WEBVTT - Conference Board's Maselli on European Labor Markets (Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg eleventh, Brio to Washington,

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<v Speaker 1>d C, Bloomber to Boston, Bluemberg, Well Undis to San

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<v Speaker 1>Francisco Bloomberg nine to the Country's series Exam Channel one

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<v Speaker 1>nineteen and around the globe the Bloomberg Radio plus Zappen

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<v Speaker 1>Bloomberg Got Gone. This is taking Stock. Coming up on

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<v Speaker 1>taking stock, will take stock of labor and its implications

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<v Speaker 1>for the European Union. For example, in early June, and

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<v Speaker 1>we're protests in Paris over French labor reform bills. They

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<v Speaker 1>turned violent. Forty people were injured, seventy five thousand demonstrators

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<v Speaker 1>convening in the capital to block the new reform bill.

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<v Speaker 1>We've got details, but right now we'll go to Charlie

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<v Speaker 1>Pellett in the Bloomberg newsroom for details. And I think

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<v Speaker 1>you very much. Pim Fox, the DAL, the SMP NEZ

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<v Speaker 1>tank all trading higher twenty nine minutes to go ahead

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<v Speaker 1>of the clothes on a Tuesday. Here SMP five hundred

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<v Speaker 1>index at a record now at fifty two, up fifteen points.

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<v Speaker 1>That is a gain of seven tenths of one percent down.

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<v Speaker 1>Jones Industrial Average also at a record on track for

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<v Speaker 1>a record close here at eighteen thousand, three hundred fifty one,

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<v Speaker 1>the Dow rallying a hundred and twenty four points, up

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<v Speaker 1>seven tenths of one percent, and Nasdaq also hired by

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<v Speaker 1>seven tenths of one percent, up thirty five points to

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<v Speaker 1>five thousand, twenty four down. Jones Industrial Average gaining and

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<v Speaker 1>along with the smp is investors way corporate health amid

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<v Speaker 1>the start of earning season. Alcohol reported last night it

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<v Speaker 1>is now up by five point one percent. Gold dropping

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<v Speaker 1>the most in seven weeks as stock markets climb on

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<v Speaker 1>speculation that policy makers will act to spur growth. Right now,

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<v Speaker 1>gold is down twenty two sixty the ounce the thirteen

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<v Speaker 1>thirty four, that is a drop of one point seven percent.

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<v Speaker 1>Dennis Gartman is the editor of the Garment Letter. He

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<v Speaker 1>was interviewed this morning on Bloomberg Surveillance on Currency Trader.

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<v Speaker 1>We were always taught from uh from the outset to

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<v Speaker 1>be a buyer of one currency as seller of another.

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<v Speaker 1>So I tend to be a buyer of gold in

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<v Speaker 1>euro terms. I tend to be a buyer of gold

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<v Speaker 1>in the end terms, and honestly, over the court of

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<v Speaker 1>past several actually over the course of past several years.

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<v Speaker 1>It's been a far better trade to have been involved in,

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<v Speaker 1>and it reduces the daily volatility, it reduces the abject

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<v Speaker 1>movements of gold. American Airlines Group expects new credit card

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<v Speaker 1>deals with City Group in Barkley's to boost its pretax

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<v Speaker 1>income by about one point five five billion dollars over

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<v Speaker 1>the next two and a half years. American Airlines Flying

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<v Speaker 1>high up eleven point four percent three thirty two on

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<v Speaker 1>Wall Street. Now, let's take a look at other news

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<v Speaker 1>from around the world. Thank you, Charlie from the Bloomberg

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<v Speaker 1>News room. I'm Jill Schneider in Dallas at this hour

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<v Speaker 1>a somber goodbye for five Dallas police officers who were

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<v Speaker 1>killed in an ambush last week. President of Bamba addressed

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<v Speaker 1>thousands of mourners, saying Dallas and the entire nation are

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<v Speaker 1>suffering the memory and more in the loss five fellow Americas.

