The functioning of the labor market influences the functioning of the economy as a whole. Employers need the flexibility to manage their human resources and workers need to move freely between jobs and regions. At the same time, employers need to be able to find the skills they need, and workers the jobs that put their skills to best use. When there are barriers to the mobility of labor (either because of stringent regulations or geographic, economic, and social constraints) or when there are mismatches between the supply and demand of skills (due to limited information employers and job-seekers cannot find each other) resources cannot be allocated to their best use and productivity suffers. On the contrary, when labor markets are flexible and employers and employees have good information, workers are able to switch jobs that need their skills relatively quickly thus facilitating the opening of more productive jobs and the disappearance of less productive ones.
This cluster focuses on the designing of policies to facilitate labor mobility and improve the matching of skills and jobs.
Regarding labor mobility, the focus is on labor regulations (modern labor laws, collective agreements, and work organization) and social insurance policies (unemployment benefits, pensions, and health insurance). The idea is to combine both to have more flexible and reliable contractual arrangements while expanding workers access to adequate and portable income protection programs.
In terms of matching skills and jobs, the focus of this cluster is on active labor market programs and activation policies. These include employment services (intermediation, counseling, job search assistance) that help to meet the demand for skills and address various constraints that individuals may have in accessing jobs – including the lack of appropriate skills (the latter is addressed by this cluster in coordination with the Skills and Employability Cluster .
Michael Weber, Economist