Lecture 4
Asymmetrical impact of the 2008/2009 recession on young people and the subsequent wave of labor market reforms implemented particularly in countries hit by the crisis.
Europe: divide between permanent and temporary jobs.
Overview:
Goal of overcoming labor segmentation lowering employment protection.
Flexicurity approach:
Initiatives to overcome labor segmentation: (so far) failed to produce noticeable changes.
Labor market segmentation:
Labor market is only segmented if there are significant mobility barriers.
Temporary employment:
depressed health;
eligibility criteria for social insurance benefits often disadvantage workers with short and interrupted work records;
employment structures welfare state institutions labor market disadvantage opposed to the notion of flexicurity promoted by the European Commission
Focus: segmentation between workers with permanent and temporary employment contracts.
Part-time employment:
mostly voluntary (except Greece, Italy, Spain & Slovakia);
Germany’s sizable apprenticeship system: 50% of temporary contracts;
low shares (< 6%): Bulgaria, Estonia, Latvia, Lithuania, Romania, the U.K.;
“55-64” group: less pronounced compared to the general workforce;
young workers: most problematic group
Mediterranean countries: lack of labor demand insufficient number of secure positions for youth reducing temporary employment – not a top priority.
However, if temporary workers remain in insecure positions for a long time “trapped” in insecure and precarious jobs.
Temporary permanent after 10 years:
100% in Austria, Estonia and Germany;
50% in Italy and Spain are still temps;
segmentation is more severe in member states with high youth unemployment.
Strictly regulated labor markets: costly dismissals temporary contracts that allow for cheaper adjustment of the workforce.
De-regulation of permanent contracts: France, Greece, Italy, Portugal, Slovenia and Spain.
Re-regulation of temporary contracts: other countries.
Italy: employers do not have to reinstate workers dismissed for invalid economic reasons.
Spain: less severance pay + more temporary workers’ protection internal flexibility.
Incentives:
Slovenia 2013 labor market reform:
France: employers are exempt from contributions for a limited period if they hire younger or older workers on permanent contracts.
Italy higher contribution for temporary than permanent workers.
Spain from 2015 onward:
Netherlands 2015: 3 2 years
Re-regulation (opposite tendency):
Italy:
Overall trends:
lower dismissal costs for permanent workers + moderate / ambiguous re-regulation of temporary contracts;
long-term declining trend in permanent hirings (Austria, Belgium and Luxembourg);
exceptions: Baltic states, Denmark, Romania
EPL for temps: significantly related to a decrease in temporary employment (when not controlling for country- and year-effects)
Flexicurity rationale:
access to social benefits
avoiding double disadvantage: losing job + lacking access to unemployment insurance benefits
Italy:
2013: **Assicurazione Sociale per l’Impiego* (ASPI) more generous and encompassing system;
2015: (NASPI) more permissive eligibility criteria (13 weeks of contributions in the 4 years before unemployment);
new unemployment benefit scheme for atypical employees
France: 4 months of employment over the last 28 months eligible for 4-months+ unemployment insurance benefits.
Spain:
more access to unemployment benefits for temporary and younger workers as well as self-employed;
stronger work incentives and activation policies for the unemployed
2007-2015 Overall trend: declining share of short-term unemployed receiving benefits
Segmented labor markets: vulnerable workers have a higher risk of becoming unemployed entering into contact with public employment services (PES).
Effective ALMPs and PESs :
Increased training expenditure: Austria, Finland, Sweden
Increased expenditure per unemployed: Germany (note: declining number of unemployed), Denmark, Sweden, Estonia
Low-skilled workers:
1/4 ~ 1/3 of all temporary workers have tertiary education unlikely to benefit from ALMP intervention (e.g. training) still insufficient jobs for skilled workers
EU-states:
policy initiatives intending to overcome labor market divides;
however, temporary employment ; youth unemployment remains high
Temporary employment can serve as bridge to permanent jobs prohibitive regulation – not an option
Deregulation of permanent contracts not automatically translating into encompassing job security
France insecurity bonuses: employers paying a bonus to the worker (10% of the total gross wage) if the employment relationship is not continued after the contract has expired.
Main challenges:
political preferences: reducing social rights of “insiders” difficult to organize democratic majorities;
expanding social protection for vulnerable workers resistance from the majority with a low unemployment risk (net payers);
insufficient labor demand workers and policy-makers view temporary employment as the lesser of two evils
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