Dynamics and collapse of local labour markets

Sweden has a tripartial regional structure; with a small number of metropolitan regions comparable in size with those on the European Continent, numerous medium sized and small towns, and in addition vast sparsely populated areas. A Parlamentary Commission has recently suggested a regional policy to cope with the uneven economic growth between these regions. The objective should be to maintain and create well performing local labour markets in all parts of the country. The strategy for achieving this is ”regional enlargement, e g extended commuting areas, increased labour mobility and flexibility. The current appr. one hundred local labour market areas range from the majority, which have less than 25 000 inhabitants, to only a few with more than 200 000. Labour mobility options are severely constrained at the small labour markets with only some one hundred industrial branches present, as compared to the dynamic metropolitan regions with five or six times as many. Population projections reveal that the ageing process will reduce the labour force, particularly threatening both the matching processes and the service provision in small and remote regions. It has to be put into question whether this will be solved by traditional labour market mechanisms. In spite of the globalization process, at most local labour markets an increasing proportion of labour demand will be based on community and household basic services. This leads to the question of the spatial consequences of the emerging polarization of the local versus the globally oriented labour market in the service economy. The paper aims at evaluating the economic returns to alternative strategies for “regional enlargement”, labour mobility and flexibility in the different types of regions found in Nordic countries. The specific meaning of polycentric develoment and of urban-rural partnership in the Nordic context will be discussed. By analysing individual labour market careers recorded in annual gross stream statistics, multidimensional mobility options are calculated and projected for a range of local labour market areas. Methods in spatial planning for evaluating labour market performance are suggested.

Metropolitan and peripheral "Entrepôts" for transitional labour markets

Differences in national welfare systems are reflected in rates of labour market participation for different segments of labour across the EU member states. The Nordic countries have of course long stressed 'full employment as a key labour market objective. The public sector is thus actively used to replace non-paid care with formal jobs. Germany and Austria on the other hand, both of which have less developed childcare systems, in practice treat males as the primary household wage earners. Moreover, several Southern member states consider the 'extended family' to have responsibility for those family members in need, which obviously limits the chances of certain segments of the population from entering or indeed re-entering the regular labour market. However, notwithstanding such differences in emphasis, the notion of 'full employment' eventually found its way onto the agenda of the European Union. The member states were moreover unanimous in their belief that this goal would require significant levels of investment in the areas of employment and social policy. The notion of the activation of all segments of labour is accentuated: e.g. the goal requires at least 50 per cent of people aged over 55 years in the EU to be employed in 2010. A new sub-goal was also set for the employment rate of women, at 10 percentage points below the male/female average. Common standards are also to be established which will enable EU wide comparisons of access to childcare and to care of the elderly. The differences in employment frequencies between EU member states remain large, but on the whole they now seem to be converging. On the other hand, regional differences within member states are reported to be on the increase. As such, the transitional characteristics of the labour market are becoming more transparent: Each transition or career - such as from education to work, from care to work, or from unemployment to work, etc - can be temporary and repetitious. Transitions can now of course occur at almost any time of one's 'working life'. There are theories explaining the nature and scope of such 'transitional' behaviour exhibited by the current labour force, stressing, among other things, the individual choice of life-style, life chances or career options in different places. The other side of the coin of course is that rapid economic restructuring increases the risk for non-voluntary changes in employment status. The regions within member states thus perform as more or less efficient 'entrepôts' for transitional labour markets, depending primarily on diversity and the vitality of its industrial structure and on the demographic structure of the labour force. In general, labour markets in Metropolitan regions are expected to permit higher rates of transition, reflecting more individual freedom of choice, than do small and less diverse LLMs. However, performance is inevitably moderated by the welfare system prevalent in each country. In all probability then it is the countries that have an 'individual' rather than a 'household' focus on labour market participation that will be better prepared for high rates of transition. The purpose of this paper is thus to outline a typology of local labour markets across Europe, reflecting the current range of variation in economic and geographic structures as well as in social policy, and to- discuss feasible mixes of policy measures to help achieve the common European goal of full employment, and to help facilitate transition in all types of regions.

