The Rise of Precarious Employment in Europe

Theoretical Perspectives, Reforms and Employment Trends in the Era of Economic Crisis

Ilias Livanos, Orestis Papadopoulos

• Editorial: Emerald Publishing Limited
• Año: 2019
• ISBN:
  9781787432659
• Categoría: Economía
• Categoría: Economía laboral

The deterioration of employmentconditions for an increasing number of employees in late capitalism hasprompted researchers to find ways to conceptualise, as well as measure, these observed new tendencies.This book examines precarious employment in Europe through the economic crisis, drawing on two main sources: theories of how the financial and debt crisis coupled with labour market reforms to exacerbate precarity in the workforce; and data from the European Labour Force Survey from 2005-12, capturing various aspects of precarious employment. It also includes a detailed discussion of policy developments in a series of EU countries, with the aim of demonstrating how precarity has been directly linked with certainlabour market reforms implemented both before and after the crisis. The authors conclude that the crisis and the labour market reforms represent significant pillars of the strategy used by states and employers torespond to the crisis, as well as promote their competitiveness agenda. Thereduction of labour costs and the promotion of higher flexibility arethe ultimate goals of that strategy, but the side-effects include an inabilityto provide high quality jobs to a growing number of people, especially youngpeople. The authors also capture the extent of precariousemployment, providing comparable evidenceacross EU countries.

Chapter 1

Theory, Concepts and EU Context

Ilias Livanos and Orestis Papadopoulos

Introduction

Precarity has occupied the theoretical and empirical studies of various social science fields (sociology, geography, industrial relations, labour economics) in recent years, mainly because it offers a plasticity and breadth that is supposedly lacking from other concepts used to grasp the increasing uncertainty experienced by many people in late capitalism. The initial use of the term by prominent sociological analyses (Beck, 1992; Giddens, 1991) denoted an attempt to conceptualise the deterioration of working conditions and the widespread feelings of insecurity endured by a growing number of people due to the dissolution of post-war relatively stable employment patterns. Initially, the term was used to theorise the insecurities felt by those at the bottom of the labour market and wage distribution including part-time, low-skilled and temporary staff. This conceptualisation has been expanded in recent years, however, mainly due to the realisation by many scholars that insecurity is not a state of affair affecting only workers on the lower end of labour markets or employed on certain contracts (Kalleberg & Vallas, 2017). For this reason, many studies of precarious employment deal with diverse employment situations, ranging from non-standard employment contracts to standard low pay jobs with limited prospects and high uncertainty in terms of job security, working time and income. In that sense, one person does not have to fall into all the different variables of precarity to be categorised as precarious (Campbell & Burgess, 2018).

Significant amount of work has been dedicated in discovering the causes of precarity and explaining the main reasons that employment relations have been significantly deteriorated over the last 30–40 years. In most of this literature it is recognised that important pillars of the employment and social systems such as unions' power, collective agreements, employment protection legislation (EPL) and social security provision have been eroded since the 1980s in most countries, albeit in different ways and degrees (Dølvik & Martin, 2015, p. 333). These changes have been manifested in the declining importance and coverage of collective agreements as well as in the evident rise of employers' power to unilaterally define crucial aspects of the employment relationship (Busch, Hermann, Hinrichs, & Schulten, 2013). In many countries, the substantive content of collective agreements has been undermined by the introduction of clauses that allow firms to adjust pay and other issues to their needs, circumscribing in that way the meaning and purpose of this important institution. In many instances, employers avoid the implementation of collective agreements by using available exit options, including soft ones like the lax enforcement of labour law in some countries or more hard options like outsourcing their operations to other companies (Bosch, Mayhew, & Gautié, 2010). This might explain the fact that many employees find themselves in low-paid jobs despite the existence of collective agreements and rules in the industry or sector they work for. In some countries, notably Germany, the phenomenon of institutional avoidance has intensified over the recent years, creating a rather exclusive employment relations framework with a growing number of low-paid and insecure workers (Lehndorff, 2016). Significant changes have also been noted over the last two decades in relation to the EPL with all countries implementing significant liberalisation reforms for both permanent and temporary contracts (Avdagic & Baccaro, 2014). Although significant variation exists in the extent that countries reformed their systems, employment protection declined in all OECD countries with detrimental effects on employees' sense of insecurity and pay levels (OECD, 2013).

Another indication of the worsening of employee's position is the decline in trade union membership and strike activity in almost all countries since the 1990s (Godard, 2011). This development needs further exploration but for the time being it is sufficient to say that the decline of collective resistance and the rebalancing of the employment relationship through successive reforms in favour of employers are important explanatory lenses for interpreting observed social and employment trends related with precarity. For instance, the increasing levels of inequality together with declining wage share in GDP and the diffusion of flexible contracts to a growing number of employees constitute foundational elements of the new employment landscape and demonstrate the effects of the changes noted above. Any institutional arrangement relies heavily and reflects the temporary power balance between actors so it should not come as a surprise that shifts in that balance bring about either radical or moderate changes in institutions (Gautié & Schmitt, 2010, p. 31).

