Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

opportunities. If transfer payments are too high and exceed market wages
for the low skilled, low skilled workers will not try hard to look for work.
If wage levels for the low skilled are set too high, employers might not
offer jobs to the low skilled. There is, therefore, a dilemma between work
incentives and labour costs, which is not easily solved. The win-win solution
is to increase the productivity of the workforce as a whole, which allows
for higher wages and transfer payments. However, in the past, raising
overall skill levels has not been easy. Many countries have experimented
with various forms of subsidies for low productivity employment by either
creating a larger public sector or by giving tax credits to employees or
subsidies to employers.
While all industrialised countries face the dilemma, the answers often vary.
Countries with lower levels of social equality and flexible labour markets
find it easier to foster employment growth by letting wages and transfer
payments drop. Others accept lower levels of employment in exchange for
higher levels of welfare provision.
High equality is the second component of the post-Lisbon agenda. High
equality is an asset in its own right - not for political or ideological reasons.
In contrast to policy discussions in the US, the European debate never
entirely shifted the emphasis from a concern over equality to a concern
over poverty but has traditionally given social equality an equal footing
with the fight against poverty. Inequality is linked with poverty, as highly
unequal societies also have higher poverty levels. In other words, fighting
poverty is far easier in more egalitarian societies than in unequal ones. This
view should be reinforced by the EU’s post-Lisbon agenda, since poverty
and social inequality are closely linked with more unequal societies also
having higher incidences of poverty.
This policy agenda towards high employment and high equality should
keep the emphasis on high levels of labour market participation and
flexibility but should also more seriously push towards employment
friendly social policies and sustained labour market institutions ensuring
low levels of wage and income inequalities. Flexicurity – which has
become the key concept of the EU Commission for guiding labour market
reforms – is a good first step towards combining economic growth and
social cohesion but has been seriously lopsided in its focus on flexibility
and neglect of social equality. Flexicurity needs to be complemented with
equality oriented policies and institutions.
Chapter 9 – Anke Hassel 131