Adri Barranco Fernndez NIA: 158498

Labour Market in Europe North and South: the cases of Finland and Italy
1. Introduction
The European Union since its formation in 1958 under the Treaty of Rome, which
created the European Economic Union, has become one of the largest customs
unions of the world and with the introduction of the euro on 1999 preceded by the
Maastricht Treaty it has become one of the largest currency unions too.
The fact that the EU has this quite large range means that it comprises many types
of countries, having entered in the union as long as they had met the criteria
included in the acquis communitaire, which serves as a pre entry test for the aspiring
countries before the voting is done by the member states. (European Commission,
2012)
Having that amount of member states also means a lot of different cultures,
organization models, economic, and policy models coexist to name a few. The
differences are so great that there are even country typologies that refer to the model
they follow. In Europe we have a number of models which varies depending on the
subject Im talking about but it usually goes like this: the Nordic model, which applies
to the countries in that zone such as Sweden, Denmark or Finland. The Continental
model, which applies to countries such as Germany and finally the Southern
European model, which applies to countries such as Spain, Italy or Greece.
The fact that we have this disparity of models and countries motivates the effort of
trying to compare the statistics regarding one of the key factors of the recent times,
unemployment.
The economic crisis which struck the world in 2008 has had a noticeable impact on
the employment rates of many countries, making the unemployment rates rise during
these past years. Therefore Im going to compare how the southern European and
the Nordic model have withstood to the effects of this economic crisis reflected on
their unemployment rates and how they had been evolving in the previous years
before it, using statistical information from two countries which represent two of the
models. Also, added to this employment rates comparison Im going to compare the
labour market policies these countries have created in order to cope with it,
expressed in terms of GDP percentage addressed to them and the number of
eligible individuals who benefit from these.
The countries selected for this analysis are Finland and Italy, as they represent this
contrast explained before. Along with these two countries Im going to bring another
comparison element, the Euro Area 17, which comprises 17 EU members that use
the European currency, the Euro. The countries represented in this group are:
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Greece, Slovenia, Cyprus, Malta, Slovakia and
Estonia. With this last element we will be able to compare the two selected countries
to somewhat of a mean of countries included in the European Union not necessarily
being the EU itself.

2. Employment and unemployment characteristics

2.1 Evolution of unemployment rate in the last two decades

(Source: Eurostat)
Looking at the unemployment rates in the last 20 decades we can notice a few
things. First we can see that the rates for all these 3 items stay between
approximately the 15% and the 5%. The classification would be, going from less to
more unemployment: Italy, the Euro Area 17 and Finland with all of them following
the same pattern, going down from the mid-nineties until 2007-2008 approximately.
From that point all of the start to grow, with Italy having the more accentuated from
all 3, followed by the EA 17 and then Finland, which goes up in a slower way.
Looking at the last registers of the Eurostat, unemployment in both Italy and the EA
starts to decrease starting in 2013 while in Finland keeps going up but in a moderate
way.
One thing thats actually surprising about this graphic is the fact that of all the
unemployment variations, Finland has the largest one, going from a 15,4 % down to
a 6,4% and then reaching a 9,4% after, although this has an explanation because
Finland during the 90s was immersed in a financial crisis which affected the Nordic
countries, especially the Finnish one, where unemployment skyrocketed from a 3%
approximately in 1990 to an almost 17% in 1993 (Honkapohja, 2009).
Italy has went from an approximate 11% rate to a surprising 6% in 2007, being the
lowest of all three, but then reaching a 13% in the subsequent years. If a tendency
was to be described about the Euro Area, we can say that it follows the same pattern
as Italy but in a less accentuated manner, starting at a 10,7% rate, going down until
2001 where it remains stable until 2005, where it goes down again before 2007.
From this point it starts to grow until 2014, where it starts to decrease moderately

2.2. Evolution of labour market activity by gender

2.2.1. By country
Finland

(Source: Eurostat)
Italy

(Source: Eurostat)

Euro Area 17

(Source: Eurostat)
Another thing that can be considered for comparison while checking the employment
statistics is the evolution of labour market activity by gender. In these 3 graphics
which illustrate the evolution of the labour market we can draw some conclusions.
First of all, all three objects demonstrate a higher proportion of males that are
employed compared to their total than females, although there are two clear
patterns.
The first one would be the Finnish one, where theres a pretty low difference between
the two genders, about 7% and it moves always in the same way (if employment in
one of them rises, the other one rises too). Apart from that, the path that follows
tends to converge, as data from 2014 illustrates, theres only a 2% gap between
males and females.
The second pattern would be the one followed by Italy and the EA 17. In this one
theres a pretty large difference in terms of employment by gender, where males
working surpass females working by quite a big gap and it evolves in a more steady
way compared to Finland. In the case of Italy theres a 30% difference in 1997 that
tends converge up to a 20% in 2014,, and in the case of the EA 17 a 25% that
shrinks to an approximate 12% in 2014.

