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Employment and Social Developments in Europe 2014
Chart 58 : Transition rate from unemployment to permanent or temporary employment
50 Low EPL for permanent Medium EPL for permanent High EPL for permanent No EPL index
45 1.6 - 2.5 2.5 - 2.8 >2.8
40 To permanent employment
% unemployed year before 30 2012
2008
35
2010
25
20
15
10
5
0
PL FI HU UK AT EE DK ES SI SK SE LU CZ EL IT PT DE BE NL FR LV HR MT BG RO LT CY EU-27
35 Low EPL for temporary Medium EPL for temporary High EPL for temporary No EPL index
0.3 - 1.8 1.8 - 2.49 >2.5
30 To temporary employment
% unemployed year before 20 2008
25
2010
2012
15
10
5
0
UK LV DE DK SE NL EE FI BE AT HU SK PT CZ PL EL IT ES SI FR LU LT RO BG MT CY HR EU-27
Source: Eurostat, EU-SILC.
Note: The ranking according to EPL level was done using 2008 values, except for LV for which 2012 value was the earliest one available. 2011 value used
instead of 2012 for PL, PT, HR, SK, SE, RO, HU and CY. No data available for IE. Reductions of EPL in 2008-11 period indicated by the white bars.
Box4: Mind the Gap: Employment Protection Legislation (EPL)
Index for Permanent and Temporary contracts
The EPL index measures the strictness of the employment protection afforded to permanent or temporary contracts. However, the
strictness that is measured by this index does not measure protection in the same way for the two forms of contract. For example,
the EPL index for temporary contracts does not measure the ease of dismissing a worker, whereas the EPL index for permanent con-
tracts focuses primarily on this aspect. On the other hand, the EPL index for temporary contracts focuses on matters such as: when
fixed-term contracts are allowed to be used; how many are allowed to run consecutively; and rules concerning agency work — none
of which are measured in the index for permanent contracts.
Given the methodological differences in their calculation, care needs to be taken when seeking to interpret or compare the
two indices in terms of the protection they afford.
It is somewhat more justifiable to compare the two indexes as a measure of the strictness of the employment protection legislation
relating to temporary and permanent contracts. In this case the gap between the two EPL indexes can be seen in terms of the differ-
ence in strictness or complexity that an employer must deal with when faced with these two types of contracts. Hence, examining the
gap can serve a purpose in terms of seeing whether the reform of employment protection legislation across countries prevents labour
segmentation, assuming that smaller gaps between the two indexes shows a reduced distinction between the two types of contracts.
the transition from unemployment to per- and into permanent contracts. Nevertheless, have been limited signs of an improvement
manent or temporary contracts (Chart 58), there are signs that EPL levels prior to the in transition rate out of unemployment in
again underlining the uncertain impact of recession had an impact on the level of the Spain (Chart 5 in Section 2.1). Neverthe -
EPL reforms during a period of weak labour transition rates out of unemployment into less, some post-reform improvements
demand and in the short- to medium- permanent employment (r= -0.53, r 2 = 0.28), were seen in 2012 in terms of exit out of
98
term ( ). Others who increased their EPL for with the average transition rates by country unemployment when a distinction is made
permanent contracts (e.g. Belgium) saw an (when grouped by EPL levels as illustrated according to length of unemployment (less
increase in transitions out of unemployment by the green lines in the graph) seem to be than 6 months, 7–12 months, and more
better for those with lower EPL. than 12 months), and between exits to
99
( ) Some mild signs of improvement exist when temporary and permanent contracts ( ).
98
looking at the transitions to permanent Despite the narrowing of the EPL gap and
employment in 2010-12 for Estonia and in
2010-11 for Portugal. the 2012 labour market reforms, there ( ) OECD (2013b).
99
76
Chart 58 : Transition rate from unemployment to permanent or temporary employment
50 Low EPL for permanent Medium EPL for permanent High EPL for permanent No EPL index
45 1.6 - 2.5 2.5 - 2.8 >2.8
40 To permanent employment
% unemployed year before 30 2012
2008
35
2010
25
20
15
10
5
0
PL FI HU UK AT EE DK ES SI SK SE LU CZ EL IT PT DE BE NL FR LV HR MT BG RO LT CY EU-27
35 Low EPL for temporary Medium EPL for temporary High EPL for temporary No EPL index
0.3 - 1.8 1.8 - 2.49 >2.5
30 To temporary employment
% unemployed year before 20 2008
25
2010
2012
15
10
5
0
UK LV DE DK SE NL EE FI BE AT HU SK PT CZ PL EL IT ES SI FR LU LT RO BG MT CY HR EU-27
Source: Eurostat, EU-SILC.
Note: The ranking according to EPL level was done using 2008 values, except for LV for which 2012 value was the earliest one available. 2011 value used
instead of 2012 for PL, PT, HR, SK, SE, RO, HU and CY. No data available for IE. Reductions of EPL in 2008-11 period indicated by the white bars.
Box4: Mind the Gap: Employment Protection Legislation (EPL)
Index for Permanent and Temporary contracts
The EPL index measures the strictness of the employment protection afforded to permanent or temporary contracts. However, the
strictness that is measured by this index does not measure protection in the same way for the two forms of contract. For example,
the EPL index for temporary contracts does not measure the ease of dismissing a worker, whereas the EPL index for permanent con-
tracts focuses primarily on this aspect. On the other hand, the EPL index for temporary contracts focuses on matters such as: when
fixed-term contracts are allowed to be used; how many are allowed to run consecutively; and rules concerning agency work — none
of which are measured in the index for permanent contracts.
Given the methodological differences in their calculation, care needs to be taken when seeking to interpret or compare the
two indices in terms of the protection they afford.
It is somewhat more justifiable to compare the two indexes as a measure of the strictness of the employment protection legislation
relating to temporary and permanent contracts. In this case the gap between the two EPL indexes can be seen in terms of the differ-
ence in strictness or complexity that an employer must deal with when faced with these two types of contracts. Hence, examining the
gap can serve a purpose in terms of seeing whether the reform of employment protection legislation across countries prevents labour
segmentation, assuming that smaller gaps between the two indexes shows a reduced distinction between the two types of contracts.
the transition from unemployment to per- and into permanent contracts. Nevertheless, have been limited signs of an improvement
manent or temporary contracts (Chart 58), there are signs that EPL levels prior to the in transition rate out of unemployment in
again underlining the uncertain impact of recession had an impact on the level of the Spain (Chart 5 in Section 2.1). Neverthe -
EPL reforms during a period of weak labour transition rates out of unemployment into less, some post-reform improvements
demand and in the short- to medium- permanent employment (r= -0.53, r 2 = 0.28), were seen in 2012 in terms of exit out of
98
term ( ). Others who increased their EPL for with the average transition rates by country unemployment when a distinction is made
permanent contracts (e.g. Belgium) saw an (when grouped by EPL levels as illustrated according to length of unemployment (less
increase in transitions out of unemployment by the green lines in the graph) seem to be than 6 months, 7–12 months, and more
better for those with lower EPL. than 12 months), and between exits to
99
( ) Some mild signs of improvement exist when temporary and permanent contracts ( ).
98
looking at the transitions to permanent Despite the narrowing of the EPL gap and
employment in 2010-12 for Estonia and in
2010-11 for Portugal. the 2012 labour market reforms, there ( ) OECD (2013b).
99
76
