Kathrin Kolb

Globalized Labour Markets and Social Inequality in Europe

List of Tables List of Figures Preface Foreword G. Esping-Andersen Notes on Contributors PART I: INTRODUCTION Globalized Labour Markets and Social Inequality in Europe S. Buchholz, K.Kolb, D.Hofacker & H.Blossfeld PART II: COUNTRY-SPECIFIC CONTRIBUTIONS ON CONSERVATIVE WELFARE REGIMES Selective Flexibilization and Deregulation of the Labour Market S.Buchholz & K.Kolb The Flexibilization of the Dutch Labour Market R.Wielers & M.Mills PART III: COUNTRY-SPECIFIC CONTRIBUTIONS ON SOUTHERN EUROPEAN WELFARE REGIMES The Flexibilization of the Spanish Labour Market J.Martinez Pastor & F.Bernardi Italy: No Country for Young Men (and Women) P.Barbieri PART IV: COUNTRY-SPECIFIC CONTRIBUTIONS ON SOCIAL-DEMOCRATIC WELFARE REGIMES A Recipe for Coping with the Challenge of Globalization? D.Hofacker Changing Work-Life Inequality in Sweden T.Korpi & M.Tahlin PART V: COUNTRY-SPECIFIC CONTRIBUTIONS ON POST-SOCIALIST WELFARE REGIMES The Estonian Form of Globalization J.Helemae & E.Saar From Guaranteed Employment to Job Competition A.Baranowska PART VI: COUNTRY-SPECIFIC CONTRIBUTION LIBERAL WELFARE REGIMES The Effects of Flexibilization on Social Divisions and Career Trajectories in the UK Labour Market C.Purcell, M.Flynn, & U.Ayudhya PART VII: DISCUSSION AND CONCLUSION The Flexibilization of European Labour Markets and the Development of Social Inequalities D.Hofacker, S.Buchholz, K.Kolb, & H.Blossfeld Index

The Flexibilization of European Labour Markets and the Development of Social Inequalities: Comparing Evidence from Nine Globalized Countries

Throughout the last two decades, globalization and the manifest increases in employment flexibility frequently associated with it have become increasingly highly debated topics and ‘buzzwords’ in media, politics, and science. Whereas, initially, the decreasing importance of national borders and the growth of a worldwide economy were often associated with favourable repercussions such as lower prices, more choice, greater freedom, higher living standards and prosperity (Edwards, 1998), and the tide of public opinion appears to have turned. Despite manifest increases in average living standards, recent survey data demonstrate that virtually one half of European citizens nowadays perceive globalization as a threat to their national economies (European Commission, 2007). In a similar manner, social and economic scientists have come to greet globalization with increasing scepticism. Nowadays, they more frequently expect the ‘flattening out’ of cross-national institutional differences to lead to adverse cross-national convergence towards the lowest common denominator. Following this line of argument, globalization is considered to steer neoliberal processes. Against a background of a virtually unlimited mobility of work and capital, national economies and welfare states enter into a global competition to provide the most favourable conditions for businesses that inevitably force them into a ‘race to the bottom’ (Teeple, 1995) as regards both their labour market regulation and their social safety net. In consequence, many scientists foresee a convergence of welfare and social policies (Montanari et al., 2007; Navarro et al., 2004; Taylor-Goodby, 2003) and labour market regulations towards an ideal–typical neoliberal model (Marginson and Sisson, 2002; McBride and Williams, 2001) based on unregulated labour markets, residual welfare provision, minimum levels of employment protection, and a universal ‘hire-and-fire’ principle. Thus, constant growth in a flexible world economy is achieved at the cost of decreasing job and social security.

Selective Flexibilization and Deregulation of the Labour Market: The German Answer to Increased Needs for Employment Flexibility and Its Consequences for Social Inequalities

Stable and continuous employment is an important source of social coverage, social participation, and social acceptance for individuals in the so-called conservative German welfare statemodel (Esping-Andersen and Regini, 2000). Not only does the current income of an individual determine his or her access to goods and services, but also in the contribution-based German social security system the individual’s employment history has a long-lasting effect on the level of welfare state support in case of non-employment. For instance, the amount of pension received is calculated accumulatively based on the whole employment history of the individual. The level and length of time that support is given in case of unemployment depends on the previous employment situation. Even today, after the implementation of the so-called Hartz Reforms, those unemployed people who have been previously regular contributors to social insurance receive higher state benefits than those who have been unemployed for a long time or have never been employed. Thus, access to the labour market and to stable employment is a core characteristic for understanding social inequalities and the risk of social exclusion in Germany.

Globalized Labour Markets and Social Inequality in Europe: Theoretical Framework

Globalization has powerfully shaped both national economies and individual life courses in modern societies during the last three decades (Blossfeld and Hofmeister, 2006; Blossfeld, Buchholz and Hofacker, 2006; Blossfeld, Mills, and Bernardi, 2006; Blossfeld et al., 2005, 2008). The growing flows of capital, commodities, services, labour, and information across national borders have intensified the exchange among people from countries with quite different productivity levels, wage structures, social standards, work cultures, and investment opportunities — in particular after the fall of the Iron Curtain. The emergence of a single worldwide market has therefore enhanced the number of competitors — with the effect that a larger market spawns more international specialization of labour and more rapidly transforms older industries and occupational structures and brings new ones into being. Furthermore, the competition between more heterogeneous market participants and companies working under different production conditions has increased, which in turn has raised the likelihood of market turbulences, the volatility of market developments, and the rate of technological progress in the economy. In addition, the increasing mobility of production factors across national borders, in particular financial capital, has led to a rising tax competition among welfare states and to governments increasing their efforts to deregulate, privatize, and liberalize their national economies. The importance of the market as a coordinating principle appears to increase with actors competing on a larger and intensified scale. Acceleration and rising uncertainty of social and economic processes in open economies have been reinforced by the constant improvement of modern information and communication technologies, which allow individuals to connect faster around the globe. Thus, important scientific discoveries and technological advances, including new and better materials and improved methods of production as well as consumer fashions and product innovations, are diffusing much faster throughout the interconnected world. The increasing integration of the world’s economic community also creates unprecedented interdependences and therefore reinforces the exposure of local markets to random external shocks (such as major political and economic crises, technological inventions, wars, terrorist attacks, etc.) occurring someplace on the globe. In other words, global markets are not only more dynamic and are pushing technological advances in an extraordinary manner, but they also have turned out to be less predictable and more risky. The increasing acceleration of technological innovation and rising uncertainty of the social and economic environment of firms require companies to respond faster to these changes (Castells, 2000; Mills and Blossfeld, 2005). More precisely, there is a rising need for a more flexible work organization in most firms and organizations. In an era of globalization, they need to be increasingly able to quickly adapt their employees’ composition and the size of their workforce to market changes.