Part-time work helps employment

Center for Economic Studies and the Ifo Institute in Munich have recently published a comparative study on European labor markets during the period of economic crisis. The study has presented a good overview of labour market reforms in such countries as France, the Netherlands, Ireland, Italy, Germany, Spain and Estonia.

Different countries have chosen different paths in reforming their labour legislation, however in general their policies were formulated toward more flexibility and security in the system, especially in growth enhancing areas within the context of tense economic environment.

Flexible wage setting, reducing costs of labour market entry or exit, better qualification and training to the labour market needs, active and not passive policies with incentives to work – all can be found in negotiating national reform agendas by governments, labor unions and businesses. Ultimately one has to deal with associated political costs to reform which depends on the expertise, political will and external pressures.

In some cases the measures taken, especially those creating necessary safety nets, were of temporary nature as presumably is the crisis itself, but if reforms were to slow down, higher levels of unemployment do risk becoming systemic. Here comes a part-time work as a part of the solution to employment.

The table below uses Eurostat data and reveals a direct correlation between a share of part-time work in the market and a rate of employment. Higher levels of part-timers were usually observed in higher employment countries or vice versa. Furthermore, during the economic downturn we can observe an increase of part-time work in countries with higher rate of employment (buffer effect). Similar pattern to employment, but not yet as clear, could be observed in the case of temporary contracts, but one has to take into account that in some cases (e.g. Spain) their costs can be very close to those associated with permanent work and so be less attractive.

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