EMCC European Monitoring Centre on Change

Slovenia: Young people and temporary employment in Europe

  • Observatory: EMCC
  • Topic:
  • Published on: 08 December 2013



About
Country:
Author:
Alenka Kajzer
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The most frequently used temporary employment forms among young people in Slovenia are fixed-term contracts and student work. Student worker is cheaper than regular employment (no social security contributions need to be paid) and very flexible (no hiring/firing procedures). Student work is the main reason for Slovenia’s highest share of temporary employment in total youth employment among youth aged 15-24 years. There is no difference between youth with fixed-term or permanent contracts in access to unemployment benefits, sickness benefits, maternity benefits, or health care. Social partners are aware of the labour market dualism. No programmes to help transition from temporary to permanent job exist.

Introduction

Youth unemployment has been a persistent problem in many parts of Europe for many years. Over the past 3-4 years, however, since the onset of the financial crisis and the economic recession which followed, it has become an even greater and more widespread problem and one which, given the on-going depressed state of the European economies, is likely to remain for some time to come. The latest monthly figures (for September 2012) show the unemployment rate of those aged 15-24 averaging 22.8% in the EU – just over 1 percentage point higher than at the time a year earlier. In Spain, the figure was over 54% and in Greece, 57%, in both cases, much higher than a year earlier. In the worst affected countries, therefore, as in most Member States, there is very little sign of any easing of the youth unemployment problem. There are, however, a few exceptions. In Germany, in particular, youth unemployment has declined since the global recession hit in 2009 and now stands at only 8%, well below the level it was before the recession. In Norway too, the rate is only 8%, though this is slightly above the level in 2007 before the crisis. Germany, apart, there are two other countries in the EU with youth unemployment below 10% according to the latest monthly figures - the Netherlands (9.4%) and Austria (9.9%). As in Norway, in both cases, the rate is above the pre-crisis level.

Moreover, young people who do manage to find jobs often have to settle for a temporary one, defined as one with a fixed-term contract of employment. According to the European Labour Force Survey (LFS), in 2011, just under 43% of employees under 25 were in temporary jobs in the EU and well over half in Germany (56%), France (55%), Portugal, (57%), Sweden (57%), Spain (63%), Poland (66%) and Slovenia (75%). (In Norway, the figure was much lower than in most EU countries, at around 24%.) While around 40% of the young people concerned on average were in temporary jobs because they had a fixed-term training contract and another 9% were on probationary contracts, a substantial proportion (37% on average) were in temporary jobs because they were unable to find permanent ones. In the Czech Republic, Cyprus and Portugal, this figure was over 75% and in Spain and Slovakia, well over 80%.

Among young people making the transition from education or initial vocational training into employment, the proportion who take up temporary rather than permanent jobs is much higher than for the age group as a whole. In 2011, 57% of those aged 15-24 in employment who were in education the previous year were in temporary jobs in the EU and 86-87% in Spain, Portugal and Poland. For those moving from unemployment into employment, the proportion who take up temporary jobs is even higher on average in the EU (61%) as well as in Spain (90%).

The fact that a relatively large proportion of young people in employment are in temporary jobs may be a reason why they have been hit disproportionately hard by the crisis. In the economic downturn in 2009, many of the people who lost their jobs first were on fixed-term contracts since not renewing these contracts represented the easiest way for employers to reduce their work forces. In 2009, therefore, there was some decline across Europe in the proportion of young people in work employed in temporary jobs (see the Tables attached to the questionnaire). Since then, there has been some tendency for the proportion to increase again, in part perhaps because employers are reluctant to take on people on permanent - or standard – contracts given the uncertainty about future economic prospects.

Given the above, it is understandable that there is growing public interest, and some concern, over the nature of the jobs that young people are taking up. This concern is mirrored at EU-level where a ‘flexicurity’ approach to labour market policy has increasingly been advocated, which, in practice, means that while flexibility is an important objective, it needs to be accompanied by protection of workers’ interests if it is not to lead to a growth of precarious employment in low quality jobs. Accordingly, there is a need to obtain a better understanding of the terms and conditions applying to temporary jobs, the extent to which they are a stepping stone to permanent jobs and a working career in line with a person’s qualifications and capabilities, the access to social protection which comes with them and the measures in place to encourage employers to convert them into more stable jobs. These issues form the focus of the present study.

