Title: Stimulating Employment and Growth : Do we need an Anglo-Saxon or a Nordic Model?
1Stimulating Employment and Growth Do we need an
Anglo-Saxon or a Nordic Model?
2National Business Systems
- Countries have different national business
systems determined by their institutional systems
and norms of behaviour - National business systems largely determine the
rules of the game for business transactions
3National Business Systems
- These systems are path determined by history and
normally they change slowly. - They however can experience rapid change in
periods of crises eg the UK in the 1980s or with
radical change in the views of elities eg China
in the 1990s
4Types of national business systems in the EU
- Anglo-Saxon
- Nordic
- Rhenish
- Issue of the emerging national business systems
in new member states
5Anglo-Saxon Model
- National business systems geared towards open
economies (active participation in globalisation
process), emphasis on extension of internal
market of the EU based on social protection at
minimal level, and flexible labour markets - UK
and to a lesser extent Ireland
6Anglo-Saxon Model
Strong market based reforms
Business friendly policies
Economic stability
Increased growth and employment
Social model conditions largely determined by
needs of competitiveness
Open to globalisation process
7Anglo-Saxon Model - Benefits
- High growth and low unemployment relative to
Rhenish model countries - Conducive to high levels of inward foreign direct
investment from outside of the EU - Fast adjustment to process of globalisation
8Anglo-Saxon Model - Benefits
- High proportion of population economically active
- Some internationally competitive sectors eg
financial business services in London,
Pharmaceuticals
9Anglo-Saxon Model - Problems
- Growth and unemployment not better than Nordic
model countries - Low level of labour productivity compared to both
Rhenish and Nordic model countries - Large income inequalities - regionally and across
types of jobs
10Anglo-Saxon Model - Challenges
- Improve labour productivity
- Reduce problems of low income for labour with low
or the wrong skills - Reduce regional inequality
- Keeping up with fast pace of change caused by
technological change and globalisation
11Nordic Model
- National business systems geared towards
globalisation process and development of high
employment (with reformed social benefits
systems) founded on knowledge-based industries,
labour markets geared towards encouraging high
productivity with high wages the Scandinavian
countries and the Netherlands
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13Nordic Model - Benefits
- High growth and low unemployment
- High labour productivity
- High social welfare benefits
14Nordic Model - Problems
- High proportion of GDP is accounted for by the
state - Low proportion of population are economically
activity - Not as attractive as the UK and Ireland for non
EU based inward foreign direct investment
15Nordic Model - Challenges
- Maintaining high proportion of GDP accounted for
by the state - Dealing with low proportion of population that
are economically activity - Creating enough high wage/high productivity jobs
in the face of increasing international
competition
16Rhenish Model
- National business systems concerned to protect
social benefits system (or to have slow pace of
reform of this system) and to protect and
encourage national (European) champions in key
industries, major concerns about the
globalisation process, and strong emphasis on
protecting employment conditions France and to
a lesser extent Germany, Italy and Spain
17Rhenish Model
Slow market based reforms
Business policies geared towards European
champions
Social model conditions determined by strong EU
laws and policies to enhance social cohesion
Increased growth and employment
Economic Stability
Cautious approach to globalisation process
18Rhenish Model - Benefits
- High labour productivity especially France and
Germany - High social welfare benefits
- Some leading international companies VW, EADS,
Siemens, Thales
19Rhenish Model - Problems
- Low growth and high unemployment compared to
Nordic and Anglo-Saxon models - High proportion of GDP is accounted for by the
state - Low proportion of population are economically
active
20Rhenish Model - Problems
- Not as attractive as the UK and Ireland for
non-EU based inward foreign direct investment - Many of the large internationally competitive
companies in France are strongly connected to the
State - For advanced economies have a relatively large
share of GDP in basic manufacturing
21Rhenish Model - Challenges
- Boosting growth and reducing unemployment
- Adjusting to the decline in manufacturing jobs
- Increasing proportion of the population that are
economically active
22Rhenish Model - Challenges
- Maintaining high proportion of GDP accounted for
by the state - Creating enough new jobs in high wage/high
productivity work in the face of increasing
international competition and technological
change
23Emerging Models
- Emerging national business systems with an
evolving orientation towards social benefits
systems and the globalisation process - Challenge what kind of national business system
will help them to catch up to the labour
productivity levels of the richer members of the
EU and to maintain international competitiveness
24Nirvana Model
High welfare benefits
High growth and low unemployment
High productivity
25Nirvana Model - requirements
- Business system which can deliver high
productivity in the face of increasing
international competition and technological
change by overcoming problems of inappropriate
characteristics in labour force, eg low economic
activity, low or the wrong skills, low adjustment
capacity, poor levels of education
26Realistic models
- Countries with high degree of consensus about
social norms and highly educated populations
versions of the Nordic model - Countries with diverse and conflicting views on
social norms and high proportion of unskilled or
wrong skilled labour with high proportion of
poorly educated labour versions of the
Anglo-Saxon model
27Realistic models
- Countries with diverse and conflicting views on
social norms and highly educated populations with
appropriate skills versions of the Rhenish
model - However, it is not clear if even France and
Germany have the conditions necessary to sustain
Rhenish models
28Role of the EU
- Flexible social and economic policies that permit
development of different national business
systems that can tackle the different challenges
that face the member states - A flexible EU with inner-core members in some
areas and peripheral members in many areas - Problems of labour migration within the EU from
low to high income countries
29Role of the EU
- Creation of a nirvana model by strong and uniform
social and economic policies with large scale
transfer of income to help poorer member states
to compete with high social costs - Systems that generate sufficient high wage/high
productivity jobs to finance high social welfare
benefits - A very difficult project to create, implement and
sustain