Performance of Local Employment Systems

At the national level the employment system consists of the set of institutions, and policies affecting institutions, which together moderate the level of production, employment and unemployment in the country (Schmid, G. & Gazier, B. eds. 2002. The Dynamics of Full Employment. Edward Elgar). These institutions include employment legislation, taxation policy and the education and training systems. However, the dynamics and the complexity of the national labour markets could only be understood by analysing the systemic character of employment at the regional and local levels. The regional and local social systems function as filters or restrictions, resulting in differing performance of local labour markets. The interaction between the labour market and the local educational and private household systems – including its various preferences and life-style options - is reflected in, and allowing for, differing rates of transition between alternative statuses at the labour market. This seems particularly valid in a country like Sweden, where there is a wide variation of functional labour markets in terms of size, differentiation, settlement and demographic structure. Also, the recent cut backs and weakened intervention of the welfare state in general combined with an increasingly dominating role of the public sector as an employer in regions with an ageing population suggest an emerging divergence in the performance of local labour markets. In this paper, we suggest that the performance of local employment systems should be evaluated in terms of the rate of activation of local pools of labour force and of immigration. Well functioning employment systems should facilitate voluntary and temporary entries to and exits from employment to other statuses, e g to and from education and training. Rapid activation should be facilitated of the local pools of unemployed and other non-employed including persons on long-term sick leave. Preliminary results from empirical analysis based on longitudinal data reveal that there is a wide variation in performance of Swedish local labour markets in these terms and that there are no signs of convergence over the period 1990-99. The results suggest that national policies to affect institutions within the employment system has to be synchronized with and supported by regionally differentiated measures to improve the local social systems, in particular within the local education system, to improve working conditions in certain sectors and also to promote local mobility between economic and non-economic sectors.

Mobile unemployment in a post-industrial society: The case of Sweden

Since the early 90s, every region in Sweden has been struck by high unemployment, especially among young persons. In the same period, there has been an overrepresentation of unemployed among inter-regional migrants. Increasingly, however, this mobility does not lead to employment. Yet, there are largely economic factors explaining this mobility. There seems to be a dual spatial pattern of this phenomenon. Preferably, unemployed migrate to (a) metropolitan regions and to (b) rural areas. This indicates that the phenomenon is multifaceted. Mobile unemployed have different backgrounds and different aspirations. Unemployed migrants to rural areas are predominantly low cost seekers who do not look for a regular job any longer. Unemployed migrants to metropolitan regions are to a large extent recent immigrants and/or young persons attracted by the informal segments of the urban labor market. The aim of the paper is to describe emerging patterns of inter-regional migration of unemployed, to analyze the socio-economic careers of different migrant groups, and to analyze factors leading to mobile unemployment. The factors analyzed include changes in the welfare system and in labor market policy. Finally, the paper will discuss the regional economic consequences of the emerging pattern and the policy implications.

Dynamics and collapse of local labour markets

Sweden has a tripartial regional structure; with a small number of metropolitan regions comparable in size with those on the European Continent, numerous medium sized and small towns, and in addition vast sparsely populated areas. A Parlamentary Commission has recently suggested a regional policy to cope with the uneven economic growth between these regions. The objective should be to maintain and create well performing local labour markets in all parts of the country. The strategy for achieving this is ”regional enlargement, e g extended commuting areas, increased labour mobility and flexibility. The current appr. one hundred local labour market areas range from the majority, which have less than 25 000 inhabitants, to only a few with more than 200 000. Labour mobility options are severely constrained at the small labour markets with only some one hundred industrial branches present, as compared to the dynamic metropolitan regions with five or six times as many. Population projections reveal that the ageing process will reduce the labour force, particularly threatening both the matching processes and the service provision in small and remote regions. It has to be put into question whether this will be solved by traditional labour market mechanisms. In spite of the globalization process, at most local labour markets an increasing proportion of labour demand will be based on community and household basic services. This leads to the question of the spatial consequences of the emerging polarization of the local versus the globally oriented labour market in the service economy. The paper aims at evaluating the economic returns to alternative strategies for “regional enlargement”, labour mobility and flexibility in the different types of regions found in Nordic countries. The specific meaning of polycentric develoment and of urban-rural partnership in the Nordic context will be discussed. By analysing individual labour market careers recorded in annual gross stream statistics, multidimensional mobility options are calculated and projected for a range of local labour market areas. Methods in spatial planning for evaluating labour market performance are suggested

