Employment inequalities and labour market trajectories in 11 European countries before and during the 2008 financial crisis

This project, undertaken by doctoral student Dafni Dima, looks at individual labour market trajectories under two comparative perspectives: geographical, comparing 11 European countries and more than 40 European regions; and temporal, comparing the period before the European financial crisis (2005-2008) to the period immediately after the beginning of the crisis (2009-2012). Comparing countries across time, Dafni has explored the effects of the crisis on different labour markets with different labour market policies, policy responses to the financial downturn and labour market adjustment strategies. Indeed, the intensity of the financial crisis varies and countries form a heterogeneous image before the start of the recession and it is interesting to observe how this image varies after 2008, the year when the global financial crisis hit Europe. Comparing regions, she explored whether the within-country or between-countries differences are more pronounced and how this variation is affected by the crisis. Finally, by comparing individual employment trajectories across time, Dafni established whether and how individual characteristics – age, gender, education level and marital status, affect the labour market transitions before and during the economic crisis.

According to the theory of labour market segmentation, the distinction between standard and non-standard employment is reinforced. In fact, during the last decade, although full-time employment is still the main form of employment, the dualisation between insiders and outsiders has increased; the outsiders are not only the unemployed any more, but also the precarious workers. Specific sub-groups are affected significantly by non-standard forms of employment: temporary employment is a mainly youth phenomenon, while part-time employment is highly gendered, with women being more affected. Countries with rigid labour markets and strict employment protection legislation, like Greece and Italy, used labour market segmentation as a shock absorber and non-standard workers were the first to lose their jobs, while unemployment rates increased sharply. Other countries, like the Netherlands, used short-time and flexible working, together with partial unemployment, while the UK responded to the crisis with a reduction of full-time jobs, a rise in unemployment and underemployment rates, and a decrease of wages.

During the crisis notable changes in job mobility patterns can be expected since high rates of unemployment in combination with a decrease of job vacancies and an increase of atypical contracts may result in more job changes. Moreover, according to the theory of job competition, in periods of crisis highly educated people are more likely to accept jobs for which they are over-qualified pushing lower-educated people downwards, toward less qualified jobs or indeed towards unemployment.

The longitudinal component of the EU-SILC dataset is used and monthly labour market statuses of more than 20,000 Europeans between 25 and 64 years old are analysed. The methods applied are sequence analysis to study and draw individual labour market trajectories and cluster analysis to construct typologies of trajectories. Logistic regression models are then used to link the clusters of labour market patterns with individual characteristics and study whether specific sub-groups of the sample experience more turbulent labour market trajectories, and whether they are more likely to be part of a cluster with precarious forms of employment.

Photo credit: ©istock MACIEJ NOSKOWSKI
Dafni Dima