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By Francesco Francioni

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Low-value-added services such as retail sales, cleaning, catering and so forth are known for providing very little scope for productivity increases (Pierson 1998). g. the United States, the UK, Switzerland). The situation is different in countries where wage determination, especially at the lower end of the distribution, is controlled by governments (through generous minimum wage legislation) or by the social partners (through encompassing collective agreements). Under these circumstances, the wages of low-skill workers are protected, but job creation in these sectors is limited, so that many low-skill individuals are in fact unemployed.

These policies have rarely been able to improve young people’s prospects in the regular labour market. On the other hand, it is hardly unproblematic to do nothing in relation to unemployed youths, as they may run the risk of becoming dropouts. Besides some of the special youth measures, there are two other types of programmes oriented towards increasing the number of jobs: subsidies to private sector employment and direct job creation in the public sector. Wage subsidies in the private sector appear to work for the long-term unemployed as well as for women re-entrants and, additionally, no other category of worker is generally associated with negative results.

The result has been a more or less constant decline in industrial employment in the traditional OECD countries since the 1970s. Deindustrialization presents a problem for labour markets because it destroys low-skill jobs. The individuals who as a result are left without employment cannot easily re-enter other segments of the labour market. The skills acquired through years of experience in manufacturing industry are not easily transferable to service occupations. The archetypical example is that of a metal worker or a miner.

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