LABOUR MARKET SEGMENTATION IN FRANCE MARKET SEGMENTATION IN FRANCE Gwenn PARENT, Economist Directorate for Employment, Labour and Social Affairs, ... LUX NLD NOR POL PRT SVK SVN ESP

LABOUR MARKET SEGMENTATION

IN FRANCE

Gwenn PARENT, Economist

Directorate for Employment, Labour and Social Affairs,

OECD

2

I. Labour market stylised facts

II. Recent policy reforms implemented in France

III. Conclusion

Labour market segmentation in France

3

I. LABOUR MARKET STYLISED FACTS

4

Employment Protection Legislation (EPL)

for regular and temporary workers

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Regular Temporary

5

France has a segmented labour market

Share of temporary employment in dependent employment in OECD countries, 2015

16.7

0

5

10

15

20

25

30

Source: OECD.Stat

6

The share of temporary contracts remained

relatively stable in France since 2000

Share of temporary employment in dependent employment (1980-2015)

Source: OECD.Stat

0

5

10

15

20

25

30

35

France Italy Netherlands Poland Portugal Spain

7

Non-regular jobs still disproportionately

held by younger workers

0

10

20

30

40

50

60

70

80

% All Youth (15-24) Prime age workers (25-54) Older workers (55-64)

0

10

20

30

40

50

60

70

80

% All Youth (15-24) Prime age workers (25-54) Older workers (55-64)

Temporary employment by age group , 2o11-12 All fixed-term contracts (share of employees with a FT contract)

Source: OECD calculations based on microdata from the European Union Labour Force Survey (EU-LFS)..

8

Temporary jobs are not an automatic stepping-stone to permanent work

Temporary contracts can be a stepping stone into stable jobs for many workers, especially for youth. But they are a trap for others:

3-year transition rates from temporary to permanent contracts is extremely low in France, and even lower than transition rate from unemployment to permanent employment.

Repeated spells of temp employment have a particularly negative effect

Three-years transition rates from temporary employment and from unemployment

to permanent employment (2008-2011)

36,4

61,9

0

10

20

30

40

50

60

70

80

90

100

NLD GRC FRA POL ESP FIN SWE CZE ALL PRT HUN ITA SVK LUX BEL LTU SVN AUT GBR EST

From temporary to permanent employmentFrom unemployment to permanent employment

Three-years transition rates (employees)

9

In many countries, non-regular employment played an

important role in the recovery from the global crisis

AUT

BEL

CZE

DNK EST

FIN

FRA

DEU GRC HUN

ISL IRL

ITA

LVA

LTU

LUX

NLD

NOR

POL PRT

SVK

SVN

ESP

SWE

CHE

GBR

0

10

20

30

40

50

60

70

80

90

0 10 20 30 40 50 60 70 80 90

2011-12

2006-07

Share of fixed-term contracts among new hires, 2006-07 and 2011-12

Percentage of employees with no more than three months of tenure

Source: OECD calculations based on microdata from the European Union Labour Force Survey (EU-LFS).

10

Temporary contracts are concentrated

in specific sectors…

Source: Magnier (2013)

11

… and lower-skilled occupations

Source: Magnier (2013)

• Probability to be unemployed is 10 times higher for a temporary-work-agency (TWA) worker than for a permanent worker.

• Out of 20 workers on fixed-term contract that are still employed one year later:

– Only 3 are on permanent contract

– 14 are still on fixed-term contract, including 11 within the same employer

12

What happens to temporary workers

one year later?

Source: Flamand (2016)

13

They are generally less protected by employment termination rules than regular workers

The comparison across contract types of different measures of job security suggests that non-regular workers (FT and TWA) feel much more insecure than permanent employees as regard to the risk of job loss and the probability of re-employment after job loss (OECD, EmO, 2014)

They face a wage penalty, about 6-10% for temporary workers once unobservables are taken into account (OECD, 2014a)

Lower access (exclusion) to social security schemes and pensions or other working conditions , weaker career progression, lack access to mortgage and other forms of credit

They receive less training (on average probability of receiving employer-sponsored training – 14%)

Non-regular workers tend to cumulate

unfavourable conditions

14

II. RECENT POLICY REFORMS IMPLEMENTED IN FRANCE

Mutual agreement between employer and employee to end the contract

= in between layoff and resignation

15

Rupture conventionnelle, 2008.

