanchis, Enric (1991), De la escuela al paro, Madrid: Siglo XXI. Tezanos, José F. (1999), Tendencias en exclusión social en las sociedades tecnológicas: el caso español, Madrid: Editorial Sistema.

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VV.AA. (2007), ‘Dossier: Cultura de la precariedad, generaciones y conflicto social’, Sociedad y utopia: Revista de ciencias sociales, 29.

Index absenteeism 115 activity status 268–70 adult education 19–110, 117 after-school care 191, 272 age discrimination see discrimination, age ageing population 30, 44, 48, 53, 58, 118, 149, 231, 234, 247–9 agency work 19, 129, 136, 139, 164, 233, 238 agriculture 243, 250, 274, 299 alcoholism 197 ALMP (active labour market policy) 193, 269, 274, 278, 295 see also labour-market policy annuities 54, 120–21 apprenticeship 17–22, 63, 80, 131–7, 156–61, 259, 284, 292–3 gender 165–7, 171, 177 housing costs 26–8 SME 269 baccalaureat 211 birth rate 4, 27, 30, 141, 216, 234 Bologna Process 135 career break 64, 84, 116, 129, 143–4, 166–76, 273 Catholic church 216, 284–5 childbirth 7, 15, 37, 89, 107, 112–13, 155, 161, 184, 208, 215 childcare 74, 86, 176–8, 216–17, 271–2, 279, 297 availability 9, 30–35, 37–8, 96, 106–8, 124, 130, 139, 163, 166–8, 192 benefit 36, 88, 90, 104, 141–2, 169–70, 270 leave 33, 36, 107, 167, 272 public 107–8, 115, 271 childlessness 112

civil service 258, 291–4, 298, 302 cohabitation 5, 24–5, 28, 105, 111–12, 197, 242 coherence 8–9, 35, 62, 208, 285 collective agreements 42, 46, 75, 128, 143–4, 147, 271, 301 collective bargaining 37, 47–8, 150, 232, 247, 269, 292, 298 see also wage bargaining construction industry 80, 171, 188–9, 193, 222, 243, 250, 287, 299 coordinated market economies 10 counselling 197, 213, 264, 274 daycare 107, 141–2, 191, 216, 272 deindustrialization 258, 260 disability 225, 275 disability benefit 54, 87, 120 disability pensions see pensions, disability discrimination age 29, 49, 83, 86, 90–91, 173, 272–3 gender 35, 173, 176, 257, 272–3, 279–80 immigrants 116 see also gender equality divorce 3–4, 58, 62, 111, 196–7, 299 domestic service 243, 250, 299 early retirement see retirement, early earnings-related benefit 119, 249 Economic and Social Council 296 education 13–19, 129–32, 140–42 higher 78–81, 95–6, 117–20, 131–2, 158, 184–6, 210, 257, 260–65, 273, 277–80, 284–5, 289–90 entry age 13, 109–10, 234 financing 17, 25, 59, 186, 215 housing costs 27, 215 location 25

309

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pension rights 55 women 89, 197, 237, 277 leaving 78, 81–2, 108, 133, 165, 277 pre-school 107, 134, 150, 297 secondary 42–5, 73, 109–10, 133–4, 157–8, 167, 171, 187, 212, 236, 257–63, 278, 284–6 tertiary 21–2, 42–5, 59, 109–11, 158–60, 167, 171, 211, 236–7, 258–65 EES see European Employment Strategy employee rights 258 employer retention 269 employment flexibility 234, 303 employment protection 21, 39, 46–8, 62, 75, 232, 234, 243, 247, 257 empowerment 9, 21, 28, 38, 47, 63, 125 empty nest 3, 115, 201–2 equity 1, 8–9, 17, 21, 28 gender 36, 54 intergenerational 56, 58, 63, 97, 250 social 241, 247 wage 44, 48 ethnic groups 16, 18, 134 ethnic minorities 60 ethnicity 156, 176–7, 187–8, 201, 259, 278 EU 13–14, 27, 29–33, 35, 49, 64, 168, 173, 231–6, 298–301 EU-(15) 36, 79–81, 160, 183, 188, 198, 274, 288, 295, 300 EU-(19) 16 EU-(25) 188–9, 262, 288, 300 EU-(27) 12, 71–2, 160, 162, 262, 288 European Community Household Panel (ECHP) 267, 303 European Employment Strategy (EES) 1–2, 58, 221, 271 European Social Fund 297 familialism 280 family allowance 26, 59, 160–61, 172, 191–2 family size 3–4, 220 female labour 4, 83, 105–6, 113, 115, 121–2, 155, 161–2, 166, 172 female life course 166

