Academic literature on the topic 'Precarious employment – European Union countries'

It is widely recognized that achieving highly productive employment is a serious challenge facing inclusive and sustainable development. In this context, the aim of this article was to highlight the main characteristics and mechanisms of productive employment, focusing on the interrelationships between productive employment, and inclusive and sustainable development in European Union countries, during the recent economic crisis and recovery period (2007–2016). The results of the correlation and regression analysis suggest that the high level of inclusive and sustainable development in some European Union countries can be mainly explained by high labor productivity, an efficient sectoral structure of employment, a low level of vulnerable and precarious employment, and low working poverty. Moreover, the results of the principal component analysis and cluster analysis show that there are common features and differences between the European Union member states in terms of their interrelationship between productive employment, and inclusive and sustainable development, which emphasizes the need to take specific actions to transform unproductive employment into productive employment, especially in southern countries and some central and eastern European countries, so that productive employment will be the driving force for development.

AbstractBackgroundThe objective of this study is to describe the prevalence of precarious employment in the European Union (EU) using a multidimensional approach, 8 years into the economic crisis (2014).MethodsWe use data from the Flash Eurobarometer 398 among salaried workers (n = 7702). We calculated the proportion and its 95% confidence intervals (CI 95%) for each of the precarious employment dimensions (not having the ability to exercise rights, vulnerability, disempowerment and temporariness), the prevalence of precarious employment (presenting at least one dimension) and the proportion of workers presenting one, two, three or four dimensions.ResultsTwo out of three workers had a precarious employment. The prevalence of precariousness was higher in Eastern (72.64%; CI 95%: 61.78; 81.34) than in Nordic European countries (51.17%; CI 95%: 44.30; 58.00). The most prevalent dimension was not having the ability to exercise rights (42.39%).ConclusionsPrecarious employment is an important social determinant of health. Therefore, the EU policy-makers should take into consideration the new forms of employment and legislate accordingly.

Purpose – The purpose of this paper is to investigate the extent and determinants of the so-called precarious employment across Europe and using different measures and based on individual’s self-assessment. Design/methodology/approach – Data on over two million workers across Europe (EU-15) from the European Union Labour Force Survey are utilised and a Heckman selection approach is adopted. Findings – About one tenth of the total European workforce is in employment relationships that could be related to precariousness. The sources of precariousness are mainly involuntary part-time and temporary work. Less prominent as a source of precariousness is job insecurity related to fear of job loss. Vulnerable groups are found to have a higher risk of precariousness while significant country variations indicate that precariousness cannot be examined in isolation of the national context. Finally, signals of previous employment inability, such as lack of past working experience, as well as the state of labour market significantly increase the risk of precarious work. Originality/value – The present study utilises a large-scale survey in order to investigate the incidence of precarious employment in a harmonised way and produce results that are comparable across EU-15 countries.

So-called bogus – or false – self-employment has been increasingly highlighted as a problem within the European Union (EU), especially since the first eastern expansion in 2004. Although the concept is not fully clear in legal terms, a common denominator of most definitions is that bogus self-employment can be seen as ‘disguised employment’, occurring when someone who has an employee status in practice is not classified as an employee, in order to hide the actual legal status and to avoid costs such as taxes and social security contributions. In the light of different welfare systems, industrial relations and EU legislation, this article discusses this issue, drawing empirically on findings from a project about precarious employment in twelve EU countries. Although there are some fairly strict definitions of the ‘employee concept’ within the EU, the difficulties of identifying the employer leave the bogus self-employed in a legal limbo. No European Social Model has curtailed this problem, despite an expressed desire to address all aspects of precarious work. However, the inclusion of all ‘self-employed’ workers within social insurance systems and workers with an employee status in practice seems possible also under existing EU regulations. It is rather a matter of goodwill and the resources to scrutinize the terms and conditions of employment.

Ιn the last decade, there has been a widespread expansion of both precarious work and precarious forms of employment (such as temporary and low-qualified jobs, seasonal and part-time jobs etc.), in which a growing share of young people work. The impact of precarious work on young people is likely to be permanent, while it seems to affect (even over-determine) their life courses. Non-smooth and early transitions into labour market are very likely to worsen progressively their long-term life chances (Lodovici & Semenza, 2012: 7). Undoubtedly, the long-lasting global economic Crisis and the subsequent Recession, has heavily affected the state of play in the labour market worldwide, provoking severe modifications both in the field of employment and countries’ social cohesion. Based on the above mentioned, the paper deals with precarious work in general, while it emphasizes precarious work among youth. It initially captures, briefly, the state of play in terms of the impact of the Crisis on the widening of the phenomenon of precarious work and then it focuses on theoretical insights and critical conceptual definitions concerning precariousness in the labour market. Further, based on secondary quantitative -data analysis, it analyses the key- parameters and facets of precarious work (focusing on youth) in the European Union and, mainly, in Greece. Additionally, it briefly presents parameters of the impact of the COVID-19 pandemic on precariousness in Greece. Finally, the paper explores the correlation between precarious work and social vulnerability, especially among young people. The present paper is based on an ongoing Research Project. More specifically, this research is co-financed by Greece and the European Union (European Social Fund- ESF) through the Operational Programme «Human Resources Development, Education and Lifelong Learning 2014-2020» in the context of the project “Precarious Work and Youth in today’s Greece: secondary quantitative analysis, qualitative filed research and research-based policy proposals” (MIS 5048510).

Is the middle class shrinking? This article contributes to the debate on job polarisation in Europe. Based on data from the European Union Labour Force Survey (EU-LFS) and looking at 12 European countries, it shows that there is an evident trend towards job polarisation. While this polarisation takes various forms, it is clearly the highest- and lowest-skilled jobs that have increased most rapidly among the active population over the past 20 years, to the detriment of middle-skilled jobs. The article then goes on to demonstrate that polarisation also exists when it comes to working conditions insofar as the lowest-skilled jobs are also where the most precarious employment conditions are found. Conversely, the remaining middle-skilled jobs are relatively shielded from this decline in working conditions.

This article explores the changing focus of collective bargaining within the context of the global drive for competition. The first section describes how the main items on the agenda for collective bargaining have shifted from income distribution to means of promoting and protecting employment and competitiveness, and explains how mass unemployment and precarious employment have pushed employment security to the top of the collective bargaining agenda. Technological change, the increasing globalisation of the economy, the formation of regional economic groupings, and the intensification of competition between firms in the product market have all contributed to the pressure on collective bargaining institutions to improve competitiveness. The second section examines innovative approaches to dealing with the issues of employment protection, creation and competitiveness by highlighting the collective bargaining experiences of a number of countries outside of the European Union.

AbstractThe rise in zero hours contracts in liberal market economies (LMEs) has recently received much attention with calls for regulation to protect workers. LMEs typically adopt flexible labour market policies that are less regulated than coordinated market economies (CMEs) as a competitive advantage. In this paper we examine nuanced differences in the nature and regulation of zero hours work in the United Kingdom (UK) and Ireland. With an increased diffusion of zero hours work in both countries, we examine the different responses taken by these similar LMEs to this contemporary employment issue. We examine whether, as expected in an LME context, there is weak regulation in both countries and the factors influencing this. We find subtle but important differences between regulations of zero hours contracts. We conclude by discussing the possible implications of the UK’s exit from the European Union (EU) (Brexit) for the regulation of precarious work.

