Tuesday, October 18, 2011

Reuters: Masses of Temporarily Employed in Southern Europe

There are some quite fascinating data points in this Reuters story on the bifurcated European job market.  I believe this is in large part feeding the type of discontent we are seeing from the Occupy Wall Street movement.  Specific to many parts of Europe however, there is a bifurcation in the workforce as older workers with benefits in established jobs are very expensive to fire, whereas new hires are put in temp jobs with no benefits.  A staggering 25% of Spain's workforce is temporary, as is 23% of Portugal's.   I posted a story about a similar thing happening in Japan a few years ago [Jul 29, 2009: Japan's "Herbivore" Men - Young American Men's Future?]- the societal effects of many who can not move out of their parents house, not have a lot of hope for a future, not able to get married, and the like are immeasurable - and as I said earlier, I believe feeds into the backlash against business we are now seeing.

Via Reuters:

  • Silvia knew things would be tough, but never like this.With a masters' degree in publicity, the 24-year-old has been working for more than two years, full-time, in an internship that is starting to feel like it will never end.  Paid 300 euros a month for the same work as the salaried public relations professionals who sit next to her, she doesn't earn enough to move out of her parents' house and her bus pass and lunch expenses eat up most of her pay.
  • But despite feeling her multinational employer is flouting rules that limit the use of worker contracts with no benefits, she's not about to complain to the labor office since she considers herself blessed to have a job at all.
  • "Since I was little my parents urged me to get a university degree to find good work. But I'm lucky to have any work at all. There were 30 of us in my graduating class and I'm one of the ones who is doing the best with their career," Silvia said.
  • With Spain's youth unemployment higher than 40 percent and its overall joblessness the highest in the European Union at one in five, young professionals accept any conditions as they try to start their careers.
  • The story is much the same in neighboring Portugal and Italy, where more and more people have so-called junk jobs: temporary contracts that used to be common in tourism, farming and construction but are now used by all kinds of companies.
  • A quarter of Spain's workforce is on temporary contracts, as is 23 percent of Portugal's, compared with a European Union average of 14 percent.
  • In Spain, Portugal and Italy, a rigid dual system has emerged. Middle-aged people have stable jobs with benefits. They are expensive to fire and protected by masses of legislation. Meanwhile, younger workers are stuck in a revolving door of temporary contracts that are easy to abuse.
  • The two-track job market is stunting economic growth, studies show. Temporary workers get trapped for longer and longer periods without benefits, which affects output and makes southern Europe less competitive.
  • The curse of the mileurista — the Spanish-language term for a temporary worker who earns a thousand euros a month without benefits — is not new. Young professionals in southern Europe have found a permanent position elusive for some time. "We used to talk about mileuristas like it was a bad thing. Now it's good. A 1,000-euro a month temporary contract is decent," said Jose Maria Marin, labor expert and contemporary history professor at Spain's National University of Distance Education.
  • The phenomenon of young people living with their parents is another thing holding back economic growth, creating a vicious cycle for job creation. If they were setting up new households they would be stimulating the housing market as well as consumer spending.
  • Another risk for economies with high percentages of temporary workers, notes Wilthagen, is that banks are shy of lending to people without permanent employment, further holding back consumption.
  • Theoretically, a temporary contract is a foot in the door to prove yourself as a good hire.  But in southern Europe many supposedly temporary hires renew contracts year after year and do the same jobs as the permanent hires around them, just without the job security or benefits. (similar to what is happening in Japan)  This creates an enduring second-class job tier similar to the phenomenon of "permatemps" in the United States in the 1990s.
  • Many Portuguese companies abuse a freelance contract called the "green receipt," using it to hire full-time, in-house workers, said Joao Labrincha, an organizer of marches earlier this year against state austerity measures.  He said green receipt workers often have fixed schedules like any other employee, but have no right to holidays, social security, health insurance or severance pay.
  • Even the government misuses the contracts. "I've worked for the state under green receipts for more than five years. The system is rather perverse. Many of my colleagues are also under these precarious conditions, some of them have been temporary workers for the last 10 years," said a middle manager at the Portuguese Institute of Museums, who asked not to be named.
  • It's difficult to transition into a permanent job when no such posts are being created. In Spain, 80 percent of new job contracts signed in the last decade were temporary contracts — businesses just aren't creating permanent positions.  (staggering!)

[Sep 7, 2011: BW - The Youth Unemployment Time Bomb]

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