The comments were made during a discussion at the ECB Forum in Sintra, which continues until Wednesday. The forum presented a study suggesting that the increased dynamism in the European labor market, which is currently less than in the US, could enhance innovation and technological development.
Mário Centeno requested to speak after the presentation, emphasizing that there should be a mention of wages, stating that “over the last 10 years, there has been an incredible change in the European labor market.”
Regarding mobility, the governor highlighted that a large portion of jobs is occupied by individuals working in a country different from where they were born, demonstrating “enormous mobility.”
Centeno asserted that the European labor market “proved to be resilient during crises, unlike the US market,” citing specific data for the Portuguese market. In the last five years in Portugal, “for every job created, there have been 10 new contracts in the labor market,” indicating “enormous mobility.”
In terms of wages, the author argued that career advancement yields salary gains. Centeno noted that over the last five years in Portugal, “individuals moving from one job to another saw their salaries increase by 14%, whereas those remaining in the same job saw a 7% increase.”
This “implies that the labor market is functioning efficiently,” reiterated the governor, emphasizing that he does not believe there was a market with “sclerosis,” referring to the title of Benjamin Schoefer’s article.
Benjamin Schoefer, an associate professor at the University of California, presented the article focused on “Eurosclerosis,” arguing that Europe shows signs of limited labor market dynamism, especially relative to the United States.
The labor market institutions differ between Europe and the US, which affects macroeconomic indicators such as job quality and inequality, potentially hindering job changes and improvements in job quality.
The author also contended that market and company dynamism affects performance, noting that in Europe, many individuals have “jobs for life.”
Portugal is one of the countries where this is notably true; according to this study, about one-third of jobs in Portugal have been held for 20 years or more.
Considering this scenario, Benjamin Schoefer proposes reforms within the European model to facilitate labor market dynamism and, in turn, promote innovation and capital investment.
