Unemployment and the Structure of Labour Costs

Abstract

The last ten years have witnessed a dramatic rise in the level of unemployment throughout most of Western Europe. The level of registered unemployment has doubled over the last four years in the United Kingdom and West Germany and this is reflected in most other European nations. Sweden is, however, an exception. Over this period there have been a number of other notable changes in the labour markets of Western Europe and it is the relationship between two distinct areas of such change and the pattern of unemployment which is the concern of this paper. The first such change is the upsurge in what might loosely be termed “employment protection”. This refers to the increased difficulty experienced by employers who wish to reduce the size of their labour force. In particular there has been a series of increases in the period of notice required prior to dismissal, in the compensation payments which must be made to workers who are made redundant and in the legal requirements which must be satisfied before an employee may be dismissed. These changes have been brought about both via new legislation and via the increased attention paid to such matters by Trade Union negotiators. The second major change referred to above has been the increasing recourse by governments to so‐called “special employment measures” which refer among other things to wage subsidies of one kind or another which are introduced in order to reduce unemployment.

Citation

Nickell, S. (1979), "Unemployment and the Structure of Labour Costs", Management Research News, Vol. 2 No. 4, pp. 7-7. https://doi.org/10.1108/eb027738