– Unlike resignation, entitlement to UI benefit is maintained.

– Reasons for signing this mutual end of contract: disagreement with hierarchy (46%), wage or work-content dissatisfaction (39%), professional/personal project (37%).

– Without this new possibility, 28% would have remained in the firm, 40% would have resigned and 22% think they would have been dismissed.

0

5000

10000

15000

20000

25000

30000

35000

40000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ruptures conventionnelles Economic dismissals

• Trade-off between higher flexibility for employers:

– Job preservation in difficult times through short-time work scheme (part-time work and unemployment insurance compensation / reduction of wages or increase in hours worked to increase productivity).

– Simplification of large collective dismissals (plan de sauvegarde de l’emploi)

• and higher security for employees:

– Higher social contributions for short-term contracts

– Personal training account

– Unemployment insurance rechargeable rights

– Generalisation of the supplemental health insurance 16

Loi de sécurisation de l’emploi, 2013

Employment securisation Law

– Painful law process, numerous strikes.

– New definition of “economic dismissal”: at least 4 consecutive quarters of decrease in sales.

– Personal Activity Account (2017): Rights are attached to the person and not the job/contract → towards transferable rights.

– Reinforcement of collective bargaining towards more decentralisation (room for firm agreements)

– Overtime regulation and collective agreement on working time.

17

Labour Law, 2016.

III. CONCLUSION

18

A number of recent reforms in EU have attempted to reduce the labour market divide through changes in the Employment Protection Legislation-EPL (address the asymmetry between EP for regular and non regular contracts)

Policy trade-offs: many regulatory reform and institutional changes have been put in place to increase employment opportunities, at the same time they were associated with wider inequalities

Rising share of non-standard contracts including dependent self-employed workers (DSEWs), new forms of work raise questions about wages, labour rights and access to social protection for the workers involved.

19

Conclusion

20

Thank you Contact: [email protected]

OECD Directorate for Employment, Labour and Social Affairs: www.oecd.org/els

OECD Employment Outlook: www.oecd.org/employment/outlook

OECD Employment Database: www.oecd.org/employment/database

OECD EPL Database: www.oecd.org/employment/protection

ANNEXES

21

22

Average percentage of workers with high perception of job insecurity, by type of contract, 2010

A. High perceived risk of job loss

0

10

20

30

40

50

60

Permanent Fixed-term contracts TWA workers

%

C. High perceived risk of costly job loss

0

5

10

15

20

25

30

35

40

45

Permanent Fixed-term contracts TWA workers

%

Source: EWCS

23

Lower investment in human capital especially in France

Estimated percentage effect of temporary contract status on the probability of

receiving employer-sponsored training, 2012

*** *** ***

*****

*** **** ***

**

***

-30

-25

-20

-15

-10

-5

0

5

10

%

24

OECD indicators of Employment Protection Legislation (EPL)

measure quantitatively the strictness of EPL, from the point of view of employers

i.e. the constraints and costs that employers face when dismissing workers or using temporary contracts

include provisions from statutory and common law as well as collective agreements (national and branch level)

Regulations divided into 4 broad areas

Individual dismissals of permanent workers (9 sub-items)

Additional restrictions for collective dismissals (4)

Regulation for fixed-term contracts (3)

Regulation for Temporary-Work-Agency (TWA) Employment (5)

Qualitative database is also available

Allows comparing institutional details in 21 standardised dimensions (sub-items)

25

Protection of permanent workers against individual dismissals, 2013

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

Scale 0-6

Difficulty of dismissal Notice and severance pay for no-fault individual dismissal Procedural inconvenience

OECD average: 2.04

26

Protection of permanent workers against individual and collective dismissals, 2013

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5Scale 0-6

Collective dismissals Individual dismissals

OECD average: 2.29

27

Reform action concentrated in few areas

Changes in Employment Protection for Regular Contracts (2008-2013),

by component

Note: Each bar in the chart represents the average change of each component. Averages are computed across OECD and G20 countries. Data refer

to 2012 instead of 2013 for Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.

Source: OECD Employment Protection Database, 2013 update.

- 0,4

- 0,3

- 0,2

- 0,1

0,0

0,1

0,2

28

Regulation of fixed-term contracts, 2013

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Scale 0-6

Valid cases for use of standard fixed-term contracts Maximum number of successive fixed-term contracts

Maximum cumulated duration of successive fixed-term contracts

OECD average: 1.65