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Replacing Europe’s Dual Labor Markets with a Single Contract

Tito Boeri's picture

Tito Boeri is a Professor of Economics and Dean for Research at Bocconi University in Milan, Italy.

In recent decades, many European countries have tried to instill greater labor market flexibility through increased use of fixed-term, temporary work contracts, as opposed to open-ended or permanent ones. The result has been dual labor markets, with temporary workers having fewer rights and job security than those on permanent contracts. At a recent conference (“Policy options to tackle labour market dualism”) at the Institute for Structural Research (IBS) in Warsaw, an expert on the topic – Tito Boeri, Professor of Economics and Dean for Research at Bocconi University, Milan – stressed that temporary workers were especially hard hit during the Great Recession.

 Photo credit: iStock 02-27-13 © kobbydagan

In an interview with the Jobs Knowledge Platform, Boeri says that the differences among labor contracts have increased and widened “quite significantly” because many European countries have undertaken two-tier reforms that have made changes at the margin without tackling the underlying issues. He believes a “single contract” for new hires – which allow gradual accumulation of employment protection – would be a viable option to tackle duality in various countries. However, its application should be based on sound economic analysis and adapted to the specific conditions of each country. At this point, Italy and Spain are considering adopting a single contract as a way of better balancing labor market flexibility and social protection.

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