Purpose The purpose of this paper is to investigate the cases of Bangladeshi, Filipina, Nigerian, Palestinian and Pakistani migrant workers and how the frame of their work and employment in precarious, low-status/low-wage jobs affects their perceptions and practices regarding health and access to healthcare services. Design/methodology/approach Using qualitative research methodology, the analysis via in-depth interviews focuses on male Bangladeshi, Nigerian, Pakistani and Palestinian unskilled manual and textile laborers as well as street vendors, and female Filipina live-in domestic workers. Findings Migrants are entrapped in a context of isolative and exploitative working conditions, i.e., in unskilled labor, textile work, street-vending, personal services, care and domestic work, which lead them to adopt a self-perception in which healthcare and social protection are not a priority. Social implications Throughout the paper it has become clear that these precarious low-status/low-wage jobs have an important underside effect on migrants’ lives, intensifying labor and health instability and exposing migrants to employment-generating activities that do not guarantee health safety. In Greek society, the impact of migration on public health is characterized by many as a “time bomb ready to explode,” especially in urban centers. Meanwhile, the economy and particularly the informal sector of the labor market is benefiting from migrant workers. More research is needed as this mode of exploitative labor and precarious employment needs to be adequately addressed to mitigate barriers in the access of labor and healthcare rights. Originality/value Via its contribution to the sociology of migration with particular emphasis on labor healthcare, the paper provides evidence that due to their concentration in precarious, low-status/low-wage jobs migrant workers have very limited access to healthcare services. The removal of inequalities and discrimination against migrant workers in accessing healthcare services and medical care is a challenge for South European Union countries and particularly for Greece. However, in spite of this, there is no uniform policy in the management of migrants with respect to their access to health services. The paper will aid debates between policy makers and academics working on migration and inequalities due to the division of labor and health disparities, will contribute to the understanding of the perils attached to precarious, low-status/low-wage jobs and in addressing health inequalities effectively.

The main purpose of the paper is to consider the impact of Covid-19 pandemic on the situation of youth in chosen countries of the European Union in the years 2009–2021. The study area includes four countries: Poland, Germany, Spain and France. The structure of the paper is following. At first, the concepts of precarity and labour market theories are presented. Then the statistical analysis of the situation of young people in Polish, German, Spanish and French labour markets is conducted to assess the economic position of youth in the labour market in the aspect of unemployment and to scrutinise temporary and precarious employment among youth. The principal research interest includes the impact of the pandemic on the situation of youth in the labour market. The conclusion is presented at the end of the paper. The article uses the methods of descriptive statistics and simple statistical measures describing the dynamics of studied phenomena. Main conclusion of the paper is that the labour market in the pandemic era has become hugely challenging for youth. They often work in crisis-sensitive sectors and workplaces. As a result, young people experience increased job insecurity, relatively higher unemployment rate and worse economic conditions compared to total population in the labour market. Due to the results of our analysis implementing the dual education system at the macro level is the strongly recommended solution for improving the situation of youth in the labour market.

L'emploi informel est devenu un sérieux défi pour l'économie ukrainienne et des pays en transition au cours de l'adaptation aux conditions du marché. La tendance du nombre de travailleurs qui participent au secteur informel est en hausse depuis les dernières années. Dans mes recherches, je vais présenter l'état actuel de l'emploi informel en Ukraine et les pays en transition. Une attention particulière est accordée à la répartition du travail entre les différentes catégories de population, en divisant les individus en cinq catégories (employés formels, employés informels, travailleurs indépendants formels, travailleurs indépendants informels et chômeurs) selon la définition de l'emploi informel de l'OIT. Nous examinons le marché du travail en utilisant les données de Ukrainian Longitudinal Monitoring Survey pour l'Ukraine et Survey on Living and Income Conditions pour les pays en transition et nous élaborons la fonction des gains du capital humain pour le marché du travail en appliquant la fonction de répartition des gains de Mincer, afin d'étudier les facteurs qui déterminent les revenus et le choix de l'emploi de l'individu en Ukraine et les pays en transition
Informal employment became a serious challenge for the Ukrainian economy and economy of transition countries during the adjustment to market conditions. Trends of the number of workers participating in the informal sector have been rising for the last years. In my research I will present the current state of informal employment of Ukraine and transition countries. Detailed attention is paid to labour distribution across different population categories by dividing the individuals into five categories (formal employee, informal employee, formal self-employed, informal self-employed and unemployed) following the definition of informal employment from the ILO. We examine labour market using the data of the Ukrainian Longitudinal Monitoring Survey for Ukraine and the Survey on Living and Income Conditions for transition countries and we design human capital earnings function for labour market by applying Mincer earnings distribution function in order to investigate the factors that determine the individual’s earnings and choice of the employment status both for Ukraine and transition countries

Defence date: 14 December 2007
Examining board: Professor Colin Crouch, University of Warwick (EUI Supervisor); Professor Ramón Ramos Torre, Universidad Complutense; Professor Martin Rhodes, University of Denver; Professor Jelle Visser, Universiteit van Amsterdam
PDF of thesis uploaded from the Library digital archive of EUI PhD theses
A large part of the literature on part-time employment stresses that this form of employment contract is the result of employers’ strategies and female employees who need to reconcile work and family life. However, the growth in the number of employees sharing employment and other paid or unpaid interests expands the range and significance of working-time issues. This dissertation claims that where regulation and implementation of working-time transitions are favourable to part-time employment, part-time is likely to expand to more diverse categories of workers than those for whom it was originally intended ( i.e. mothers with caring responsibilities). The research follows a case-oriented comparative approach that draws on documentary information and a total of 48 in-depth interviews with actors’ representatives at three levels: national, sector (education and local government) and organizational, in the UK, the Netherlands and Spain. Initiated in different moments in time, the regulation of working-time transitions appears to follow a similar staged path in the three countries, although the wider institutional context affecting part-time and the active support of main actors varies for each country, especially at the organizational level. In the Dutch case, part-time regulation started off as a mechanism to enable the employment of women with caring responsibilities and, from there, it evolved towards a wider understanding of workingtime flexibility, extending the right to work part-time to other categories of employees. Given the pioneering role of the Netherlands in this area, it could be argued that both the UK and Spain have been following the Dutch example although with different degrees of success. In the Netherlands, after two decades of active support to part-time, there is still a big gender gap among part-timers, and in many sectors and occupations employees face difficulties to change their working hours; still, the general trend seems to be that access to part-time is becoming easier at more sector and occupational levels, in a context where organizations, already facing short full-time working weeks and high percentages of part-time, have been learning to decouple business hours from the different duration of the employees’ shifts. The need to design clear-cut coordination mechanisms that guarantee the steadiness of the service and the 'standardisation' of handing-over procedures, have helped to accept a variety of working-time arrangements. This capacity to dissociate organisations’ operative time from employees’ working hours is also present in British and Spanish 24-hour services, what has favoured exceptional good part-time jobs. However, the political efforts to promote part-time in Spain and the UK are confronted with serious obstacles, their segmented labour forces among them. The long-hours culture in both Spain and the UK, together with the high proportion of temporary contracts in the Spanish case, are the most visible signs of the structural difficulties these two countries face to achieve working-time flexi-curity. In the three countries, there are no clear links between long hours and productivity levels, and the processess that lead to more transparent assessments of work performance seem to facilitate working-time flexibility beyond standard full-time employment contracts. Certainly, different commitments and compromises need to be achieved between conflicting demands and interests about how employees use their own time, but this thesis argues that part-time may help to soften the conflicts between the specialization and hierarchy requirements of the social division of labour and individuals’ time-use autonomy.

