By Ann Pettifor
Comparing the UK with Germany, Netherlands and Sweden
The Organisation for Economic Cooperation and Development (OECD) brings together 34 member states from the higher income and “emerging” countries. Its website provides useful comparative sets of statistics on a range of indicators relevant to the performance of labour markets and economies. These can be found, updated to 27th September 2011, at:
http://www.oecd.org/document/22/0,3746,en_2649_39023495_43221014_1_1_1_1,00.html#taxes
In view of current political and economic debates on whether the UK’s economic performance is being held back due to excessive employment protection, PRIME has analysed UK employment data in relation to those of three northern European countries whose economies are comparable: Germany, the Netherlands and Sweden.
Here, in summary form, is the evidence drawn from the OECD’s data, and below, we set out our conclusions. In some cases, we have given the average OECD and the USA figures for comparison.
1. Overall employment protection:
Taken from the OECD’s ‘scorecard’, where the lower figure = less protection:
The UK scores 1.1, Germany 2.4, Netherlands 2.1, Sweden 2.
Conclusion: The UK provides far less employment protection than other relatively successful European economies
2. Annual average hours worked 2010:
UK 1647, Germany 1419, Netherlands 1377, Sweden 1624
Conclusion: We work longer hours
3. GDP growth (decline) 2009 and 2010 %:
UK -4.9 +1.3
Germany -4.7 +3.5
Netherlands -3.9 +1.8
Sweden -5.3 +5.3
Conclusion: our economy declined more over the period (and 2011 Eurostat figures show we are lagging further)
4. Employment to population ratio (% of working age population) 2010:
UK 70.3
Germany 71.2
Netherlands 74.7
Sweden 72.7
OECD average 64.6
Conclusion: A little below the others, but above the OECD average
5. Employment growth 2010 %
UK 0.2
Germany 0.5
Netherlands -0.5
Sweden 1.0
Conclusion: employment grew a little in 2010 in the UK, which was better than the Netherlands, worse than Germany and Sweden.
6. Part-time employment as % of total employment 2010:
UK 24.6
Germany 21.7
Netherlands 37.1
Sweden 14.0
USA 13.5
OECD average 16.6
Conclusion: UK is in the middle of the pack, but well above OECD average
7. Wage growth 2010 %
UK -2.0
Germany 0.2
Netherlands -0.4
Sweden 0.2
USA 0.7
OECD average 0.7
Conclusion: the UK’s wages declined more in real terms than the others (two of whom grew)
8. Ratio of minimum wage to median wage 2009:
UK 0.46
Germany (not available)
Netherlands 0.47
Sweden (not available)
OECD average 0.48
Conclusion: the ratio of UK minimum to median wage is near the OECD average
9. Taxes on labour 2010:
UK 32.7
Germany 49.1
Netherlands 38.4
Sweden 42.7
OECD average 34.9
Conclusion: UK labour taxes are lower than the other European countries
10. Unemployment benefits as % of previous earnings 2007:
UK 12.1
Germany 23.7
Netherlands 33.9
Sweden 32.4
USA 13.6
OECD average 24.7
The UK figure is the lowest by a huge margin.
11. Unemployment 2010 %:
UK 7.9
Germany 7.2
Netherlands 4.5
Sweden 8.5
USA 9.8
OECD average 8.5
Conclusion: despite having less employment protection etc., the UK in 2010 had higher unemployment than Germany and the Netherlands (though lower than Sweden that year). By July 2011, according to Eurostat, the UK unemployment rate had grown to be higher than the other 3 EU countries.
Overall conclusions:
- The UK has a much lower level of employment protection than Germany, Netherlands or Sweden, and is next to bottom of the OECD league table (i.e. the least protected).
- The UK has had less GDP growth than the comparators, real wages declined in 2010 more than in the others, and while total employment grew, it was less than 2 out of the other 3.
- Unemployment in 2010 was higher than German and Netherlands but a little lower than Sweden – it is now (late 2011) higher than in all 3 countries
- UK taxes on labour are less than the other countries, and a little below the OECD average
- UK workers worked longer average hours than in the comparator countries.
- We have a greater percentage of part-time workers than Germany or Sweden, or than the OECD average, but lower than the Netherlands
- UK unemployment benefits, compared to previous earnings, are the lowest by far, and only half of the OECD average.
- The UK minimum wage as a ratio of median wage is close to the OECD average.
- There is no economic evidence from the OECD’s statistics to support the thesis that it is excessive employment protection which is damaging the UK’s below-par economic performance.
- The OECD figures tend to support a stronger correlation between low employment protection and the UK’s relatively poor economic performance.