feminisation 4, 113 fertility 5, 24–5, 30, 36–8, 63, 72, 85–6, 112, 243, 280, 299 final salary pension 86, 92, 94 fixed-term contract 111, 129, 136–7, 159, 233–4, 238, 241, 269 flexible employment 38, 60, 64, 85, 88–9, 124, 164, 171, 177 flexible working hours see working hours, flexible foreign born 13, 111, 116, 124 see also immigrants GDP 16, 46, 165, 183–6, 193, 249, 274, 288, 295, 299–303 gender disparity see gender equality gender equality 29–30, 36–8, 52–5, 84–5, 96, 104–6, 123–4, 142–4, 149, 161, 177, 220, 237, 278–80, 290, 297–8 see also discrimination, gender gender inequality see gender equality gender mainstreaming 105 geographical mobility 86, 191, 208, 269 globalisation 2, 115, 149 graduates 16–17, 45, 246, 259–66, 288–9 earnings 143, 184, 186 female 83, 165, 171 labour market entry 79, 82–3, 134–7, 186–7, 240–41 supply and demand 212, 239 unemployment 273, 278, 280 vocational training 138 see also education, tertiary; university grant system 17, 22, 59–60 see also student loan healthcare 93–5, 104, 137, 164, 188, 257–8, 264, 299–301 higher education see education, higher homelessness 197 house price inflation 28, 84, 94, 267 housework 4, 124, 166, 297–8 housing 24–9, 59, 84–6, 189 allowance 111, 121, 123, 215, 264 asset 93, 96 costs 87, 89, 242

Index independent 4 loan 267, 270 students 263 housing market 9, 84, 86, 137, 188, 190, 194, 200–201, 242, 291–3, 302 deregulation 27 human capital 5, 64, 108, 112, 121, 124, 237, 239, 241 illegal work 298–9 immigrants 299 average pay 290, 297 care work 298 exclusion 169 female 247 fertility 299 healthcare 301, 304 integration 115, 124, 133–4, 150, 280, 287 see also foreign born immigration policy 159–61, 280 independent living 9, 24–9, 59–62, 73, 82–5, 136–7, 155–6, 161, 188–9, 265–8, 278–80 family support 63 transition 7, 22 industrialisation 191, 259, 284 inflation 193, 247 job creation 233, 238, 272–3, 277 job security 4, 44, 106, 292 job shortage 22, 37 job stability 159, 269 job-to-job mobility 86, 90, 94 labour-market policy 170–75, 183–6, 193–5, 209–13, 225–7, 233–4, 241–50, 258, 296 levy system 44, 60 liberal market economies 10, 12, 130 life course approach 2–4, 6, 8, 38 life course policy 59–64, 104–25 life expectancy 3–4, 54, 91, 120, 200, 234 life stage analysis 2, 8 life trajectories 4–6, 38, 105, 125, 156, 164, 208 lifelong learning 21, 39, 44, 48, 60, 63, 116–18, 124, 187, 225 lifetime income 34, 54, 120