Award date: 1 December 2005
Supervisor: M. A. Moreau
In this thesis I propose to examine the effectiveness of the non-discrimination legislative framework now in place at the European level as a tool for achieving fairness and a decent standard of living for people with disabilities. With this aim in mind, the first section of the thesis will examine what factors led the Union to frame its work in the promotion of disability rights and how current anti-discrimination legislation emerged as a result. Section two goes on to examine the relationship between equality and disability and how the notion of equality can be applied to disability discrimination. Section three is dedicated to an analysis of the Framework Directive and its effectiveness in ensuring protection and rights for people with disabilities in the labour market. Finally section four examines the potential of the most innovative part of the Directive for people with disabilities, the concept of reasonable accommodation, which has been introduced to EU law for the first time by Article 5 of the Directive.

The thesis investigates the role of structural rigidities in recent labour market performances in Europe through various and complementary angles in five essays. By structural rigidities, we mean a lasting feature caused by a set of institutions, which prevents a market from operating efficiently. The approach is essentially empirical and macro-economic, while the scope of the analysis is definitely European, which is technically reflected in the use of either euro area aggregates or panels and cross-sections of European countries.
Doctorat en Sciences économiques et de gestion
info:eu-repo/semantics/nonPublished

This thesis focuses on the industry wage differentials, rent-sharing and the gender wage gap. I empirically investigate: i) the interaction between inter-industry wage differentials and the gender wage gap in six European countries, ii) how rent sharing interacts with the gender wage gap in the Belgian private sector and iii) the existence of inter-industry wage differentials in Belgium, through the unobserved ability hypothesis.

The first chapter is devoted to the analysis of the interaction between inter-industry wage differentials and the gender wage gap in six European countries, i.e. Belgium, Denmark, Ireland, Italy, Spain, and the U.K. To do so, we have relied on a unique harmonised matched employer-employee data set, the 1995 European Structure of Earnings Survey. As far as we know, this paper is the first to analyse with recent techniques, on a comparable basis, and from a European perspective: i) inter-industry wage differentials by gender, ii) gender wage gaps by industry, and iii) the contribution of industry effects to the overall gender wage gap. It is also one of the few, besides Kahn (1998), to analyse for both sexes the relationship between collective bargaining characteristics and the dispersion of industry wage differentials.

Empirical findings show that, in all countries and for both sexes, wage differentials exist between workers employed in different sectors, even when controlling for working conditions, individual and firm characteristics. We also find that the hierarchy of sectors in terms of wages is quite similar for male and female workers and across countries. Yet, the apparent similarity between male and female industry wage differentials is challenged by standard statistical tests. Indeed, simple t-tests show that between 43 and 71% of the industry wage disparities are significantly different for women and men. Moreover, Chow tests indicate that sectoral wage differentials are significantly different as a group for both sexes in all countries. Regarding the dispersion of the industry wage differentials, we find that results vary for men and women, although not systematically nor substantially. Yet, the dispersion of industry wage differentials fluctuates considerably across countries. It is quite large in Ireland, Italy and the U.K. and relatively moderate in Belgium, Denmark and Spain. For both sexes, results point to the existence of a negative and significant relationship between the degree of centralisation of collective bargaining and the dispersion of industry wage differentials.

Furthermore, independently of the country considered, results show that more than 80% of the gender wage gaps within industries are statistically significant. The average industry gender wage gap ranges between -.18 in the U.K. and -.11 in Belgium. This means that on average women have an inter-industry wage differential of between 18 and 11% below that for men. Yet, correlation coefficients between the industry gender wage gaps across countries are relatively small and often statistically insignificant. This finding suggests that industries with the highest and the lowest gender wage gaps vary substantially across Europe.

Finally, results indicate that the overall gender wage gap, measured as the difference between the mean log wages of male and female workers, fluctuates between .18 in Denmark and .39 in the U.K. In all countries a significant (at the .01 level) part of this gap can be explained by the segregation of women in lower paying industries. Yet, the relative contribution of this factor to the gender wage gap varies substantially among European countries. It is close to zero in Belgium and Denmark, between 7 and 8% in Ireland, Spain and the U.K. and around 16% in Italy. Differences in industry wage premia for male and female workers significantly (at the .05 level) affect the gender wage gap in Denmark and Ireland only. In these countries, gender differences in industry wage differentials account for respectively 14 and 20% of the gender wage gap. To sum up, findings show that combined industry effects explain around 29% of the gender wage gap in Ireland, respectively 14 and 16% in Denmark and Italy, around 7% in the U.K. and almost nothing in Belgium and Spain.

In conclusion, our results emphasize that the magnitude of the gender wage gap as well as its causes vary substantially among the European countries. This suggests that no single policy instrument will be sufficient to tackle gender pay inequalities in Europe. Our findings indicate that policies need to be tailored to the very specific context of the labour market in each country.

The second chapter examines investigates how rent sharing interacts with the gender wage gap in the Belgian private sector. Empirical findings show that individual gross hourly wages are significantly and positively related to firm profits-per-employee even when controlling for group effects in the residuals, individual and firm characteristics, industry wage differentials and endogeneity of profits. Our instrumented wage-profit elasticity is of the magnitude 0.06 and it is not significantly different for men and women. Of the overall gender wage gap (on average women earn 23.7% less than men), results show that around 14% can be explained by the fact that on average women are employed in firms where profits-per-employee are lower. Thus, findings suggest that a substantial part of the gender wage gap is attributable to the segregation of women is less profitable firms.

The third and final chapter contributes to the understanding of inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering the period 1995-2002. Findings show the existence of large and persistent wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. The unobserved ability hypothesis may not be rejected on the basis of Martins’ (2004) methodology. However, its contribution to the observed industry wage differentials appears to be limited. Further results show that ceteris paribus workers earn significantly higher wages when employed in more profitable firms. The instrumented wage-profit elasticity stands at 0.063. This rent-sharing phenomenon accounts for a large fraction of the industry wage differentials. We find indeed that the magnitude, dispersion and significance of industry wage differentials decreases sharply when controlling for profits.

