"Safety Nets Not Enough to Allay Fears in Europe
PARIS — It never occurred to Arancha Calvo that she would lose her job. Yet two weeks ago Ms. Calvo, a Madrid native, was laid off from a €60,000-a-year position as a sales executive in Spain for L’Oréal, part of a general downsizing at the French cosmetics company.
“I feel like a complete loser,” she said.
Fortunately, Ms. Calvo, 44, doesn’t have immediate worries about money. As a 19-year veteran of the company, she received €150,000, or $198,000, in severance pay. She also receives about €1,000 a month in state unemployment benefits, which were based on her most recent salary. She has rental income from two apartments she owns. And she lives with her parents.
Nevertheless, she worries about the future, especially over her prospects of re-entering the job market if the recession drags on. “Two years from now, I’ll be 46,” she said. “Who’s going to employ me then?”
In some ways Ms. Calvo’s story is typically European: The blow of losing her job was cushioned by a strong social safety net and the support of family. This is the Europe that most non-Europeans believe exists behind the rising jobless rates released each month.
On Wednesday, the European Union’s statistical agency said the unemployment rate in the 15 countries that share the euro rose to 8.5 percent in February from 7.2 percent a year earlier. It was lowest in the Netherlands, at 2.7 percent, and highest in Spain, at 15.5 percent.
By contrast, the U.S. figure rose to 8.1 percent last month, from 4.8 percent a year earlier. The faster rise there can be explained by the fact that Europe started the recession with a higher rate of unemployment, and it also tends to be harder and more expensive to remove employees in Europe. But Europe is by no means a homogenous welfare state. Different approaches to labor — rooted in history and enshrined in national policy — mean that Europeans who are thrown out of work can face a reality, and a future, very different from that of their neighbors.
Whether workers are well protected by the state or not, most experts agree that rising unemployment is becoming an increasingly acute social and economic problem in Europe.
“The worry here is not about social support,” said Elie Cohen, a professor at the Institut d’Études Politiques in Paris. “It’s about finding another job as the crisis lasts.”
Around the world, many people feel that governments are not doing enough to protect jobs. The stimulus packages enacted in most countries have favored financial bailouts and tax cuts instead of job creation and social protection. On Wednesday, labor unions called on government leaders at the Group of 20 summit meeting in London to agree on more generous support for those who lose their jobs in the financial crisis.
During a recession, as tax receipts fall, European countries simultaneously spend more on welfare. This process, known as automatic stabilizers, forms part of the debate about whether Europe should stimulate its economy as much as countries with lower outlays, like the United States and China.
“Governments need to take quick and decisive action to avoid the financial crisis becoming a fully-blown social crisis,” the secretary general of the Organization of Economic Cooperation and Development, Ángel Gurría, said this week.
Demographics, too, are a challenge. On the one hand, workers fear that as they age, they will be at a disadvantage when competing for scarce jobs against younger, less expensive workers. Experts also fear a shortage of skilled workers, as Europe’s population ages and becomes more of a burden on budgets.
Despite the advent of the single market, the labor market in Europe is fragmented. In Spain, the jobless rate runs as high as 25 percent in some regions, according to the country’s National Statistics Institute. And unemployment has spread from the construction sector to broader industry and services as domestic demand shrinks and global demand for automobiles drops.
Carlos Martín, an economist with the Workers Commissions, the biggest Spanish trade union, said that government projections that the country would begin to pull out of the crisis next year were unrealistic and that hundreds of thousands of jobs would be lost in hotels, restaurants and retailing. “Six months from now, we’ll be looking at five million unemployed,” he said. “This is going to be a deep, broad crisis that is going to last a lot longer than two years.”
The German imperial chancellor, Otto von Bismarck, had something more generous in mind when he designed the world’s first social insurance program — initiated in the 1880s — on the assumption that the welfare state should help smooth economic cycles.
“In Germany, there was this class system, with the richer classes feeling guilty and frightened of the working classes, creating this paternalism,” said Richard Layard, a professor at the London School of Economics. “In the U.S. and the U.K. it was the belief that all have the same opportunities, and if you don’t succeed it’s your fault. Now, it’s the belief that the more people you mobilize, the shorter the recession will be.”
