Vouchers in Belgium for informality

The issue of bringing informal workers into social security is a challenge even in the wealthier and more urbanized countries. Belgium adopted a program based on vouchers that has enjoyed success. The program provides a framework for small employers and households employing domestic or other service workers to buy vouchers through authorized distributors. Those vouchers provide access to social security benefits. This seems to be a good example on how providing a simple framework can induce significant increases in participation at a low administrative cost. The Belgian labor force is roughly 5 million people, and the voucher system had 760 thousand active users in 2010, so the share of work covered is not small. The system is still growing, and by 2010 there were 2,664 companies supporting the distribution of the vouchers. It is interesting that when the word voucher is used in the context of social programs, it is often to define a mechanism to distribute a public subsidy, while in this case, the voucher is really issued by households and small employers to allow workers to access the benefits of social security.

Norway: labor and the welfare state

Speaking at the research meeting of the ISSA, the Secretary of Labor of Norway makes some points:

1. Norway is currently one of the leading countries in terms of "trust" among the population.
2. Oil wealth is not enough to finance the welfare system. Actually, the total work effort is the main determinant of the sustainability of the welfare state. Labor supply will decrease 7% towards the middle of the century due to aging, but the Government of Norway thinks that policies to raise labor supply are being successful. They think that the more realistic path is that for decades the labor participation rate can increase, because the average hours per worker will not increase.
3. To reduce benefits is not considered necessary to raise participation rates. Rather, if the welfare system is reliable, the population will be more businesslike, more trusting. On the other hand, a policy to graduate benefits may be needed. The system (as it is in most of the world) is "all or nothing": If someone receives a disability pension or sick pay, he receives 100% or nothing. There has been a massive increase in child care services, and to improve the quality is seen as critical to raise labor supply.

 

 

In this graph we see some interesting things: Norway has taken advantage of the boom in the price of oil to reduce public debt significantly (this is the inverted-U seen from 2000 to 2012). They are achieving in effect a raise labor participation (which is something that is not happening in general in the European Community). Norway is not in the community and does not use the Euro, and they have maintained a more stable exchange rate (they have had the revaluation from 2000 to today, but the exchange rate is approximately the same as in the 1990s).

European pension reform

This is the white paper by the European Commission on pension reform. We see first that parametric reforms (change in age of retirement, for example), are reducing replacement rates in most countries, but not in all. Second, we see that there are large differences in the share of Europeans working after age 55: 70% in Sweden, 57% in the UK, and only 36% in Italy.

The main recommendations of the report:

• improve job opportunities for older workers,
• encourage private retirement schemes and provide incentives including tax breaks,
• improve protection for international migrants,
• link retirement age with life expectancy, restricting early retirement and closing the pension gap between men and women.

Mandatory paternity leave

One tool to facilitate the work of women is to allow paternity leaves to be used by any of the partners in marriage. Traditionally, this benefict was grantes only to working women. In Sweden, additionally, there is now a mandate for fathers to take up part of the leave.

German reforms, pre-crisis

Germany has been a resilient country during the world crisis that began in 2007. From being the Sick Man, now is the Strong Frau. That is the way Chancellor Gerhard Schröder puts it. He talks in this interview of the reforms to the social protection system that in his view have cemented the results. Germany has virtually the lowest unemployment rate sine reunification.

France reduced retirement age

The French government agreed to cut the retirement age for some workers to 60 years (Sarkozy had risen to 62 years). The European Union is concerned because this measure could damage further the social welfare system. More information here.

In Europe young people are most affected by the crisis

According to the European Commission youth unemployment in Europe has soared by 50% since the financial  crisis of 2008, is rising faster than overall unemployment rates, and nearly half of young workers do not have permanent jobs. More information here.

Britain's jobs crisis is deepening

In Britain, almost half of unemployed workers aged 50 or over 50 have been out of work for a year or more. More information here.

Spain in plans to allow pensioners to continue working

The Spanish government is considering the possibility that older adults remain working while receiving his pension. More information here.

France implements measures to stimulate growth

The French government announced some measures to stimulate growth and protect jobs. Raising the rate of VAT to finance labor costs and thus it will be possible to reduce the contributions tax work. For more information see here and here.

"Gender equality bonus" in Switzerland

In Sweden, in addition to fathers already receive great benefits with couples sharing maternity leave, the parliament has just approved an "gender equality bonus" of 3,000 swedish kronor (£ 287) each month for couples in which the father takes over caring for the baby. More information here.

ILO warns of major labour market decline

A study prepared by the International Labour Organization (ILO) and the OECD warns of major G20 labour market decline in 2012 and a serious jobs shortfall by 2015. More information here.

NHS ends IT proyect

In the UK, health secretary, ministers and NHS (National Health System) chief executive have preferred to suspend the computarised patient record programme rather than put even more money into it. The program had years of delays, in addition to technical difficulties, contractual disputes and rising costs. Complete note here.

Ibero-American Multilateral Agreement on Social Security

The Ibero-American Multilateral Agreement on Social Security will provide social security benefits to immigrant workers in signatory countries. The Agreement aims to ensure pension minimum coverage to 611 million people. Currently countries who have signed Bolivia, Brazil, Chile, Ecuador, El Salvador, Spain, Paraguay, Portugal and Uruguay. On May 1, the Agreement entered into force in Spain, Brazil and Bolivia allowing workers in these three countries benefit from the agreement. Complete note here.

Swedish private pension system

An interesting note about regulatory difficulties face by Sweden to regulate the transfer of accounts in private pension systems.

Life expectancy continues to rise

The following figures show life expectancy at 60 years for different regions. Although there is a difference of about 4 to 5 years between North America and less developed countries, all regions show a trend of rising life expectancy at 60 years, close to retirement age in most countries. This confirms the need to raise retirement age in countries (see previous note).

life expectancy at 60 years for different regions

Labor Force Participation Rates in Regions of the World

The following graphs show labor force participation (LFP) rates in different regions of the World. As expected, women in Europe, Japan, and North America have higher rates than in Mexico and the Latin Caribbean, Central America, Korea, and the South Cone between ages 40 to 54. On the contrary, European women stop working at earlier ages and have very low participation rates after retirement ages, followed by Mexico and the Latin Caribbean, 2% and 11.75% respectively, in contrast with 25% in Korea and the Andean Region between ages 70 and 74. European men have the lowest participation rates, followed by North America, between ages 50 and 74. Elderly men have higher participation rates than elderly women, in Mexico and the Latin Caribbean the rate is 45%, and in Central America and the Andean Regions participation rates are higher than 50%.

Great news for older people in UK

In the United Kingdom the government accepted the law that says employers will no longer be able to force workers to retire at 65 years old, as long as they remain in working condition. This law came into force gradually from April to October this year. More information here.

NHS Reforms

The health secretary of the United Kindom announced today that despite the opposition, the government will push ahead with reforms to the National Health Service (NHS), which he described as the biggest reorganisation since the creation of the system. More information here.

Labor supply shocks sensitivity in migration

The paper "Birth Rates and Border Crossings: Latin American Migration to the U.S., Canada, Spain, and the UK" examines the migration of 25 countries in Latin America and the Caribbean to the United States, Canada, Spain and the UK. According to the authors, migration to the United States is sensitive to labor supply shocks, while the migration to other countries studied is insensitive to these shocks.