Doctorat en Sciences économiques et de gestion
info:eu-repo/semantics/nonPublished

The general focus of this thesis is on how the family, work and the welfare system are intertwined. A major determinant is the way responsibilities are shared by the state, the market and civil society in different welfare state regimes. An introductory chapter will therefore be dedicated to the development of the social dimension in the process of European integration. A first chapter will then go deeper into the comparative analysis of welfare state regimes, to comment on the provision of welfare in societies with a different mix of state, market and societal welfare roles and to assess the adequacy of existing typologies as reflections of today’s changed socio-economic, political and gender reality. Although they stand strong on their own, these first two chapters also contribute to contextualising the research subject of the remainder of the thesis: the study and comparison of the differential situation of women and men and of mothers and non-mothers on the labour markets of the EU-15 countries as well as of the role of public policies with respect to the employment penalties faced by women, particularly in the presence of young children. In our analysis, employment penalties are understood in three ways: (i) the difference in full-time equivalent employment rates between mothers and non-mothers, (ii) the wage penalty associated with motherhood, and (iii) the wage gap between part-time and full-time workers, considering men and women separately. Besides from a gender point of view, employment outcomes and public policies are thus assessed comparatively for mothers and non-mothers. Because women choose to take part in paid employment, fertility rates will depend on their possibilities to combine employment and motherhood. As a result, motherhood-induced employment penalties and the role of public policies to tackle them should be given priority attention, not just by scholars, but also by politicians and policy-makers.
Doctorat en Sciences économiques et de gestion
info:eu-repo/semantics/nonPublished

In the first chapter of this thesis, we investigate the impact of human capital and wage structure on the gender pay in a panel of European countries using a newly available and appropriate database for cross-country comparisons and a comparable methodology for each country.

Our first question is :What role do certain individual characteristics and choices of working men and women play in shaping the cross-country differences in the gender pay gap? What is the exact size of the gender pay gap using the “more appropriate” database available for our purpose? Giving that there are mainly only two harmonized data-sets for comparing gender pay gap throughout Europe: the European Community Household Panel (ECHP) and the European Structure of Earning Survey (ESES). Each database having its shortages: the main weakness of the ECHP is the lack of perfect reliability of the data in general and of wages in particular. However the main advantage of this database is the panel-data dimension and the information on both households and individuals. The data of the ESES is, on the contrary, of a very high standard but it only covers the private sector and has a cross-sectional dimension. Furthermore only few countries are currently available :Denmark, Belgium, Spain, Ireland and Italy.

We use the European Structure of Earning Survey (ESES) to analyse international differences in gender pay gaps in the private sector based on a sample of five European economies: Belgium, Denmark, Ireland, Italy and Spain. Using different methods, we examine how wage structures, differences in the distribution of measured characteristics and occupational segregation contribute to and explain the pattern of international differences. Furthermore, we take account of the fact that indirect discrimination may influence female occupational distributions. We find these latter factors to have a significant impact on gender wage differentials. However, the magnitude of their effect varies across countries.

In the second chapter, we analyse the persistence of the gender pay differentials over time in Europe and better test the productivity hypothesis by taking into account unobserved heterogeneity.

Our second question is :What is the evolution of the pay differential between men and women over a period of time in Europe? And what is the impact of unobserved heterogeneity?

The researcher here provides evidence on the effects of unobserved individual heterogeneity on estimated gender pay differentials. Using the European Community Household Panel (ECHP), we present a cross-country comparison of the evolution of unadjusted and adjusted gender pay gaps using both cross-section and panel-data estimation techniques. The analysed countries differ greatly with respect to labour market legislation, bargaining practices structure of earnings and female employment rates. On adjusting for unobserved heterogeneity, we find a narrowed male-female pay differential, as well as significantly different rates of return on individual characteristics. In particularly, the adjusted wage differential decreases by 7 per cent in Belgium, 14 per cent in Ireland, between 20-30 per cent Germany, Italy, the Netherlands and Spain and of 41 per cent and 54 per cent in the UK and in Denmark respectively.

In the third chapter, we investigate causes of the gender pay gap beyond the gender differences in observed and unobserved productive characteristics or simply the sex. Explanations of the gender pay gap may be the penalty women face for having children. Obviously, the motherhood wage penalty is relevant to larger issues of gender inequality given that most women are mothers and that childrearing remains a women’s affair. Thus, any penalty associated with motherhood but not with fatherhood affects many women and as such contributes to gender inequalities as the gender pay gap. Furthermore, the motherhood wage effect may be different along the wage distribution as women with different earnings may not be equal in recognising opportunities to reconcile their mother’s and earner’s role. This brings us to our third question.

Our third question is :What is the wage effect for mothers of young children in the household? And does it vary along the wage distribution of women?

This chapter provides more insight into the effect of the presence of young children on women’s wages. We use individual data from the ECHP (1996-2001) and both a generalised linear model (GLM) and quantile regression (QR) techniques to estimate the wage penalty/bonus associated with the presence of children under the age of sixteen for mothers in ten EU Member States. We also correct for potential selection bias using the Heckman (1979) correction term in the GLM (at the mean) and a selectivity correction term in the quantile regressions. To distinguish between mothers according to their age at the time of their first birth, wage estimations are carried out, separately, for mothers who had their first child before the age of 25 (‘young mothers’) and mothers who had their first child after the age of 25 (‘old mothers’). Our results suggest that on average young mothers earn less than non-mothers while old mothers obtain a gross wage bonus in all countries. These wage differentials are mainly due to differences in human capital, occupational segregation and, to a lesser extent, sectoral segregation between mothers and non-mothers. This overall impact of labour market segregation, suggests a “crowding” explanation of the family pay gap – pay differential between mothers and non-mothers. Nevertheless, the fact that we still find significant family pay gaps in some countries after we control for all variables of our model suggests that we cannot reject the “taste-based” explanation of the family gap in these countries. Our analysis of the impact of family policies on the family pay gap across countries has shown that parental leave and childcare policies tend to decrease the pay differential between non-mothers and mothers. Cash and tax benefits, on the contrary, tend to widen this pay differential. Sample selection also affects the level of the mother pay gap at the mean and throughout the wage distribution in most countries. Furthermore, we find that in most countries inter-quantile differences in pay between mothers and non-mothers are mainly due to differences in human-capital. Differences in their occupational and sectoral segregation further shape these wage differentials along the wage distribution in the UK, Germany and Portugal in our sample of young mothers and in Spain in the sample of old mothers.

In the fourth chapter, we analyse the combined effect of motherhood and the family status on women’s wage.

Our fourth question is :Is there a lone motherhood pay gap in Europe? And does it vary along the wage distribution of mothers?

Substantial research has been devoted to the analysis of poverty and income gaps between households of different types. The effects of family status on wages have been studied to a lesser extent. In this chapter, we present a selectivity corrected quantile regression model for the lone motherhood pay gap – the differential in hourly wage between lone mothers and those with partners. We used harmonized data from the European Community Household Panel and present results for a panel of European countries. We found evidence of lone motherhood penalties and bonuses. In our analysis, most countries presented higher wage disparities at the top of the wage distribution rather than at the bottom or at the mean. Our results suggest that cross-country differences in the lone motherhood pay gap are mainly due to differences in observed and unobserved characteristics between partnered mothers and lone mothers, differences in sample selection and presence of young children in the household. We also investigated other explanations for these differences such as the availability and level of childcare arrangements, the provision of gender-balanced leave and the level of child benefits and tax incentives. As expected, we have found significant positive relationship between the pay gap between lone and partnered mothers and the childcare, take-up and cash and tax benefits policies. Therefore improving these family policies would reduce the raw pay gap observed.

