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Nobel laureate for Economics: Reform labour market unless you want to end up like Spain

Autor: Adelina Mihai

14.03.2011, 23:50 38

British-Cypriot professor Christopher Pissaridessays unless Romania wants to end up in a similar position to Spain,where youth unemployment is 43%, it needs to make the labour marketmore flexible by using temporary employment contracts.

In Spain, where youthunemployment reached a historic high of 43%, temporary employmentcontracts were very little used, whereas Germany, where there iscurrently a workforce deficit and the lowest unemployment rate inthe last 18 years, saw the fastest rebound because it allowed thelabour market to become more flexible through temporary contractsand by cutting wages and working hours.

In Romania almost one infive unemployed as registered in the autumn of last year were under29, with 160,000 youth unable to find a job at the time.

"The old jobs offer too muchprotection, the new jobs offer too little protection. One of thepolicies that could lead to a more flexible labour market would beto use temporary employment contracts with a duration of three orfour years for young people who do not have access to the labourmarket at present, who should gradually get the benefits of thepermanent employees," said professor Pissarides, who teaches at theLondon School of Economics.

He got the Nobel Prize forEconomic Science along with economists Peter A. Diamond and Dale T.Mortensen for "Markets with Search Frictions" last year, a theoryexplaining why unemployment rate remains very high despite vacantjobs.

Professor Pissarides was thespecial guest of "The Future of European Labour Markets" conferenceorganised by the European Commission in Brussels at the end of lastweek.

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