On Wednesday, May 29 the all-Russian seminar "Mathematical methods of decision analysis in economics, finance and politics" was held.
Speaker: Prof. Dr. Dr. Andranik Tangian (Hans-Böckler-Stiftung and Karlsruhe Institute of Technology)
Title: "Macroeconomic analysis of Flexicurity with Regard to the Crisis"
Speaker: Prof. Dr. Dr. Andranik Tangian (Hans-Böckler-Stiftung and Karlsruhe Institute of Technology)
Title: "Macroeconomic analysis of Flexicurity with Regard to the Crisis"
Abstract
Flexicurity is a part of the European Employment Strategy, its goal is to compensate the current deregulation of the labor market (flexibility) by social protection measures (social security). The report focuses on refuting the promises of the European Commission that flexicurity will contribute to sustainable economic growth and protect the economy from the crisis.
The analysis is carried out using three aggregated indicators for 25 countries: the degree of labor market regulation (legal and factual), social security (general social costs and benefits to the population), and the damage from the crisis (reduction of production, increase in the fiscal deficit, the amount of subsidy crisis and rising unemployment). We have shown empirically that countries with strict labor market regulation is much less affected by the crisis, as well as the countries with developed system of social protection. Apparently, the deregulation of the labor market provokesfirms to choose more risky manufacturing strategy, giving less expensive re-production in the case of strategic mistakes. Redesigning requirescredit, and firms are more dependent on the financial sector and its problems. Tight regulation of the labor market, on the contrary, makes firms to be more cautious and therefore less dependent on the financial turmoil. On the other hand developed social system indirectly shows the involvement of the state to the economy. These countries have an economic "buffer" in the form of government programs that are less susceptible to the wholesituation and have a stabilizing effect on the economy.
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