Future of Work

“Minijobs”, part-time work, temporary agency work and low-paid work. More and more workers are employed on conditions very different from those of traditional employment contracts.

Conditions of employment that do not meet the criteria of so-called standard employment, such as a permanent employment contract, full-time work with a corresponding income, complete social security and working for the company with which one has an employment contract, are referred to as atypical. In the case of labour leasing, workers are not employed by the company for which they work. Agency workers conclude an employment contract with a temporary work agency but work for a host company. It is the host company that also issues instructions to the employees. As well as temporary agency work, fixed-term employment, part-time work and low-paid work (so-called “Minijobs” with an income of up to 400 euro and “Midijobs” with an income of up to 800 euro) compare unfavourably with standard employment and may also be termed atypical.

Such atypical employment relationships are gaining ground. In the early 1990s, they accounted for just 20 per cent of all employees while in 2007 the proportion had risen to nearly 37 per cent. What are the features of such working relationships?

High risk of precarity

A heated debate has broken out because atypical working relationships have a number of disadvantages in comparison with standard working relationships. They are associated with higher risks of precarity. Measured against the criteria of wages, access to corporate vocational training and employment stability, atypical jobs have a worse record. The extent to which the different forms of employment are precarious varies, however. It is low-wage employees and agency workers who have to make the biggest compromises with regard to income as the employment situation among employees on fixed-term contracts and agency workers is particularly instable. However, these findings, based on extensive empirical evidence, are not to be interpreted as meaning that each of these employment relationships is to be categorised as precarious. Conversely, too, it is not true to say that standard working relationships have no risk of precarity.

The risks of precarity would have less of an impact if employees only worked in these forms of employment temporarily. That was the expectation when the Hartz laws were adopted between 2003 and 2005. They deregulated the legal framework conditions governing temporary agency work, fixed-term contracts and low-wage work. Atypical employment was intended to be a kind of springboard from unemployment into standard employment relationships. This expectation has only been fulfilled to a limited extent. When changing jobs, it is much more difficult for people in atypical employment to move into a standard job than for other people. The longer employees remain in insecure and often badly-paid jobs, the greater the risks of poverty in old age.

Resulting social problems

The social problems resulting from atypical employment relationships cause social problems extending into pensionable age, far beyond the employment phase. The risk of poverty in old age will increase to the extent that we move away from the solidarity-based model of security for old age towards the principle of greater private provision. How should employees on low wages and with high employment risks make private pension provision if, upon becoming unemployed, they do not receive any unemployment benefits until they have used up most of their savings? The chances of levelling out the limited access opportunities to corporate vocational training on one’s own are also poor. The funds required are often lacking here too.

Proposed solutions

What is to be done? The general aim is remove the disadvantages in income and working conditions in comparison with standard working relationships. Above all, the principle of equal pay for equal work should be upheld. That not only applies to basic wages, but also to variable income components. In addition, there should be equal opportunities with regard to access to corporate vocational training. In the case of temporary agency work, a fund-financed arrangement, such as the one that exists in France, could improve opportunities. The systematically high level of employment instability, particularly in the case of fixed-term employment relationships and temporary agency work, justifies some kind of precarity bonus payment, as is made in some EU countries.

A person’s claim to pension insurance depends on the duration of employment and the amount of contributions paid (equivalence principle). The risk of poverty in old age, particularly among part-time workers and low-wage employees, can probably only be reduced by changing the system, introducing basic security available to all in old age, regardless of any previous employment.