Temporary employment: Dead-end or gateway to permanent labour market establishment? A comparative study

The regulation of fixed-term work (FTW) may influence the integration of low-employment groups in the labour market. Since the rules for FTW are far more liberal in Sweden than in Norway, this project has compared employer motives and effects of FTW in these countries. A key finding is that the total share of FT-workers in Sweden is much higher than in Norway, and so is the shares of FT-workers who do not find stable employment or become marginalized. It is common to assume that access to FTW can integrate more people with weak labour market ties into work. But FTW contracts are often insecure, provide little training and poor prospects for permanent work. In this project we compare how differences in the rules for FTW in Norway and Sweden influence employers' recruitment, and how FTW influence job careers and later transitions into stable work. Does FTW function as a springboard or as a dead-end, and are these effects strengthened or weakened if the rules are liberalized? How is FTW influenced by other sources of flexibility and how does this vary across industries? Why and how do employers use FTW? By comparing companies in five labor-intensive industries with modest competence requirements in Norway and Sweden, we found strong commonalities in the scope and reasons for FTW within the same industry and large differences between industries in both countries. The variation was largest between industries, but the proportion of temporaries was clearly higher in all industries in Sweden. In both countries, employers state that they prefer permanent employees, unless special conditions make FTW "absolutely" necessary. The use of FTW is dependent on which flexible alternatives the companies face, such as leasing agency labour, on-call workers or variable part-time, to cope with demand shifts, sick leave, leave of absence etc. In both countries, FTW and hiring agency workers are more common in male-dominated than in female-dominated industries, where the use of part-time and on-call workers is more prevalent. Overall, Sweden's liberal rules appear to have led to a drift in employers' perceptions of when it is legitimate to use FTW, compared to Norway. To what extent do fixed-term positions in Norway lead into stable employment? By studying mobility from FTW to stable work by way of labour force surveys and register data in both countries, we found that FT-workers had lower probability than permanent employees of being in stable employment 4 years later, but a higher probability than those unemployed. However, a significant proportion of those in FTW did not transit into stable employment, especially the on-call workers. Higher age and education increased the probability of stable employment later. How high is the risk that FT-workers end up in a marginalized position 5 years later in Norway and Sweden? The risk of being unemployed, having low income or receiving social assistance was far higher than that of former permanent employees in both countries. In Sweden, the risk of marginalization in this group was much higher than in Norway, especially among groups with limited work experience. But among low-educated and non-European immigrants, the risk of marginalization was almost equal in Norway and Sweden. Thus, easier access to FTW does not appear to be an effective way of strengthening the foothold of vulnerable groups in the labour market. Since 2015, Norwegian employers have been able to offer FTW on a general basis for one year. How has Norway's new rule on general fixed-term contracts functioned? In 2018, the proportion of FTW was almost unchanged. The new rule is seldom used because 1) many employers meet their needs by combining the law's original legal provisions, 2) many perceive the quota and quarantine rules as obstacles, and 3) the controversy over the law has raised awareness regarding the rules and use of FTW. This study has provided knowledge that highlights key points in the strife over the FTW rules; how and why do employers in different industries use fixed-term contracts? The findings provide grounds for curbing expectations that liberalization of FTW will strengthen integration of vulnerable groups into the labour market. For politicians and the social partners, access to such knowledge provides a more precise picture of under which conditions and for which groups FTW may function as a springboard or not, and such information has probably been useful. See the projects web-page: http://www.fafo.no/index.php?option=com_zoo&task=item&item_id=6015&Itemid=1001&lang=nb

Cooperating with researchers at University of Gothenburg, we will examine whether liberalization of fixed term employment increases transition rates into stable employment or rather contributes to more dualized labour markets with higher risks of being stuck in unstable, short term jobs. Combining quantitative and qualitative data from Sweden and Norway, where regulations of fixed term employment are very different, we will analyse the impact of regulations on such transition flows from the perspective of employees as well as employers. The project is divided into three work packages (WP), the first two comparing Norwegian and Swedish developments. WP1 links Labour Force Survey (LFS) panel data, with data on contract type, and longitudinal registry data on income and job careers prior to and after the LFS interviews, enabling us to trace the job careers of people initially in FTW and unemployed over 7 years. The key question is to what extent differences in individual careers, and differences between Norway and Sweden in this respect, are affected by regulations and cyclical and other factors. WP2 uses qualitative interviews with employers in Sweden (1 round) and Norway (2 rounds) to investigate employer recruitment practices and trade-offs between internal and external flexibility. The Norwegian interviews will be timed to catch the situation before and after the announced liberalisation of fixed term employment, allowing comparison of the effects across the countries and time. In Norway only, WP3, will analyse turnover and individual careers among newly hired employees in companies with different hiring and manning practices, on the basis several large surveys among companies covering hiring issues, coupled with register-based staff information in the same companies. The results will be disseminated in scientific journals, communication with public users, and an end conference.