Policies for Low Wage Employment and Social Exclusion

The last two decades have been a period of significant change in the functioning of European labour markets. Increasing earnings inequalities, as well as growing rates of unemployment have raised concern for those individuals placed at the margin of the labour market and at the bottom end of the earnings distribution, who appear to have been most strongly affected by the changing economic conditions. More flexible employment contracts and working time arrangements, less stringent controls on employers' hiring and firing practices and the associated reduction in the degree of job protection, growing decentralisation of the bargaining process, are some of the facets of the deregulation process that has affected labour markets throughout Europe.

The patterns described above are of crucial importance in the process of European integration and are central to any discussion on policy designs aimed at supporting the increased flexibility and insecurity in working life. The contributions contained in this book address different issues, looking first at the implication for the welfare of the less skilled and the low paid and second trying to investigate to what extent these forms of social exclusion can be tackled by means of appropriate social welfare policies and active labour market intervention.

In this context, it is suggested that minimum wage policies can prove an effective device to provide protection for vulnerable workers and, under certain conditions, may also help reducing poverty and discrimination on the labour market. Tax reductions and different forms of means tested benefits are also considered as an alternative way to alleviate the burden of low pay employment and enhance the living standards of low income working families. Education and training play an important role in the job opportunities people have, such that educational policies as well as re-training schemes can be effectively used as instruments to reduce low wage employment and help people out of low pay. Finally, it is argued that Government policies should aim at expanding demand in those service industries - such as retail trade or personal services - but also try to regulate pay and employment conditions therein.