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<v Speaker 1>Dallas Mayor Mike Rawlings also spoke, pointing out the presence

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<v Speaker 1>of some of his fellow city leaders. These men and

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<v Speaker 1>women are here with us because they know we have

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<v Speaker 1>a common disease, this absurd violence on our streets. Former

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<v Speaker 1>President George W. Bush also made remarks The attorney for

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<v Speaker 1>the family of a Minnesota black man who was shot

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<v Speaker 1>and killed by police during a traffic stop, says there

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<v Speaker 1>will be a lawsuit against the officer who fired the

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<v Speaker 1>Shops attorney Glenna Hatchett today announced the planned litigation in

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<v Speaker 1>the death of Philando Castile. State officials are still investigating

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<v Speaker 1>the shooting. The decision on possible criminal charges will fall

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<v Speaker 1>to a local county attorney. Senator Bernie Sanders has offered

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<v Speaker 1>his long awaited endorsement to Hillary Clinton. The two appeared

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<v Speaker 1>on stage together at a rally in Portsmouth, New Hampshire.

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<v Speaker 1>They have to reform our broken criminal justice system, take

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<v Speaker 1>back our democracy from the wealthy special interests, and make

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<v Speaker 1>our economy work for everyone, not just those at the top.

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<v Speaker 1>Republican presumptive nominee Donald Trump accused Sanders of selling out

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<v Speaker 1>to Clinton. Global News twenty four hours a day, powered

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<v Speaker 1>by more than journalists and analysts in more than one

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<v Speaker 1>twenty countries. I'm Jill Schneider, and this is Bloomberg, Charlie,

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<v Speaker 1>and we thank you, and again we capping S and

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<v Speaker 1>P five hundred index up sixteen points to three, a

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<v Speaker 1>gain of seven tenths of one percent. I'm Charlie Peloton.

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<v Speaker 1>That's a Bloomberg business flash. You're listening to taking stock

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<v Speaker 1>with bim Box at Kathleen Hayes on Bloomberg Radio. Labor

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<v Speaker 1>reform labor reform in the European Union. In early June,

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<v Speaker 1>European Central Bank Executive board member ben Wa Korree issued

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<v Speaker 1>a lee for quick adoption of economic reforms throughout Europe. Indeed,

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<v Speaker 1>he said that the Eurozone risks suffering a lost generation

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<v Speaker 1>because of high youth unemployment. Here to tell us more

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<v Speaker 1>about labor markets in Europe is Elaria Masselli, senior economists

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<v Speaker 1>for Europe for the Conference Sports. He's based in Brussels,

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<v Speaker 1>but joins us here in our studio in New York. Hilaria,

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<v Speaker 1>thank you very much for being with us. Thank you

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<v Speaker 1>for inviting me. So set the stage if you can

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<v Speaker 1>describe for people that may not be following what's going

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<v Speaker 1>on in labor reform in the European Union, what is

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<v Speaker 1>or isn't happening, and maybe compare it to some of

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<v Speaker 1>the issues that we face in the United States. Okay, well,

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<v Speaker 1>and he's a question to start here there, you go right,

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<v Speaker 1>just to do it all once, Okay, well, I will

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<v Speaker 1>start perhaps on what I see as the biggest problem

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<v Speaker 1>in the European labor markets. UM, not all of them,

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<v Speaker 1>because let's remember I mean Europe. You know, you can

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<v Speaker 1>show statistics with every for the urala European Union, but

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<v Speaker 1>it's made of very diverse economies within. But notwithstanding the differences,

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<v Speaker 1>I would say that a big problem is the dualization

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<v Speaker 1>of the labor market. I'll explain what I mean. It

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<v Speaker 1>means that there is a generation of works, a portion

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<v Speaker 1>of the workers that enjoy let's say, the full package

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<v Speaker 1>of all the benefits that were negotiated some fifty sixty

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<v Speaker 1>years ago, and then there is UH. And then there

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<v Speaker 1>were a series of labor market reforms that started in

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<v Speaker 1>the nighties in in a lot of European economies, and

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<v Speaker 1>these reforms were called well, we're liberalizing in the labor market,

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<v Speaker 1>but on the margin. And on the margin it means

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<v Speaker 1>that we're introducing all forms of flexible contracts, temporary work

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<v Speaker 1>arrangements and UM, without touching what was there already. So

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<v Speaker 1>you have right now in France, in Italy, in Spain,

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<v Speaker 1>to some extent in Germany, you have a lot of

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<v Speaker 1>workers which enjoy it let's say two thirds or four

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<v Speaker 1>fifths of the workers that enjoy the full package UM,

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<v Speaker 1>and then you have a portion of workers, most likely

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<v Speaker 1>young workers that's uh, that a much weaker position in

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<v Speaker 1>the labor market. So I think all the attempts to

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<v Speaker 1>do reforms should aim at rebalancing this situation. So is

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<v Speaker 1>that similar for example to let's say the US airline

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<v Speaker 1>industry that negotiates contracts and has the pilots that are

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<v Speaker 1>veterans who have been in those positions for many years.

