Flexibility and Employment Security in Europe
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Flexibility and Employment Security in Europe

Labour Markets in Transition

Edited by Ruud Muffels

This book seeks to gain a better understanding of the paradoxical relationship between the alleged need of European labour markets to become more flexible and the way in which national policies pursue this aim without jeopardising existing high standards of income and employment security. Special interest is devoted to the way in which countries opt for different policy routes to cope with the aim of balancing flexibility and security goals in their respective labour market and social protection policies. The contributions in this book all try to unveil the particular changes or transitions occurring in the various labour markets, to learn about their medium and longer term effects and the role of institutions and policies to cushion the adverse consequences of these changes. By studying some ‘best practices’ in Denmark, Canada and Australia they also draw some important lessons about the reasons why national policies might either fail or better cope with the challenges Europe face today.
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Chapter 7: Unemployment and Worker Career Prospects: A Cross-national Comparison

Markus Gangl


Markus Gangl 7.1 INTRODUCTION Experiences of job loss and unemployment are clearly among the unpleasant facts of economic life. As industries expand and shrink, as businesses grow and collapse, as employment relationships between individual employers and workers come and go, some workers inevitably find themselves caught ‘in the wrong place, at the wrong time’ (Leonard, 1987). And relative to continuous employment, resulting unemployment spells are likely to create significant psychological, social and, last but not least, economic costs to the affected workers. With respect to the latter, unemployment experiences may bring significant financial stress in the short term as unemployed workers may spend some time searching for reemployment, as non-employed household members will not be able to make up for the lost income immediately, and as welfare states will typically protect less than full earnings through unemployment insurance or social assistance programs (see for example, Hauser and Nolan, 2000). Furthermore, there may be significant longer-term costs whenever past unemployment experiences contribute to sustained reductions in individual earnings capacity, that is, whenever workers’ future employment and earnings prospects are significantly diminished due to unemployment. Clearly, workers’ total economic cost of unemployment comprises both short-run costs of income losses during unemployment spells and potential long-term costs due to any reduction of workers’ earnings potential associated with unemployment. To complement the many earlier analyses that have documented the first component, the income level and income packages available to the unemployed, the analyses in this chapter focus on the second component and seek to...

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