The prevailing view in many accounts is that the above changes are linked with the declining significance of Fordist systems of work organisation and capitalist accumulation manifested in rigid and hierarchically organised structures and corporatist policy-making. The stability of the employment relationship and the institutional arrangements put in place during that period were necessary constellations for providing legitimacy to capitalist development as well as sufficient levels of demand. The Keynesian style policies combined with wage–productivity deals between employers and trade unions secured some protection to workers while for employers it meant social and industrial peace as well as reassurance that socialist and anticapitalist narratives remain marginalised (Heery, 2016). The economic crisis of the late 1990s together with other changes in the world economy such as the rise of new global economic powers and the new division of labour resulted in the decline of Fordist systems of production and demand-side Keynesian policies. The rise of a new management of the economy paradigm underpinned by the neoclassical economics and neoliberal politics was the outcome of the belief that the new realities require novel solutions in employment, social and economic fields. A range of variables including flexibility in labour processes, products and consumption patterns altered the Fordist paradigms and disturbed stable employment and social patterns (Brown & Crompton, 1994, p. 20). The increasing use of part-time jobs accompanied with the use of time adjusters or staff adjusters – resourced predominantly by the young and female workforces – signifies the impact of cost-cutting priorities and adjustability concerns on structuring the profile and working conditions of the workforce. Another determinant of the intensified pressures for increasing work output and/or performance is the restructuring of a series of service jobs (for instance, extension of working hours in retail and shifts in hospitals). In cases where self-employment or project-based work prevails, work intensification originates from the discrepancy between the available hours and resources provided to workers with the targets and deadlines – determined by market competition and company's profit target – required to be met within very restrictive time limits (Lehndorff & Voss-Dahm, 2005).

Evidence, however, suggests that the standard employment relationship of the Fordist period has been undermined even in professional spheres not associated with low-skilled service sector jobs like retail or hospitality. Processes of heightened casualisation and work degradation in professional fields like academia support the argument that aspects of precarity are also affecting those previously protected from the vagaries of the market (Morgan & Wood, 2017). The marketisation of public services with the implementation of market principles in state-run enterprises together with a series of organisational restructuring (outsourcing) in the private sector as a response to global competition have put a serious strain on working people's rights and remuneration. Since the eruption of the economic crisis many countries have introduced significant public-sector reforms (pay cuts, pension reforms and promotion of non-standard work) that considerably intensify the sense of precarity felt by employees. Although many reforms have been accompanied with and framed through empowerment management strategies tipped to increased autonomy, employees experience increased pressures to meet targets and adopt increased workloads as a survival strategy (Lehndorff & Voss-Dahm, 2005, p. 301). For this reason, some authors have argued that many employees on permanent contracts feel increased ‘job status insecurity’ as important aspects of their jobs are under threat while lack of control, anxiety and work intensity dominate their everyday work experience (Findlay & Thompson, 2017, p. 126).

In addition, the need for external flexibility of many firms is often satisfied by recourse to outsourcing (especially in specific sectors like home care services) whereby external organisations provide service delivery usually employing migrant and low-skilled workers on low pay. This process has a manifold effect; on the one hand it converts the need of external flexibility of a given organisation into internal flexibility for another one (provider of outsourcing) while on the other hand it leads to a process of internalisation since more pressure is placed on core workers to accept worse terms and conditions since their job can be done with a much lower rate of pay (Lehndorff & Voss-Dahm, 2005). It can therefore be argued that the precarious conditions experienced by large numbers of the workforce in service sector occupations is the result of flexibility requirements prescribed by the nature of work and the cost-cutting objectives that many companies set up due to price competition and relaxing employment regulations.

Because of these changes, the composition of the workforce has been altered with a significant rise in casualised and non-standard jobs that fail to secure earnings higher than the poverty line. As early as 1988 in a study on the development of wages in the US, researchers (Bluestone & Harrison, 1988, p. 190) found that the US society has been polarised between those earning high wages and those at the bottom of the labour market (low-wage blue-collar and contingent jobs) while those in the middle have been constantly losing a significant part of their income due to wage stagnation. The same authors observe that for the lowest occupational categories there has been a sharp deterioration in terms of earnings and benefits as their workplace power was weakened due to the decline of union power and the coverage of collective bargaining. Thus, the evidence does suggest that business needs to reduce costs and adjust production (and workers) to changing demands were the factors accounting for the prevalence of non-standard work (Edgell, 2011). For this reason, the rise in certain forms of flexible employment such as part-time is indicative of deeper and structural changes that necessitate the adoption of labour management strategies that can no longer guarantee secure and long-term jobs since their purpose is to benefit one side, the employers, of the employment relationship at the expense of the other, the employees (Edgell, 2011).

