Monitoring quality in work: European Employment Strategy indicators and beyond.

Abstract. Within the framework of the European Employment Strategy, the European Union has defined a set of indicators to monitor employment quality--the so-called Laeken indicators. This article discusses and implements these indicators. From a theoretical perspective, it shows that the concept of work quality encompasses several dimensions, which are likely to be related to national institutions, particularly industrial relations and welfare systems. It then proceeds with a comparative analysis of quality in work across the 27 Member States, which confirms the existence of several models in Europe and suggests that the Laeken indicators should be supplemented by additional measures.

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The academic study of job quality has known major developments over the past decade, especially in the fields of economics and industrial relations. Labour economists' growing interest in job satisfaction data has generated a debate about the pre-eminent factors explaining workers' judgements on the quality of their jobs (Clark, 2005). Besides, many studies question the trend decline in job satisfaction observed in national and European surveys, despite rising real wages (Green, 2006), which could be explained, among other factors, by some kind of work intensification and its impact on work-life balance. Job quality has also become an economic policy issue both at the international level, through the definition of "decent work" by the ILO (1999), and at the European level, through the inclusion of so-called "quality in work" indicators in the European Employment Strategy in 2001 (European Commission, 2001a). (1) These definitions involve a range of dimensions--including wage level, social security and representation rights, type of contract, and training opportunities--which can be influenced by labour market and social policies.

Nevertheless, these international indicators are rarely used in the literature, and apart from a few empirical studies (European Commission, 2001b, 2002 and 2003) and a special issue of the International Labour Review (2003), very little is known about job quality from a comparative perspective.

This article tries to fill this gap by implementing, discussing and completing European indicators. The empirical enquiry is based on hypotheses derived both from the literature on job quality, and from the findings of comparative labour market research. The article draws policy-oriented conclusions, concerning both the European Employment Strategy, in particular the relevant indicators to monitor quality in work, and the relationships between national institutions and the quality of employment.

European Employment Strategy (EES) and quality in work

The emergence of job quality in the EES

The introduction of work quality in the European debate about labour market performance and labour market policy dates back to the Lisbon Summit, which was held in 2000 against a background of emerging cooperation between Member States in the field of employment and social policy, based on the so-called Open Method of Coordination and on the framing of the EES. At the Nice Council in December 2000, job quality was included in the European Social Agenda, and became an objective of the EES. Indicators of quality in work were then defined at the Laeken Summit in December 2001. Quality in work is still an official goal of the new EES adopted in 2003 with the aim of promoting "full employment", "employment quality and productivity", "social inclusion and social cohesion". These three objectives were confirmed for the period 2005-08 by a Council decision of 12 July 2005.

Nevertheless, this growing interest in quality issues in the field of employment also shows signs of weakness. For instance, the 2004 Employment in Europe report by the Commission does not include any specific chapter devoted to work quality, contrary to the practice adopted in the three previous years. The 2004 report by Wim Kok on employment and labour market policies (entitled Jobs, jobs, jobs) focused on quantitative aspects of employment (and especially the employment rate and incentives to work), without any consideration of quality.

This brief history of quality in work at the European level highlights the ambiguity of the concept. On the one hand, it appears to be an innovation testifying to a will to renew the European Social Model. But on the other hand, it is strongly embedded in economic and political contexts. Indeed, the concern for quality was supported by left-wing governments--which were a majority in the EU at the end of the 1990s--in a successful economic context, characterized by growing employment. But the increase in unemployment and the weakness of social democratic parties in the 2000s have limited the scope for quality concerns. The objective is still present in the EES, but its substance has changed: quality is increasingly interpreted in terms of job productivity and the financial benefits of job creation. And hesitations over the definition of work quality reveal more general ambiguities in the EES (Erhel and Palier, 2005).

From a European policy perspective, reference to quality in work since 2000 appears to have been a political compromise, which has met with uncertain and variable success. Nevertheless, results have been achieved in terms of indicators and monitoring.

Indeed, the political process has led to the definition of common indicators (European Commission, 2001a). This EU definition of job quality relies on a multi-dimensional approach, based on ten groups of indicators relating to: intrinsic job quality; skills, life-long learning and career development; gender equality; health and safety at work; flexibility and security; inclusion and access to the labour market; work organization and work-life balance; social dialogue and worker involvement; diversity and non-discrimination; overall economic performance and productivity. According to the Commission, the first two dimensions concern the "characteristics of the job itself", whereas the other eight dimensions concern "the work and wider labour market context". At the Laeken Council and in the Employment Guidelines for 2002, key indicators and context indicators were defined for each of these dimensions, except for social dialogue on which no political compromise could be reached. These indicators (listed in Appendix A) are likely to be calculated on the basis of European surveys (European Community Household Panel, Labour Force Survey, etc.). In its Employment in Europe reports (2001, 2002, 2003), the Commission undertook to implement them and proposed some empirical analysis of the relationships between job quality and job quantity, and job quality and flexibility.

