For Hans Dietrich from the Institute for Employment Research (IAB) in Nuremburg, the length of the period of job insecurity is the deciding question. Student jobs or short-term employment after completing one’s studies do not pose a problem in theory; indeed they are part of the transition phase from life as a student to working full time. This transition is different in each country and education system and is also influenced by economic fluctuations. However, in general, the earlier one starts to work, the less complicated the transition will be. Placements and short-term employment in this context serve as a testing ground and can lead to a permanent job. Two thirds of young French people enter professional life thanks to a short-term contract. At the end, 45% are offered a permanent contract with the same employer (according to a study by the French Economic and Social Council). So, is precarity a flexible answer to the rigidity of permanent employment conditions?
Transition as the exception
Job insecurity becomes a problem when low-educated young people fall into the trap of working in low-qualified jobs which don’t offer any training opportunities. According to Dietrich, doing so significantly increases the possibility of being unemployed at a later date. People without qualifications, young women and children of immigrants are particularly affected. For example, in 2004, the rate of unemployment among young French people who had left school at 16 was 45% - four times higher than for graduates (according to INSEE).
At the other end of the scale, labour market researchers are becoming increasingly interested in students who don’t use placements to improve their career chances in a particular field or to obtain additional qualifications, but rather as a way of avoiding unemployment. This raises questions about self-image and chances of development for young people, who have only short contracts and short periods of unemployment. They repeatedly have to prove themselves, without assuming real responsibility, while permanent staff earn incomparably more for the same work.
Alongside the market for ‘insiders’ (those with secure jobs and privileges) and the market for ‘outsiders’ (mostly under-qualified older people), there is a ‘third labour market’ for the young and flexible who are willing to learn but who, because of their position as entry level workers, will remain excluded from the insiders’ market for a long time. Companies do not pay social and pension contributions for these trainees and, in some EU countries, consecutive short-term contracts mean salaries do not increase according to their time of service. Moreover, companies tend to employ overqualified staff, ruling out candidates without the relevant qualifications and experience.
With every intern who doesn’t pay social security contributions, and doesn’t have the right to pension payments, the inequality gap between the givers and takers in the welfare system widens, destabilising an already fragile system. Due to increasing life expectancy and longer length of study, retirement age will increase in the years to come. Those who still don’t have a permanent job by the age of 30 or are on low incomes will be unable to retire 30 years later with full benefits.
Is it possible that young people in unstable economic conditions spend less and are therefore excluded from society? A study in cooperation with the IAB in 10 European countries concludes that young unemployed people are in fact not marginalised, perhaps because those that have no pronounced consumer behaviour are still benefiting from the support of their parents. Whether this will continue to be the case if unemployment among young people continues to rise or when the ‘Generation Precarity’ has children is debatable.
And what about the effects on EU birth rates? The age at which women have children has increased in the past few years. The insecurity of the period of transition into professional life may strengthen this trend. And given the imbalance between the numbers of contributors to and receivers from the welfare state across Europe, this situation is becoming increasingly explosive.