Fixed-term Employment Contracts – Employment Opportunities Better than Perceived

Employees usually do well accepting fixed-term employment contracts for a start since the probability of passing on to an employment contract of indefinite duration during the first year amounts to 38 per cent.

These are the findings of a survey conducted by the Centre for European Economic Research (ZEW) on behalf of the Hans Böckler Foundation. Over the same period of time, the risk of becoming unemployed once the contract expires merely ranges between nine and ten per cent. This percentage is almost twice as high as among comparable employees in permanent employment but the long-term prospects of fixed-term workers are not worse than those of employees with a permanent contract. The risk of becoming unemployed after three years of work is equally high. The scientists even consider the danger of getting caught in a never-ending circle of fixed-term contracts to be rather low. According to the data available, such successive contracts, fixed-term contracts repeatedly renewed over a long period of time, are a rather rare phenomenon on the labour market.

However, compared to permanent employees, fixed-term employees consider their employment situation to be significantly worse. These are the results based on an analysis of the subjective evaluation of the working situation. Employees were asked to assess their job security, payment, career opportunities, access to advanced training and unjustified criticism by colleagues and supervisors. The study indicates that, in all areas, fixed-term employees see themselves in a worse position than their colleagues with a permanent contract.

The project aimed at identifying causal effects: How much influence does a fixed-term or permanent employment contract have on the working situation of an employee? ZEW’s approach to this question was based on two extensive data collections, the Socio-economic Panel (SOEP) and the BIBB/IAB data set. The institute’s methodology was similar to the current standard proceedings for the evaluation of labour market policy programmes.

Contact

PD Dr. Bernhard Boockmann, E-mail: boockmann@zew.de