Transcript Diapositiva 1

Flexibility and Worker Security in Advanced
Political Economies
Flexnet Conference
Leuven, 28-29 October 2011
Stefano Sacchi
University of Milan and Collegio Carlo Alberto, Turin
[email protected]
Out in Spring
2012
Policy Press
(in the US,
University of
Chicago Press)
motivation
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Studying the empirical links between labor market
flexibility and worker security (dynamically: labor market
flexibilization and its consequences on worker security)
Most studies focus on the macro level: policy reforms and
arrangements
Individual-level studies tend to focus either on the labor
market (careers, wages) or on the social protection system
(benefits received) but less so on the interaction between
the two
But such interaction is key if worker security is understood
as employment and income (i.e., wage and social) security
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In-depth analysis of Italy, to single out and
document the processes and mechanisms
empirically linking flexibility and security in an
advanced political economy.
Show that these processes and mechanisms are
relevant, in various degrees, in Germany, Japan
and Spain
All social-insurance countries that have
undergone important changes in their labour
markets in the past decades, witnessing
substantial deregulation at the margin and the
spread of non-standard work
Labour market reforms
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All the four countries analyzed have introduced
labour market reforms at the margin as a
strategy of response to high unemployment rates
(or perceived high unemployment rates, as in
Japan), and to accommodate productive
necessities that could no longer be satisfied with
existing instruments. In doing so, they sought to
shelter the core workforce from regulatory
changes, shifting the burden of functional
adjustment mostly on new entrants in the labour
market.
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Spain: Liberalization of the use of fixed-term contracts in
Spain already in the 1980s; incidence of fixed-term in
dependent employment rose from less than ten per cent in
the early eighties to more than a third ten years later, it still
makes up a quarter of dependent employment.
Germany: comprehensive reform of both the labour market
and the social protection system (the Hartz reforms,
entered into force between 2003 and 2005), introducing
new forms of employment and restructuring its existing
income maintenance system for the active population.
Japan: the traditional model of work relationships based on
long-term mutual commitment between workers and firms
(shushin koyo) and a significant role of company-based
welfare provision are being increasingly and radically
challenged by the diffusion of more flexible work
arrangements. More than formal deregulation of nonstandard contracts – that has however taken place –
massive substantive changes are occurring.
Reforms at the margin
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Spain, which already in the 1980s had gone the
furthest in the strategy of reform at the margin
has later tried to redress it, acting on both sides
of re-regulation of fixed-term work and
deregulation of open-ended work, apparently to
little avail thus far (but the effects of the 2010
reform have obviously still to percolate through
the labour market). Italy and Germany have
maintained regulation of open-ended contracts
largely intact, while Japan has written into law
the principles of protection against unjustified
dismissal.
labor market flexibility
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labor market flexibility is a
multidimensional concept
we focus on numerical flexibility: easing
EPL for open ended workers; making it
easier for firms to hire fixed-term workers
Share of fixed-term dependent employment on total dependent
employment, 1980-2009
Source: OECD data.
Share of part-time dependent employment on total dependent
employment, 1980-2009
Source: OECD data (for Japan: National Statistical Office)
worker security
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Focus on stabilization of material life chances
Worker security: capability of an individual to
mantain an adequate living standard through
labor market participation and/or (public or
mandatory private) social protection when not in
work
Worker security is given by a combination of
employment security, wage security and social
security
substitutability between security
dimensions
Even if they should take place, interrupted
(‘bumpy’) careers do not lead to insecurity
per se, provided that when in employment
workers earn wages high enough to allow for
precautionary savings and income
smoothing; or if income-maintenance
schemes during periods of no employment or
top-up benefits for low incomes allow for the
enjoyment of an adequate standard of living
Contribution
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Worker security (or, on the contrary, precariousness) does
not depend solely on a country’s labour market
institutions, or its employment protection legislation; it
emerges as the outcome of the interaction between
labour market dynamics and the social protection system.
The relationship between the main strategy of labour
flexibility adopted in many advanced countries in the past
twenty years – reducing regulatory constraints to the use
of non standard, mainly fixed-term work – and worker
security cannot be solved at the analytical level:
empirical research on the consequences of flexibility in
terms of work careers, wages and social protection must
be carried out.
Contribution
What we do:
•separately investigate the relationship between non-standard
work arrangements and the three main dimensions of worker
security (operationalized through employment continuity, wages,
and access to social protection);
•propose, based on a unifying monetary metric, a summary
measure which is comprehensive in the medium run of the three
elements above, allowing for international comparisons;
•overall, highlight the mechanisms linking institutional
dualism(s) at the policy output level to divides at the outcome
level.
What we do not do:
•provide an evaluation of labor market reforms (we do not
assess counterfactuals)
•estimate behavioral responses to labor market policies.
Data
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For Italy, most work carried out on administrative
microdata: individual work histories (WHIP)
For Germany, Spain and Japan mostly
secondary evidence. Problem: a good deal of
heterogeneity is lost as most literature groups
fixed-term workers together as “temporary”:
direct hire temps, TAW, apprentices, sometimes
independent contracts, etc.