In Britain, where the jobless rate is running at 6.5 percent and two million people are out of work, the unemployed receive the same allowance for six months, no matter how high their previous income was. After that the amount drops according to savings. The model is based on the assumption that the objective of a welfare system is to limit poverty.
“No one’s helping you,” said Irene Richardson, 53, of Southport, England, who lost her job as a sales assistant at Woolworths in January when the company, a household goods retailer, closed its stores. She is now struggling to find a new job and to survive on the £60.50, or $87, a week she receives from the government as a jobseekers’ allowance.
In France, the closure of midsize companies suppling the German export economy has been a particular problem. The unemployment rate is 8.6 percent; for those under 25, it climbs to 21.5 percent.
Unemployment assistance is based on contributions made, the contract held and years worked. Full-time employees can claim for a period of 18 months, slightly longer for people over 50, and they can receive a maximum of 75 percent of their most recent salary for six months, less for the remainder. After that, they pass to a basic monthly payment. Those on limited contracts receive far less generous payouts.
The flip side is that French employees and employers pay a hefty premium — approximately 20 percent of gross salary from employees and around 50 percent from companies — in social charges. This builds inflexibility into the labor market by making employers reluctant to hire.
Germany, where unemployment stands at 7.4 percent, has been affected by the collapse in its exports of goods like luxury cars and precision industrial instruments. But this has kicked its flexible benefits model into gear.
Six months ago at Trumpf, a machine tool maker in Baden-Württemberg, orders were up, sales were strong and there was a hope that the crisis might bypass the family-owned company that was founded in 1929.
“Then the crisis hit us, in November,” said Heidi-Melanie Maier, a spokeswoman. By the end of December, halfway through the company’s financial year, orders had fallen 20 percent.
So far, Trumpf has not cut jobs. Its 4,500 employees in Germany — of 8,000 worldwide — are on short-term work, but with a twist: Employees still receive full pay because when the company introduced overtime to deal with a previous surge in orders, workers were not paid extra. Now, that money is being used — with government help — to pay wages. That is why there is still not a sense of panic about swift job losses.
“The system, in principle, can work,” said Roland Döhrn, head of growth and labor cycles at RWI Essen, a policy institute. “But the problem facing companies is that after a time, it becomes very expensive to prolong short-time work.”
To hear Prime Minister Silvio Berlusconi of Italy, the global financial downturn has barely touched his country. Italy “is healthy,” he said recently, because 83 percent of Italians own their own homes, families know how to save, the country’s small and midsize businesses are extraordinary and the Italian banking system is solid.
But the on-the-ground statistics tell a different story. The latest figures from the national statistics agency Istat put the unemployment rate at 7.1 percent for the fourth quarter of 2008, up from 6.6 percent a year earlier.
But experts note that these figures do not taken into consideration Italy’s vast underground economy.
“Before, we used to speak of the ‘fourth week’ syndrome,” said Enrica Amaturo, dean of the Sociology Faculty at the University of Naples, referring to the moment in the month when families began to have cash-flow difficulties. “Now it’s become the third week.”
The crisis is accentuating the discrepancies within the Italian unemployment support system, which is structured to benefit select categories of workers.
When Alessandra Santoro, 31, lost her job in October at a client relations company in Rome that worked with Alitalia, the former national airline of Italy, she got no severance pay because she had been hired on a short-term renewable contract, which was simply not renewed.
She also gets no government unemployment benefits, since Italy’s welfare system does not cover short-term and part-time employees.
Ms. Santoro sent out dozens of résumés, first in her field of human resources — she has two master’s degrees — then for lower-paying secretarial work, to no avail. On Monday she started working as a salesperson in a chocolate shop, thanks to a tip she got from a friend. The job doesn’t pay much — Italy has no minimum wage — but “I need to pay the rent,” she said. And like others in her position, she feels that the longer she is out of the professional marketplace, the harder it will be to get back in.
“I’m afraid that employers will be more apt to hire someone younger,” she said.
Posts
No comments:
Post a Comment