The role of information systems in analyzing the EU labour market.

Costescu, Mihai Alexandru ; Costescu, Mihai Radu

The year 1989 represented a watershed in the economical and political evolution of Europe. After decades of communism and isolation, the Central and East-European countries decided that a change would be needed. Shortly after, at least from a declarative point of view, the situation knew a major change through a quick leap towards a total embracing of capitalism. Unfortunately, this was precisely the moment in which the "start" was missed, because of the attempt to copy functional, capitalist politics and practices, on a technical and material support completely non-operating from a structural point of view, with communist origins.

The result was easily foreseen--in a competitive economy, in which the most important thing is work productivity, the highest card of the Central and East-European countries was, at the beginning, the low cost of the labour force. In time, while people's desires and aspirations begun to raise, this card started to diminish in importance and, in some cases, even to disappear.

Thus, the only solution that would insure the surviving of some economic sectors was the privatisation and, compulsorily, the modernisation and updating from all point of views: technical, human, informational. This eventually lead to investment costs and, implicitly, to higher total costs that could be covered only by increasing productivity or reducing "indirect" costs--personnel, administrative costs etc.

The reality proved that the most used method of cost reduction was to reduce personnel costs which translated into lay offs, on one side justified by the technological boost given by the new technological production line and, on the other, by the personnel's lack of qualification in operating this new equipments.

These where the times when the unemployment rate dramatically increased, situation that was also caused by the lack of real professional reconversion or economic activity development policies. The period was characterized by economic anxiety, uncertainty, a period in which the mirage of escaping from an apparently closed situation was the integration in the European Union. Thus, the first EU enlargement in Eastern Europe started in 2004, when Poland, Slovenia, Hungary, Malta, Cyprus, Latvia, Estonia, Lithuania, Czech Republic and Slovakia completed their negotiations for EU accession. In 2007, Romania and Bulgaria acceded, which ended this stage of EU enlargement. The number of state members reached 27, all theoretically equal in rights and obligations, but in reality so different in what it concerns their economic development or economic and social politics. The need to follow a common and unitary set of rules was even greater, as the final aim was to completely eliminate travelling barriers for food and services, labour force or adopting the EURO single currency.

Concerning the labour market or, more specifically, the analysis of the unemployed number, the most used indicators are:

a) The number of unemployed persons, standardly defined, includes 14 years old plus persons that, during the reference period, simultaneously comply with the following conditions (1) --do not have a job, do not work; are available for immediately starting work; are searching for a job.

b) The number of registered unemployed persons contains all persons that have declared that, during the reference period, they were registered in job and unemployment centres, receiving or not unemployment benefits or support allowances.

The number of unemployed persons--as defined by the first two indicators--disguises an important part of the unutilized work time. Thus, because of the economic recession, a larger or smaller segment of population is now affected by the reduction of worked hours, without being statistically included in the unemployed category.

These persons are, in fact, in a state of partial unemployment, a phenomenon especially implying a temporary interruption of work, because of economic contexts, shortage of energy and raw materials etc. In these conditions, for entirely quantifying unemployment, one utilizes the "available and unused work time", that cumulates both unutilized work time by the unoccupied population (the unemployed persons) and the unutilized work time by part of the occupied population (in a state of unemployment).

c) The unemployment rate is an indicator used to measure the intensification of unemployment, calculated as a ratio between the number of unemployed persons and the reference population.

It remains thus easily understandable that these are general guidelines, each country being allowed to adapt the methodology of the labour market analyze, to impose some own set of rules and provisions, leading to major differentiations when it comes to treating the same subject between EU member states.

In this context, the problems generated by the economic crisis were felt differently in EU countries, depending on their gravity and imperativeness. Countries such as Italy, Spain, Portugal have strongly felt the disequilibrium created in the financial system, but this did not necessarily implied a disadvantage in implementing reforms for sustaining the community economy. As mentioned before, a dominant market position is occupied by European companies and their major goal is to identify areas with affordable work force prices. Why this phenomenon? A cheap work force adds a plus-value, hence the company's ability to continue to develop and reinvest its profits.

To develop attractive economies every state is interested in providing a stimulating package and cheap labour to attract investors for various areas of the national economy. This phenomenon is quite recent but did not appear as a government desire, but because of the recession, felt in all economic sectors.

Thus, governments are obliged to reduce labour costs to be able to attract investors, any investment actually representing a country's ability to honour its public debt.

As a result of various reforms in national economies and, implicitly, of the European economy, solutions were imposed in the form of salary cuts, staff reductions and massive cuts in social benefits. Also, European countries increased retirement age, although it is known that many people past a certain age are now in direct competition with the young for a job. All these have made the EU a daily avalanche of unemployed trying to find a job in any European country.

Imbalances caused by these events are actually directly generated benefits for local companies, a broad range of workforce offers employers the opportunity to choose quality employees at a low cost.

The reforms discussed above have been and are being implemented not only in small countries, but also between the great powers, because there are European countries that have overcome the crisis precisely by reducing wages and speeding the development of private companies, the economic crisis been overtaken. An example in this area is Germany, which has surpassed France and has consolidated its position in international markets through reforms intended to reduce wages.

It is important that any reform aimed at stabilizing the labour market and the economic crisis has not short term but long term repercussions, the EU Member States providing a framework for interstate competition. Also, countries with low labour remuneration are required to align the standards set at EU level, which will result in future optimal investment in private companies. Investing in cost savings is a feature of the competitiveness and sustainability of European Union imposed as a condition sine qua non for each country in its composition.

