The flexibilization of employment in Germany: Who suffers? And how did it affect the development of social inequality st

1. The flexibilization of employment in Germany:Who suffers? And how did it affect the development of social inequality structures? Sandra Buchholz and Hans-Peter Blossfeld Otto-Friedrich-University Bamberg, Germany

2. Aim • Changes of employment careers in an era of globalization? • Effects of these changes on social inequality structures • Empirical testing of competing perspectives dealing with the development of employment flexibility and social inequalities • Focus on ‘German flexibility strategy’ • How flexible is the German labor market? • Who was flexibilized? • i.e.: Changing patterns of social inequalities due to increasing needs for employment flexibility? • If interest, international comparative results in discussion

3. Labor market access and social inclusion • Continuous and stable employment as an important source for social safeguard, social participation and recognition • Labor market access as an important dimension to understand social inequalities • Especially within contribution-based German welfare regime

4. Changing labor market conditions • 1960s/1970s: flexible and insecure employment mostly unknown • Economic stability and growth, full employment • Employers‘ interest in long-term relationships with employees • Investing in trust-based cooperation • Growth of internal labor markets high employment security and good employment chances • Supported by the German labor market institutions/ employment system (‘rheinischen Kapitalismus’)

5. Changing labor market conditions • Typical employment career highly standardized Education  Full-time employment  Retirement • ‘Zenith’ of the standard employment contract (lifelong, permanent full-time employment) • Empirical pre-dominant, but also normative significance • Individuals continuous integration into the employment and social security system

6. Changing labor market conditions • Labor market chances have never been equally distributed in Germany • Closed employment relationships • Favoring those who are employed • Insider/Outsider segmentation • Supported by German institutions and the logic of internal labor markets • However, full and stable labor market integration secured for large parts of the population in times ofthe economic miracle

7. Changing labor market conditions • Changes since late-1970s/early-1980s: • Rising uncertainty about (future) market developments due to globalization • Employers‘ interest in long-term relationships decreasing • Instead, increasing interest and need to flexibilize employment and to transfer market risks to employees

8. Forms of employment flexibility • Different forms of employment flexibility (Regini 2000) • Numerical flexibility • Functional flexibility • Temporal flexibility • Wage flexibility • Not all these forms of employment flexibility are connected with employment insecurities and the riskof (social) exclusion. • Today: concentration on effects of numerical flexibility

9. Competing perspectives • Competing perspectives on the development of labor market flexibility and social inequalities in the globalization process: • Strong increases in employment flexibility + breaking down of (existing) social inequality structures • Persisting level of employment/labor market flexibility +relative stability of social inequalities • Systematic increase in flexibility + strengtheningof existing social inequalities

10. (1) Breaking down of social inequality structures in the process of indiviualization Beck (1992), Giddens (1990, 1994) • Western societies no longer class societies, but class societies with a high general level insecurities • New forms of risks and insecurity break with existing structures of social inequality • Risks no longer affect special groups permanently, but have become a part of the lives of larger parts of the population  Strong general increase of flexibility andbreaking down of (existing) social inequalities

11. (2) Relative stability of existing social inequalities • Not an in detail formulated theory • Low level of employment flexibility and no erosion of standard employment careers in Germany (e.g., Erlinghagen 2002, 2005) • Classification of employment flexibility in Germany as ‘regulated experiment’ (Regini 2000, Esping-Andersen 2000)  Stability of existing inequalities due to relative persistentlevel of employment stability • Problem to under-estimate the ‘real” level of employment flexibility due to concentration on average level!

12. (3) Strengthening of social inequalities Breen (1997) • ‘Type of contract’ at the core when market risks are transferred to employees • Unqualified and routine contracts:Clearly defined tasks that can be learned easily  Exchange based on pay/wage • Service contracts:Specialized knowledge, long training period, high level of independence  diffuse exchange on a long-term basis • As a result, stability for the well qualified employees, recommodification of low(er) qualified  Systematic increase in flexibility resulting into a strengtheningof existing social inequalities

13. (3) Strengthening of social inequalities • Differentiation between ‘attractive’ core staff and marginal staff not entirely new • Segmentation theories of the 1970s • But: • Privileges of ‘better’ labor market segments expanded to ‘less attractive’ groups of employees in times of economic growth and full employment • Taking back of these privileges in the flexibilization process (Breen 1997)

14. Employment flexibilization in Germany – empirical findings • Testing of above mentioned perspectives • Especially, by drawing back on empirical finding of two research projects: • GLOBALIFE (1999 to 2006) • flexCAREER (since 2005) • Aim of both projects: • Examining life and employment courses in the globalization/flexibilization process • Strength: Separate analysis of different life course/employment phases • Labor market entries, employment career of mid-career men and women, late careers and retirement processes

15. Employment flexibilization in Germany – empirical findings • Perspective of a dominance of flexible employment patterns not supported: • Fixed-term employment even today relatively rare in average (8 to 9 percent at maximum)

16. Fixed-term employment, 1985-2002(dependent employees, without training contracts) Own calculations based on Mikrozensus.

