Presentation by Anna Kiersztyn (University of Warsaw, Institute of Sociology) on the occasion of the EESC LMO conference on "Typical and atypical work contracts - advantages and disadvantages from the labour market perspective" in Warsaw, Poland, on 8/9 April 2013.

1. Fixed-term employment in
Poland: correlates and
consequences
dr Anna Kiersztyn
Institute of Sociology
University of Warsaw

2. The main question
What are the consequences of fixed-term
employment (FTE) for employees in Poland?
The answer depends on the specific reasons for FTE
use by employers, especially whether:
FTE is treated mainly as a way of screening
candidates for stable employment on the basis of
open-ended contracts (OEE)?
FTE is used mainly to cut down on labor costs and
facilitate worker dismissal? („Flexibility at the margin”)

3. Premises
It has been found that in countries where regular employment is
highly protected and in periods of higher uncertainty, in increase in
FTE reflects an attempt to achieve flexibility 'at the margin' and
results in a dual labor market. Under such conditions FTE is more
likely to offer lower job security and fewer training opportunities.
In Poland:
Despite relatively low levels of the OECD strictness of EPL
indicator, there is a widespread opinion that in practice, the firing
of employees on open-ended contracts is very difficult and costly.
According to Polish LFS data, the fastest growth in the incidence
of FTE took place in 2001-2004, a period of economic slowdown,
high unemployment and economic uncertainty for companies.

4. Hypothesis
I expect that in the Polish context, fixed-term contracts
are associated with insecure, secondary sector jobs –
rather than jobs which serve as entry-points to high
quality, stable employment.
The analysis:
Correlates of FTE (to what extent is it concentrated among
individuals with the lowest labor market position: women, the
young, low qualified workers, low status occupations)?
Economic consequences of FTE for workers and their
households: wages, the risk of poverty, social / financial
exclusion (access to mortgage loans).
Individual dynamics of FTE: stepping stone or trap?

5. The data
European Survey of Income and Living Conditions (EU-
SILC), Polish data covering the years 2005-2008; on a
representative sample of 14-16 thous. households. All
household members aged 16 and above were surveyed.
Analysis on a sample of production age respondents in
paid employment (sample sizes in the successive
waves: N=12126; 11787; 11607; 11452).

6. Incidence of FTE
60% Total Male Female
50%
Percent in FTE
40%
30%
20%
10%
0%
2005 2006 2007 2008

7. Correlates of FTE: age
2005 2006 2007 2008
80%
70%
Percent in FTE
60%
50%
40%
30%
20%
10%
0%
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-64
Age category
This relationship cannot be fully explained by the fact that many
young people are still in education, and have lower tenure
Even when both variables are controlled for (logistic regression
models), workers aged under 30 are almost 3 times more likely to
be in FTE, compared to those aged 35-54

8. Correlates of FTE: education
60% 2005 2006 2007 2008
50%
Percent in FTE
40%
30%
20%
10%
0%
Elementary and Vocational / high College / universi-
below school ty

9. Correlates of FTE: occupation
60% 2005 2006 2007 2008
50%
Percent in FTE
40%
30%
20%
10%
0%
ISCO-1,2 ISCO-3 ISCO-4 ISCO-5 ISCO-6,7,8 ISCO-9
Occupational category
ISCO- 1,2 Managers and professionals
ISCO- 3 Technicians and associate professionals
ISCO- 4 Clercs
ISCO- 5 Service and sales workers
ISCO- 6,7,8 Skilled manual workers
ISCO- 9 Elementary occupations

10. FTE means lower wages
Average gross monthly wage of full-time employees in 2008 (zloty)
0 500 1000 1500 2000 2500 3000 3500
2229
All employees 1556
3107
Managers and professionals 2190
2438
Technicians and associate professionals 1768
1964
Clercs 1438
1475
Service and sales workers 1211
1978 OEE
Skilled manual workers 1672
FTE
1379
Elementary occupations 1255
Wages of FTE's are, on average, 30% lower than those of open-
ended employees (OEE's). However, the difference between
FTE and OEE wages is generally smaller in lower status jobs

11. FTE and wages: OLS results
OLS regression models (dependent variable: log monthly
wages) controlling for other determinants of earnings levels
(gender, age, education, occupation, industry branch, work
hours etc.) confirmed the relationship between FTE and
lower wages.
For example, according to the OLS models, employee X
employed on the basis of an open-ended contract, receiving
average wages in 2008, would earn – on average – 411
zloty more than an identical fixed-term employee Y (19%
difference).
If both X and Y were full-time workers, the estimated
difference in their expected wages would be 14%. This
difference can be considered a specific „penalty” suffered by
FTE's, wholly attributable to their employment contract!