Doctorat en Sciences économiques et de gestion
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Aquesta tesi té com a objectiu principal descriure la precarització del mercat laboral tal com es manifesta en diferents tipus de contracte (permanent, temporal i informal) i explorar l’associació de la precarietat laboral amb la salut dels treballadors. A través de diferents metodologies s’han realitzat tres estudis quantitatius amb dades de diferents enquestes i dues revisions diferents de la literatura. Els resultats confirmen la precarització de les condicions d’ocupació com a conseqüència de les polítiques del mercat de treball i l’augment del poder dels empresaris. La precarietat laboral està present en tots els tipus de contracte estudiats, tant en els treballadors permanents com en els temporals i informals, i segueix un gradient entre elles. També s’ha demostrat que el treball informal, una de les condicions d’ocupació menys estudiades des del punt de vista de la salut pública, es troba present a la Unió Europea. Aquests treballadors tenen pitjors condicions de treball i nivells més elevats de precarietat laboral comparats amb els treballadors permanents i temporals; però això no es reflexa en un pitjor estat de salut. Els nostres resultats confirmen la importància d’estudiar la precarietat laboral mitjançant una mesura multidimensional. Incloure en els sistemes de vigilància epidemiològica la mesura tant de la precarietat laboral com del treball informal seria de gran importància per tal de constatar-ne l’evolució i permetre el disseny de polítiques públiques orientades a millorar la salut dels treballadors i reduir les desigualtats en salut existents entre ells.
The main aim of this dissertation was to describe the precaritzation of the labour market as it manifests itself in different types of contract (permanent, temporary and informal) as a proxy of employment conditions and to explore the association of precarious employment with workers’ health. Adopting different methodologies, three quantitative studies were performed using data from different surveys as well as two different types of literature reviews. Results confirm the precaritzation of employment conditions as a consequence of the labour market policies and an increase of the employers’ power. Employment precariousness is present in all types of contract studied, both in permanent employees and in temporary and informal employees, and a gradient exists between them. It has also shown that informal employment, one of the least studied employment condition from a public health stand point, is present in the European Union. These workers have worse working conditions and higher levels of precarious employment compared with permanent and temporary workers; but this is not reflected as having worse health. Our results confirm the importance of studying precarious employment through multidimensional measure. Including both measures of precarious and informal employment in epidemiological surveillance systems is of great importance in order to verify their evolution and allow for the design of public policies oriented to improve workers’ health and reduce existing health inequalities among them.

The thesis, entitled "Essays on macroeconometrics and short-term forecasting",

is composed of three chapters. The first two chapters are on nowcasting,

a topic that has received an increasing attention both among practitioners and

the academics especially in conjunction and in the aftermath of the 2008-2009

economic crisis. At the heart of the two chapters is the idea of exploiting the

information from data published at a higher frequency for obtaining early estimates

of the macroeconomic variable of interest. The models used to compute

the nowcasts are dynamic models conceived for handling in an efficient way

the characteristics of the data used in a real-time context, like the fact that due to the different frequencies and the non-synchronicity of the releases

the time series have in general missing data at the end of the sample. While

the first chapter uses a small model like a VAR for nowcasting Italian GDP,

the second one makes use of a dynamic factor model, more suitable to handle

medium-large data sets, for providing early estimates of the employment in

the euro area. The third chapter develops a topic only marginally touched

by the second chapter, i.e. the estimation of dynamic factor models on data characterized by block-structures.

The firrst chapter assesses the accuracy of the Italian GDP nowcasts based

on a small information set consisting of GDP itself, the industrial production

index and the Economic Sentiment Indicator. The task is carried out by using

real-time vintages of data in an out-of-sample exercise over rolling windows

of data. Beside using real-time data, the real-time setting of the exercise is

also guaranteed by updating the nowcasts according to the historical release calendar. The model used to compute the nowcasts is a mixed-frequency Vector

Autoregressive (VAR) model, cast in state-space form and estimated by

maximum likelihood. The results show that the model can provide quite accurate

early estimates of the Italian GDP growth rates not only with respect

to a naive benchmark but also with respect to a bridge model based on the

same information set and a mixed-frequency VAR with only GDP and the industrial production index.

The chapter also analyzes with some attention the role of the Economic Sentiment

Indicator, and of soft information in general. The comparison of our

mixed-frequency VAR with one with only GDP and the industrial production

index clearly shows that using soft information helps obtaining more accurate

early estimates. Evidence is also found that the advantage from using soft

information goes beyond its timeliness.

In the second chapter we focus on nowcasting the quarterly national account

employment of the euro area making use of both country-specific and

area wide information. The relevance of anticipating Eurostat estimates of

employment rests on the fact that, despite it represents an important macroeconomic

variable, euro area employment is measured at a relatively low frequency

(quarterly) and published with a considerable delay (approximately

two months and a half). Obtaining an early estimate of this variable is possible

thanks to the fact that several Member States publish employment data and

employment-related statistics in advance with respect to the Eurostat release

of the euro area employment. Data availability represents, nevertheless, a

major limit as country-level time series are in general non homogeneous, have

different starting periods and, in some cases, are very short. We construct a

data set of monthly and quarterly time series consisting of both aggregate and

country-level data on Quarterly National Account employment, employment

expectations from business surveys and Labour Force Survey employment and

unemployment. In order to perform a real time out-of-sample exercise simulating

the (pseudo) real-time availability of the data, we construct an artificial

calendar of data releases based on the effective calendar observed during the first quarter of 2012. The model used to compute the nowcasts is a dynamic

factor model allowing for mixed-frequency data, missing data at the beginning

of the sample and ragged edges typical of non synchronous data releases. Our

results show that using country-specific information as soon as it is available

allows to obtain reasonably accurate estimates of the employment of the euro

area about fifteen days before the end of the quarter.

We also look at the nowcasts of employment of the four largest Member

States. We find that (with the exception of France) augmenting the dynamic

factor model with country-specific factors provides better results than those

obtained with the model without country-specific factors.

The third chapter of the thesis deals with dynamic factor models on data

characterized by local cross-correlation due to the presence of block-structures.