17. Employment flexibilization in Germany – empirical findings • Perspective of a dominance of flexible employment patterns not supported: • Fixed-term employment even today relatively rare in average (8 to 9 percent at maximum) • Despite an increase in subcontracted employment, subcontracting is still very rare (1.3 percent of all dependent employees, Rudolph 2005).

18. Subcontracted employment, 1993-2003 Rudolph 2005: 114; own illustration = 1.3 % of all dep. employees

19. Employment flexibilization in Germany – empirical findings • Perspective of a dominance of flexible employment patterns not supported: • Fixed-term employment even today relatively rare in average (8 to 9 percent at maximum) • Despite an increase in subcontracted employment, subcontracting is still very rare (1.3 percent of all dependent employees, Rudolph 2005). • Firm membership relatively stable (Erlinghagen 2005)

20. Average firm membership (in years)Men, West Germany Erlinghagen 2005: 36; own illustration

21. Employment flexibilization in Germany– empirical findings • However, employment flexibility can no longer be described as a regulated experiment, too. • Applying a more differentiated view, one finds clear signs of increased labor market flexibility in Germany • Flexibilization of employment concentrates on special groups.

22. Employment flexibilization in Germany– empirical findings • High employment stability and security among qualified mid-career men • No changes in inter-firm mobility at all (Kurz et al. 2006) • No worsening of career chances across cohorts (Kurz et al. 2006) • Fixed-term employment even today very rare in age group 30 plus (2004: ~ 5 percent) • Increases in the risk of unemployment among mid-career men • However, these risks/increases concentrate on unqualifiedand lowly qualified

23. Employment flexibilization in Germany– empirical findings • Situation of young adults very different, supported by selective labor market deregulations by German governments • Massive flexibilization and increases in employment risks (Buchholz and Kurz 2005, Buchholz 2006) • Decreases in smooth school-to-work transition • Increases in unemployment after completing education • Increasing risk of fixed-term employment

24. Fixed-term employment, 1985-2004, different age groups * Only dependent employees, without training contracts; own calculations based on Mikrozensus.

25. Employment flexibilization in Germany – empirical findings • Situation of young adults very different, supported by selective labor market deregulations by German governments • Massive flexibilization and increases in employment risks (Buchholz and Kurz 2005, Buchholz 2006) • Decreases in smooth school-to-work transition • Increases in unemployment after completing education • Increasing risk of fixed-term employment • Fixed-term contracts not only more frequent, but also more risky • Prolonged phase of establishment as labor market insiders • Also among young adults especially low(er) qualified suffered from these changes

26. Employment flexibilization in Germany – empirical findings • Also among mid-life women signs of employment flexibilization (Buchholz and Grunow 2006, Grunow 2006) • Despite increases in educational attainment and labor market participation, strengthening of women’s outsider position on the labor market • Increasing risks of unemployment across cohorts • Rising problems to leave unemployment again • Higher risks of downward mobility (despite higher level of education in younger cohorts) • Career interruptions (due to unpaid care giving) becamemore risky.

27. Employment flexibilization in Germany – empirical findings • Empirical results support the perspective of a selective increase in employment flexibility and a strengthening of existing social inequality structures • Increasing significance of an individual’s structural labor market position • Protection of the insiders (qualified men in mid-career) • Burdening of outsiders (labor market entrants, women) • Increasing importance of education and occupational class • Thus, flexibilization of employment concentrates on special labor market groups.

28. Employment flexibilization in Germany– empirical findings • Governments‘ efforts to reduce selective distribution of risks in the process of flexibilization • Unburdening of the labor market by massively introducing early retirement programs • As a results, we do find massive flexibilization of employment at labor market exit, too (Buchholz 2006a, 2006b) • Ever earlier employment exit and early retirement

29. Employment flexibilization in Germany– empirical findings • However, this early retirement strategy applies the German insider-outsider logic, too. • Flexibilization of elderly (former insiders) cushioned by very generous pensions • Especially among labor market entrants, increasing risks are not compensated.

30. Conclusions • Access to secure and stable employment as an important aspect to understand social inequalities in Germany • 1960s/1970s: secure and stable labor market integration of large parts of the population • Aim of this presentation: • Understanding German strategy to flexibilize employment in an era of globalization and the effects of this strategy on social inequalities

31. Conclusions • German strategy: ‘flexibilizing at the margins’ • This strategy to flexibilize the rigid labor market led to an increasing division within the German society • Group of labor market insiders being largely protected against risks • Growing number of marginalized persons having problemsto find stable and secure employment • Strategy to selectively increase labor market flexibility makes already disadvantaged groups suffer • Thus, we find a strengthening of already existing social inequalities.