Definition of temporary jobs

The interest in the study is in all young people employed in temporary jobs of whatever kind, in the sense of all jobs that they are not subject to a standard contract of employment which is normally one of indeterminate length, or at least one for which no specific length is specified. Such temporary jobs can be for a period of training (i.e. traineeships or apprenticeships) or probation, intended to enable employers to check the suitability or aptitude of people for the jobs concerned. They might also be to replace someone on maternity leave or on a training programme or they might relate to a specific project of fixed duration.

All such jobs and others which are of fixed duration should be covered, whether they are part-time or full-time and irrespective of whether they are specifically for young people (such as perhaps in the case of traineeships or apprenticeships) or for people of all ages which young people happen to be doing. In some cases, it should be noted, it is relevant to include, in addition, to temporary employees, the ‘bogus’ self-employed – i.e. those people who have self-employment status but who are contracted to work for a single employer and who are effectively similar to employees who have a fixed-term contract of employment. (The cases in question relate to instances where employers use self-employment contracts as a means of employing young people without bearing the costs, and obligations, of a standard contract of employment.)

Outline of study

The study is divided in three sections. The first is concerned with the main types of job in which young people who are employed under temporary contracts work and the reasons why employers choose to use temporary contracts of employment instead of standard ones when they take on young people, as well as with the link, if any, with labour market conditions (i.e. with the extent to which the crisis has led to an increase in temporary employment). The starting point is the data summarised above, derived from the LFS, which indicate the relative number of young people employed on temporary contracts in the different European countries and the way that this has changed over the recent past (these data, as noted, are set out in the tables attached to the questionnaire). Correspondents are asked to check these data against any national data on temporary employment and to indicate where these show a different picture from the LFS data, perhaps because a different definition is adopted of temporary jobs.

Any description or commentary on national statistics should, however, remain brief, since the main task of the first section, is to review and summarise relevant sources of information on the different kinds of temporary contract under which young people are employed in each of the countries, the circumstances and areas (the types of job and the sectors of activity) in which they tend to be used and the main reasons why employers adopt them.

The second section is concerned with the access to social benefits which temporary jobs provide, distinguishing between the various kinds of benefit, and with the extent to which entitlement to benefit differs for young people employed in temporary jobs from that for those employed under standard contracts of employment. It should be emphasised that the concern is not only with the formal regulations which apply, which in many if not most countries do not make a formal distinction between temporary jobs and others, but also with de facto entitlement which stems from the nature of temporary employment. In particular, young people in temporary jobs may have difficulty in complying with the need to have a continuous period in employment, or a continuous record of paying social contributions, in order to be eligible for unemployment benefit.

The third section is concerned with the measures in place to regulate the use of temporary contracts of employment (such as specifying the number of times they can be renewed), with the attitudes of government and the social partners towards their use and with the incentives which exist to encourage the wider use of standard contracts of employment and the conversion of temporary jobs into permanent ones. A particular point of interest is the extent to which regulations and attitudes as regards temporary jobs have changed over the crisis period as the number of jobs available for young people to take up has diminished and as expanding these has become a policy priority.

A final point to note is that while it is customary to define youth employment (and unemployment) in terms of those aged 15-24, it is also the case that many of those aged 25-29 are also employed in temporary jobs, as indicated in the attached tables. Correspondents are therefore asked to extend the coverage of the study to this age group where relevant. It is recognised that in some countries the statistics available may not relate precisely to the age groups specified here, in which case correspondents should report on the age groups nearest to these.

Questionnaire

1. Importance of temporary employment for young people

1.1. Do the figures shown in the attached tables (on the number of temporary employed as a % of total employees based on Eurostat LFS data) give a reliable indication of the scale of temporary employment among the young in your country and the way that it has changed over recent years? Are there young people employed in temporary jobs who do not show up in the Eurostat figures? Are there national statistics which show a different picture from the Eurostat data? If so, please indicate what they show and give the source of the data.