The latter is modeled by introducing block-specific factors, i.e. factors that

are specific to blocks of time series. We propose an algorithm to estimate the model by (quasi) maximum likelihood and use it to run Monte Carlo

simulations to evaluate the effects of modeling or not the block-structure on

the estimates of common factors. We find two main results: first, that in finite samples modeling the block-structure, beside being interesting per se, can help

reducing the model miss-specification and getting more accurate estimates

of the common factors; second, that imposing a wrong block-structure or

imposing a block-structure when it is not present does not have negative

effects on the estimates of the common factors. These two results allow us

to conclude that it is always recommendable to model the block-structure

especially if the characteristics of the data suggest that there is one.
Doctorat en Sciences économiques et de gestion
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ABSTRACTThis research presents several machine learning algorithms and prediction models to anticipate the European Structural and Investment Funds (ESIF) application in different European Union (EU) countries. These analyses start with data training from 2014 to 2020 ESIF, to test and predict the application of the future ESI Funds for 2021–2027. We deliver an analysis focused on the priorities of each fund, highlighting the differences between the programs in different time periods. In the framework of the European Regional Development Fund (ERDF), we will specifically address the assessment of the following themes: support innovation of small and medium-sized businesses, to greener, low-carbon, and resilient projects with enhanced mobility. In what concerns the European Social Fund (ESF), we will evaluate projects that promote and increase the EU’s employment, social, education, and skills policies, including structural reforms in these areas. Regarding the cohesion funds (CF), we will be targeting the improvements between the two ESIFs, looking at projects in the field of environment and trans-European networks in the area of transport infrastructure (TEN-T). In summary, we will be looking at the future of ESIF through the glasses of artificial intelligence.

<p>Conservation of cultural heritage buildings is a demand from society, which recognizes this heritage as a part of their identity, but it is also an economic issue. In Europe, tourism accounts for 10% of the gross domestic product (GDP) and 12% of the employment, if linked sectors are considered. The European Union (EU) is the world’s number one tourist destination, with 40% of arrivals in the world and with seven European countries among the top ten. According to the World Trade Organization (WTO) estimates, international tourist arrivals in Europe will increase signifi cantly. The built European heritage, namely monuments or historical centres, is a main attractor for tourism, with 45% of the United Nations Educational, Scientifi c and Cultural Organization (UNESCO) World Heritage sites situated within the EU. Therefore, the need for their conservation is unquestionable.</p>

This chapter examines the labor market integration of recent migrant youth from Central and Eastern Europe (EU8) countries, Bulgaria and Romania (EU2), Southern Europe, and the remaining European Union in the German and UK labor markets. The chapter measures levels of employment, income, marginal employment, fixed-term employment, (solo) self-employment, and the skills/qualification mismatch of each group compared to nationals before and after the financial crisis. Despite institutional differences, young EU citizens are well integrated into the respective labor markets (especially in the United Kingdom) in terms of employment rates. However, EU youth migrants’ qualitative labor market integration seems to mirror the existing stratification across regions of Europe: EU8 and EU2 citizens often work in precarious and nonstandard employment, youth from Southern Europe take a middle position, and youth from the remaining EU countries do as well or better on several indicators compared to their native peers.

The European Union funds constitute the main budgetary instrument for the Union to promote its policy goals. The European Union Funds or European Structural and Investment Funds (generally, either EU funds or ESI funds) finance projects that pertain to a large array of areas, including regional and urban development, employment and social inclusion, maritime and fisheries policies, research and innovation, and humanitarian aid. Part of such funding is directed towards the Member States, whereas another part is intended for third countries.

This chapter looks at trends in 10 Central and Eastern European (CEE) countries, exploring both convergence between these countries and the centre of the European Union on the one hand and comparative inequality trends within some of the CEE economies on the other. Time trends are presented from the beginning of the 1990s until the most recent available year. The aim is to explore patterns of income convergence and inequality developments experienced during and after the transition from non-democratic regimes and centrally planned economies to competitive markets and representative democracies. Attention is paid to between-country similarities and dissimilarities of the paths taken, attempting to find out whether homogeneity or heterogeneity dominates between the observed countries, both in relation to trends and results.

Abstract In this chapter the authors first briefly show how early activation, intensive service provision, and access to active labor market policies (ALMPs) in the first six months of a job seeker’s unemployment spell gained increasing important in the years following the Great Recession in the countries of the European Union. They then go on to review the evidence on these instruments, with special attention paid to experimental studies. While the evidence on timing of participation in active measures is weak and inconclusive, the authors show that intensive meetings between job seekers and employment counselors speeds up return to work. It seems that this approach is cost-efficient but is no panacea because it might lead to negative spillover effects in slack local labor markets.

According to the general theory, it is recognized that exports increase employment. Recently, in the world economy, increasing unemployment, foreign trade of the impact on employment has led to new research. Many of the aforementioned studies validating the theory, some of them have different results. In recent studies in Turkey was a different result. In this study, Turkey and the European Union countries in terms of trade effect on employment will be examined. For this purpose, employment and foreign trade data for the years 2000-2012 using a panel data analysis will be done. Exports, imports, wages, and production depending on the change in employment and the interaction will be investigated. Depending on available data at the sectoral level, there will be a distinction. Especially in the last ten years, the recession and rise in unemployment in Europe will be discussed with the relevant dynamics. In Turkey, the current account deficit, growth, unemployment issues are noteworthy. European Union accession process, Turkey and the European Union countries in the comparison will be significant in the economic indicators.

Due to the imperfect functioning of labour markets in certain cases, State aid may be an appropriate instrument for creating new jobs and preserving existing ones. Legal regulation of the issue of State aid is an element of the competition mechanism protection, which was recognized in the Treaty on the Functioning of the European Union (TFEU). This paper discusses guidelines for implementation of art. 107–109 of the TFEU, from the point of view of State aid for employment. Statistical analysis was carried out on State aid granted by EU Member States in the period 2001–2018 – from the perspective of its impact on competitiveness of these countries. This should lead to verify the thesis that the amount of State aid granted by EU Member States for employment should be positively correlated with the size of the GDP per capita of these countries.

In modern conditions, developed market economies base their growth and development on the small and medium enterprises sector and entrepreneurship, as the most efficient segment of the economy, which pro­vides the greatest contribution to employment, GDP and turnover. Since SMEs significantly contribute to employment, competitiveness and exports, developed countries have taken a systematic and organized approach to encourage their development and successful functioning. Following the ex­ample of developed countries, developing countries, are increasingly basing their economic growth and development on the SME sector. In the Republic of Serbia, at the beginning of the 21st century, institutional changes were implemented, which resulted in the improvement of the business environ­ment and significant progress in building a system for encouraging and supporting the development of SMEs. The paper aims to, through compar­ative analysis, explain the development of the SME sector in the Republic of Serbia and the European Union.

The article analyses European Union anti-discrimination law development in Member States and differences between protected grounds of discrimination. On this basis, the analysis covers recognition of the social complexity, internationalization and discrimination of foreigners for different grounds. The process of internationalization and migration, covering social, political, economical, cultural, legal processes, the non-discriminatory protection of a foreigner as a member of the society has become complicated, when attempting not to discriminate people arriving from the other countries and to have equal possibilities. The problems of discrimination are valid and significant for the civil society itself. The article also discusses the concept of multiple discrimination in European Union anti-discrimination law, legal regulation and protection against multiple discrimination in Europe and separate legal regulation of the Member States. This article argues that internationalization processes bring new approaches of interpretation of European Union employment equality law and contemporary challenges, introduces recent cases of equal treatment of employees during employment at private companies.

