Bruegel Policy Brief, Issue 2005/1. BIS Review 18/2008  1  In the Continental Model unemployment benefits are generous and the legislation on employment protection is relatively strict (high equity and low efficiency). The social welfare system is largely based on insurance-based benefits and old-age pensions. The Anglo-Saxon Model includes relatively good unemployment insurance but weak employment protection (low equity and high efficiency).
It is essential that this trend continues and, at the current juncture, two factors support the view that this should indeed be the case. First, the slowdown in economic activity which I just mentioned may contribute to containing inflationary pressure stemming from the labour market.