Due to student work, which is specific form of temporary employment in Slovenia, the share of temporary employment in total employment of youth is the highest in EU. Student work is a form of very flexible temporary work, which allows combining school and work. If youth do not perform student work it could be only involved in education and it is out of labor market. Therefore we could say that the share of temporary employment in total employment of youth (aged 15-24 years) is too high for Slovenia. However, the share of fixed term contract (without student work) in Slovenia is much closer to EU average. If we extract the student work from youth employment in that age group, the share of temporary employment in Slovenia is around EU average. The Eurostat figures include all temporary work among youth. The labour force survey is the most important data source for measuring temporary employment among youth, no other national statistics exist. Slovenia student work is specific form of temporary employment among youth aged 15-24 years, while the majority of temporary employment of youth aged 25-29 years are fixed-term contracts.

1.2. Is there any evidence that other forms of employment are used as a substitute for temporary contracts, such as bogus self-employment where young people are contracted to provide services to a single work provider in a continuous manner so acting de facto as employees? If so, please give the source of the evidence and indicate the scale of the phenomenon in terms of the number of people concerned.

Beside fixed-term contracts student work is very important for temporary employment among youth aged 15-24 years in Slovenia. Slovenia belongs to the group of countries with above-average school-leaving age and more than 33% of students working (OECD, 2010, p. 55). In Slovenia, the high share of students in employment is largely due to students working through student employment services (student work). Student workers received preferential regulatory and tax treatment in Slovenia. Student workers enjoyed major benefits. First, student work is administratively very flexible. Employers do not have to go through the lengthy procedures to hire or fire student workers that were required for other workers. To qualify, students only needed a proof of student status (called a “student referral”). Second, neither students nor their employers had to contribute to the public pension fund or pay for social and health services, making student workers much cheaper than regular full–time employees. The main burden for employers is a special 25% concession fee (Till June 2012 the concession fee was 14 %, which makes student work cheaper than any other form of work activity.), which was distributed to student employment agencies, the Student Organisation, and the public funds for scholarships and improvement of study facilities. Student work represented around 45% of total employment of youth aged 15-24 years in 2010-2012 period.

There are also some indications that bogus self-employment in Slovenia exists. Based on LFS data there are around 10 % of self –employed, who work predominantly for one work provider. However, the data do not allow the identification of this problem among youth.

1.3. Please list (and give summary details, i.e. purpose and duration of the contract) the most common contract types or contractual arrangements under which young people are employed on a temporary basis (such as for traineeships, apprenticeships, probationary periods, replacement of workers on leave or projects of a fixed duration). What is the relative importance of each type of contract or arrangement in terms of the number of young people employed under them?

The most common contractual arrangements are fixed-term contracts and student work. According to Eurostat data the largest share of temporary contracts among youth (15-24 years) last from 1-3 month. There are no detailed data on purpose of temporary contracts among the youth The number of fixed term contracts due to apprenticeship is rather low (around 2000 persons) , However, the fixed term contracts are frequently used in case of substitution of employees on maternity leave. The average duration of fixed term contracts was 11,4 year in 2012, while average duration of student work was around 8,3 months. As you can see from Figure 1 student work was growing faster than in orher forms of work among youth Table 1 presents the importance of student work for youth employment in Slovenia. As you can see from Table 1 the share of student work in total youth employment(aged 15-24 years) was 46,8%, in 2010-2012 period.while in 2002 the share of student work was18,8%.


Figure 1: Youth aged 15-24 years in employment and temporary employment growth (2000=100)

si1304011q.tmp00.jpg

Source: SORS

 

2002

 

2010

 

2011

 

2012

 

 

in 000

in %

in 000

in %

in 000

in %

in 000

in %

employed-total

80,0

100,0

68,3

100,0

60,8

100,0

64,5

100,0

temporary-total

44,0

55,0

46,5

68,1

44,8

73,7

45,6

70,7

student work

15,0

18,8

30,8

45,1

28,3

46,5

29,5

45,7

fixed term contract

29,0

36,3

15,8

23,1

16,5

27,2

16,1

25,0

Source:SORS

1.4. Please indicate the main reasons for the emergence and development of the different types of temporary contract which you have listed in response to question 1.3. To what extent are they linked to particular conditions in the labour market or employment protection legislation/regulation in your country? What is the main attraction of such contracts to employers? What effect has the crisis had on the use of such contracts?

