Prevalence of temporary contracts among young people

The report, ‘Youth of 2011’, presents a multidimensional picture of young Poles. It draws attention to the vulnerable labour market situation of those aged 15–34 and particularly those aged 15–24 whose employment prospects have been most affected by the economic crisis. Only Slovenia has a higher percentage of temporary contracts in the EU than Poland in the 15–24 age group. This domination of temporary contracts is causing increasing labour market segmentation.

Background

The report, Youth of 2011 (in Polish, 21.16Mb PDF), written by strategy advisors to the Polish Prime Minister, Donald Tusk, gave rise to much discussion in the media, partly because it was published in the middle of the election campaign. Although the report examines many different subjects (such as demographic changes, education preferences, lifestyle, views and opinions), one of the main issues which attracted the attention of expert commentators as well as politicians was the situation of young Poles in the labour market, facing limited access to jobs, low earnings and temporary contracts.

Access to work and conditions in first job

The employment rate in 2010 in the 15–34 age group was 54.2%. The rate was particularly low among the youngest in this age group; in 2009 it was only 11% for those aged 18–19, and 45.6% for those aged 20–24.

The recent economic crisis has not helped the young find work. The unemployment rate in the economically active population increased from 6.7% in 2008 to 8.5% in 2009, whereas the unemployment rate of those aged 18–19 increased from 21.7% in 2008 to 32.6% in 2009 and the rate for those aged 20–24 increased from 16.9% to 20.7%. In addition, employers started to report the decreasing possibility of new jobs being created (Figure 1) and fewer vacancies (Figure 2).

Figure 1: Perspectives for new jobs, 2007–2009 (Q4)

Note: Based on panel survey of 1,000 employers (every six months, Q2 and Q4).

Source: Boni and Szafraniec (2011, p. 143)

Figure 2: Vacancies in companies, 2007–2009 (Q4)

Note: Based on panel survey of 1,000 employers (every six months, Q2 and Q4).

Source: Boni and Szafraniec (2011, p. 143)

Young people starting their first jobs often receive the lowest earnings; 30% of people starting working for the first time in 2008 received the minimum wage or less. Their average earnings oscillated between the second and third band of income of the overall population and were lower for women. In addition, over 50% of all contracts in a first job between 2005–2008 were temporary ones.

Prevalence of temporary contracts

In 2009 Poland had the highest share of temporary contracts among EU Member States (see table). In the 15–24 age group, which has the highest percentage in all the Member States, Poland (62.0%) was beaten only by Slovenia (66.6%).

In the countries where a high proportion of the youngest age group have temporary contracts, the situation changes significantly in older age groups – with the exception of Portugal and Spain. However, in Poland the proportion of temporary contracts remains significantly high across all age groups.

The transition rates from temporary to permanent employment for the youngest age group in Poland in 2006–2007 were among the lowest in the EU, where the odds ratio for those aged 15–24 was approximately 0.3%. It increased to approximately 0.6% for those aged 25–34 but this was still low compared with other Member States.

Note: na = not available

Source: European Commission (2010)

Duality of the labour market

The report’s authors conclude that these data reveal the threat of labour market duality. On one hand, there is a group of young people who may count on stable employment and the gradual increase in income and career development that usually comes with it. On the other hand, there is a group who, because of their temporary employment status, face a higher risk of unemployment and an unclear career progression.

The report includes recommendations to improve the employment situation of this second group. The proposals focus mainly on creating conditions to help the youngest groups of employees to have a more stable and independent life (that is, stopping depending on parents and having a chance to establish their own family). Among other things, the report proposes:

• a governmental programme creating better opportunities for flats to rent, more social housing and special long-term home loans, possibly underpinned by guarantees from the state;
• a new obligation to employ people for longer periods after traineeships;
• long-term contracts for (recurring) seasonal employment.

However, experts have expressed doubts about the last two proposals which, they claim, could lead to the reluctance of employers to organise traineeships or to employ young people for seasonal jobs.

References

Boni, M. and Szafraniec, K. (2011), Młodzi 2011 (21.16Mb PDF) [The youth of 2011], Kancelaria Prezesa Rady Ministrów, Warsaw.

European Commission (2010), Employment in Europe, Publications Office of the European Union, Luxembourg [cited by Bont and Szafraniec, 2011].

Gumuła, W. with Gucwą, A., Nalepą,W. and Opiołą, Z. (2010), Rynek pracy w Polsce (wynagrodzenia i migracje w listopadzie 2009 r. na tle badań panelowych w latach 2006-2009) (1.23Mb PDF) [Labour market in Poland (earnings and migration in November 2009 against the background of panel surveys in years 2006–2009)], Narodowy Bank Polski, Warsaw.

Piątkowska, M. (2011), Nie polepszać jednym, kosztem drugich [Do not improve one at the expense of others], Gazeta Wyborcza, 6 September 2011.

Marianna Zieleńska, Institute of Public Affairs