311

Lisbon Target 12, 118, 224, 227 lone parent 27–8, 34, 81, 87–8, 171, 197, 201–3, 208, 272, 299 low-skilled jobs 47, 80, 149, 220 low-skilled workers 44–5, 53–5, 60, 118, 136–9, 149, 165, 243, 245, 251, 287, 301 lower secondary education see education, secondary Luxembourg income study 26, 88 male breadwinner 11, 37, 59–63, 90, 113, 140, 146, 163–5, 172, 178, 234, 245–6 marriage 3, 5 accommodation 243 age 25, 266, 268 benefits 55, 174 birth outside 24, 34 career penalty 220 dissolution 196 employment rate 113 legal status 112 rate 111 social security 172 women leaving work 128, 155, 161, 246, 258, 270 maternity 215–16, 238, 299 benefit 164, 191 leave 33, 35, 88–90, 95, 106, 192, 270–72 support 182 means-testing 26, 54, 95 Mediterranean model 10–12, 30, 37, 284–304 mini jobs 37, 140–42 see also part-time work minimum wage 35, 88, 95, 150, 191, 238, 266, 273–5, 295, 301 mining industry 258 mortgages 28, 85, 242, 293 motherhood 30–32, 37, 59, 84, 164, 218–20, 237, 246, 266, 270–72 NEET 9, 19, 79–80 nest-leavers 267 New Deal 80, 87 New Labour 80, 87–8, 91, 95–7 nuclear family 201 nursery school 35, 191

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occupational mobility 195, 203, 259, 269 occupational pension see pension, occupational OECD 16, 19, 33, 44–6, 106, 109–10, 131, 134, 210–11, 259–60, 265, 286–8 on-the-job training 117–18, 224, 259, 269 Organisation for Economic Co-operation and Development see OECD parental leave 30–38, 64, 88–90, 95, 104–7, 112–16, 123–5, 168–70, 193, 217, 227, 238, 246, 297 parenthood 1–4, 9, 29–37, 59–62, 74, 88, 96, 112, 192, 270–72, 279 parenting 3, 29, 37–8, 54, 85, 105, 120, 123, 200 part-time work 64, 94–7, 140–42, 158, 162–70, 183, 192, 266 benefit 217 fathers 123 men 223, 226 mothers 31, 36–7, 55, 89–91, 107, 113–15, 218–20 parental 246, 272–4 pensions 174 students 79, 135 women 104–5, 298, 302 see also mini jobs paternity leave 35, 37–8, 88, 123, 142, 168–9, 271 pay inequality 84 pension 90–97, 118–25, 144–50, 170–78, 199–200, 225–6, 247–51, 274–80, 299–303 credits 54, 92 disability 49–52, 198–200, 222, 276, 301 eligibility age 3, 49, 52 final salary 86 fund 85, 275–6 guaranteed minimum 119–21 occupational 49, 54–5, 57, 91–5, 147–9 personal 90–91 reduced 131 reforms 53–60, 222

schemes 37, 49, 164 state 53–7, 91–5, 119, 146–7, 149, 200, 250 wage-indexed 129 widows 174, 301 People’s Party 288, 292 Personal Autonomy Law 298, 302–3 poverty 88, 91, 171, 194, 200–203, 248–50, 303 child 36, 87–8, 96–7, 192, 270 female 9, 96–7 older workers 44, 48, 145 pensioner 54–7, 121, 145–6, 149–50, 199, 226, 275, 279, 301 youth 29, 277 pre-school education 134, 150, 297 pregnancy 80, 270–71 public sector 115, 210, 232–3, 285–7, 292, 304 graduates 294 parental leave 271–2, 297 pay 95 pension 56, 90–93, 269 women 34, 84, 258, 270, 276 recruitment 38–9, 80, 86, 90, 223, 226, 272–3, 279 refugees 116, 128 renting 26, 84, 189–90 retirement 1, 7–9, 51–7, 60–62, 90–94, 118–21, 145–9, 173–7, 198–200, 209–10, 221, 225–7, 232, 234, 236, 248–51, 257–9, 274–9, 299–301, 306 early 76, 130–31, 139–40, 147, 159–61, 173–7, 198–200, 202, 209, 222, 248–9, 300–301 female unemployment 30 opportunities 130, 147 penalties 53 pensions 170, 174–7 programmes 139–40, 226 scheme 3, 49–52, 91, 159, 161, 173–4, 222, 225, 227, 234, 248, 258, 275–6, 279 postponement 49 statutory 148–9 Riester pension 148–9 Roma 187–8, 193