2.2.2 By gender
Males

(Source: Eurostat)
If we look at the % of the total males in each group we can see clearly that both
Finland and the EA 17 have the highest percentages which go between 72 and 78%,
with EA having the more stable pattern. Italy has the lowest rate and the less stable
one, since it goes from 72% up to a 75% in 2007, starting to abruptly decrease to a
69% in the subsequent years.
Females

(Source: Eurostat)

If we take a look into the females employed in each group they all follow the same
pattern across the years demonstrating a positive tendency, with Finland being the
country with the most % of females employed reaching up to 72%, followed by the
EA which reaches the 62% and in the last place Italy, with a mere 50% . The country
that has the largest variation would the EA17, which presents an increment of 12% in
17 years, followed by Italy with 10% and in the last place Finland with about 7%.
2.3 Share of long-term unemployment
-By country

(Source: Eurostat)

(Source: Eurostat)

EA 17

(Source: Eurostat)
If we take into account the long-term unemployment, which is described as people
who have been unemployed for 12 months or more (Eurostat, 2015), there is a
different model for each one of the studied countries. In a more general way we can
see that Finland has the lowest of all three, followed by the EA 17 and Italy, which
has the largest one In the case of Finland we have a decreasing trend, which goes
from 5 for both genders, with a higher proportion of males that accentuates in the
first years after the economic crisis, staying about 1% above the females long term
unemployed. In the case of Italy we have a higher level of long term unemployment
for both genres, being in this case in reverse, females with a larger %. Theres a 4
point discrepancy between males and females that goes in a downward and
converging trend (females approaching male rates) for 10 years, and starting on
2007, the number starts to increase almost reaching the starting numbers but with a
lesser discrepancy between genders, of a 2%.
Finally, taking a look into the conglomerate of the EA 17, it has a lesser gender
discrepancy than Italy, of a 2, 5% in favor of males. This one has the most
accentuated tendency changes of all three, having a massive decrease while both
genders convey up until 2008 where they climb up abruptly with almost no difference
between genders.

2.4 Analysis of unemployment by gender

Finland

(Source: Eurostat)
Italy

(Source: Eurostat)
EA 17

(Source: Eurostat)

By analysing the unemployment (not the long term, just plain unemployment) in
terms of gender, because by ethnicity was not possible to find regarding these 2
countries we can draw some conclusions. Both three objects have quite a close
similarity compared with the data for long term unemployment but with higher
percentages and variation, all of them showing a decrease across the years and
then increasing in the second half of the 2000s decade with differences in the way
they increase. In terms of unemployment equality we have two tendencies, the
Finnish one, which has a more equal share of unemployment, having both genders
similar rates and even the males surpassing the males as the effect of the 2008
crisis. Regarding the other two, there seems to be a larger gap between males and
females in favour of males (more females unemployed) which gets reduced as the
years pass, almost converging (in the case of the EA17)
2.5 Unemployment by age
Below 25 years

(Source: Eurostat)
If we take a look into the youth unemployment rate it remains pretty similar across
the three objects, with Italy showing the worst results and Finland being close to the
EA17. This difference increases with the arrival of the 2008 crisis, which makes the
Italys rate skyrocket into an almost 44 % from a 26% in 4 years. For the other two
the crisis impact on the youth labour market isnt that significant at all.
Between 25 and 74

(Source: Eurostat)

Now focusing on the unemployment between 25 and 74, what we see is a much less
lower unemployment rate in all 3 items with pretty similar rates all among them. The
unemployment rates for older population vary from 14% to almost 4%, being Finland
the one that has the largest variation across the years and follows a unique pattern
compared to the other two, which have a similar pattern between them too. The first
one has a large decrease tendency with a little increase in the last years. The other
two have a moderate decrease across the years with a more accentuated increase
from 2008 onwards. The explanation for this may be, in the case of Finland, the
unemployment rate decreasing showing signs of recuperation from the Nordic
financial crisis and in the case of the other two, the effect of the 2008 crisis.
3. Policies aimed at coping with unemployment
After having seen the main data available for the employment related concepts, Im
going to take a look into the public policies that have been made to cope with
unemployment. These policies can be divided into active labour market policies and
passive labour market policies in terms of the way that they cope with
unemployment.
To discuss the distribution of the policies used in both countries Im going to see
what % of the GDP is spent on them by type and the % of individuals that receive
them of all the eligible ones.
To make the comparison Im going to use the % of GDP and the % of eligible
individuals assigned to passive policies and the % assigned to most part of the
active policies except for the Public Employment Service organization and its
spending because only data for that was available in all the areas ((both in spending
and individuals assigned) with enough evolution margin and the percentage that
PES represents does not make quite enough of an impact (about a 0, 1 %). Also the
EA17 could not be included in this analysis because the data was not available for
that object and trying to artificially reproduce it by making the means of all the
countries included in that group because theres so much data missing in between
countries.
While arranging the data about both countries, Ive decided to take two starting
points because of the availability of the information. In terms of % GDP the starting
point is 1990 and in terms of % of the labour force is 1998. I couldve taken 1998 for
both indicators but I thought that, after looking at the whole evolution, it could be
more interesting to see the tendency change across the nineties in both countries.

