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Measuring Precarious Employment: A Proposal for Two Indicators of Precarious Employment Based on Set-Theory and Tested with Dutch Labor Market-Data

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Abstract

Scholars claim that precarious employment is rising. The precariously employed earn low wages, have little job- and income security and occupy jobs that can generally be deemed low quality. These employees are at a disproportionally high risk of poverty and are at risk of detrimental psychological effects. Despite the salience of the issue, precarious employment remains an elusive concept and has proven difficult to measure directly. Instead, measurement tends to rely on non-integrated indicators and proxies, thus introducing significant issues concerning the validity of found results. This paper proposes two integrated indicators for specific aspects of precarious employment. Indicator 1 focuses on income insecurity and is constructed using wage, supplementary income and unemployment benefit entitlements. Indicator 2 focuses on job insecurity and is constructed using contract type and unemployment duration. Additionally, to check for the coexistence of job- and income insecurity at the individual level and give a more holistic picture of precarious employment, Indicators 1 and 2 are integrated. First, previous research on precarious employment and job insecurity is reviewed to bolster the indicators’ validity. Second, the indicators are constructed using an approach grounded in crisp-set theory and data from the Dutch “Organisatie Strategisch Arbeidsmartkonderzoek” labor supply panel. Finally, the indicators are tested by assessing precarious employment over time, by educational level, sector and immigrant status.

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Notes

  1. See: Kalleberg (2011).

  2. It is somewhat difficult to reconcile the notion of a “job” with self-employment. Acknowledging the risk of neglecting some theoretical components, the “job” of the self-employed corresponds here, nonetheless, to the activities performed for a contractor or multiple contractors who provide them with an income.

  3. For a discussion methodology and a comparison of different methods for calculating household needs, see Duclos and Mercader-Prats (2005).

  4. Note that the term UB entitlement refers to the amount of replacement income an individual is entitled to, should become unemployed, according to the specific regulations of entitlement build-up active in a given context. As in the Netherlands, both the amount and the period of replacement income are conditional on the duration and the remuneration of past employment, both of which variables are observable in OSA, so UB entitlements are readily calculable. The calculated period and the entitled amount do not independently indicate whether these entitlements will be claimed in the near future, i.e., in the case of unemployment.

  5. The Dutch WW is divided into a basic phase and an extended phase, with the basic phase paying 75 % of previous daily wages for a maximum of 3 months and being accessible for all employees who earned a wage for 26 out of 36 weeks prior to dismissal, and the extended phase paying 70 % of daily wages to employees who have worked a minimum of 4 out of 5 years prior to dismissal, with every extra year over 3 years granting an entitlement to one extra month of benefits. However, daily wages are currently capped at €188 before-taxes per day, and the duration is capped at 38 months for basic and extended benefits combined (Pennings and Damsteegt 2009).

  6. See Leschke et al. (2008) and Munoz de Bustillo et al. (2011), all of whom encounter similar issues when integrating and, in their cases, weighing dimensions.

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  1. Faculty of Social and Behavioural Sciences, Amsterdam Institute for Social Science Research (AISSR), University of Amsterdam, Amsterdam, The Netherlands

    Martin Olsthoorn

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Olsthoorn, M. Measuring Precarious Employment: A Proposal for Two Indicators of Precarious Employment Based on Set-Theory and Tested with Dutch Labor Market-Data. Soc Indic Res 119, 421–441 (2014). https://doi.org/10.1007/s11205-013-0480-y

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