Index savings 53–6, 91, 95, 97, 200, 248, 267, 293 school leavers 17, 165, 212–14, 239, 262, 273, 278 school to work 7, 9, 20, 62–3, 73, 78, 136, 160–61, 193, 210, 212–13, 241 secondary education see education, secondary selective exclusion 21, 208–9, 224 selective inclusion 21 self-employment 40, 146, 164, 233, 249–50, 257, 264, 266, 269, 275, 294 seniority-based wage system 42, 44, 48, 54 service industry 162 sexual harassment 29 single parent see lone parent skilled jobs 212, 287 skilled workers 16, 19, 139, 150, 165, 187, 239, 247, 259, 269 SME’s (small and medium enterprises) 157, 168, 269, 272 social cohesion 8, 63, 279–80, 291–4, 302–3 social exclusion 8, 97, 124–5, 194, 208–9, 245, 294 social norms 5, 9, 24, 90 social protection system 8, 125 social security see social welfare system social security contributions 146, 238, 250, 300 social welfare system 1, 6, 8–9, 128–30, 139–40, 155, 164, 170–72, 177–8, 226–7, 257–8 see also welfare system Spanish Socialist Party (PSOE) 285, 292, 297, 303 stable employment 4, 22, 28, 41, 82, 131, 134–9, 212, 248, 294–5 state pension see pension, state student grants 17, 22, 25–6, 44, 59, 79, 111, 135, 160–61, 288 student loan 17, 22, 25–6, 79–81, 95, 106, 109, 111, 117, 215, 263 see also grant system subsidies 16, 62, 272–4, 292–6 education 59, 218 housing 189–91

313 low pay 87–8 wage 193, 213

tax 26, 104, 106, 108, 123–4, 303 benefits 17 part-time work 216 pensions 121, 146 second income 33, 37, 74, 90, 129, 140–41 tax allowance 135, 192, 217 tax base 34, 63 tax credit 87–8, 92, 95, 97, 264, 271, 278 tax exemption 264 tax relief 26, 59, 79 temporary contract 19, 39–41, 62, 111, 136–7, 212, 225, 239–40, 266, 290–92, 294–6 temporary work see temporary contract trade unions 37, 117, 139, 155, 165, 172, 238, 285 training rights 225, 238 training systems 6, 19, 21, 80, 138, 157, 239, 258, 284 Treaty of Amsterdam 295 tuition fees 17, 22, 59, 79, 186, 262–3 unemployment 1–4, 36–41, 47, 54–5, 86–90, 120, 192–6, 238–46, 268–9, 272–4, 277–80, 289–91, 294–6 benefit 46, 49–51, 138–9, 148, 164, 171, 257–8 childcare 170 education 82 elderly care 175 female 30, 141, 147, 171, 213, 268 fertility rates 112 fixed-term contract 137 graduate 17 high 30, 129–30, 134 immigration 115 insurance 39, 47, 52 long-term 131, 148, 170, 188, 193, 234, 296 older workers 149, 210, 222–3 open 36 pension 176–7 rising 169–74, 183–4, 186, 208

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The welfare state and life transitions 109–11, 128–40, 156–7, 160–61, 177, 187, 239, 262–5, 284, 286–7, 291, 296 collective agreements 143 grants 17 levy system 44

training 129, 138–9 unskilled 136–7 youth 19, 22, 28, 71, 110–11, 131, 135, 157–61, 177, 210–15, 222, 226, 233–6, 238, 241, 257–8, 260–66, 278, 280 United States of America see US university 132–7, 236–7, 240, 262–3, 266, 278, 287–90 applications 81 entry 109 fees 215 graduates 165, 171 grants 160 see also graduates; education, tertiary unskilled workers see low-skilled workers upper secondary education see education, secondary US 21, 78, 87, 90, 94–6, 288

wage bargaining 130 see also collective bargaining welfare system 1–3, 6–12, 30, 49, 78, 129, 140, 197, 208 see also social welfare system work history 3, 55, 60, 107, 112, 120, 250 work–life balance 8, 29, 295, 298, 302 working conditions 38–41, 117, 222, 232, 258, 277, 303 working hours 163, 172, 218, 225 flexible 9, 35, 106, 117, 272 increased 303 reduced 35–6, 113, 168, 271–2

VET see vocational training vocational education see vocational training vocational training 20–22, 79–83,

youth employment 13, 19, 41, 71, 176, 213–14, 234, 242, 291 youth unemployment see unemployment, youth