The formation and existence of degraded areas is one of the consequences of civilization, which has a negative impact on both the environment and economic development in the municipality. The problem of degraded areas has been faced by all countries worldwide, including Latvia, when as a result of the change of the state political system in the 1990s after the collapse of the Soviet system, a large number of inactive production companies appeared, resulting in a significant number of polluted / degraded areas. To solve the existing problem, local governments in Latvia use European Regional Development Fund (ERDF) funding under the Operational Program ‘Growth and Employment’ 5.6.2, specific support objective ‘Revitalization of territories by regenerating degraded areas in accordance with local government integrated development programs’ (SSO 5.6.2) to ensure the sustainable development of the territory by revitalizing degraded areas. In the implementation of projects, local governments must ensure the fulfilment of the indicators planned in the projects in the following groups of indicators: the area of degraded areas has been renewed, adapted for the location of new businesses or expansion of existing businesses in order to promote employment and economic activity in local governments; new jobs created in supported areas; non-financial investments made by businesses located in the supported territory in their own intangible investments and fixed assets. Therefore, it is necessary to evaluate the indicators of the implemented projects in order to be able to draw conclusions about the financial aspects of the project implementation and the progress of the project implementation.

The paper presents the results of the analysis of NUTS 2 regions with a focus on the regions of Visegrad countries. The aim is to assess the level of development of the regions in the area of Knowledge Intensive Business Services (KIBS) in relation to their economic level and position within the regions of the EU. The division of regions into groups was based on the clustering method, including Ward's method for determining the number of groups. Furthermore, the correlation between employment shares in KIBS and the level of economic development of the regions was examined. The resulting data confirms a statistically significant dependence between GDP per capita and the aggregate indicator of employment share in KIBS, especially in the sub-areas of knowledge market services and high-technology services.

The Small and Medium-Sized Enterprises (SMEs) are a necessary element of the social and economic development of the national economy from the perspective of their significant contribution to employment, innovative capacity, and flexibility. Innovative SMEs are necessary building block in the restructuring of transition economies. The successful reformers of the Central and Eastern Europe countries can promote policies conducive to the development of innovative SMEs, and consequently benefit from the economic advantages of SMEs. However, the majority of the Commonwealth of Independent States (CIS) countries are lagging behind significantly. This paper gives the analytical description of the development of SMEs in post-socialist countries during the transition process within the framework of the market reforms. The main barriers to growth of SMEs with innovation capacity are the institutional environment, and the inadequate attitude of the government towards small companies. The countries which integrated to European Union been able to overcome these barriers considerably, while the CIS countries do not have a record of significant achievement in this area.

Today, the European Union aims to integrate young people into the labour market and provide employment support. However, youth unemployment figures in the European Union are very serious. In addition to youth unemployment, NEET (Not in Education, Employment and Training) rates, which we hear frequently today and which is closely related to youth unemployment, have high rates both in the European Union and in Turkey. If these two main problems that countries have to deal with are not successful, they will impose serious costs on countries both socially and economically. Although education policies are often used for the solution, factors such as gender perception and patriarchal social structure must be left behind. In addition, strong economic growth should not be ignored to combat the problems of the young unemployed. The first aim of the study is to examine the factors that cause young unemployed and NEETs in the EU and Turkey at the macro and micro level and to present them comparatively. The second aim of the study is to empirically analyse Okun's Law, which argues that there is a negative correlation between unemployment and economic growth, for young unemployed and NEETs in Turkey between 2000 and 2020. The data used in the study was obtained from the OECD and Eurostat databases. The empirical findings obtained as a result of causality analysis show that there is a one-way relationship between economic growth, youth unemployment and NEETs.

National law is affected by a number of different international regulations and agreements. International agreements provide for rules aimed at harmonizing certain requirements and understandings that different countries should follow. In labour relations, international standards are set at two different levels – on the one hand, by the International Labour Organization (ILO), and on the other by regional standards – by the Council of Europe and the directives and regulations adopted by the European Union. All these international rules have important implications for national labour law. However, such international norms do not provide a clear personal scope – that is, it is not clearly defined to whom such international norms apply. Although the various international rules do not directly define the persons to whom those norms apply, – the implementation of international rules remains a matter for national law. Thus, the concept of both employee and employment relationship is shaped by national law. The exception here is the European Union, where the European Court of Justice has given an autonomous meaning to the concept of worker (particularly in the context of freedom of movement for workers). Although the concept of a worker and of an employment relationship has been developed by the Court of Justice of the European Union, Member States retain the right to define the employment relationship in accordance with the law in force in the respective Member State. The main factor in shaping employment relationships is the employee's dependence on the person providing the work, and the person providing the work also has an obligation to pay remuneration for the work performed. Although the scope of those rules is defined differently by different international rules, the characteristics generally applicable to the definition of an employee and the employment relationship are similar to those used in national law.

The main objective of the following paper is to present the Environmental Goods and Services Sector (EGSS) in European Union countries. The Environmental Goods and Services Sector is one of the modules of environmental economic accounts, as satellite accounts in relation to national accounts. The first part of the paper gives an overiew of EGSS definitions and classifications. In second part, the comparison between the EGSS variables in certain EU countries was made. The output, export and employment of the Environmental Goods and Services System were analyzed. The data is presented by environmental protection domains and natural resources managements domains, as well as by economic activity.

The COVID-19 pandemic has worsened the extreme inequality in Southern African Development Community (SADC) countries, and pushed millions into poverty. The economic crisis continues due to the obscene global vaccine inequality. As of end March 2022, a dismal 14% of SADC citizens had been fully vaccinated against COVID-19, compared with 65.5% in the United States and 73% in the European Union. In 2021, with infections rising in SADC, the critical health, social protection and economic programmes put in place by most governments in 2020 were rolled back and replaced with austerity, in the context of growing debt burdens and lack of external support for country budgets. Such austerity has been built into IMF programmes in the region. Recovering from the pandemic, however, offers SADC governments a once-in-a-generation opportunity to do what their citizens want: increase taxes on the wealthy and large corporations, boost public spending (especially on healthcare, education and social protection), and increase workers’ rights as well as tackling joblessness and precarious work. With external support, including through debt relief and aid, they could reduce inequality drastically and eliminate extreme poverty by 2030.

The COVID-19 pandemic has worsened the extreme inequality in Southern African Development Community (SADC) countries, and pushed millions into poverty. The economic crisis continues due to the obscene global vaccine inequality. As of end March 2022, a dismal 14% of SADC citizens had been fully vaccinated against COVID-19, compared with 65.5% in the United States and 73% in the European Union. In 2021, with infections rising in SADC, the critical health, social protection and economic programmes put in place by most governments in 2020 were rolled back and replaced with austerity, in the context of growing debt burdens and lack of external support for country budgets. Such austerity has been built into IMF programmes in the region. Recovering from the pandemic, however, offers SADC governments a once-in-a-generation opportunity to do what their citizens want: increase taxes on the wealthy and large corporations, boost public spending (especially on healthcare, education and social protection), and increase workers’ rights as well as tackling joblessness and precarious work. With external support, including through debt relief and aid, they could reduce inequality drastically and eliminate extreme poverty by 2030.

