Over the period under review there has been a significant increase in employment in virtually all European welfare states whereas the new Member States experienced a transformation crisis. Figure 7.16 describes the employment/ population ratios among people in the working-age population. What is striking is, first, the long-term increase in employment in most countries and, second, some persistent differences in the overall share of people in gainful employment across countries and families of welfare states. The convergence over time within the EU is marked. Now both the Anglo-Saxon and the Scandinavian countries have about 75-80 per cent of the working-age population in employment. The same level is also achieved by the Netherlands after an

Employment/population ratio, 1980-2006

Figure 7.16. Employment/population ratio, 1980-2006.

Source: OECD, labourforce statistics.

impressive increase in employment over the last two decades. The other Continental and southern European countries are still behind with employment rates of 60-70 per cent. But even there we can see some progress, in particular in Spain and Italy while France and Germany have been more stagnant.

We know that the response of the Continental and Mediterranean welfare states to the process of economic restructuring in the 1970s and 1980s was aimed at keeping open unemployment low by limiting labour supply with the help of a host of early retirement options. Growing demands on social security led to burgeoning costs to be borne by the labour market. From the middle of the 1980s onwards, employers in Continental welfare states increasingly began using labour-saving technology and shedding less productive employees via the social security system. It was not until the second half of the 1990s that there was a limited increase in the employment rate in the Mediterranean welfare states, which, in fact, have seen some of the biggest employment gains in the EU over the last decade. The Netherlands occupies a comparatively special place because it was the first Continental welfare state with a historically low female employment rate to improve its performance, trending towards Scandinavian levels (Nelson and Stephens, 2008).

The general employment rate hides important differences across countries. It is better to look at full-time equivalent employment rates, which measure employment in terms of hours worked. What stands out here is the much lower employment rate for the Netherlands compared to Austria, Sweden, and the UK (Fig. 7.17). This is explained by lower average working hours and the

Full-time equivalents employment, 2000-7. Source

Figure 7.17. Full-time equivalents employment, 2000-7. Source: Eurostat.

high levels of part-time employment among women in the Netherlands. In contrast, the scores for Austria, Portugal, and the Czech Republic are quite high if the full-time equivalent employment rates are considered, which can be partly explained by low levels of part-time employment in the new Member States.

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