Employer Responses to Legislation Protecting Non-Regular Workers: Evidence from South Korea

Many countries have taken steps to address employment insecurity by enacting employment protection legislation (EPL) for non-regular workers. Although the aggregate impacts of EPL reforms have been examined in the literature, less attention has been paid to the heterogeneous ways that different types of employers respond to these reforms. In this paper, we seek to shed additional light on the impact of non-regular workforce protections by investigating the response of establishments to legal changes in Korea in 2007. We employ a difference-in-difference framework to explore which establishment characteristics predict that employers will convert non-regular workers to regular status. Results indicate that, in the short term, the Korean labor reforms led to increased conversions of fixed-term workers to permanent status. Establishments that have shifted risk onto workers via the use of performance pay are more likely to extend permanent status to non-regular workers. However, establishments that provide favorable employment conditions were less likely to convert. Unions play a double-edged role. Unions in large establishments with a wide range of occupational categories are associated with relatively greater conversion of outsiders to regular status, while unions in smaller, more resource-constrained establishments with a narrower occupational focus are associated with more exclusionary behavior.

Temporary Contracts, Employment Trajectories and Dualisation: A Comparison of Norway and Sweden

This study compares the labour market trajectories of the temporary employed in Norway with those in Sweden. Sweden’s employment protection legislation gap between the strict protection of permanent employment and the loose regulation of temporary employment has widened in recent decades, while Norway has maintained balanced and strict regulation of both employment types. The study asserts that the two countries differ concerning the distribution of trajectories, leading to permanent employment and trajectories that do not create firmer labour market attachment. Using sequence analysis to analyse two-year panels of the labour force survey for 1997–2011, several different trajectories are discerned in the two countries. The bridge trajectories dominate in Norway, while dead-end trajectories are more common in Sweden. Moreover, the bridge trajectories are selected to stronger categories (mid-aged and higher educated) in Sweden than in Norway. The results are discussed from the perspective of labour market dualisation.

The partisan politics of employment protection legislation: Social democrats, Christian democrats, and the conditioning effect of unemployment

Political parties are likely to hold differing views about employment protection legislation (EPL). While pro-welfare parties could support EPL, pro-market parties might focus on labour market deregulation. In this paper, we investigate empirically whether partisan politics, especially the government participation of Social democrats and Christian democrats, matter for EPL in 21 established OECD countries from 1985 to 2019. We show that during the golden age of the welfare state, the level of EPL was much higher where Social and Christian democrats dominated the government than elsewhere. After the golden age and under conditions of high unemployment, these unconditional effects mostly disappeared. Instead, the level of unemployment conditions partisan differences. Christian democrats liberalize EPL for regular employment significantly less than other parties under high levels of unemployment. In contrast, Social democrats defend high levels of EPL for regular and temporary employment when unemployment is low. Against expectations, they even liberalize employment protection for labour market insiders more than other parties at very high levels of unemployment.

Managers on balancing employment protection and what’s good for the company: Intended and unintended consequences of a semi-coercive institution

Sweden’s institutionalized employment protection legislation, ‘LAS’, is interesting theoretically because parts of it are semi-coercive. The semi-coerciveness makes it possible for firms and unions under collective agreements to negotiate departures from the law. Thus, the law is more flexible than the legal text suggests. The present study explores intended and unintended consequences of LAS as experienced by managers of smaller manufacturing companies. The results suggest that managers support the idea of employment protection in principle but face a difficult balancing act in dealing with LAS. From their point of view, the legislation’s institutional legitimacy is low, producing local cultures of hypocrisy and pretense. The article gives insights into how institutions aimed at specific, intended behavior sometimes end up producing unintended consequences fostering the opposite.

Labour market flexibilization and income distribution in Europe

This paper analyses the role played by the flexibilization of labour markets on functional income distribution. Specifically, we analyse whether employment protection legislation affects the evolution of labour income share, measured by the size of compensation of employees as a percentage of GDP, the sum of wages and salaries as a percentage of GDP and the size of the adjusted wage share, in twenty European economies. Our study?s results show that the evolution of labour income share is explained by the economic growth, the growth of employment and unemployment rates, and the growth of real wages. Regarding the role played by the flexibility of the labour market, and specifically of the employment protection legislation, only employment protection for temporary workers has a significant impact on the evolution of labour shares. Our results show that stricter provisions on the use of fixed-term and temporary agency contracts have a positive impact on the growth of labour shares.

Quiet Politics of Employment Protection Legislation? Partisan Politics, Electoral Competition, and the Regulatory Welfare State

Political parties and party competition have been important factors in the expansion and retrenchment of the fiscal welfare state, but researchers have argued that regulatory welfare is not part of political debate among parties. We explore this claim theoretically, and then empirically examine it in the case of employment protection legislation (EPL) in twenty-one established democracies since 1985. EPL is a mature and potentially salient instrument of the regulatory welfare state that has experienced substantial retrenchment. We test three prominent mechanisms of how electoral competition conditions partisan effects: the composition of Left parties’ electorates, the strength of pro-EPL parties, and the emphasis put on social justice by pro-EPL parties. We find that the partisan politics of EPL is conditioned by electoral competition under only very specific circumstances, namely when blame sharing becomes possible in coalitions between EPL supporters.

Complementarities between Labour Market Institutions and their Causal Impact on Youth Labour Market Outcomes

We analyse theoretically and empirically the effects on young people’s labour market outcomes of two specific labour market institutions and their interaction: employment protection legislation and active labour market policy. The paper examines recent policy reforms in Italy focussing on the impact of the 2012 Fornero reforms of employment protection legislation as well as the initial impact of the EU-wide Youth Guarantee scheme introduced in Italy in March 2014. The paper then examines how these two policy reforms interacted. The analysis first confirms the finding that the Fornero reform increased permanent hires particularly amongst the very youngest workers; it then goes on to find that the YG was indeed successful in increasing the hires of young people, although this operated through a statistically significant increase in female hires on temporary contracts. Third, it finds some evidence of a dampening effect of the YG on EPL reforms as predicted by theory.