Theoretical Perspectives on Precarity

The agreement in the literature over the increasing use of flexible forms of employment has not led to a consensus over its exact definition since different theoretical accounts use diverse explanatory lenses to identify the origin of precarity. Similarly, these theoretical approaches propose distinctive policies and ideas for tackling precarity and reducing the insecurity experienced nowadays by an increasing number of employees. In this section, we present different theoretical perspectives dealing with precarity, identifying how exactly they theorise it and what sort of solutions each of them recommends for overcoming it. The theories included in that section are the Marxist, the institutionalist and neoliberal. Because of the recognised diversity within these theoretical traditions we will also endeavour to provide a rich account of the different streams of each theory.

The Marxist Perspective

For those writing within the Marxist perspective, especially in its classical version, the phenomenon of precarity is not something new since capitalism has been always based on the exploitation of workers, through the appropriation of surplus value (Allen, 2014). In that sense, the foundation of the capitalist system entails precarious existence since employees' economic survival depends on their ability to sell their labour power to employers considering that they possess nothing else (no means of production) apart from this ability (labour power) (Marx, 1965). Intensifying the levels of exploitation and dismantling some protections that employees used to have might be captured by the term of precariousness but this does not cancel out the fundamental aspect of capitalism associated with the exploitative social relations of production (Muntaner, 2016).

In that sense, the expropriation of surplus value (unpaid labour) by employers means that employees will always be exploited regardless of the price (wage) that they receive and therefore fair treatment and justice as well as perpetual security are not applicable to capitalist employment relationships. In addition to that, capitalism has been undergoing over-accumulation crises that equate with and translate into a destruction of productive forces manifested in high unemployment rates and increasing insecurity. The decline of rates of profits and the subsequent decreasing investment activity are capitalism-led phenomena which generate unemployment (a reserve army of unemployed) as well as work intensification since workers are pressurised to work harder under the threat of high unemployment and insecurity (Clarke, 2001). The current economic crisis seems to support the above narrative as the exploitation of labour has been intensified since 2009 while an increasing number of working population are experiencing extremely precarious conditions and lack of social protection (Greer, 2016).

Besides, due to increased competition among employers, automation of production through technological advancement and reduced rates of profits due to cyclical crises, there is always a surplus of employees whose work is not needed by employers. As early as the 1990s, US-based academics, observing the effects of technological advancement and internationalisation of production on the US economy, argued that the future economic recovery will not be sufficient to substitute for the job losses for the traditional industrial working class. Lay-offs in the US, however, have not been contained only in the traditional working-class occupations but they have also included traditional middle-class jobs since business strategies such as corporate mergers and technological innovation to increase productivity and efficiency make labour superfluous in professional and technical occupations too (Aronowitz & DiFazio, 1994, p. 4). The response available to employers and governments in that case has been to promote flexible and non-standard employment to a burgeoning number of people so that at least temporarily they are not excluded by the labour market relying on social benefits and being a potential source of social unrest. A recent Eurofound study shows that flexible contracts (mainly part-time) together with high inactivity rates observed across many EU countries are the results of the inability of EU economies to respond to the hours of work and jobs demanded by the European workforce (Eurofound, 2017a). According to this report, the labour market slack increased to almost 50 million people with the inclusion of discouraged workers – defined as those willing to work but not actively looking for a job – and involuntary part-timers. The fact that a growing number of European workers are being discouraged from participating in the labour market but not officially registered and counted as unemployed demonstrates the deeper impact of the crisis as well as the hidden dimensions of flexible work and welfare provision. The rise of the involuntary part-time work indicates the lack of sufficient growth while the rise in the number of male labour market inactivity (including those on disability benefits) shows that the decline of traditional manufacturing jobs has not been replaced by equally well-paid ones, leading many older, working-class, people to ‘forced’ inactivity. It has also been reported by many international organisations (ILOs) that part-time work, and especially in its involuntary version, is associated with in-work poverty, lower social security provision and less career advancement opportunities (ILO, 2017). The fact that many workers in involuntary part-time contracts actually want to work more and secure a full-time job is probably an indication that these jobs offer limited opportunities for a transition to a full-time job (ILO, 2017).

