Are unemployment insurance systems in Europe adapting to new risks arising from non-standard employment? Janine Leschke, ETUI-REHS (research unit) QMSS conference 2007, Prague, June 2007

Hypotheses  Persons with non-standard employment contracts face greater risks to make transitions to unemployment or inactivity than persons with regular contracts;  Unemployment insurance systems that strongly incorporate welfare principles instead of insurance principles grant better coverage of non-standard workers. Insurance principle: strong equivalence between contributions and benefits; aims: status maintenance, contributory justice Germany and Spain Welfare principle: stronger degree of tax financing and thus weaker link between contributions and benefits (easier redistribution); aims: preventing and mitigating poverty United Kingdom and Denmark

Part-time employment by gender, 2006 (% of total employment of a given sex 15-64) Source: Eurostat LFS data, 2nd quarter 2006.

Fixed-term employment by age group, 2006 (% total number employees in age group) Source: Eurostat LFS data, 2nd quarter 2006.

The European Community Household Panel (ECHP)  EU-15 countries  8 waves (for most countries )  Sample of approximatelly nationally representative households and about individuals (1994)  Follow up data: EU-SILC (from 2004 onwards) Advantages:  Country comparisons are possible (common questionnaires except for DE, UK, LUX, SE)  Panel data (dynamic analysis is possible)  Encompassing information on individuals (employed, unemployed, inactive) and households Disadvantages:  Sample size restrictions  Some limitations in variables (f. ex. no distinction between unemployment insurance and unemployment assistance)

Short-term upward, downward, and sideward transitions from and to full-time and part-time employment for prime- age workers (25 to 55) tt+1 age 25 to 55 full-timepart-timeeducationunempl.inactivity full-timeDK DE SP UK part-timeDK DE SP UK Source: Own calculation based on European Community Household Panel (ECHP), waves

Longer-term upward, downward, and sideward transitions from and to full-time and part-time employment for prime-age workers (25 to 55) t age: t+4 full-timepart-timeeducationunempl.inactivity full-timeDK DE SP UK part-timeDK DE SP UK Source: Own calculation based on European Community Household Panel (ECHP), waves

Characteristics of unemployment insurance systems that potentially restrict coverage of non-standard workers Part-time workers:  Hours or wage thresholds (access)  Qualifying period (access)  Means-testing (access and level)  Proportionality between benefits and former wages (level) Fixed-term workers:  Qualifying period (access)  Benefit period depending on contribution time (duration)  Means-testing (access and level)

% 1-19 hours20-29 hours30+ hours Denmark Germany Spain United Kingdom28 54 Source: Own calculation based on pooled and weighted ECHP data; Basis: all unemployed jobseekers. Registration at employment office by former working hours Advantage of survey data

Unemployment benefit receipt of former full-time and part-time workers: comparison of registered unemployed (fond) and all unemployed jobseekers (stripes) Source: Own calculation based on pooled and weighted ECHP data.

Access of non-standard workers to unemployment benefits (random effects logit model ) Dep. variable: unemployment benefit receipt (no/yes) DenmarkGermanySpainUnited Kingdom odds ratios last job part-time0.32**0.47** ** REFERENCE: reason for stopping last job: obliged to stop end of contract/temp. job women *0.43**0.36** observations prob > chi rho prob >= chibar Further variables included in models but not shown here: age, household type, qualification, wage before unemployment, current household wage, occupation last job (except for Germany), length of unemployment, year dummies. + significant at 10%; * significant at 5%; ** significant at 1% Source: Own calculation based on ECHP data. Basis: all unemployed jobseekers.

Individual predicted probabilities of unemployment benefit receipt for typical former part-time and full-time workers ideal type*DenmarkGermanySpainUnited Kingdom predicted probability (95% confidence interval in brackets) Former female part- time worker in couple without kids 0.62 ( ) 0.14 ( ) 0.23 ( ) 0.11 ( ) Former female full- time worker in couple without kids 0.83 ( ) 0.24 ( ) 0.27 ( ) 0.18 ( ) *Age, former wage, current household income, length of unemployment and qualification level are set to their mean. Source: Own calculation based on ECHP data; basis: all unemployed jobseekers.

Average monthly unemployment benefit level by working time (in purchasing power parities) Source: Own calculation based on pooled and weighted ECHP data. The figure refers to unemployment benefit recipients with between 3 and 12 months of unemployment.

Net replacement rates at unemployment for former part-time and full-time workers (approximation) % part-time (>20 hours) full-time Denmark8555 Germany8847 Spain5834 United Kingdom7322 Source: ECHP data, own calculation. Average wage and unemployment benefit level for people who worked more than 20 hours.

Conclusions  Non-standard workers are in all countries more likely than standard workers to become unemployed or inactive  The expectation that unemployment insurance systems of the four countries strongly vary in their potential to cover non- standard workers did not prove true  Differences in coverage rates are driven by the overall coverage levels rather than by the predominance of welfare or insurance principles  There is evidence for redistribution concerning benefit levels

Conclusions Unemployment insurance reforms did not directly tackle deficient coverage of non-standard workers, nevertheless, they had some (unindended?) influences on the insurance situation of non-standard workers Hours thresholds have been lowered or abolished and some countries introduced favourable benefit regulations for workers who change from full-time to part-time work On the other hand, some of the reform measures that aimed at making the systems financially more viable worsened the situation of non-standard workers: Abolishment of original unemployment assistance (Germany) Shortening of reference periods for contribution requirements (Germany and Spain) Extension of contribution requirements (Denmark) Cutting of the duration of non means-tested benefits (Germany and the UK)

Possible solutions for more inclusive benefit systems Fighting against the gendered division of labour Supporting high hours part-time employment and upward mobility (I) Incentives for more equal distribution of household/care activities between men and women (IV) Modifications in UI design (II) Basic or minimum insurance for all (but danger of further segmentation) Abolishing earnings- and hours thresholds Installing sufficiently long reference periods for contribution payments Individualisation of benefit receipt Modifications in financing mechanisms Encouraging labour mobility through “positive” activation Fighting against the gendered division of labour Supporting high hours part-time employment and upward mobility (I) Incentives for more equal distribution of household/care activities between men and women (IV) Modifications in UI design (II) Basic or minimum insurance for all (but danger of further segmentation) Abolishing earnings- and hours thresholds Installing sufficiently long reference periods for contribution payments Individualisation of benefit receipt Modifications in financing mechanisms Encouraging labour mobility through “positive” activation Modifying the gendered division of labour  Supporting high hours part-time employment and upward mobility  Incentives for more equal distribution of household/care activities between men and women Modifying the design and functioning of unemployment benefits  Basic or minimum insurance for all (but danger of further segmentation)  Abolishing earnings- and hours thresholds and installing sufficiently long reference periods for contribution payments  Individualisation of benefit receipt  Modifications of financing mechanisms  Encouraging mobility and employability through “positive” activation