False self-employment: The scandal hitting workers and taxpayers

via ToUChstone blog: A public policy blog from the TUC

Guest post by Rachel Reeves (Shadow Chief Secretary to the Treasury and Member of Parliament for Leeds West) and Chuka Umunna (Shadow Business Secretary and Member of Parliament for Streatham)

Bogus self-employment is a scandal that continues to undermine employment rights and hit taxpayers' pockets. There are too many cases of employees being classed as self-employed when in practice they work for a single company, meaning they can be sacked without warning, do not receive holiday or sick pay, have reduced benefit entitlements and are also denied access to employment tribunals. Often desperately searching for employment, workers are made to sign contracts with payroll companies which sign away their basic rights.

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Patterns of non-employment: labor market institutions and employment performance of social groups

a Working Paper (Number 145) by Thomas Biegert published by the Mannheim Center for European Social Research

Abstract

Increasing labour market participation to a high level is seen as a necessary means for international economic competitiveness and sustainable financing of the welfare state. One of the major goals of labour market research is, therefore, to explore why certain social groups are less likely to be employed.

While most research focuses on the determinants of unemployment, this study includes also inactive persons, thus examining the total non-employed population. The paper argues that labour market institutions interact with individual characteristics and resources, thereby shaping nationally specific patterns of non-employment. Following a social structural approach, it analyses the institutional effects on individual employment performance in 14 countries using the European Labour Force Survey.

Non-employment patterns are disaggregated by gender, age group and educational level.

Institutional arrangements are modelled by including macroeconomic indicators into pooled cross-sectional models with country, country-education level, country-age group, and year fixed-effects.

Results not only indicate the important role of the institutional context in forming absolute levels of non-employment, the observed group differences also underline that labour market institutions shape the social composition of non-employment. Furthermore, institutional arrangements commonly associated with inactivity have an impact on overall non-employment. The evidence for institutional interactions supports the need for developing comprehensive models of national employment régimes.

Full text (PDF 41pp)

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Hysteresis in unemployment

an article by Terry O'Shaughnessy (St Anne’s College, Oxford) published in Oxford Review of Economic Policy Volume 27 Number 2 (Summer 2011)

Abstract

Unemployment has risen sharply in a number of countries and it appears to be becoming more persistent. The experience of the 1970s and 1980s showed that adverse unemployment shocks could have long-lasting effects with very serious economic and social consequences. A key mechanism producing these adverse consequences was hysteresis¹ in unemployment whereby temporary rises in unemployment generated by supply and/or demand shocks had permanent (or, at least, very persistent) effects. Clearly, it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes. On the other hand, experience during the subsequent two decades showed that, under more favourable macroeconomic conditions, it is possible to observe “good” hysteresis effects. Now is a very appropriate time to re-visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and, if possible, to get hysteresis effects working in a positive direction.

¹Hysteresis is the dependence of a system not just on its current environment but also on its past. (Wikipedia)

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