So, although precarity would not be necessarily associated with the classical Marxist terminology, it is used as an example to demonstrate that capitalism has failed to overcome its current crisis and fulfil its promise to provide decent and secure jobs. At the same time, it has been increasingly recognised that labour market reforms since the eruption of the crisis have been mainly implemented to overcome the crisis by creating greater opportunities for profitable investments to employers or simply helping them to compete against their competitors. This process, though, is not without its own contradictions since much of the employment growth during the crisis years has been associated with non-standard employment patterns and low-paid jobs. This phenomenon has been accelerating even further the proletarisation or precarisation of a growing number of employees and shedding doubts on the growth prospects of many European economies that are based on consumer spending.

The Institutionalist Perspective

The proliferation of flexible employment contracts, associated with the inclusion of a significant number of people and especially young people to the precariat, has also been theorised by many institutionalist accounts. Being consistent with the fundamental principles of institutional theory, many researchers have attributed precarity to the neoliberalisation of the world’s economy and the dismantling of regulatory frameworks and institutionalised systems of industrial relations that were the hallmarks of the post-war modernity era (Doellgast, Lillie, & Pulignano, 2018). Leading industrial relations scholars (Baccaro & Howell, 2011) have conceptualised precarity as a phenomenon, originating from the deregulation of labour markets and employers’ offensive against the very foundations of the social contract sealed off between capital and labour after the end of the Second World War. The proponents of this thesis attribute the dismantling of the post-war institutional safeguards to significant economic, political and social changes that took place over the last 30 years. The most important of those changes include the decline of unionisation, the increasing power of institutional investors through the financialisation of the economy, the competition among workers for the existing jobs produced by globalisation and the digital revolution that gives rise to new forms of work (on-demand, gig economy) (Findlay & Thompson, 2017; Kalleberg & Vallas, 2017).

This offensive has also been associated with the eruption of the crisis and the selection of neoliberal supply-side policies for re-engineering economic and employment growth. The institutional narrative suggests that such a choice has exacerbated precarity since economic growth is supposed to be materialised through greater flexibility in the labour market and less protection for workers (Crouch, 2015). Since the role of the state in regulating and stimulating the economy is waning, although in rather contradictory and disputed ways, individuals are left exposed to market forces facing a very precarious employment landscape that constantly undermines employment and social rights (Streeck, 2014b). The corrosion of national employment systems through the emerging superiority of enterprise-based agreements, over sectoral ones, constitute some of the most notable examples provided by institutionalists to explain the origin behind the precarisation since the beginning of the crisis (Heery, 2016; Marginson, 2015).

Despite the seeming similarities between Marxist and institutionalist theories on that point, we should highlight the fact that most institutionalists utilise Keynesian theoretical tools to explain economic phenomena. Therefore, for them the stagnation is the result of failed supply-side neoliberal policies that neglect the demand-side and the potentially beneficial role of the state in stimulating the economy. Institutionalists also dispute the proposition of neoliberal leaning thinking that unemployment and insecure employment are strongly linked with human capital deficits, as well as with the shortage of adequate up-to-dated skills corresponding to skills required by the information and automation era. To dispute the supply-side explanation of the crisis, many researchers that work within the institutionalist school provide evidence of an increasing number of young people with high skills and credentials whose employment prospects are circumscribed by limited demand for their skills and the outsourcing and dislocation that many businesses opt for to cut their costs (Means, 2017). In many countries of the Global South, most job openings have occurred in low-wage sectors that require limited or no education and training while prospects for financial advancement are restrained by the abundance of available and primarily cheap labour of migrant or disadvantaged background willing to do those jobs (Kalleberg, 2009).

Institutionalist accounts also question the empirical grounds that neoliberals postulate about deregulation prompting job growth and reducing unemployment. Many have argued that although deregulation gives rise to temporary jobs, there is no evidence to suggest that there is an overall increase in employment and in some cases the opposite happens. The substitution effect of temporary employment has been pointed out by scholars within this camp (Maciejewska, Mrozowicki, & Piasna, 2016) as employers tend to replace their permanent staff with temporary ones instead of creating new positions when labour market reforms are enacted. The European Trade Union Institute for Research (ETUI) has reached a similar conclusion arguing that there is a discrepancy between the total employment growth and the hours of work as the latter has been increasing in a much slower rate than the number of newly created jobs. The data on part-time employment support the argument that jobs growth is mainly emanated from increasing the number of those in employment but reducing at the same time the volume of work. In other words, distributes the same amount of work to a higher number of people (ETUI, 2017, p. 28). Moreover, the demographic changes currently under way in EU is another variable that needs to be accounted for when considering the labour market developments as between 2008 and 2016, the working-age population of EU has declined holding back the overall unemployment rates.

A popular stream of the institutional theory argues that tackling precariousness requires an alternative policy paradigm to neo-liberalism around a more inclusive labour market approach whereby regulation is provided to both outsiders and insiders of the labour market (Rubery & Piasna, 2017). Contrary to a more radical approach, wishing to eradicate the specific forms...