Labour markets in transition: balancing flexibility and security in Central and Eastern Europe

Sandrine Cazes and Alena Nesporova

Revue de l'OFCE, 2004, vol. 91 bis, issue 5, 23-54

Abstract: The article, based on a recent book by the two authors, attempts to give the answer to the question whether persistently high unemployment in Central and Eastern Europe is to be attributed to the rigidity of their labour markets. After defining the concept of labour market flexibility, the article discusses the incidence of flexible forms of employment in the region. The analysis shows that Central and Eastern European labour markets have increased their flexibility, but the forms of flexibility are different from those to be found in the OECD countries. Correlation of labour turnover with business cycle suggests a counter-cyclical movement of labour turnover, which is opposite to developments in the OECD countries. This is to be explained by high job, employment and income insecurity perceived by workers in transition countries contrasting with much higher confidence in the labour market and in assistance provided by labour market and social welfare institutions enjoyed by their colleagues in industrialized countries. Comparisons of the strictness of employment protection legislation in the group of selected transition countries with the EU countries indicate that on average employment protection legislation is similarly liberal/rigid as the EU average. The econometric analysis identifies significant correlation between the level of employment protection on the one hand and the employment rate and the labour market participation rate on the other but with opposite signs for the two groups of countries. While in the OECD countries stricter employment protection tends to have a negative effect on employment and labour market participation, in transition countries the results indicate that more protection could contribute towards improving employment performance and higher economic activity of people in the formal sector of the economy. All selected labour market indicators? labour market participation, employment, unemployment, youth unemployment and long-term unemployment? are positively affected by collective bargaining and active labour market policies, while unemployment and in particular long-term and youth unemployment tend to rise with higher payroll taxes. JEL classifications: J21, J63, J65, P23, P31

JEL-codes: J21 J63 J65 P23 P31 (search for similar items in EconPapers)
Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (70)

Downloads: (external link)
http://www.cairn.info/load_pdf.php?ID_ARTICLE=REOF_075_0023 (application/pdf)
http://www.cairn.info/revue-de-l-ofce-2004-5-page-23.htm (text/html)
free

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cai:reofsp:reof_075_0023

Access Statistics for this article

More articles in Revue de l'OFCE from Presses de Sciences-Po
Bibliographic data for series maintained by Jean-Baptiste de Vathaire ().