“Job Quality, Labour Market Performance and Well-Being”_Hijzen

EC/OECD seminar, Brussels,

27-28 November 2014

HOW GOOD IS YOUR JOB?

MEASURING AND ASSESSING JOB

QUALITY

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• Why does job quality matter?

– A key element of individual well-being (i.e. an end in its own right)

– Determines labour force participation, worker commitment and productivity (i.e. a means to greater economic performance)

• Despite the importance of job quality, it has received limited attention in the international policy debate

– Assessment of policies and institutions has tended to focus on their impact on job quantity (e.g. Reassessed Jobs Strategy, Europe 2020)

– Need to assess labour market performance in terms of more and better jobs

• A major obstacle to giving more prominence to job quality has been the difficulties of defining and measuring it

– Multi-dimensional nature of job quality

– But also requires addressing many other difficult issues

Job quality, labour market

performance and well-being

3

• Growing momentum with proliferation of initiatives on job quality and the measurement of well being

– EC (2001), Eurofound, ILO (2012), EMCO (2013), UNECE (2014) (see Table 1 of the hand-out for an overview)

– Similar trend for quest of going beyond GDP by focusing on well being (Stiglitz Commission, 2009; OECD How is Life?, 2011)

• Propose a new conceptual and operational framework to measure

and assess job quality in OECD countries − Focus on worker well-being building on Stiglitz et al. − Favour actionability over comprehensiveness − Improve and extend over time

• Provide an overview of job quality across OECD countries and

socio-economic groups

How good is your job?

Measuring and assessing job quality

How good is your job?

1. A framework for measuring and

assessing job quality

Income

Jobs

Housing

Personal activities incl. work

Insecurity, economic and physical

Social connections and relationships

Subjective well-being

Political voice and governance

Health Health

Education Education

Work-life balance

Civic engagement

Social relationships

Work environment

Labour market security Personal security

Earnings Material living

conditions

Well-being OECD

Job quality OECD

Well-being Stiglitz, Sen & Fitoussi

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Assessing economic and labour

market performance

Labour market

security

Quality of the

work environment

Well-being

Labour market performance

Earnings

quality

Employment /

unemployment

Job quantity Job quality

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• Focus on outcomes experienced by workers

– Consistent with well-being perspective

– Allows evaluating the role of policies and institutions

• Concentrate on individual workers

– To take account of the distribution of job quality outcomes

– Allows assessing to what extent poor outcomes on one dimensions are associated with poor outcomes on another

• Favours objective features of job quality

– Ensures better comparability of outcomes across countries and time

Principles for the

measurement of job quality

How good is your job?

2.1 Earnings quality

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• Life satisfaction increases with the level of earnings

– Holds both across countries as well as between persons within countries

• For a given level of average earnings, overall well-being tends to be higher the more equal its distribution

– Life satisfaction rises at a decreasing rate with earnings (“saturation effect”)

– People tend to display an intrinsic dislike of high inequality in society (“inequality aversion”)

Earnings and subjective well-being

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• At the individual level

– Gross versus net: use gross earnings because of data constraints, net earnings more relevant for well-being

– Frequency: hourly wage not affected by working time (job quantity )

• At the aggregate level

– Make use of general means framework (Atkinson, 1970)

– Allows giving more weight to the bottom of the distribution, thereby taking account of both the level and its distribution

– Assume “moderate” degree of inequality aversion (weight of 2/3 on 1st tercile, ¼ on 2nd tercile and remainder on 3rd decile)

Measuring earnings quality

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Earnings quality across countries

Gross hourly earnings in US dollars, PPPs, 2010

How good is your job?

2.1 Earnings quality

2.2 Labour market security

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Measuring labour market security:

Unemployment risk and insurance

• Existing frameworks typically focus on job security using indirect proxies such as incidence of temporary or short-tenured workers

• Definition of labour market security effectively assumes that the cost

of unemployment is limited to the associated loss of income

Unemployment risk

- probability of becoming unemployed - expected duration of unemployment -> measured using data on unemployment inflows and outflows

Effective unemployment insurance

- accessibility of benefits - their generosity and maximum duration - the progressivity of the tax system ->use OECD benefit-recipiency database and OECD taxes-benefits models

Expected cost of unemployment

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Labour market insecurity

in OECD countries

Share of previous earnings, 2010

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Unemployment risk and insurance have

important implications for well being

Estimated effects of unemployment risk on life satisfaction and the compensating effects of effective unemployment insurance.

How good is your job?

2.1 Earnings quality

2.2 Labour market security

2.3 Quality of the work environment

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• Depends on balance between job demands which impair health and job resources which mitigate their effects

• Either use EWCS for 2010 or combine EWCS with ISSP 2005 to expand coverage to non-European OECD countries

Measuring quality of the working environment:

Job demands, job resources and job strain

Job demands

- time pressure - physical health risks - (workplace intimidation)

Job resources

- work autonomy & learning - good relationships with colleagues - (good management practices)

Index of job strain

combination of excessive job demands & insufficient resources that increases risk of health impairment

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Quality of the working environment

in OECD countries

incidence of job strain, 2005

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Job strain and work-related health

0

10

20

30

40

50

60

Workers in strainedjobs

Other workers

A. Work reporting that work impairs health

0

2

4

6

8

10

12

Workers in strainedjobs

Other workers

B. Number of sick leave days (over the past year)

0

2

4

6

8

10

Workers in strainedjobs

Other workers

C. Workers not at all satisfied with working conditions

0

10

20

30

40

Workers in strainedjobs

Other workers

D. Workers not at alll satisfied with work-life balance

How good is your job?

3. A statistical portrait of job quality

in OECD countries

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How does job quality compare

across countries?

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How do job quality and job quantity

relate across countries?

Country rankings (1-32) from highest to lowest performance

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• Youth and low-skilled not only tend to have relatively low employment rates but also weak job quality outcomes

– Education is positively associated with job quality in all three dimensions.

– Age is associated with higher earnings quality and better QWE. Labour market security is highest for prime-age workers (30-49).

– Women have lower earnings, but have otherwise similar outcomes to men.

• Non-standard work tends to be associated with weaker job quality outcomes but not necessarily all

– Temporary work is not only negatively associated with earnings quality and labour market security but also with QWE.

– Part-time work is associated with lower earnings quality (in terms of hourly wages) and labour market security, while QWE tends to be higher.

Which workers hold quality jobs?

How good is your job?

4. Wrap up

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• New conceptual and operational framework to measure based on three broad and complementary dimensions

• Allows for more comprehensive assessment of labour market performance and the role of policies and institutions

– Fuller assessment effects of policies and institutions

– Reinforce attention to certain areas in debate on labour market performance (e.g. preventive health systems)

• Actual implementation and measurement flexible and can be adapted to one’s preferences or the specific context

Concluding remarks

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• For further information on OECD work on job quality please contact:

– Sandrine Cazes (STD): [email protected]

– Alexander Hijzen (ELS): [email protected]

Thank you!