The Strategist

Non-standard forms of employment: boon or bane?

11/18/2016 - 13:36

According to report of the International Labour Organization (ILO), proportion of workers, engaged in non-standard forms of employment (part-time, temporary or "contract labor"), is growing. In Europe, the proportion ranges from 5% to more than 20%, in Asian countries - from 24% to 67%. Difference in salaries of comparable professionals with permanent and non-standard contracts can reach 30%.

Jorge Royan
Jorge Royan
Share of employment in temporary, part-time or agency sectors in the world is increasing, and may adversely affect the global economy. These findings have been published in the ILO’s report called " Non-standard employment around the world: Understanding challenges, shaping prospects". In more than 150 countries around the world, share of such forms of employment is around 11%. On average, about half of enterprises in the world economy do not use temporary workers at all, yet 7% of companies have more than half of non-standard working contracts. In Europe, where a temporary contract is a usual thing, the maximum number of such employees (20%) was recorded in Poland, Spain, Portugal, Cyprus and the Netherlands. The minimum (less than 5%) falls on Norway. Ireland demonstrated the greatest rate of increase in number of non-standard contracts. There, the number tripled in the last ten years. In Malta and Slovakia, proportion of such workers has increased by almost half over the same period. Average proportion of non-standard employment is even higher in Asia - 24% in the Philippines and 67% in Vietnam.

According to the ILO’s report, there are more women than men involved in non-standard forms of employment. On average, 57% of total number of such workers consist of women. In Argentina, Germany, India, Japan and Switzerland, the gap between share of women and men in non-standard employment sector is even higher - about 25 percentage points. 

Such a spread in non-standard forms of contracts can be explained by hardship and poverty. According to the report, 62% of employees cite an inability to find a permanent job. The ILO stated that difference in salaries of temporary and permanent workers can reach up to 30% among all other things being equal. Although non-standard jobs can provide access to the labor market, workers are balancing at risk of getting "in a vicious circle between temporary work and unemployment." 

Impact of non-standard forms of employment on employers is also contradictory. "In the long run, short-term benefits and flexibility, provided by such forms of contracts with employees, may negate performance due to losses in productivity. The paper indicates that those companies, which often resort to non-standard employment, do not invest enough in training, or technology and innovations to increase productivity, "- said Philip Marcadent, Chief of the ILO unit responsible for the report. According to him, widespread use of non-standard forms of employment can stimulate segmentation of the labor market and lead to greater instability of employment. Consequently, it can disorganize the whole economy.