It is real that any competition leads to an increase of quality in any economic sector within the context in which the European Union wants to become a competitor in the international market by 2020. This policy is noticeable, both in the financing directions offered by the state members and in the day-by-day policy of its resources. But the question on everyone's lips is whether these changes will be perceived by the population as saving, or be considered as gratuitously imposed restrictions. This was highlighted in several events occurred in Portugal, Spain, Greece and Romania, due to the reduction of salaries and massive reduction of staff

You should be aware that industrial development actually means a change in production cycles, a higher automation, which inadvertently leads to fewer employees for jobs filled by machines. We are seeing, however, a demand for diverse qualifications in private companies and a more acute shortage in certain types of professions that the labour market needs to cover through homogenous reforming and professional reconversions programs, through unemployed placement in the community space projects, possible with a common data base so that you can track exactly how many unemployed people there are and how they can be oriented towards sectors that lack personnel.

An optimal training policy, in line with the market requirements begins to take shape since college, when training departments are represented by practical cases. This phenomenon should be encouraged and helped to develop, due to the fact that investment in the knowledge economy should be successful and effective, this only being possible through flexibility and continuous training. Unemployment is one of the relevant indicators for measuring the efficiency of the labour market directly involved in the economic development of that country. Also influences the smooth running of industrial relations and labour market impact of addressed development strategies.

Late twentieth and early twenty-first century marked the transition to the knowledge economy, an economy where information gained unsuspected power, a place where the well-informed, accurate and up to date, have an extra chance to get success. Technological advance has allowed not only to obtain the same amount, if not a larger quantity of products with a reduced staffing, but also helped correct orientation of attention toward the most appropriate markets and allowed operators to increase competitiveness and productivity. At the same time, it helped to establish a better link with the immense labour market--more or less free (see the current situation in the EU, with the remaining restrictions for Romania and Bulgaria)--market where are recruited those who meet the requirements of the employer, when certain qualifications are requested, and in the extent in which they are required. The evolution of industrial level has increased the requirements of employers in the skill level of future employees, asking them for a higher level of performance and curriculum.

Nowadays, computers are commonplace, and even essential one would say in the economic activity. For economic organizations, the use of computers significantly increases economic efficiency and one of the means by which economic activity is automated is given by the economic management systems.

In individual entities there are many activities that can be subject to computerization, and each of the compartments of an economic unit can be more or less computerized, but ideally would be that all these to be embedded in a global information system of economic administration throughout the company, therefore intended to cover all the problems of an economic agent, to create interdependencies between components, so that the physical structure of the economic system attached to the economic agent to be upgraded with an informational structure.

Based on this idea, we propose to use a computer system at EU level in order to manageunitarily, with clear rules, generally applicable--the labour force, respectively the unemployment rate. The information system operation will involve mainly the following activities: gathering data on the economic situation in each country; transmitting data for processing; data processing; obtaining information and unitarily transmitting it; generating reports on the real situation of the labour force structure and, respectively, the unemployment, at an EU level.

Using electronic computer techniques in this field can produce major changes in the way of performing these activities and thus determining the reduction of disparities reports submitted by each country. It will thus eliminate at least some of the problems of national policy--different times to realize certain statistics for each country, different ways and times to analyze economic indicators, the attempt to "brush" certain official results in order to hide the real economic situation in times of crisis. Correlation between official data provided by the state authorities, and data provided directly by businesses--public or private--should be complete (of course, with that [+ or -]% considered acceptable), so the final data to be as close to the real situation as possible.

The proposed system takes into account, in a very simplistic description, the following method of data processing and analysing:

--each economic operator (public, private, state institutions etc.) provides the data on the employers' situation according to accounting documents, based on clear regulations, adopted and respected in the EU;

--each statistic institute, official organization--at a national level--provides the official data, based on clear regulations, adopted and respected in the EU;

--all data provided by the operators and the official data should be linked through control keys;

--after the data correlation at a national level, the results can be reported to the EU level, in order to create the data base to be utilised at a given time;

--since the creation of the database, the system should be made available to the general public, so that everyone--private or legal--should have access to the system, adopting the user's rights and restrictions imposed by the EU.

As a working method, the recommended is the online method, so that all information is quickly available anytime, anywhere and anyone has the right to access the system.

The involvement must, however, be complete--we're talking full cooperation--or as complete as possible--between state authorities, through labour market surveillance organizations, and every trader or group of traders, in their capacity as market players workforce. By implementing the use of mathematical models and computer electronic technology, the information system prints enhanced valences to the informational system, both quantitatively and qualitatively. Thus, we may witness an increase in the calculation capacity, considering the volume of data to be processed and the operations to be effectuated, an increased in information's exactness, an enhancement in information efficiency, given the increasing complexity of economic activities seen to region, country, group of countries or the EU. All this leads to greater closeness to the decision maker--whether state authority or economic agent--the economic phenomena and processes that coordinate with many positive economic effects derived from it.

Achieving sustainable systems at European level requires joint action to all the above elements, neglecting even only one of which can compromise the overall system.

The state must participate in creating such a system, in that it is the guarantor of economic and social policies that will result from the analysis. Business entities must participate, in their capacity as creators of "added value" of players involved directly in the production process using the resource "labour". People--actual labour--must attend to them considering that will go with the direct effects of economic and social policies and/or decisions of economic agents.

Computerization of society has unwillingly led over time to a better organization, and to a centralization developed for every level of society. Given policy coordination at European level, the desire to unify and, where possible, to coordinate policies of EU member countries, creating a unified system of labour market analysis at EU level can only have beneficial effects.

Mihai Alexandru Costescu

University of Craiova, Facultz of Economics and Bussiness Administration

E-mail: [email protected]

Mihai Radu Costescu

University of Craiova, Faculty of Social Sciences

E-mail: [email protected]

Notes

(1) Joan Benach, David Gimeno, "Types of employment and health in the European Union", Luxemburg, 2002, pg. 5-10