After restructuring: Labour markets, working conditions and life satisfaction

ERM (European Restructuring Monitor) Report 2012 (Ref: EF/12/61/EN) by John Hurley, Jean-Marie Jungblut, Anja Meierkord, Donald Storrie and Carlos Vacas with Andrea Broughton published by the European Foundation for the Improvement of living and Working Conditions

Executive summary

Introduction

The 2012 Report from the European Restructuring Monitor (ERM) analyses the consequences of restructuring for the individual employee. Specifically, it examines which employees lost their job at the onset of the recent economic crisis, which of them found a new job and how these events, job loss and subsequent re-employment, impacted on their overall personal situation and life satisfaction. It also looks at the impact on working conditions for the employees who continue to work at the restructured firm. The situations of these two groups – those who lost their jobs and those who stayed at the restructured workplace – have never before been analysed by using common, EU wide and representative, datasets.

Policy context

The overarching EU policy concern is that in 2012 there are 5 million fewer jobs in Europe than there were in 2008. Many of these jobs were terminated through the dismissal of employees following restructuring. The European Union has for decades provided support to mitigate the negative effects of restructuring for employees, mainly through the European Social Fund and more recently with the European Globalization Fund. Furthermore, the recent European Commission’s Green Paper on Restructuring reflects policy concerns about the impact of restructuring for employees who stay at the company, not least from the perspective that ‘poorly managed restructuring can have a significant negative long-term impact on the human resources of companies, thereby weakening this key resource for competitiveness’.

Key findings

• Several employment indicators show that while on average the labour market continues to deteriorate, there is wide variation among Member States. Countries such as Austria, Germany and Poland, in fact, continue to exhibit reasonably positive labour market developments.
• While job loss at restructuring has fallen from the high levels experienced at the start of the economic crisis, there are still overall more cases of job loss than job gain announced in the ERM.
• Employees with the highest probability to lose their jobs are generally less likely to find a new one. These people can be characterised as having low levels of education, belonging to a minority, having a foreign background, having significant health problems and low occupational status.
• Having long tenure protects against job loss, but when long-tenured workers lose their job, they are less likely to find a new one.
• Those who lose their job report a lower level of life satisfaction and significant depreciation of their life situation than those employees who do not lose their jobs.
• The job losers who subsequently find a new job report significantly higher life satisfaction than those who do not.
• Just over a third (37%) of EU27 employees reported that restructuring took place in the previous three years. These ‘stayers’ are most likely to be in higher occupational groups and working in larger establishments, as well as employees working in traditionally state-funded sectors.
• There is significant cross-national variation in the extent of reported restructuring, with employees in the Nordic cluster of Denmark, Finland and Sweden reporting the highest level of workplace restructuring (between 55 to 62%). The lowest levels were recorded in some eastern Member States (Poland and Bulgaria) and southern Member States (Italy, Spain and Greece).
• On the positive side, work organisation features associated with high performance work systems were found to be more prevalent in restructured workplaces: higher levels of employee autonomy, more access to training, a higher incidence of teamwork, and employees having greater influence and involvement in how work is organised.
• On the negative side, the analysis also confirms associations between restructuring and higher work intensity as well as lower job security. Restructured employees, especially those in bluecollar occupations, were more likely to find themselves in ‘high strain’ work. They were also more likely to report higher exposure to workplace psychosocial risks, higher levels of psychosomatic disorders and of absenteeism.
• In general, the analysis signals potential negative associations between restructuring and employees’ self-reported health. The fact that it does so consistently across a broad range of indicators suggests that these associations are not spurious even if specific causal mechanisms are necessarily complex and not so easy to demonstrate.

Policy pointers

The fact that those most likely to lose their jobs are least likely to find new ones strongly suggests that institutions and policies are not sufficiently developed to ensure that the external flexicurity model does not lead to negative distributional effects. It also highlights that active labour market policy regarding restructuring should focus on the needs of disadvantaged and vulnerable groups.

The high life satisfaction scores of persons who found a new job soon after losing their old job underscores the importance of activation policy for employees.

Some of the negative impact on stayers is almost certainly related to the restructuring process itself, as the reported restructuring event was to have taken place in the previous three years. This underlines the importance of a careful management of the change process, not least as regards the health and well-being of employees. The results further suggest that recent initiatives, mentioned in the Commission’s Green Paper on Restructuring, undertaken by companies and social partners in some sectors undergoing particularly strong change to manage mental health issues at workplaces should be expanded further to cover all sectors.

Full text (PDF 109pp)

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