This section investigates the extent to which labour market deregulation and the process of globalization are related to socio-economic vulnerabilities. Crudely put, are outsiders and globalization losers exposed to similar socio-economic risks?
To answer this question, we embrace a multi-dimensional conceptualization of risk exposure by estimating eight ordinal logit models (i.e. four with country dummies and four with ‘welfare regime’) on the dependent variables income insecurity, employment insecurity, access to social protection, and family dependency, each of them pointing to a special vulnerability potentially suffered by respondents due to their contractual form or to the exposure of their employment sector to international competition.
Appendix Tables 3 and 4 report the full model specifications and the coefficient estimates. As ordinal logit coefficients do not carry any substantive meaning beyond their statistical significance, to grasp the direction and magnitude of the associations of interest, Figs. 3, 4, 5, 6 display the average marginal effects of a unitary increase in each independent variable of interest on the probability of choosing a given category of the dependent variable.
In Europe, a relevant share of the workforce lives on wages that do not allow them to make a decent living, a phenomenon also known as in-work poverty (Marx & Noland, 2014). But which segments of the labour force? Model 1 (see Appendix Table 3) shows that outsiders are significantly more exposed to in-work poverty than insiders. The average marginal effects in Fig. 3 Panel A suggest that being an atypical worker (versus being an insider) decreases the predicted probability of living comfortably ( − 0.05 points) and coping ( − 0.01) on present income, while it increases the predicted possibility of finding it difficult (+ 0.04) and very difficult (+0.02). The pattern is the same, but with a stronger magnitude, for the unemployed: they are less likely both to live comfortably ( − 0.17) and to be coping (− 0.21) on present income and are more likely to find it hard (+ 0.20 points) than insiders. It is worth noticing that the solo self-employed seem to share with outsiders the burden of income insecurity, though occupying an intermediate position between unemployed people and atypical workers.
If we look at sectors’ offshorability, Model 1 shows that working in occupational sectors exposed to international competition (versus working in sheltered sectors) is unrelated to income insecurity. Indeed, the coefficient of the variable ‘offshorable’ does not reach statistical significance either alone or in interaction with respondents’ skill levels. This means that, once the contractual forms and socio-demographic characteristics are controlled for, the exposure of a given employment sector to international competition does not exercise an autonomous effect on the respondents’ predicted probability of facing income insecurity.
Our results also suggest that skill level autonomously affects income insecurity. As shown by the conditional average marginal effects in Fig. 3 Panel B, highly skilled respondents working in both sheltered and offshorable sectors are more likely to live comfortably (+ 0.11 for sheltered and + 0.09 for offshorable) and to cope (+ 0.03 for sheltered and + 0.01 for offshorable) on present income and are less likely to find it difficult (− 0.10 for sheltered and − 0.07 for offshorable) or very difficult (-0.05 for sheltered and − 0.03 for offshorable) than low-skilled workers.
Thus, our results outline that the contractual form and the skill level are significant predictors of in-work poverty, whereas this is not the case for the offshorability of an occupational sector.
The variable ‘welfare regime’ in Model 5 (see Appendix Table 4) highlights significant cross-country differences. While welfare regimes seem unable to condition the effect of offshorability, which keeps its statistical insignificance, they exercise an autonomous effect on respondents’ likelihood of enduring in-work poverty. Notably, living in Southern Europe increases the probability of finding it difficult (+ 0.02) or very difficult (+ 0.01) to live on the present income compared to Eastern Europe. Patterns are reversed in Continental ( − 0.06 and − 0.03) and Nordic countries ( − 0.07 and − 0.03), where respondents are less likely to face in-work poverty than those residing in Eastern countries.
