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Addressing the challenge of non-standard employment

Janine Berg's picture

Janine Berg, guest blogger, is a Senior Economist at the International Labour Organization (ILO)
 

For many developing countries, the existing challenge of informality has been compounded by the challenge of non-standard employment. Photo: Maria Fleischmann / World Bank

Efforts to extend social security to workers in non-standard employment and to build a social protection floor are critical for reducing poverty and part of the challenge of addressing informal employment.

Formal jobs provide workers more than just social protection. They are a source of income and stability which allow workers to build assets and plan for the future. Formal jobs confer a range of labor protections that include a minimum level of earnings, limits on working hours, paid leave, redress in case of unjust dismissal, union membership, protection from discrimination, and a safe and healthy workplace. These aspects of the employment relationship are sometimes overlooked in discussions about extending social protection.

A growing trend in the world of work in developing countries is the rise in non-standard employment. Non-standard employment, as defined by the International Labour Organization (ILO), comprises four different types of waged employment that deviate from the standard employment relationship. These include temporary employment (casual work and fixed-term contracts); part-time work and on-call work arrangements; triangular employment relationships (temporary agency work and other forms of labor brokering or labor dispatch); and disguised employment or dependent self-employment relationships (where workers are legally classified as self-employed but someone else directs their work).

The types work available in developing countries are never ‘standard’, with large segments of the labor force employed in casual jobs. Nevertheless, standard jobs were an important feature of some sectors, including manufacturing, forming the basis for a small but important middle class. The growth of non-standard employment has affected these segments. For many developing countries, the existing challenge of informality has been compounded by the challenge of non-standard employment.

While non-standard employment is not always a concern – some forms are welcome and if managed correctly can provide new opportunities and flexibility for workers, it is largely associated with greater insecurity for workers. For some, it can mean cycling between short-term jobs and unemployment, heightening concerns over when they will work and next be paid. Workers in non-standard jobs also typically earn less and have lower coverage of social security benefits, as they often do not meet thresholds on contributions or benefits.

Non-standard workers are also less likely to join a trade union, either because of legal impediments to joining or because they fear retaliation. This can have important ramifications for occupational safety and health as unions are an important means for voicing concerns over these issues. Coupled with the lower levels of training given to non-standard employees, the result is higher occupational injury rates among non-standard workers.

These risks are assessed and documented in the ILO’s recently published report, which documents the trends and consequences of the rise in non-standard employment across the world for workers, employers and labor markets. It offers four policy recommendations:

  1. Plug regulatory gaps. While non-standard employment can offer employers options for how they organize their operations, when there are distinctions in the entitlements that accrue to different contractual forms, it creates incentives for employers to reduce labor costs, rather than to respond legitimately to fluctuating demand. There is thus a need to narrow the differences between ‘standard’ and ‘non-standard’ jobs, so that employers’ need for flexibility is not achieved at the expense of workers’ well-being. This can be done with policies that ensure equal treatment among workers regardless of their contractual arrangement, which would mean that workers would have the same access to entitlements and benefits, even if on a pro-rata basis.

    Other regulatory responses include establishing minimum guaranteed hours for on-call workers and giving workers a say in their work schedules; legislation and enforcement to address employment misclassification; restricting some uses of non-standard employment to address abuse, such as not allowing temporary agency workers to replace workers during strikes. For workers in employment relationships involving multiple parties, there is a need to ensure that employers using agency workers are held responsible for safety and health and must pay wages and social security benefits if the contracting firm becomes insolvent.
     
  2. Collective bargaining. Collective bargaining addresses the particulars of individual sectors or enterprises and meets the needs of both employers and workers. It should be strengthened by ensuring that all workers have freedom of association and collective bargaining rights. Presently, some workers in non-standard employment may not have the right to join a union either because the law prevents it, or because it is difficult to join, especially if they fear retaliation. Efforts are also needed to build the capacity of unions to represent workers in non-standard jobs. The extension of collective agreements to all workers in a sector or occupation is a useful tool for reducing insecurities and improving working conditions in non-standard jobs.
     
  3. Improve social protection coverage. Here the ILO proposes a two-pronged approach: (1) adapt social security systems to increase the coverage of workers in non-standard jobs, by lowering thresholds on minimum hours, earnings or duration of employment, making systems more flexible with regard to contributions required to qualify, allowing for interruptions in contributions, and enhancing the portability of benefits, and (2) complementing social security with universal policies guaranteeing a basic level of social protection.
     
  4. Comprehensive employment policies. There is a need for comprehensive employment and social policies that support the labor market, especially employment creation, the provision of public care services, and giving workers greater ability to take parental and elder care leave as well as to pursue training and life-long learning. These types of policies can help address shortcomings in the design of standard jobs, thereby providing workers greater choice in whether to engage in standard or non-standard work.
These recommendations are based on the view that while not all jobs need to be standard, regulations and policies are needed to ensure that all jobs are ‘decent’ – that work is productive, delivers a fair income, security in the workplace and social protection for families.

 
 
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