The latter tends to hide very big differences:
Italy’s detailed analysis shows that heterogeneity
is fundamental
employment security
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employment security: reasonable expectation of
having secure and continuous employment
careers, which may entail changing employers and
jobs
Employment continuity is a matter of:
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duration of the contracts
frequency of job-to-job transitions
duration of non-employment
frequency of transitions towards contracts with
longer duration
Italy
1. fixed-term contracts have shorter durations than openended ones (but open-ended contracts are far from being
’permanent’)
2. fixed-term workers are roughly as likely as standard
workers to enter non-employment when the job spell ends
3. fixed-term workers experience on average nonemployment spells of shorter duration
4. (2) and (3) are not sufficient to compensate for (1)
5. Moreover, fixed-term workers are more likely to get other
fixed-term contracts (than open-ended contracts)
⇒ fixed-term jobs are associated to lower employment
security
Port of entry: Other things being equal, holding a
job – under whatever arrangement – enhances
the probability to work also in the future, but
Persistence: The most likely outcome is that of
persisting in the same type of contract.
Only within-firm effects: These effects disappear
once within-firm transitions are controlled for, so
that the likelihood of fixed-term workers getting
a job in a different firm after their contract has
expired is not significantly different from that
of the unemployed. The only real port of entry to
open-ended jobs across firms lies in openended contracts themselves.
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Germany
Non-standard work mainly concerns low qualified
individuals, and those who fail the transition from
training to work, plus those with university
education. With the exception of the latter, this
group might therefore be at high risk of
employment discontinuity.
For workers who do not enter or fail the
vocational training path to stable employment,
fixed-term jobs, despite the initial high turnover,
represent an alternative to gain employment
continuity in the medium run.
Agency workers represent nonetheless a notable
exception to this positive picture (in contrast to
Italy)
Japan
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Substantial turnover; non-standard workers’ probability to
become unemployed is five times as high as for standard
ones
Entering regular employment for non-standard workers is
extremely unlikely: in the short run the probability to get a
standard job is lower for non-standard workers than for the
unemployed
It takes twenty years of participation to the labor market for
the probability of holding a standard job to be the same for
everybody irrespective of their starting position
Japanese firms’ recruitment strategies for core positions
basically did not change in the last decades: only 25% of
Japanese firms consider promotion from non-standard to
standard positions a viable recruitment strategy. Past work
experience thus deeply determines one’s career
perspectives and its impact cumulates over time
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Spain
Very similar to Italy
High turnover
Partly compensated by lower unemployment
spells (this also crowds out “incumbent” longterm unemployed, systematically anticipated by
workers moving back and forth from
unemployment to temporary jobs in their job
search activity)
A small fraction only of temporary positions is
eventually converted into open-ended
employment relationships and this happens
either in the presence of strictly binding legal
constraints or when temporary workers present a
credible threat of quitting their current job
Gross wage differentials in Italy
(benchmark: open ended full time)
Wage increase for independent contractors to
match standard workers’ overall economic
treatment
Germany
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Not controlling for individual unobserved
heterogeneity would put the wage gap up to
25-28%
Controlling for unobserved heterogeneity the
wage gap shrinks to 4-6%.
Temporary agency workers appear to suffer
from a more substantial gap of 15-18% after
controlling for observed and unobserved
characteristics
Part-time no penalty
Japan
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part-time is explicitly related to status within the firm
and not to hours worked: Japanese surveys indicate
that 20-30% of those classified by their employers as
part-time work as many hours as full-time workers
hourly wage differentials can be as high as about
40%, with up to 60% of this gap not explained by
differences in productivity
part-time workers are not covered by the traditional
seniority-based pay and promotion system (Nenko
joretsu), whereby employees’ wages are closely tied
to their age and seniority
Spain
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Wage gape of about 10% for temporary
workers
10-15% for men; 7% for women
Gap reduces with firm seniority, but this is
generally short
Part-time no penalty
Social security
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For Italy detailed analysis of actual
eligibility (assessed through individual
work histories) to UB, but also maternity
and sickness schemes (plus pensions)
Comparative: unemployment
compensation and income-maintenance
system for working-age population not in
work
Income-maintenance system for
working age population not in work
Unemployment
insurance
Unemployment
assistance or
social
assistance for
able to work
General social
assistance
Germany
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X
X
Spain
X
X
(x)
Italy
X
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Japan
X
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Entitlement, eligibility,
coverage
Entitlement is used to connote formal availability of an
actionable right to benefit provision for a given category of
workers, that may then be conditional to further specific
requirements. Its extension thus comprises those who – in
principle – have the formal opportunity to receive a benefit.
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Eligibility connotes the substantive ability to claim a
benefit on the grounds of qualifying conditions. Its
extension thus comprises those who, among those entitled,
actually fulfil the requirements set for accessing the right to
benefit, for instance on the basis of a claimant’s work and
contribution record for social insurance, of need as
operationally assessed through a means-test for social
assistance.
Coverage connotes actual benefit recipiency among a
target population.
