Challenge: To Raise the Employment Rate

Rita Asplund and Pekka Vanhala

No 77, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract The government reached its 2019 goal of 72% for the employment rate. Yet, the policymaking arena has already rushed to raise the target to 75%. This official employment rate, which measures the share of the employed in the 15–64 aged population, however, conceals large differences both between and within age groups. Particularly problematic is that it overlooks the weak employment situation of those with only a primary education and of persons of foreign background born abroad. In view of this it may be asked whether the official employment rate really is to be considered as a reasonable goal and guiding principle for employment policies. It includes school-aged groups and even youngsters still obliged to participate in compulsory education. It neglects the fact that growing numbers of adults leave working life for upskilling or reskilling due to rapid technological change. Hence, the activity rate (the joint share of students and employed) would be a more relevant indicator especially in the case of youngsters but increasingly so also for adults. Left aside are also key questions such as: Why has the employment rate risen in some age groups but not in others? What is the quality of the employment relationships underlying the observed increase in employment? The design of policy measures needs to be supported by information on group-specific employment rates supplemented with more precise quantitative as well as qualitative indicators.

Keywords: Employment rate; Age group; Gender; Education level; Ethnicity; Activity rate (search for similar items in EconPapers)
JEL-codes: I20 J21 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2019-03-22
New Economics Papers: this item is included in nep-age
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