The European Union effort to reach an employment rate of 75% for women and men aged 20-64 years by 2020, in the framework of the strategy ''Europe 2020'', may not be feasible, Cypriot economist and winner of the Nobel Prize for Economics, Christopher Pissarides, said on Thursday.
Speaking to the press, after having participated in a conference organised in Brussels by the European Commissioner on Employment Laszlo Andor, headed ''The future of European labour markets,'' Pissarides said that there are two reasons why the target of 75% might not be achieved. One is the incentives to retire early and the other incentives for women to come into the labour force. ''The gender dimension is much more complicated because it is related to culture and even religion in Europe. Unless we manage to increase the participation of women, that 75% might not be feasible'' he added.
Pissarides said the benefit of unemployment is that one is able to find a ''better match'', something that suits their skills and qualifications better. This, he explained, makes workers more productive and jobs will last longer. ''So in terms of durability and productivity in a job, some unemployment is absolutely essential'' he said, adding that this unemployment is usually short in terms of duration and it can last up to one year, but certainly not more than a year.
He noted that workers should be given about 6 months to look for a job. He added that if the economy is in depressed state, that would not be enough, but ''if it's booming then one does not really have an excuse for not finding a job after six months''. At the same time Pissarides does not recommend the provision of unemployment benefit in case someone has been unemployed for over 12 months, under any circumstances, and in the absence of some program run by the government or at least without the government finding the reasons why the person remains unemployed.
Asked about low wages in the services sector, Pissarides said that in a flexible economy with high mobility of labour, wages for similar workers should eventually be equalized across the economy. ''The existence of short-term inequalities is caused by labour shortages in the sectors that pay more''. However if services pay low wages, that is a distortion in the labour market, he said, adding that there will be labour shortages in services now, ''so if anything, services should be paying more''.
