The Politics of Temporary Work Deregulation in Europe

• Date: 01 September 2013
• DOI: 10.1177/0032329213493754
• Published date: 01 September 2013
• Author: Tim Vlandas
• Subject Matter: Articles

Politics & Society

41(3) 425 –460

© 2013 SAGE Publications

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DOI: 10.1177/0032329213493754

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Article

The Politics of Temporary

Work Deregulation in Europe:

Solving the French Puzzle

Tim Vlandas

European Institute, London School of Economics, London, UK

Abstract

Temporary work has expanded in the last three decades with adverse implications

for inequalities. Because temporary workers are a constituency that is unlikely

to impose political costs, governments often choose to reduce temporary work

regulations. While most European countries have indeed implemented such reforms,

France went in the opposite direction, despite having both rigid labor markets and

high unemployment. My argument to solve this puzzle is that where replaceability is

high, workers in permanent and temporary contracts have overlapping interests, and

governments choose to regulate temporary work to protect permanent workers. In

turn, replaceability is higher where permanent workers’ skills are general and wage

coordination is low. Logistic regression analysis of the determinants of replaceability—

and how this affects governments’ reforms of temporary work regulations—supports

my argument. Process tracing of French reforms also confirm that the left has

tightened temporary work regulations to compensate for the high replaceability.

Keywords

insider-outsider, temporary work, employment protection legislation, replaceability,

labor market reform.

Corresponding Author:

Tim Vlandas, European Institute, London School of Economics, Houghton Street, WC2A 2AE, London,

UK.

Email: t.r.vlandas@lse.ac.uk

493754PAS41310.1177/0032329213493754Politics & SocietyVlandas

research-article2013

426 Politics & Society 41(3)

A growing literature documents the increased dualization of welfare state policies and

employment protection in Europe.1 Welfare states have been reformed in ways that

reduce the entitlements, protection, and welfare of outsiders, understood here as pre-

carious and unemployed workers.2 The literature argues that governments choose to

preserve existing institutional arrangements for insiders while reducing the entitle-

ments and employment protection of outsiders. In this paper I consider the case of

temporary workers, which represents a good case of outsiders. The expansion of tem-

porary work also has political implications, as these workers have distinct political

preferences3 and distinct preferences for labor-market policies.4 More importantly,

like other labor-market outsiders, temporary workers have lower electoral turnout,

raising the risk of an increasingly large segment of the population being politically

excluded.5

The emergence of temporary work also has wide-ranging implications for inequal-

ity. Besides having lower objective and subjective employment security,6 temporary

workers also earn comparatively less, report lower job satisfaction, and have less

access to training.7 In Europe, temporary workers earn, on average, 20 percent less

than their permanent counterparts and the pay gap remains when controlling for differ-

ences in seniority, skills, and sector.8 The Organisation for Economic Co-operation

and Development (OECD) estimates that the pay penalty of working with a temporary

contract may be as large as 25 percent when controlling for gender, age, working

hours, and education.9

As a result, temporary workers are twice as likely to be in poverty than permanent

workers (12 percent compared to 6 percent).10 Wage inequality therefore increases as

the regulation of temporary work is reduced and the employment protection of regular

workers is raised.11 Temporary workers are also less often eligible for unemployment

benefits and social insurance,12 and they raise particularly acute challenges for private

insurance systems.13 Being employed on a temporary work contract also has adverse

effects on health.14

To the extent that temporary work is not evenly distributed among different groups

of the population, these contracts also exacerbate preexisting inequalities between

workers of different gender, age, and educational levels.15 Women are more likely to

be temporary workers, thereby increasing gender inequality.16 Youth are particularly

affected with 42 percent being on temporary contracts in the EU27.17 More than 20

percent of those with lower levels of education are in the temporary work sector, twice

as much as for those with higher education.18 Last but not least, among low-income

workers, the pay gap between temporary and permanent workers is even larger.19

The evolution of Employment Protection Legislation (EPL) for temporary workers

in the European Union (EU) therefore has important implications for inequality and

for the politics of labor-market policies. Despite the adverse consequences of tempo-

rary work for inequality, poverty, and economic efficiency, the ensuing politics of

temporary work regulations entail a particular challenge for governments. Specifically,

it is particularly difficult for governments to increase the protection of temporary

workers because they are unlikely to impose political costs on governments that

neglect their interests. To the extent that governments need to choose which group to

Vlandas 427

protect or to focus on, they are unlikely to choose temporary workers. Thus, temporary

work should be construed as a case of the political challenges that governments face

to protect politically weaker groups.

Most governments have indeed reduced the EPL for temporary workers in the last

two decades (see Table 1). There are three important exceptions to this trend: the

United Kingdom, Ireland, and France. Both the United Kingdom and Ireland are lib-

eral market economies, with very flexible labor markets20 and comparatively few tem-

porary workers. Though they have slightly tightened the EPL for temporary workers,

the resulting level in 2007 was still among the lowest in Western Europe.

The case of France is much more puzzling, as its EPL for temporary workers in

2007 was the highest in Western Europe. This strongly suggests that France has been

moving in the opposite direction from other European counties. Whereas left-wing

parties in other EU countries have deregulated temporary work when in power, the left

in France has repeatedly increased regulation of temporary work. This is puzzling

because France has all the conditions that the literature identifies for reductions of

outsiders’ status, such as lower EPL for temporary workers, to occur. Regular workers

in permanent employment—insiders—are well protected. Unions have neither tempo-

rary workers among their members,21 nor are they strong enough to protect them.

France also had as much “need” as other countries (e.g., unemployment, trade open-

ness) to deregulate temporary work.

Table 1. EPL for temporary workers and size of temporary work sector in the EU.

EPL temporary

workers

Temporary workers

(share of total dependent employees)

Countries 2007-1985 2007 2007 2007 - earliest year Reference year

France 0.57 3.63 15.08 11.74 1983

Ireland 0.38 0.63 8.05 1.94 1983

UK 0.13 0.38 5.85 0.35 1983

Austria 0 1.5 8.89 2.9 1995

Finland 0 1.88 15.96 -2.38 1997

Spain -0.25 3.5 31.66 16.07 1987

Portugal -0.63 2.75 22.36 7.96 1986

Netherlands -1.19 1.19 18.08 12.26 1983

Greece -1.62 3.13 10.88 -5.36 1983

Denmark -1.75 1.38 9.05 -3.4 1984

Belgium -2 2.63 8.65 3.26 1983

Sweden -2.45 1.63 17.45 2.85 1997

Germany -2.5 1.25 14.64 4.68 1984

Italy -3.5 1.88 13.21 6.6 1983

Source: OECD statistic website, own calculations.

Note: EPL for temporary workers is a composite index created by the OECD.