Non-Standard Employment in Europe: Its Development and Consequences for the European Employment Strategy

1 Introduction A central objective of the Lisbon Process was full employment defined as an employment rate of at least 70 percent until 2010. Although most of the EU member states moved ahead, the Lisbon process failed to reach this target. Furthermore, the major part of employment gains was related to non-standard employment, especially in the form of part-time work, fixed-term contracts, temp-agency work and self -employment. Whereas many welcomed this development as a blessing for flexible labour markets, demanding even more of this kind of employment relationships in favour of the Lisbon benchmark, others were highly critical hinting to disastrous intended or unintended side-effects such as low or volatile income, dead-end jobs instead of stepping stones, high job insecurity, and poverty in old-age. In 2003, the European Employment Task Force stepped in as a kind of broker of these two visions by recommending to direct the European Employment Strategy and the related open method of coordination (OMC) towards a proper balance of flexibility and security (Kok et el. 2004). Dubbed already early by ingenious Dutch researchers as 'flexicurity' (Wilthagen 1998), the European Commission took over these recommendations and after long debates eventually succeeded in reaching some kind of consensus about the common elements of the flexicurity strategy (European Commission 2007). Despite many conceptual drawbacks of the flexicurity strategy (Keune/Jepsen 2007; Schmid 2010a), its central objective of increasing employment and labour force participation is still valid. Even taking into account the fact that the current crisis led to a drastic increase of unemployment in most of the EU -member states, the long-term perspective of most EU member states is still one of labour shortage for two reasons: one quantitative related to the ageing society, one qualitative related to the rapid change of technology and global competition. Whereas migration might fill this gap to some extent, policies raising labour force participation and life-long -learning are generally seen as the more sustainable solution. Furthermore, changing work preferences, especially among women traditionally tied to unpaid work in the private households, hint to unexploited potentials of endogenous factors driving labour force participation. Preferences for labour market participation might still be blocked by institutional barriers of various sorts: employment protection, tax incentives, lack of child care or elderly care infrastructure, and wage discrimination. Whether one likes the flexicurity-oxymoron or not, a further increase of labour force participation therefore seems inevitably be connected with a greater variety of employment relationships. The aim of the following essay, therefore, is to test this assumption in a preliminary way through systematic descriptive work and conceptual reflections: first by comparing the development of non-standard employment in EU member states from 1998 to 2008; second by relating this development to the dynamics of economic welfare and labour force participation; third by exploring the main determinants of this development; and fourth by discussing the policy consequences to overcome the weaknesses of the current flexicurity strategy and to provide guidelines for advancing the Post-Lisbon employment strategy. The Change of the Employment Relationship in the European Union The following view on the dynamics of employment relationships is based on the European Labour Force Survey using the following definitions for labour force participation and non-standard employment: (1) Activity rate or labour force participation rate = (employed + unemployed) as per cent of working age population (age 15 to 64)1 (2) Part-time employment rate = employed in part-time work and in open-ended contracts or in own account work (2) as per cent of working age population; or part-time employment share as a proportion of total employment (3) Fixed-term employment rate = employed in fixed-term contracts (including temp-agency work with fixed-term contracts and part-timers in fixed-term contracts) as per cent of working age population; or fixed-term employment share as a proportion of total employment (4) Self-employment rate = own account workers (self-employed without dependent employees) in full-time as per cent of working age population; or self-employment share as a proportion of total employment (5) Aggregate non-standard employment rate = sum of (2, 3 and as per cent of working age population. …