Despite these efforts, European job quality indicators suffer from important weaknesses. First, the concept of quality in work is weakly defined, on the basis of a political consensus rather than by theoretical analysis. For instance, as a result of the position adopted by the United Kingdom and the Scandinavian countries, the definition does not include wage level as a component of work quality, whereas other countries (e.g. France) were in favour of taking this indicator into consideration. An agreement was reached by the introduction of a wage mobility indicator (Barbier and Samba Sylla, 2004).

The concept of job quality: Recent contributions and the Laeken indicators

In labour economics, job quality was traditionally understood as being captured by the wage level; and in some sociological or industrial relations studies, it was related to working conditions. But recent developments in economics and socioeconomic approaches can contribute additional dimensions to the definition of job quality.

Developments in human capital theory (Becker, 1964) recognize the heterogeneity of jobs and workers, and a first step can be made to differentiate degrees of job quality according to the skills involved in particular jobs or the skill-matching between workers and jobs. At the macro level, market failures can lead to underinvestment in human capital, so that investment and participation in education and training activities could be an indicator of employment quality.

In the recent framework of the "economics of happiness" (Layard, 2005), the approach to job quality is enriched by the consideration of workers' points of view through the development of surveys on job satisfaction and workers' well-being. Such surveys make it possible to determine the dimensions of job quality by asking people what is more important to them. For instance, according to ISSP data (Clark, 2005), "job security" and an "interesting job" are "very important" for a majority of people and seem to be more important than items such as "being allowed to work independently", "good opportunities for advancement", and "high income". According to such studies, it appears that the absolute wage level is not so important. Comparison effects and habit effect dominate: workers are unhappy if they are paid less than their colleagues or peers (all else being equal), and wage rises have only a transitory effect (Clark, 1999). These results suggest that decent living standards, wage equity, and good wage mobility could be taken as indicators of employment quality. A modern definition of job quality should also take into account the impact of employment on the other spheres of life. Indeed, the possibility of reconciliation between work and family life appears to be a very important dimension of job quality according to workers' responses to the European Social Survey. This is also consistent with policy-oriented approaches, like the "transitional labour market" perspective (Schmid and Gazier, 2002; Schmid, 2006), which stresses the importance of out-of-work quality dimensions, such as the right to training, to occupational redeployment or retraining, to a family life, and to decide one's working hours throughout the life cycle.

The recent framework suggested by Green (2006) integrates these results and recognizes the multi-dimensional character of job quality. Indeed, this author studies job quality through the evolution of different dimensions--including skills, work effort and intensification, workers' discretion, wages, risk and job insecurity, and workers' well-being--and thus takes into account the multi-dimensional nature of job quality.

To sum up, this short review of the literature shows that employment quality is gaining prominence in the research agenda of labour economists, and that it is preferentially treated as a multi-dimensional concept, covering the following four main aspects:

* socio-economic security (i.e. decent wages and secure transitions);

* skills and training;

* working conditions;

* ability to combine work and family life, and promotion of gender equality.

These dimensions can be captured through a combination of objective and subjective data, and should be interpreted in both static and dynamic perspectives, using data on transitions. A definition incorporating these four components would match the framework proposed by the European Foundation for the Improvement of Living and Working Conditions (2002).

The Laeken indicators also partly fit with these conclusions. Indeed, the ten dimensions of Laeken can be related to these four synthetic components. (2) This definition also calls for self-reported data and embodies a broad concept of job quality, involving other life spheres, especially family life. Nevertheless, the EU definition also has important limitations if one compares it with the academic literature or with other job quality definitions, like the ILO's decent work concept or the European Foundation's approach.

First, although the Laeken definition provides a broad coverage of job quality issues, it excludes some crucial dimensions, such as wages and work intensity. We argue for adding a wage variable to the set of indicators used to capture a job quality--namely, the mean wage in purchasing power parity--and an indicator of wage "dispersion", e.g. the proportion of working poor. These wage indicators are part of the socio-economic security dimension.

Second, some dimensions are only partially covered. Concerning skills and training, for example, the Laeken indicators focus only on the occurrence of on-the-job vocational training episodes without regard to the volume or intensity of such activities (that can be measured through the average number of hours spent on formal training, the cost of formal training per participant). On working conditions, the only Laeken indicator is the rate of change in the incidence of accidents at work, which gives a very limited view of working conditions. Self-reported data from the fourth European Survey on Working Conditions (ESWS) managed by the European Foundation for the Improvement of Living and Working Conditions can …