Metropolitan and peripheral "Entrepôts" for transitional labour markets

Differences in national welfare systems are reflected in rates of labour market participation for different segments of labour across the EU member states. The Nordic countries have of course long stressed 'full employment as a key labour market objective. The public sector is thus actively used to replace non-paid care with formal jobs. Germany and Austria on the other hand, both of which have less developed childcare systems, in practice treat males as the primary household wage earners. Moreover, several Southern member states consider the 'extended family' to have responsibility for those family members in need, which obviously limits the chances of certain segments of the population from entering or indeed re-entering the regular labour market. However, notwithstanding such differences in emphasis, the notion of 'full employment' eventually found its way onto the agenda of the European Union. The member states were moreover unanimous in their belief that this goal would require significant levels of investment in the areas of employment and social policy. The notion of the activation of all segments of labour is accentuated: e.g. the goal requires at least 50 per cent of people aged over 55 years in the EU to be employed in 2010. A new sub-goal was also set for the employment rate of women, at 10 percentage points below the male/female average. Common standards are also to be established which will enable EU wide comparisons of access to childcare and to care of the elderly. The differences in employment frequencies between EU member states remain large, but on the whole they now seem to be converging. On the other hand, regional differences within member states are reported to be on the increase. As such, the transitional characteristics of the labour market are becoming more transparent: Each transition or career - such as from education to work, from care to work, or from unemployment to work, etc - can be temporary and repetitious. Transitions can now of course occur at almost any time of one's 'working life'. There are theories explaining the nature and scope of such 'transitional' behaviour exhibited by the current labour force, stressing, among other things, the individual choice of life-style, life chances or career options in different places. The other side of the coin of course is that rapid economic restructuring increases the risk for non-voluntary changes in employment status. The regions within member states thus perform as more or less efficient 'entrepôts' for transitional labour markets, depending primarily on diversity and the vitality of its industrial structure and on the demographic structure of the labour force. In general, labour markets in Metropolitan regions are expected to permit higher rates of transition, reflecting more individual freedom of choice, than do small and less diverse LLMs. However, performance is inevitably moderated by the welfare system prevalent in each country. In all probability then it is the countries that have an 'individual' rather than a 'household' focus on labour market participation that will be better prepared for high rates of transition. The purpose of this paper is thus to outline a typology of local labour markets across Europe, reflecting the current range of variation in economic and geographic structures as well as in social policy, and to- discuss feasible mixes of policy measures to help achieve the common European goal of full employment, and to help facilitate transition in all types of regions

Performance of Local Employment Systems

At the national level the employment system consists of the set of institutions, and policies affecting institutions, which together moderate the level of production, employment and unemployment in the country (Schmid, G. & Gazier, B. eds. 2002. The Dynamics of Full Employment. Edward Elgar). These institutions include employment legislation, taxation policy and the education and training systems. However, the dynamics and the complexity of the national labour markets could only be understood by analysing the systemic character of employment at the regional and local levels. The regional and local social systems function as filters or restrictions, resulting in differing performance of local labour markets. The interaction between the labour market and the local educational and private household systems – including its various preferences and life-style options - is reflected in, and allowing for, differing rates of transition between alternative statuses at the labour market. This seems particularly valid in a country like Sweden, where there is a wide variation of functional labour markets in terms of size, differentiation, settlement and demographic structure. Also, the recent cut backs and weakened intervention of the welfare state in general combined with an increasingly dominating role of the public sector as an employer in regions with an ageing population suggest an emerging divergence in the performance of local labour markets. In this paper, we suggest that the performance of local employment systems should be evaluated in terms of the rate of activation of local pools of labour force and of immigration. Well functioning employment systems should facilitate voluntary and temporary entries to and exits from employment to other statuses, e g to and from education and training. Rapid activation should be facilitated of the local pools of unemployed and other non-employed including persons on long-term sick leave. Preliminary results from empirical analysis based on longitudinal data reveal that there is a wide variation in performance of Swedish local labour markets in these terms and that there are no signs of convergence over the period 1990-99. The results suggest that national policies to affect institutions within the employment system has to be synchronized with and supported by regionally differentiated measures to improve the local social systems, in particular within the local education system, to improve working conditions in certain sectors and also to promote local mobility between economic and non-economic sectors

Mobile unemployment in a post-industrial society: The case of Sweden

Since the early 90s, every region in Sweden has been struck by high unemployment, especially among young persons. In the same period, there has been an overrepresentation of unemployed among inter-regional migrants. Increasingly, however, this mobility does not lead to employment. Yet, there are largely economic factors explaining this mobility. There seems to be a dual spatial pattern of this phenomenon. Preferably, unemployed migrate to (a) metropolitan regions and to (b) rural areas. This indicates that the phenomenon is multifaceted. Mobile unemployed have different backgrounds and different aspirations. Unemployed migrants to rural areas are predominantly low cost seekers who do not look for a regular job any longer. Unemployed migrants to metropolitan regions are to a large extent recent immigrants and/or young persons attracted by the informal segments of the urban labor market. The aim of the paper is to describe emerging patterns of inter-regional migration of unemployed, to analyze the socio-economic careers of different migrant groups, and to analyze factors leading to mobile unemployment. The factors analyzed include changes in the welfare system and in labor market policy. Finally, the paper will discuss the regional economic consequences of the emerging pattern and the policy implications