Abstract
Labour market and social policies, including employment, job protection and social inclusion policies, significantly influence a nation’s economic growth and prosperity as well as the quality of life of its populace and the degree to which economic benefits are equitably distributed. With economies operating in an increasingly globalized world, states are under pressure to remain internationally competitive while at the same time they must address challenges such as demographic change, diversity, a mobile labour force and rising inequality. The volumes reviewed examine these issues from two different vantage points. Velluti’s volume is a regional analysis of the governance of the European Union’s employment strategy while Vettori’s edited volume is a series of country case studies on employment and social strategies in the context of an ageing society. Although the volumes differ in scope and approach, they are complementary, with Velluti providing a broad framework for addressing labour market policy, and Vettori presenting specific case studies of policy challenges and solutions for creating inclusive labour markets and societies for older workers and an ageing population.
At the cornerstone of Velluti’s detailed and in-depth analysis of the European employment strategy (EES) is her preoccupation with the interaction of ‘hard’ law and ‘soft’ law and how this relationship has defined the effectiveness of the EES. Underpinning her analysis is her conceptualization of a hybrid model aimed at bridging the gaps between New Governance and EU constitutionalism thus allowing for mutual co-existence. As Velluti notes, New Governance optimizes effective voice and participation whereas EU constitutionalism ensures the preservation and applicability of the rule of law (p. 45).
After presenting her conceptual framework, Velluti provides the reader with the political and economic context from which a new mode of governance has emerged, as reflected in the creation of the EES. Her analysis focuses on three key drivers: globalization, market integration and the European Monetary Union (EMU). According to Velluti, globalization has led to the involvement of new actors at the regional and local levels and to the reconceptualization of the roles of state and law. It has also undermined the traditional role of the state as new regulatory tools have been adopted that link new actors to transnational processes. The creation of a single market and the implementation of an EMU, which reflect movement towards European integration, have constrained European states’ ability to use interest rates to leverage macroeconomic policy. As a result, member states’ economic interventions have shifted to supply-side measures such as the EES. Velluti notes that employment has become the only flexible economic variable to market adjustment whereas all others remain fixed, including levels of unemployment (p. 78).
Velluti examines in detail the origins and development of the EES, delving into the institutionalization of the Open Method of Coordination (OMC) as a new mode of governance for the EU. The EES is viewed as a multi-tiered and iterative process involving several levels of decision and policy making. Its historical evolution is organized into three time periods – creation and development of the EES (1997-2002); consolidation of the EES (2003–4); and integration into the Lisbon Strategy (2005 to the present). The employment strategy had its inception in the 1990s as European states struggled to address problems of high unemployment rates. An approach was adopted to regulate employment policies which emphasized improving employment and participation rates as well as implementation of active labour market policies such as training and skills development. The OMC was introduced at the 2000 Lisbon Summit as a regulatory tool whereby member states agreed to meet certain benchmarks using an ‘open method’ of open participation in the implementation of policies, consensus building, exchange of best practice and information and cooperation and coordination.
In her concluding chapters Velluti evaluates the success of the EES and its strengths and weaknesses. The strengths of the EES lie in providing a common cognitive framework to understanding national labour market problems and in developing adaptable workable solutions that can be customized to member states’ employment and welfare systems. Velluti identifies several shortcomings:
the EES, as a non-binding process, is limited in its capacity to measure results;
the soft method approach constrains its development during times of political instability and economic recessions;
the EES lacks systematic procedural rules, guidelines and an accountability system; and,
the EES is characterized as an elitist process that does not involve parliamentary bodies and other social partners in its development.
In order to strengthen the EES and address its weaknesses, Velluti proposes that this strategy be reconciled with other dimensions of EU governance such as the European Social Dialogue. The conceptual framework she presents is based on her hybrid model that enables the interaction of new modes of governance with law and constitutionalism.
In contrast to Velluti’s regional analysis of the European Union, Vettori’s edited volume presents a series of case studies from developing and developed countries that analyse issues and policies relating to the increase in the longevity of their populations and a the decrease in their working age populations. Even though these countries face similar problems, they encounter different challenges in coping with the effects of an ageing population. A common objective that these countries share is in maintaining their economic growth and prosperity despite a shrinking pool of labour. Broad solutions include prolonging the working lives of individuals through active employment measures; effective investments in their human capital; and enhancing the productivity of their workers. To successfully implement these solutions, countries will need to address several obstacles including: eliminating persistent workplace discriminatory practices against older workers; removing or increasing the age of mandatory retirement thus encouraging greater labour market participation by older workers; and, as countries make greater use of migrant workers to address their labour shortages, ensuring these workers are not exploited and that agreements are in place between the host and sending countries.
A selection of case studies from Vettori’s volume highlights the complexity of issues countries at different stages of their economic and welfare state development are facing. EU countries, for example, are experiencing rapid ageing of their population and low fertility rates. These demographic changes are negatively impacting their economies. Sönmezler et al. recommend that EU member states encourage internal labour mobility and that they move away from populist tendencies to restrict migration. These countries are also concerned with ensuring inclusive and non-discriminatory workplaces for older workers. Shaw analyses the effectiveness of legal measures taken by the UK to combat age discrimination in the workplace. She underlines the need for developing anti-discrimination compliance programs to create a workplace that is welcoming to all.
Rapidly growing economies, such as China, India and Turkey, encounter a different set of obstacles in developing solutions to their ageing population. These countries have experienced a rapid rise in urbanization and modernization as well as changing family structures. China, for example, is a country that will experience rapid growth of its elderly population – its worker-retiree ratio will decline from 6.6 in 2004 to 2.3 in 2030 (p. 69). By 2050, one third of China’s population will become retirees. China is faced with the challenge of creating an old age security system that will provide a decent post-retirement livelihood for its ageing population. According to Shi, the ‘weakest link’ in China’s current pension system consists of the impoverished rural families with limited incomes; the remaining and wasted rural workforce; and the migrant rural workers (known as the floating population).
In countries such as South Africa and Botswana a specific set of challenges will need to be addressed, namely the HIV/AIDS pandemic and the division between formal and informal economic sectors. As Geldenhuys explains, in South Africa the distribution and rate of population growth varies according to racial grouping with the black population experiencing higher mortality rates and lower life expectancy rates than the Asian and white populations (p. 187). The black population also faces higher poverty rates compared to other racial groups. This is explained by high unemployment rates among black South Africans who usually are employed in low paid jobs in the informal sector. These unemployed individuals are increasingly marginalized in households with no incomes. Among these households, there is a higher dependence on old age pensions which are used to support members of an entire household. The pensions from an elderly member of the family become the only source of support. In the South African case, the state old age pension has become a safety net, supporting the livelihood of three generations of household members.
In conclusion, the analyses presented in these two volumes provide a deeper understanding of how nation states are attempting to develop policies, strategies and solutions to effectively cope with internal and external labour market challenges in an uncertain world that has become increasingly complex and interconnected. As Vettori notes, problems arising from such demographic trends as ageing populations will require a multi-disciplinary approach combining education policy, fiscal policy and industrial and human resource management policies (p. 254). Both volumes make important contributions to the literature on employment and social policy development. Velluti proposes a new governance architecture that bridges soft and hard modes of regulation while at the same time including new processes and actors involved in policy making. Vettori’s edited volume captures the challenges facing developed and developing countries as they try to resolve the problem of demographic change and an ageing population.