Monday, 30 March 2015

Getting to thirty eight - Prof Perri 6, Professor in Public Management, School of Business and Management, Queen Mary University of London

When their subject is dominating the general election debate in the media and among ordinary citizens, what could a public management academic possibly complain about?

Well, don’t get me wrong, I'm not bellyaching at all. Democracy doing its job ought to be celebrated, even when the news for the public services is hardly cheering.

But... (and you knew there’d be one...) it’s not at all clear yet that the politicians and journalists are focusing on all the big issues of public management that will really matter during the 2015-2020 parliament. Let’s start with those cuts which will follow the general election, as soon as a government is formed and its budget is prepared.

Friday, 27 March 2015

When Labour Market Reforms actually Reduce Unemployment - Prof Pierre Cahuc, Prof Francis Kramarz and Prof Pedro Martins

Recently, “Les Echos” journalist Dominique Seux observed that, in contrast with the abundant commentary on Greek economic woes, there is little discussion about the case of Portugal. A recent conference of Pedro Martins, one of the authors of this article and former Secretary of State of Employment in Portugal, provides us with the perfect occasion to revisit the recent evolution of Portugal’s labour market. 

Between 2008 and 2011, the minimum wage there increased by 20%. This increase was also broadly reflected in salaries beyond the minimum wage, thanks to centralized negotiation mechanisms featuring unrepresentative trade unions, with a membership below 10% that mostly represent permanent workers’ interests. Thus, when the recession started, these developments on wages amplified its impact on employment. From April 2008 to January 2013, unemployment rose from 8.6% to 17.7%, affecting mostly young workers. Permanent workers enjoyed one of the most restrictive regulations of the OECD, with its redundancy payments (one month per year of compensation) amongst the highest. In this situation, Portuguese youth was confined to temporary contracts, destroyed in a very large scale once economic activity cooled off. Among those below 25 years, unemployment rate surged from 20 to 40%.