3.1 % of the GDP spending

Finland

(Source: OECD)
Italy

(Source: OECD)
As we can see from both graphics, theres a signficant difference between Finland
and Italy in terms of GDP spending for labour market policies. The Nordic country
has values between 5 and 1 % while the Southern European one goes between
0,2% and 1,6%. Each country has a pretty clear tendency of GDP spending: in
Finland there seems to be kind of a boomerang effect, where, in 1990 both types of
policy have equal spending. Then in the subsequent years the passive rate goes up
almost reaching the 5% while the active measures remain constant. Finally, as the
years pass the passive policies rate tends to equal the active one. This can be
attributed to the financial crisis that affected the northern countries for most part of
the nineties.

If we take a look into Italy we can notice a totally different trend. During the nineties
theres a noticeable gap between passive and active measures, with the first ones
being on top. This gap is reduced in the subsequent years as the passive measures
go down while the active ones go up at the same time, getting to the point where
from 2001 to 2003 approximately the active measures surpass the passive ones.
This doesnt remain for too long because where it starts to reverse and keeps
endingwith an even larger difference between passive and active measures. The last
pheneomena can be explained by the increase of unemployed population resulting
from the 2008 crisis and the need for more unemployed benefits.
3.2. % of the eligible labour force
Finland

(Source: OECD)
Italy

(Source: OECD)

Taking a look now at the percentage of the labour force benefited from the active and
passive market policies we can notice a few things. First, as the previous tables
(GDP) suggested, theres a larger percentage of eligible labour force covered by
these policies in Finland (reaching the 16% in the passive measures, 21% for both at
one point) compared to Italy (maximum reach to a 14%). In Finland labour force
benefiting from active measures has a constant rate, whereas the ones benefiting
from the passive measures keep lowering. In the case of Italy, we can find something
remarkable, which is that theres actually a larger amount of people benefiting from
active labour policies than people benefiting from passive ones, even though at the
end of the data available passive measures take the lead.
4. Conclusion
After analysing these two countries along with a group of countries where these two
belong we have gotten some points about them. First, Finland has showed a unique
pattern which doesnt follow the trend of the Euro Area in terms of both labour market
activity and unemployment (short and long term unemployment).Apart from this we
can clearly see much more equal rates in terms of gender in all areas. In terms of
labour market policies, the Nordic country has shown an effort for equalizing both
types.
For Italy and the Euro Area 17 we can see that they have pretty similar tendencies
across all levels, with Italy being below the EA. These two show a noticeable gap in
terms of gender resulting in females being the ones getting the worse from all
situations, even though this gap has been reduced in the last few years. In terms of
labour market policies, Italy has shown what it seems to be an effort to invest more
GDP share into active market policies (as shown from 2001 to 2003) but in the end
the gap has expanded again in favour of passive market policies, getting to a 1.3%
difference in spending.
Bibliography
- European Commission (2012, September 7). Acquis. Retrieved from
http://ec.europa.eu/enlargement/policy/glossary/terms/acquis_en.htm
- Eurostat (2016) Employment (main characteristics and rates) - annual
averages [Table]. Retrieved from http://ec.europa.eu/eurostat/web/main/home
- Eurostat (2016) Unemployment rate by sex and age - annual average, %
[Table]. Retrieved from http://ec.europa.eu/eurostat/web/main/home
- Eurostat (2016) Long-term unemployment by sex - annual average, % [Table].
Retrieved from http://ec.europa.eu/eurostat/web/main/home
- Eurostat (2015, March 27) Glossary: Long-term unemployment. Retrieved
from http://ec.europa.eu/eurostat/statisticsexplained/index.php/Glossary:Long-term_unemployment
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Honkapohja S. (2009) The 1990s financial crises in Nordic countries [PDF

file]
Retrieved
from
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kapohja.pdf

OECD (2015) Public expenditure and participant stocks on LMP [Table]

Retrieved from http://www.oecd.org/