Student work is frequently used due to procedural simplicity in hiring and firing and substantially lower tax obligations on student work compared to other forms of regular employment contracts or work contracts. Fixed-term contracts are also frequently used due to relatively high employment protection of regular jobs in Slovenia. According to OECD Employment protection legislation index Slovenia ranks among the coutries with very rigid employment protection (OECD EPL index for regular jobs was scored to 2,98 in 2008 for Slovenia ( OECD 2,26) and only five OECD countries had higher score and stricter employment protection.)

During the crisis the non-prolongation of fixed-term contracts was frequently used for reducing employment and the extent of student work declined substantially (in 2011 it was by 21% lower than in 2008). However, the share of temporary employment in total youth employment (age 15-24 years) increased in 2007-2011 due to substantial decrease of regular youth employment. The share of temporary jobs in total youth employment (age group 25-29 years) remained unchanged in 2007-2011 as the most flexible employment of youth (student work) is not used at that age of youth.

1.5. To what extent are temporary contracts a ‘stepping stone’ to ‘permanent’ jobs (or those with standard contracts of employment of undefined duration)? Are apprentices and trainees typically taken on by the companies or other organisations concerned on standard permanent contracts once they complete their training? Has the situation changed over the crisis period? Please summarise any relevant studies which have been carried out in your country or other evidence at the national level which exists and give the reference to them.

There are no available data or study about transition from temporary to permanent jobs. As the analysis of the student work (Šušteršič et al., 2010) showed that it mostly entails physical and less demanding jobs, it could be said that the transition from student work to permanent decent job is not very frequent. During the crisis it became very difficult for youth to get first job.

2. Access to social benefits

2.1. Does entitlement of young people to (contributory) unemployment insurance benefits and (non-contributory) unemployment assistance (i.e. benefits, usually means-tested, which provide a minimum level of income) differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

There is no difference between unemployment insurance benefits for youth on fixed-term contracts or youth on permanent jobs. Eligibility criteria for unemployment benefit require certain insurance period, which could be gained with regular job (fixed-term or permanent employment contract). However, student workers are not included in unemployment insurance system and not eligible for UB. In 2011 the eligibility criteria for youth changed: the minimum insurance period was shorted from 12 to 8 months of employment in last 24 months (previous in 18 month). The change was made to increase a possibility of youth to get unemployment benefit.

2.2. Does entitlement of young people to sickness benefits and maternity benefits differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

Entitlement of young people to sickness benefits and maternity benefits are the same if they are employed on fixed–term contracts compared to permanent employment contract. There have not been any changes in this regard over the period of crisis.

2.3. Are there any differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to pensions changed over the period of the crisis (including through pension reforms introduced as part of a long-term strategy to improve the financial sustainability of the system)?

Youth with fixed-term contract pay social security contributions in the same amount as employees with permanent contracts. Therefore there are no differences in entitlements. On the other hand, youth in student work are not included in social security system and do not get rights in pension system. The pension reform, adopted in 2010, was rejected on referendum and did not get into force. New pension reform was adopted in December 2012.

2.4. Are there any differences in entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to health care changed over the period of the crisis?

Youth with fixed-term contract pay social security contribution for health insurance in the same amount as employees with permanent contacts. Therefore there are no differences in entitlements of young people to health care. The right to health care have also young people in student work. Their right comes from the education status and not through health insurance.

3. Regulation of temporary contracts and policies to support transitions into permanent contracts

3.1. Please describe briefly the regulations applying to the main types of temporary contract in your country. Do restrictions exist on the maximum duration of the different types of temporary contract for young workers or the number of times they can be renewed? Do these regulations differ by age (i.e. between young people and older workers) and/or by type of temporary contract (as mentioned in question 1.3), by occupation, or by sector of activity? Do special regulations exist for those completing apprenticeships or traineeships? Have the regulations changed over the period of the crisis – i.e. has there been a tendency for them to have been tightened or relaxed?