The dependent variable ‘employment insecurity’ allows us to cast a light on whether respondents experienced unemployment in the last two years, and on the duration of their spells of unemployment. Average marginal effects from Model 2 (see Appendix Table 3) displayed in Fig. 4 Panel A show that being an atypical worker (versus being an insider) increases the predicted probabilities of having experienced an unemployment spell that lasted less than six months (+ 0.07), from six to twelve months (+ 0.08), or more than twelve months (+ 0.14). Not surprisingly, this pattern is even stronger for respondents who are currently unemployed, whose probability of having already spent more than twelve months without a job in the last two years is 0.56 points higher than that of insiders. Relevantly, and as for income insecurity, the solo self-employed’s exposure to employment insecurity is similar to that of atypical workers.
Here, too, the variable ‘offshorable’ does not reach statistical significance either alone or in interaction with respondents’ skill levels, suggesting that offshorability is not a good predictor of longer unemployment spells when unhampered by skill level.
Results from Model 2 confirm that skill level also has an autonomous effect on employment insecurity. According to Fig. 4 Panel B, irrespective of their employment sector’s exposure to international competition, highly skilled respondents are less likely to have been unemployed for more than twelve months ( − 0.05 for sheltered and − 0.03 for offshorable) than their lower skilled colleagues.
Cross-country comparisons provide interesting insights. Notably, the likelihood of facing longer unemployment spells is higher in Southern countries (up to +0.07 for more than 12 months) and lower in Continental ones ( − 0.01) than it is in Eastern countries.
Here, too, no conditional effects are detected between welfare regime and offshorability in Model 6 (see Appendix Table 4), meaning that the risk of being unemployed is not higher for offshorable workers living in Continental, Nordic or Southern countries than for those living in Eastern countries. Moreover, if we look at the risk of unemployment by employment sector and skill level through cross-tabulations by country, only Finland complies with the expectations derived from the globalization losers’ literature: 47% of unskilled workers in offshorable sectors have been unemployed in the last two years, this share dropping to 42% for their counterparts in sheltered sectors. Conversely, 69% of highly skilled workers in offshorable sectors in Finland have never experienced unemployment, while this share drops to 62 per cent for their counterparts in sheltered sectors. In France, less skilled workers exposed to international competition are the most exposed to employment insecurity (38% experienced unemployment vs 34% for their counterparts in sheltered sectors), but the reverse pattern does not hold for their more skilled colleagues. Contrary to our initial expectations, in the remaining countries of our sample, low skilled workers are not more exposed to the risk of being unemployed when they work in offshorable sectors than when they work in sheltered ones.
Access to social protection
Outsiders are more likely than their permanent counterparts to rely on social benefits different from pensions and/or old age benefits. The average marginal effects from Model 3 (see Appendix Table 3) displayed in Fig. 5 show that atypical workers are more likely than insiders to access social benefits (+ 0.08) and to declare that these benefits constitute the main or a very important part of their household income (+ 0.11). This result holds for the unemployed, but with a stronger magnitude, as the unemployed are 0.30 points more likely than insiders to declare that social benefits constitute an important part of their household income. It is very interesting to note that, on this front, the solo self-employed are quite different from outsiders, as they are only slightly more likely than insiders to declare that they receive social benefits and that such benefits constitute an important part of their household income (+ 0.03).
The fact that outsiders declared that they rely on social benefits more frequently than insiders does not mean, however, that their access to social protection systems has been equally easy across the surveyed countries. To start with, the average marginal effects for welfare regime in Model 7 (see Appendix Table 4) confirm the overall higher inclusiveness of the welfare state in Nordic countries compared to all other country groups (up to + 0.11). Moreover, cross-tabulations by country add that, on average, 45% of atypical workers had access to social benefits in Southern European countries (i.e. Greece, Italy and Spain) and 52% in Continental countries (i.e. France, Germany and the Netherlands), compared with 66% in universalistic Nordic countries (i.e. Sweden and Finland). This evidence is particularly striking if we consider that 75% of atypical workers declared having experienced a period of unemployment in the last two years in Southern European countries, whereas this share decreases to 64% in Nordic countries. In brief, atypical workers in Southern Europe are more likely to experience unemployment and less likely to have access to welfare benefits.
Moving to sectors’ exposure to international competition, the variable ‘offshorable’ does not reach conventional levels of statistical significance either alone or in interaction with respondents’ skill levels. Also, skill level does not perform well as a predictor of respondents’ likelihood of accessing social benefits.
