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New Flexibilities in European Labor Markets Noted
Daily Policy Digest

International Issues / Labor Market Regulations and Growth

Friday, January 25, 2002
Because of government-mandated rigidities in European labor markets, it is more difficult for employers to lay off full-time workers in lean times -- which encourages them to hire the minimum number they can get by with during expansion periods.

But because part-time and temporary workers are more easily laid off, companies hire then more readily in the first place -- and this makes for more flexibility.

Michael Saunders, an economist at Schroder Salomon Smith Barney in London, has charted the rise in the numbers of part-time workers and those on fixed-term contracts in Europe.

  • In Germany, part-time employment as a share of total employment rose from 13.4 percent in 1990 to an estimated 18 percent in 2001.
  • Similarly, part-timers in France grew from 12.2 percent to 14.6 percent of total employees.
  • Part-timers in Italy shot up from 8.8 percent of workers to 12.6 percent in 2001.
In part due to the increased flexibility of part time work, European labor-force participation rates -- the ratio of the total labor force to the working age population -- rose by more than two percentage points, to nearly 69 percent, in the five years to 2001.

Source: David Fairlamb, "Economic Scene: Wiggle Room for Euro Bosses," Business Week, January 21, 2002.

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