Labour Market Change in Europe: Determinants and Effects of Temporary Employment Contracts

Abstract

Few would deny that the growth of temporary employment means an important change in how European labour markets function. A common interpretation is that it has contributed to labour market dualism, that is, a situation in which ‘core’ workers enjoy employment security, while employment insecurity is concentrated in a group of ‘marginal’ or ‘peripheral’ workers. Although legal definitions vary across countries, jobs are usually considered ‘temporary’ if they end at a predefined date or after the completion of a specific task.¹ From these features it is easy to see why many employers find them advantageous. Given that it is usually costly to fire workers with permanent contracts, temporary workers provide a ‘flexible buffer’ that can be used to adjust to workload fluctuations. This rationale points to a first explanation for why temporary employment has grown so rapidly in many countries (see Figure 2.1). Because employers in capitalist economies cherish flexibility in deciding on their staffing level and because job security regulations restrict this flexibility, workers outside standard job security regulations become attractive. So it essentially remains true what Michael Piore (1980, p. 380) argued already 35 years ago:

dualism is at root connected to the variability and uncertainty that adheres to all modern, industrial economies.