Looking at cross-country variations, however, some interesting insights on the association between offshorability and access to social protection emerge. In Germany and Poland, less skilled workers in offshorable sectors seem to rely more heavily on social protection than those working in sheltered sectors: 36 per cent of them in Germany and 52% in Poland declare that they have benefitted from social benefits in the last two years, compared with 26% of their counterparts in sheltered sectors in Germany and 40% in Poland. The opposite is true in countries such as Greece (49% vs 57%), Italy (15% vs 19%), Hungary (24% vs 33%) and Spain (27% vs 33%), while in the other countries no significant differences emerge. Though more research is needed on this front—and to disentangle which social benefits these workers have access to—this evidence seems to suggest that workers exposed to international competition tend to access social benefits more easily in some countries than in others.
The family can be important in reducing market insecurities by providing economic support, particularly in those countries where the welfare state is less inclusive and generous. Overall, our results support previous insights that familism is particularly relevant in Southern Europe (Ferrera 1996; Naldini 2003). The average marginal effects for welfare regime in Model 8 (see Appendix Table 4) show that the likelihood of relying on financial help from family is higher in Southern (up to + 0.04) and lower in Continental and Nordic countries (up to − 0.03) than in Eastern ones. Cross-tabulations add that, on average, in Mediterranean countries, 32% of atypical workers and 45% of the unemployed sometimes or often ask for financial help from their families, shares significantly higher than in Continental (21% and 28%, respectively) and Northern European countries (31% and 25%, respectively).
Also on this front, outsiders appear particularly exposed to the risk of depending on family help. The average marginal effects from Model 4 (see Appendix Table 3) displayed in Fig. 6 Panel A show that atypical workers are more likely than their permanent counterparts to rarely (+0.03), sometimes (+ 0.04) or often (+ 0.02) ask for financial help from family and close friends, while they are less likely than insiders never to ask ( − 0.10) for such help. Again, similarly to atypical workers but with a greater magnitude, the unemployed are more likely than insiders to rely financially on their families. On family dependency, the solo self-employed are similar to atypical workers, being more likely than insiders to ask for financial help from family or close friends (about + 0.04).
Neither working in an offshorable sector nor being low- or medium-skilled affects the likelihood of receiving financial help from family. In this regard, the only significant result is that highly skilled respondents, no matter whether working in sheltered or in offshorable sectors, tend never to ask for family help, unlike their lower skilled colleagues (Fig. 6 Panel B).
Overall, Models 1–8 unanimously suggest that outsider status significantly and positively correlates with income and employment insecurities, as well as with the need to rely on financial help from the welfare system and the family. Working in occupational sectors exposed to international competition seems not to be a good predictor of these socio-economic risks. Not surprisingly, skill level seems to exercise a key role in sheltering individuals from socio-economic risks.
While the presence of conditional effects between the offshorability of the sector in which respondents work and welfare regimes is not supported, country-level characteristics autonomously affect the intensity of the socio-economic risks the active population has to face across EU countries. Notably, the risks of in-work poverty, longer unemployment spells and dependency on financial help from family are more salient in Southern countries than in Eastern ones, while Continental and Nordic countries seem overall to be better equipped to cope with these risks.
Overall, our results are in line with the literature outlining that the exposure of employment sectors to international competition is a much less important determinant of socio-economic risks and vulnerabilities than the individual position in the labour market (Iversen & Cusack 2000; Langsæther & Stubager 2019; Rehm 2009). The contractual form, rather than sectors’ exposure to globalization, plays the major role in triggering socio-economic insecurities and need for financial help. It is still possible, however, that similarly to so-called modernization losers—i.e. workers in routine jobs negatively affected by automation and technological change—low-skilled workers in offshorable jobs perceive a relative decline of status (Kurer 2020) and the potentiality of future vulnerabilities. Future research should address this hypothesis because, unfortunately, our data do not allow us to do it satisfactorily.Footnote 5