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<v Speaker 1>They enjoy the pay and the benefits of those and

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<v Speaker 1>that new pilots perhaps coming into the company they work

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<v Speaker 1>under a different contract. Yes, and they have the longer

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<v Speaker 1>hours for example of work and UM, much more limitations

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<v Speaker 1>on sickness for example, or maternity leaves UM. So there

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<v Speaker 1>is an unfair distribution of rights, and to some extent

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<v Speaker 1>this distribution is also generational. And this is why UM

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<v Speaker 1>young workers feel really affected by this by the crisis.

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<v Speaker 1>In your analysis, tell us countries in Europe that you

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<v Speaker 1>feel are doing the right thing when it comes to

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<v Speaker 1>labor reform and those that are dragging their feet, Well,

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<v Speaker 1>the model, I would say is the Scandinavian model. UM.

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<v Speaker 1>It's a very interesting equilibrium because um, everyone enjoys UM

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<v Speaker 1>a lot of a lot of benefits. I mean, the

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<v Speaker 1>Scandinavian welfare system is perhaps the best system in the world.

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<v Speaker 1>At the same time, it's very convenient for companies. There

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<v Speaker 1>are a lot of profitable companies that operate in Copenhagen

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<v Speaker 1>or in Stockholm and UM well, if if there is

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<v Speaker 1>a problem within a labor relationship, they can easily higher

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<v Speaker 1>fire people. And at the same time this is not

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<v Speaker 1>a drama because the system is there to help you.

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<v Speaker 1>And also you're sure that you will find another job

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<v Speaker 1>easily because if you're, for example, your skills are outdated,

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<v Speaker 1>there is a whole system of ACTI labor market policies

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<v Speaker 1>that would really help you to to be trained again

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<v Speaker 1>and then be employable the relatively easily. So in this

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<v Speaker 1>system you have very low unemployment rates, very high employment rates,

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<v Speaker 1>everyone works UM and everyone is happy. It's called flex security.

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<v Speaker 1>Is that something that could have been adopted by the

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<v Speaker 1>United Kingdom. Why didn't David Cameron, the former Prime Minister,

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<v Speaker 1>push for that kind of system. Oh, that's the one

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<v Speaker 1>billion dollar question. Because UM, of course, how generous systems

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<v Speaker 1>are welfare systems are depends on depend on um preferences

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<v Speaker 1>of the people, because a system like the Danish one

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<v Speaker 1>is also an expensive system, which means that people pay

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<v Speaker 1>quite high taxes UM and maybe you know, the same

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<v Speaker 1>system could not be applied in the United States, where

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<v Speaker 1>there is a different preferences. There are different preferences compared

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<v Speaker 1>on this on this domain also there is another challenge.

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<v Speaker 1>So actually one my my my TASiS when I wasn't

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<v Speaker 1>Universe City was on, exported this model to Italy, which

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<v Speaker 1>is my home country, and the bitter conclusion of that

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<v Speaker 1>was that it's not possible because it requires a lot

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<v Speaker 1>of management. You know, every single unemployed worker needs assistance,

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<v Speaker 1>and every single UM employee of a of a local

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<v Speaker 1>local office so that manages active level market policies, needs

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<v Speaker 1>to be trained in order to provide the type of assistance.

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<v Speaker 1>So it's really working on each single person, and not

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<v Speaker 1>every system has that capacity. I want to thank you

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<v Speaker 1>very much for coming and spending time and look forward

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<v Speaker 1>to having you again on the program in the future.

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<v Speaker 1>Larry Maseli is Senior Economist for Europe the Conference Board

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<v Speaker 1>based in Brussels, speaking about labor market reform in Europe.

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<v Speaker 1>You're listening to taking Stock. I'm pim Fox and this

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<v Speaker 1>is Bloomberg coming up on taking Stock. Weaker earnings, higher multiples. Strategists,

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<v Speaker 1>pundits and bears. They say they can predict the market.

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<v Speaker 1>Will find out more from Jonathan Golob of RBC Capital

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<v Speaker 1>Markets