In the second quarter, annual inflation (9.67%), the technical staff’s projections and its expectations continued to increase, remaining above the target. International cost shocks, accentuated by Russia's invasion of Ukraine, have been more persistent than projected, thus contributing to higher inflation. The effects of indexation, higher than estimated excess demand, a tighter labor market, inflation expectations that continue to rise and currently exceed 3%, and the exchange rate pressures add to those described above. High core inflation measures as well as in the producer price index (PPI) across all baskets confirm a significant spread in price increases. Compared to estimates presented in April, the new forecast trajectory for headline and core inflation increased. This was partly the result of greater exchange rate pressure on prices, and a larger output gap, which is expected to remain positive for the remainder of 2022 and which is estimated to close towards yearend 2023. In addition, these trends take into account higher inflation rate indexation, more persistent above-target inflation expectations, a quickening of domestic fuel price increases due to the correction of lags versus the parity price and higher international oil price forecasts. The forecast supposes a good domestic supply of perishable foods, although it also considers that international prices of processed foods will remain high. In terms of the goods sub-basket, the end of the national health emergency implies a reversal of the value-added tax (VAT) refund applied to health and personal hygiene products, resulting in increases in the prices of these goods. Alternatively, the monetary policy adjustment process and the moderation of external shocks would help inflation and its expectations to begin to decrease over time and resume their alignment with the target. Thus, the new projection suggests that inflation could remain high for the second half of 2022, closing at 9.7%. However, it would begin to fall during 2023, closing the year at 5.7%. These forecasts are subject to significant uncertainty, especially regarding the future behavior of external cost shocks, the degree of indexation of nominal contracts and decisions made regarding the domestic price of fuels. Economic activity continues to outperform expectations, and the technical staff’s growth projections for 2022 have been revised upwards from 5% to 6.9%. The new forecasts suggest higher output levels that would continue to exceed the economy’s productive capacity for the remainder of 2022. Economic growth during the first quarter was above that estimated in April, while economic activity indicators for the second quarter suggest that the GDP could be expected to remain high, potentially above that of the first quarter. Domestic demand is expected to maintain a positive dynamic, in particular, due to the household consumption quarterly growth, as suggested by vehicle registrations, retail sales, credit card purchases and consumer loan disbursement figures. A slowdown in the machinery and equipment imports from the levels observed in March contrasts with the positive performance of sales and housing construction licenses, which indicates an investment level similar to that registered for the first three months of the year. International trade data suggests the trade deficit would be reduced as a consequence of import levels that would be lesser than those observed in the first quarter, and stable export levels. For the remainder of the year and 2023, a deceleration in consumption is expected from the high levels seen during the first half of the year, partially as a result of lower repressed demand, tighter domestic financial conditions and household available income deterioration due to increased inflation. Investment is expected to continue its slow recovery while remaining below pre-pandemic levels. The trade deficit is expected to tighten due to projected lower domestic demand dynamics, and high prices of oil and other basic goods exported by the country. Given the above, economic growth in the second quarter of 2022 would be 11.5%, and for 2022 and 2023 an annual growth of 6.9% and 1.1% is expected, respectively. Currently, and for the remainder of 2022, the output gap would be positive and greater than that estimated in April, and prices would be affected by demand pressures. These projections continue to be affected by significant uncertainty associated with global political tensions, the expected adjustment of monetary policy in developed countries, external demand behavior, changes in country risk outlook, and the future developments in domestic fiscal policy, among others. The high inflation levels and respective expectations, which exceed the target of the world's main central banks, largely explain the observed and anticipated increase in their monetary policy interest rates. This environment has tempered the growth forecast for external demand. Disruptions in value chains, rising international food and energy prices, and expansionary monetary and fiscal policies have contributed to the rise in inflation and above-target expectations seen by several of Colombia’s main trading partners. These cost and price shocks, heightened by the effects of Russia's invasion of Ukraine, have been more prevalent than expected and have taken place within a set of output and employment recovery, variables that in some countries currently equal or exceed their projected long-term levels. In response, the U.S. Federal Reserve accelerated the pace of the benchmark interest rate increase and rapidly reduced liquidity levels in the money market. Financial market actors expect this behavior to continue and, consequently, significantly increase their expectations of the average path of the Fed's benchmark interest rate. In this setting, the U.S. dollar appreciated versus the peso in the second quarter and emerging market risk measures increased, a behavior that intensified for Colombia. Given the aforementioned, for the remainder of 2022 and 2023, the Bank's technical staff increased the forecast trajectory for the Fed's interest rate and reduced the country's external demand growth forecast. The projected oil price was revised upward over the forecast horizon, specifically due to greater supply restrictions and the interruption of hydrocarbon trade between the European Union and Russia. Global geopolitical tensions, a tightening of monetary policy in developed economies, the increase in risk perception for emerging markets and the macroeconomic imbalances in the country explain the increase in the projected trajectory of the risk premium, its trend level and the neutral real interest rate1. Uncertainty about external forecasts and their consequent impact on the country's macroeconomic scenario remains high, given the unpredictable evolution of the conflict between Russia and Ukraine, geopolitical tensions, the degree of the global economic slowdown and the effect the response to recent outbreaks of the pandemic in some Asian countries may have on the world economy. This macroeconomic scenario that includes high inflation, inflation forecasts, and expectations above 3% and a positive output gap suggests the need for a contractionary monetary policy that mitigates the risk of the persistent unanchoring of inflation expectations. In contrast to the forecasts of the April report, the increase in the risk premium trend implies a higher neutral real interest rate and a greater prevailing monetary stimulus than previously estimated. For its part, domestic demand has been more dynamic, with a higher observed and expected output level that exceeds the economy’s productive capacity. The surprising accelerations in the headline and core inflation reflect stronger and more persistent external shocks, which, in combination with the strength of aggregate demand, indexation, higher inflation expectations and exchange rate pressures, explain the upward projected inflation trajectory at levels that exceed the target over the next two years. This is corroborated by the inflation expectations of economic analysts and those derived from the public debt market, which continued to climb and currently exceed 3%. All of the above increase the risk of unanchoring inflation expectations and could generate widespread indexation processes that may push inflation away from the target for longer. This new macroeconomic scenario suggests that the interest rate adjustment should continue towards a contractionary monetary policy landscape. 1.2. Monetary policy decision Banco de la República’s Board of Directors (BDBR), at its meetings in June and July 2022, decided to continue adjusting its monetary policy. At its June meeting, the BDBR decided to increase the monetary policy rate by 150 basis points (b.p.) and its July meeting by majority vote, on a 150 b.p. increase thereof at its July meeting. Consequently, the monetary policy interest rate currently stands at 9.0% . 1 The neutral real interest rate refers to the real interest rate level that is neither stimulative nor contractionary for aggregate demand and, therefore, does not generate pressures that lead to the close of the output gap. In a small, open economy like Colombia, this rate depends on the external neutral real interest rate, medium-term components of the country risk premium, and expected depreciation. Box 1: A Weekly Indicator of Economic Activity for Colombia Juan Pablo Cote Carlos Daniel Rojas Nicol Rodriguez Box 2: Common Inflationary Trends in Colombia Carlos D. Rojas-Martínez Nicolás Martínez-Cortés Franky Juliano Galeano-Ramírez Box 3: Shock Decomposition of 2021 Forecast Errors Nicolás Moreno Arias