Fixed-term contracts and student work represent majority of temporary employment in Slovenia. Student work and the operation of temporary work agencies are regulated by Labour market regulation Act and specified by Rules on conditions for performing activities on employment agencies. General provisions about fixed-term contracts work are in Labor relation Act. Labor relation Act specifies situation for eligibility of concluding a fixed-term employment contract. There are also limitations for concluding fixed-term Employment Contracts (stated in article 53) :(i) The employer may not conclude one or more successive fixed-term employment contracts with the same worker and for the same job, the uninterrupted period of which would last longer than two years, except in cases laid down by law and in cases of replacing a temporarily absent worker, of employment of a foreigner or person without citizenship who was granted work permit for a definite period, of seasonal work. No special regulation exists for traineeship and apprenticeship.

Student workers receive preferential regulatory and tax treatment. First, student work is administratively very flexible. Employers do not have to go through the lengthy procedures to hire or fire student workers that are required for other workers. To qualify, students only need a proof of student status. The employer orders student work from special student employment agency. A payment per hour of work is usually stated by employer and is advertised with kind of work student work agency. The student, which decides to pick up the work, is directed to employer by a note to employer. The number of hours work mainly depends on employer’s labour demand. Second, neither students nor their employers had to contribute to the public pension fund or pay for social and health services (pay social security contributions in total amount of 38 %), making student workers much cheaper than regular full–time or part-time employees. The only burden for employers is a special concession fee, which is distributed to student employment agencies, the Student organization, and the public funds for scholarships and improvement of study facilities. The student work is limited to young population since only pupils and students involved in education are allowed to work on that basis.

Social partners are now discussing the changes of labour law, while no changes have been implemented during the crisis. The concession fee on student work was increased substantially in June 2012 (from 14% to 25%) in order to reduce the attractiveness of this type of contract.

3.2. Do incentives exists in your country to encourage employers to opt for standard rather than temporary contracts of employment, to convert temporary contracts into permanent ones or to make it easier for employees to move from temporary to permanent contracts? If so, please briefly describe the form that these incentives take. Do they apply equally to young people as well as to older workers? Are any incentives in place to encourage employers to take on young people who have completed an apprenticeship or traineeship on permanent contracts? Have there been any changes to incentives over the period of the crisis? Are any such changes being proposed or being actively discussed at present in your country?

There is no incentive for employersto encourage them to opt for standard rather than temporary contracts of employment, to convert temporary contracts into permanent ones. Public employment service launched some active employment programmes to encourage employers to employ registered unemployed persons under age 30 years. (Both type of contracts could be concluded. The incentive for employer in programe »Prvi izziv« was subsidy in amount of 7500 EUR in case of employment of youth unemployed person.). Those programmes appeared in 2011and 2012, when crisis substantially deteriorated the youth position in labour market. They are aimed to provide youth employment and first work experience. Social partners are currently discussing changes of labour code, which might decrease employment protection of permanent employment.

3.3. Is the employment of young people on temporary contracts an important issue of concern for the social partners? Are there strong differences in attitudes and policies between employers and trade unions towards the use of temporary contracts? Have any initiatives been taken by the social partners, either jointly or separately, to encourage the use of permanent rather than temporary contracts? Have any specific initiatives been taken in respect of young people completing apprenticeships or traineeships over the types of job they are offered when their temporary position comes to an end?

Social partners are aware of the labour market segmentation problem caused by student work and big difference between employment protection of fixed-term contracts and permanent employment contracts (with unlimited duration). Trade unions often point out problems of workers, with fixed-term contracts. They call attention to the fact, that in some branches predominantly temporary employment exist (marketing and sales, or journalism). They also point out the problem of workers at getting loans as banks often considers fixed-term employment as insufficient guaranty for approval of loan. Employers’ organization support existing forms of flexible employment and are in favour of further measures to increase labour market flexibility.

Alenka Kajzer, Organisational and Human Resources Research Centre (OHRRC), University of Ljubljana



Useful? Interesting? Tell us what you think. Hide comments

Add new comment