New flexibilities in European labour markets

Because of government-mandated rigidities in European labour markets, it is more difficult for employers to lay off full-time workers in lean times – which encourages them to hire the minimum number they can get by with during expansion periods.

But because part-time and temporary workers are more easily laid off, companies hire then more readily in the first place – and this makes for more flexibility.

Michael Saunders, an economist at Schroder Salomon Smith Barney in London, has charted the rise in the numbers of part-time workers and those on fixed-term contracts in Europe.

In Germany, part-time employment as a share of total employment rose from 13.4 percent in 1990 to an estimated 18 percent in 2001.

Similarly, part-timers in France grew from 12.2 percent to 14.6 percent of total employees.

Part-timers in Italy shot up from 8.8 percent of workers to 12.6 percent in 2001.

In part due to the increased flexibility of part time work, European labour-force participation rates - the ratio of the total labour force to the working age population - rose by more than two percentage points, to nearly 69 percent, in the five years to 2001.

Source: David Fairlamb, Economic Scene: Wiggle Room for Euro Bosses, Business Week, January 21, 2002.

For more on Labour Market Regulations and Growth
http://www.ncpa.org/iss/int/

FMF Policy Bulletin\30 January 2002