32. Consequences of the‘German flexibility strategy’ • Declining fertility rates (Kurz 2005; Blossfeld et. al 2005) • Dilemma of German policy makers:labor market flexibility vs. fertility • Financing of the German social security and pension system • Trying to increase old age employment again with latest reforms (e.g. „retirement age 67“) • Open questions:Success of these reforms?Will the late career course become risky, too?

33. Thank you for your attention!

34. Life Courses in the Globalization ProcessResults from the GLOBALIFE Project Sandra Buchholz, Dirk Hofäcker und Hans-Peter Blossfeld Otto-Friedrich-University Bamberg,Germany

35. Globalization Research • Globalization strongly shaped modern societies in the past two to three decades. • Globalization has become an important field in current research in social and economic sciences. • Existing research mostly focuses on the question how globalization affects societies at the “macro level”. • Lack of research on how globalization influences life courses and social inequalities within different societies

36. The GLOBALIFE Project • GLOBALIFE project studied the effects of globalization on life courses in different modern societies • 1999-2005 at the Universities of Bamberg and Bielefeld • Funded by the Volkswagen Foundation • Directed by Prof. Dr. Hans-Peter Blossfeld • Research network: • Participation of 71 researchers and 17 countries

37. Countries of the GLOBALIFE Study * Countries did not participate in all project phases.

38. Project Phases • 4 project phases focusing on different transitions of the life course • Transition to adulthood • Men’s mid-careers • Women’s mid-careers • Late careers and retirement transitions

39. What is Globalization? • Globalization as a set of processes leading to increasing international interconnectedness • Speed, intensity, and range of international interaction increased significantly in the past two to three decades • Intensification especially with the accelerating technological progress and since the breakdown of the Eastern block and the integration of Asian countries into the world market

40. Globalization Filtered by Institutions

41. Globalization Filtered by Institutions (Continuation)

42. Aim of this Presentation • Summary of the core results of the GLOBALIFE study • Effects of globalization on the 4 life course transitions under study • Effects on the development of social inequalities in different modern societies • Detailed results published in 4 book volumes

43. GLOBALIFE Book Volumes(Published with Routledge and Edward Elgar)

44. 1st Research Phase:Transition to Adulthood • Effects of globalization on labor market entries • Specific situation of young people:Very vulnerable to increasing uncertainty because of lacking labor market experience and networks • Resulting effects of increasing labor market insecurities on family decisions • Transition to marriage and parenthood

45. 1st Research Phase:Transition to Adulthood • Strong increase of precarious and atypical employment across cohorts, especially among lower qualified • Temporary employment • Part-time employment • Precarious self-employment • Decreasing incomes • Variation across regimes: • Closed insider/outsider regimes: unemployment and temporary employment • Liberal regimes: decreasing incomes • Netherlands as a special case: part-time employment • Young people as the losers of globalization

46. 1st Research Phase:Transition to Adulthood • Increasing employment insecurities strongly affected family transitions • Postponement or even relinquishment of marriage and parenthood • This trend is especially strong in the traditionally family-oriented regimes of Central and Southern Europe • Importance of the relative, not the absolute level of insecurity • Dilemma of modern societies:labor market flexibility vs. birth rates

47. 2nd Research Phase:Men’s Mid-Careers • NO general emergence of patchwork careers for the core of employees! • Men in mid-career still enjoy high employment security and continuity. • Men as the winners of globalization • Explanation: • Employers are NOT interested in an entirely flexibilized workforce (risk of threatening the performance of the organization).  Security for the established, qualified male employees (increasing labor market segmentation)

48. 2nd Research Phase:Men’s Mid-Careers • However, we observe some increase in employment instabilities among mid-career men, too. • Especially among lower qualified male employees • Variation across regimes: • The amount of male globalization losers is comparatively high in liberal and post-socialist countries, while it is low in middle, Southern and Scandinavian countries.

49. 3rd Research Phase:Women’s Mid-Careers • Increasing (potential) integration of women on modern labor markets in the past decades • Supply side and demand side related reasons • However, as for other outsider groups on the labor market, we find an increasing marginalization of women in the globalization process • Precarious, low-paid, insecure jobs • Jobs with low upward mobility chances, but high risks of downward mobility and unemployment • Also among women, increasing importance of education • Additionally, increasing discrimination of women with strong “family orientation”

50. 3rd Research Phase:Women’s Mid-Careers • Variation across regimes: • Conservative and Southern Europe: increasing labor market participation of women, but still on a relatively low level • Scandinavia and post-socialist regimes: stagnation or even decreasing labor market participation • Liberal: increasing labor market participation especially among lowest qualified women