Youth employment security and labour market institutions: A dynamic perspective

• Author: Alina ŞANDOR,Paola VILLA,Eleonora MATTEAZZI,Gabriella BERLOFFA
• DOI: http://doi.org/10.1111/ilr.12034
• Published date: 01 December 2016
• Date: 01 December 2016

International Labour Review, Vol. 155 (2016), No. 4

Copyright © The authors 2016

Journal compilation © International Labour Organization 2016

* Department of Economics and Management, University of Trento, Italy, emails: gabri

ella.berloffa@unitn.it; eleonora.matteazzi@unitn.it; alinamihaela.sandor@unitn.it; paola.villa@

unitn.it. This article is based on research carried out under the Strategic Transitions for Youth

Labour in Europe (STYLE) project (information available at: http://www.style-research.eu), with

funding from the European Union’s Seventh Framework Programme for Research and Techno-

logical Development (Grant No. 613256).

Responsibility for opinions expressed in signed articles rests solely with their authors, and

publication does not constitute an endorsement by the ILO.

Youth employment security

and labour market institutions:

A dynamic perspective

Gabriella BERLOFFA,* Eleonora MATTEAZZI,* Alina S¸ ANDOR*

and Paola VILLA*

Abstract. The shift of policy focus from job security to employment security calls

for a more dynamic measurement of young people’s labour market performance.

This article uses data on monthly employment status trajectories and job duration

to investigate young Europeans’ employment security around ve years after they

nished education. The authors show that almost 40 per cent of “job-insecure” in-

dividuals actually enjoy employment security – i.e. they are able to re-enter paid

employment rapidly after losing their job. The article highlights the need for policy

measures to enhance employment security, and the positive role that stricter tem-

porary employment protection, and ALMP expenditure, could play.

The debate that began in the early 1990s on the role played by labour

market institutions in the poor performance of the European economy

considered exibility and security to be diametrically opposed. This apparent

trade-off led to the need to increase labour market exibility by relaxing em-

ployment protection legislation (EPL), i.e. with less stringent hiring and ring

rules. By the mid–2000s, however, increasing concern for the growing insecur-

ity associated with the deregulation of the labour market led the European

Commission to recommend a mix of policies that would increase labour mar-

ket exibility, i.e. reduce “job security”, while ensuring employment security, i.e.

improving people’s employability by providing better training, public employ-

ment services, and adequate income support in the event of job loss. This “exi-

curity” approach was based on less stringent permanent and temporary EPL,

accompanied by higher expenditure on active labour market policies (ALMPs)

International Labour Review652

in order to improve employability, together with well-designed unemployment

benets to ensure income security but reduce the risk of benet dependency.

The adoption of this approach by policy-makers has important conse-

quences for the concepts and measures used by researchers to assess labour

market performance. First, analysis of individuals’ security should clearly

distinguish between employment security and economic (i.e. income) secur-

ity. Indeed, these two dimensions are covered by different types of policies:

ALMPs are designed to enhance the former, while passive labour market pol-

icies (PLMPs) are designed to ensure the latter. Second, researchers should

recognize that an individual’s employment security is not the same as his or

her job security. Indeed, labour market exibility implies that workers can

move quite frequently across jobs, with possible unemployment spells in be-

tween. One should therefore adopt a denition of employment security that

reects a situation in which, over a long enough time period, individuals are

mostly employed, with or without short unemployment spells between one

job and the next.

In most European countries, labour market reforms involved the de-

regulation of temporary employment, while retaining stringent protection for

regular workers. For this reason, many empirical studies concerned with the

security aspects of individuals’ employment focused on the type of contract

they had. In particular, the transition from xed-term to open-ended contracts

was studied, with the implicit assumption that individuals with xed-term con-

tracts are more “employment-insecure” than individuals with open-ended con-

tracts (D’Addio and Rosholm, 2005; Ichino, Mealli and Nannicini, 200 8; Berton,

Devicienti and Pacelli, 2011). However, there is considerable variation in the

security – and other working conditions – enjoyed by “permanent” and tem-

porary employees across countries (Burchell, 2002; Paugam and Zhou, 20 07;

European Commission, 2003; Booth, Francesconi and Frank, 2002). For ex-

ample, the lack of protection for permanent workers in liberal employment

regimes is seen as a major reason for the low rates of temporary employment

in these countries. Therefore, even when examining job security, in a cross-

country analysis one should adopt a denition that is not based on contract

type, but on actual job duration.

In this article, we propose a new operational denition of individual “em

-

ployment security”, based on monthly employment status trajectories, specify-

ing the conditions under which these trajectories can be considered sufciently

“secure”. We also adopt a dynamic denition of “job security” by looking at

whether individuals remain in the same job over a specied period, rather

than at the type of contract they have. These two denitions are used to ana-

lyse the early labour market experiences of young Europeans. In particular,

we focus on the job security and employment security of young people around

ve years after nishing their education (secondary school or higher educa-

tion), by which time the main problems encountered entering the labour mar-

ket should have been overcome. Indeed, Eurostat statistics show that, three or

more years following completion of the highest level of education, three out of