Social security and labour market flexibility
Social safety nets for workers on flexible labour contracts: the current picture
The Netherlands Court of Audit performed a comparative study of the personal safety nets available to the self-employed and people employed on either flexible or permanent contracts of employment. The study involved analysing data on all almost 8 million working people in the Netherlands over a period of eight years (from 2010 to the end of 2017). The study showed that temporary contracts of employment formed the main source of income for 1.9 million people for most of this period. For a further 1.2 million people, income from self-employment was their main source of income.
Why did we undertake this study?
We hope that these findings will provide input for the debate on labour market flexibility and social security for people in work. This debate was given a fresh impulse earlier on this year with the publication of recommendations both by the Committee on the Regulation of the Labour Market, chaired by Hans Borstlap, and by the Scientific Council for Government Policy. In its response to these reports (published on 11 November), the government said that it was paving the way for the next government to act on the recommendations.
What are the main findings?
One fifth of the 1.9 million Dutch workers employed on flexible labour contracts have neither savings nor a partner in work they can fall back on if they lose their source of income. Yet it is precisely these workers, employed as they are on temporary or zero-hours contracts or by temping agencies, who most need this type of buffer. They are far more likely to encounter a period of unemployment than the 4.8 million workers on permanent labour contracts.
The study sheds new light on the composition of the group of 1.9 million workers on flexible contracts. They are generally very young when compared with the self-employed and people working on permanent contracts, i.e. the majority of workers on flexible contracts are under 35. At the same time, it is by no means customary for young people to start their careers by working on flexible labour contracts and not building up any buffers, and to catch up with workers on permanent contracts and the self-employed at a later stage.
The study revealed that 20% of workers on flexible contracts are aged between 35 and 65. These 800,000 people consistently work under temporary contracts. Invariably, they do not save as much as their peers who are employed under permanent contracts or who run their own businesses. Of these 800,000 workers, 135,000 have neither any savings to fall back on if they lose their source of income, nor a partner in work who can support them.