Labor market reforms in Europe: towards more flexicure labor markets?

Abstract

Labor market segmentation refers to a salient divide between secure and insecure jobs and is related to problems in important areas, including macro-economic efficiency, workers' well-being and repercussions for social cohesion. EU-28 countries have started a new wave of labor market reforms in the aftermath of the 2008/2009 crisis to tackle a number of issues, including labor market segmentation. This particularly concerns reforms in: (1) employment protection, i.e. dismissal protection and restrictions on fixed-term contracts; (2) unemployment benefit generosity and coverage; and (3) the intensity of active labor market policies. The paper provides an overview of reform patterns and tries to assess whether and to what extent these reforms have led to less dualized, more 'flexicure' labor markets in terms of dismissal protection, the provision of unemployment benefits and access to ALMPs. In particular, we will provide some evidence on potential changes in hirings on temporary contracts.

The occupational trajectories and outcomes of forced migrants in Sweden. Entrepreneurship, employment or persistent inactivity?

“…These circumstances cause rigidity in the labor market. Another tentative outcome from this situation is the large share of temporary workers, of which Sweden has among the highest share in Europe (Eichhorst et al 2016).…”

The Entrepreneurial Society

“…Finally, it would be beneficial to reduce job tenure-related wage scales and severance pay; these insider benefits tend to lock people into their current job and shift bargaining power in the labor market to large, incumbent employers (Lindbeck and Snower 2001;Eichhorst et al 2017). However, before employment protection and job security can be reformed, it is wise to put in place a social security system that empowers (all) workers vis-à-vis their employers by creating a robust fallback option.…”

The determinants of employers’ use of temporary contracts in the frictional labor market

“…As observed by Eichhorst (2014) and OECD (2014), policymakers are increasingly aware of these facts, and suggest that converging the costs from terminating different types of contracts will effectively mitigate labor market segmentation 4 Although eliminating the difference in termination costs between different types of contracts is one way to resolve labor market dualism, this goal is difficult to achieve. As Eichhorst, Marx, and Wehner (2016) indicated, in the real economy, some duality will always exist under certain conditions. Subsequently, we focus on another avenue-specifically, a policy that seeks to increase the transition rate from temporary to permanent employment by influencing employers' reasons for using temporary contracts.…”

“…Other reforms may cancel out the effects from weakening firing regulations for permanent jobs. In Spain, firing regulations for open-ended contracts were relaxed by extending and clarifying the reasons for the separation as well as limiting severance pay with reforms in 2010 and 2012 (Eichhorst et al, 2016;Fita-Ortega, 2016). Nevertheless, and according to the European Commission (2016), the year-to-year probability of transition from temporary to permanent employment declined between 2007 and 2013.…”