Entitlement to unemployment
insurance
• Italy: self employed and independent contractors
not entitled
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Germany: self-employed not entitled; marginal
employment (minijobs) not entitled; also very
short-termed seasonal workers not entitled
Spain: all workers now formally entitled:
compulsory for dependent workers and
independent contractors whose income mainly
come from a single employer; enrolment on a
voluntary basis for self-employed
Entitlement to unemployment
insurance - Japan
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Self-employed not entitled
Non-standard employees not always entitled to
unemployment insurance – or to other social programmes.
Those who work less than 20 hours per week and fixedterm workers whose contract is shorter – or are scheduled
to work less – than six months cannot be enrolled in the
unemployment insurance scheme.
30% of temporary agency workers, 55% of part-time
workers and 70% of fixed-term workers not formally entitled
to unemployment insurance (as a consequence of lack of
enrolment)
OUB
RUB
entitlement
only dependent workers, apprentices
only dependent workers, no
only if previous qualifying job spell,
apprentices, no independent
no independent contractors (formally
contractors (formally independent)
independent)
eligibility
insured since at least 2 years
insured since at least 2 years
contributory requirement: at least
work requirement: at least 78
52 full weekly contributions in the 2 worked (or work-equivalent) days in
years before unemployment
the year the benefit is claimed for
duration
8 months, 12 months for over 50
number of worked days in the
reference year, with a maximum of
180
amount
60% of previous wage up to 6
months; 40% for the following 2
months; 30% for further months
ceilings: 890 €/month gross for
gross monthly wage up to 1,930 €;
1,070 €/month gross beyond
35% of previous wage up to 120
days; 40% afterwards
NO UB
full time open ended
(standard)
OUB
RUB
9,1%
86,8%
4,1%
19,4%
69,7%
11,0%
apprentices
78,9%
1,3%
19,8%
direct hire temps
38,1%
42,8%
19,1%
part time direct hire
temps
47,1%
29,5%
23,4%
temp agency workers
47,8%
33,9%
18,3%
part time temp
agency workers
63,4%
17,3%
19,3%
100%
0%
0%
17,1%
75,9%
7,0%
part time open ended
independent
contractors
total
EMPLOYMENT
STOCK
STOCK OF
EXCLUDED FROM
UB
NO UB
open ended
(private sector only)
11,302
10,5%
1,187
direct hire temps
1,968
38,1%
750
apprentices
260
78,9%
205
trainees
140
50,0%
70
temp agency workers
116
47,8%
55
public sector
independent
contractors
560
100%
560
private sector
independent
contractors
375
100%
375
14,721
-
3,202
total
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Unemployment insurance
Japan: many workers not entitled, maximum
duration rather short
Italy vs Germany: ALG I provides similar
coverage to OUB+RUB, but generosity and
duration different (already comparing ALG I
to OUB, cristal-clear when including RUB)
Spain: possibility of long duration,
comparatively easy access due to long
reference period for eligibility
 Spanish unemployment assistance fragmented, mainly
geared to those with family responsibilities and to
elderly workers, thus disregarding young non-standard
workers
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A monetary measure of worker
(in)security
(Italy)
Comprehensive monetary
measure of what one
gets from participation to the labor market and
work-related social protection in the medium run
(six years)
 it includes
 The wage earned, net of the contributions paid to the social security
administration and of taxes
 The social protection benefits received, excluding pensions
 we define insecure those workers whose total net
income is less than 60% of the median of its
distribution on the whole population
 2008 prices were used
Conclusions (Italy)
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Non-standard workers are worse off, as
compared to standard workers, with
respect to all the relevant dimensions of
worker security: they have lower
employment security, lower wage security,
lower social security.
All in all, they have lower cumulated labor
and social protection incomes over the
medium run, associated with lower upward
income mobility. This remains true even
after controlling for individual unobserved
characteristics.
Comparative conclusions
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Italy and Spain seem to be comparable as
regards employment security, with Japan faring
worse (segregation) and Germany being a case
where fixed-term work (much less so TAW) is
port of entry
Wages: huge differences in Italy, problems with
unrecognized contract heterogeneity in other
countries, Germany substantial gaps for TAWs,
Spain about 10% overall, Japan huge gaps are
possible
Social protection: substantial entitlement gaps in
Japan; in all countries, social insurance
doesn’t work any longer
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Summing up
analysis casting light on the mechanisms linking the
output of labor market deregulation (dualisms) to
outcomes (divides: patterns of disadvantages in the
labor market)
it does so focusing on the interaction between labor
market dynamics and the functioning of social
protection systems (thus looking at labor market
dualisms only captures part of the story, if we want to
link them to outcomes: how patterns of disadvantage in
the labor market are replicated, transformed or offset by
the social protection system is key)
non-institution-specific (‘able to travel’) monetary
measure of worker security to analyze labor market
divides (outcomes), comprising employment and
income (wage and social) security
Policy proposals
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Single contract neither necessary nor
sufficient
Basket of rights (employment, wage,
social) for all workers, irrespective of their
contract, complemented with social
insurance/social drawing rights
Return to job security neither necessary
nor advisable: TLMs, Supiot report