12. Working poor among FTE's
At risk of poverty indicator (equivalised household disposable
income after social transfers below 60% of country median)
Material deprivation index – identifies households which declare
they cannot afford to satisfy certain needs (according to the
operationalization adopted in the EU-SILC)
Financial exclusion indicator – identifies households which do not
own a bank account nor have access to credit or loan due to an
actual or anticipated denial on the part of the bank (2008 only)
Individual-level poverty indices by type of employment, 2008
At-risk of poverty
OEE
Material deprivation
FTE
Financial exclusion
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

13. Conditional relationships
Poverty indices by sources of income at the household level, 2008
All households (100%)
Stable employment only (20,5%)
Stable and temporary employment (6,2%)
Temporary employment only (5,8%)
Retirement / disability benefits (31,9%)
No stable sources of income (3,6%)
0% 10% 20% 30% 40% 50% 60% 70%
Financial exc- Material depriva- At-risk of poverty
lusion tion
The negative consequences of FTE concern mostly households
in which FTE is the only source of fairly stable income. Living
together with someone holding stable employment offsets the
risk of poverty and social exclusion among FTE's

14. Access to mortgage loans
However, despite common assumptions, today FTE does not, by
definition, preclude access to mortgage loans...
(...for banks, it is actually more desirable than other kinds of non-
standard work arrangements: civil agreements, self-employment)
Today, what is most important – for both FTE's and OEE's –
is sufficiently high income, and also:
Tenure with the current employer must be at least 3 months (in
some banks, 6 months or even more), it is better if this is not the
first employment contract with the current employer
The number of months left before the contract expires should
be at least 6 (in some banks, 12). Even when this is not the case,
if the employee obtains a notice confirming the employer's
willingness to prolong the current contract, he / she can still get
the loan...

15. FTE – stepping stone or trap?
Analysis of the panel subsample in the EU-SILC: production
aged respondents, initially in FTE
In the successive waves of the EU-SILC, between 26% and
29% of FTE was in open-ended employment one year later.
(Between 54% and 58% remained in FTE, and an additional
13-16% exited employment.)
However, in the long term the percentage of FTE making the
transition to open-ended employment increases (to almost
40% after 2 years), especially among higher educated workers.
In the case of former FTE's, open-ended contracts do not
always lead to stable employment: 12% of initial FTE, who
became OEE a year later, returned into FTE after an additional
year (for initial OEE, the respective percentage was 3%)

16. Conclusions
The results show that FTE is concentrated in the lower
segments of the Polish labor market: among the least
educated and in low level occupations, and young workers.
The relationship between age and the likelihood of FTE holds
when tenure is controlled for, implying cohort effects
FTE significantly lowers workers' wages, independent of other
factors (14% „penalty” wholly attributable to FTE...)
FTE increases the risk of poverty and material deprivation –
but mostly in households which do not have access to income
from OEE. Living together with OEE's protects against poverty
...however, it does not, by itself, rule out access to mortgage
loans. In practice, lack of access may be more likely among
FTE's, but due to lower wages.
A significant group of workers appear trapped in FTE
FTE exacerbates existing labor market inequalities

17. Thank you for your attention!

18. Correlates of FTE
Modele regresji logistycznej; zmienna wyjaśniana: forma
zatrudnienia
Zmienne wyjaśniające:
płeć, wiek (kategorie), wykształcenie (wg klasyfikacji ISCED:
podstawowe , średnie, wyższe; średnie obejmuje też zasadnicze
zawodowe), status edukacyjny, status emerytalny
miejsce zamieszkania (obszar gęsto, średnio i słabo zaludniony wg
definicji Eurostat), bezrobocie w roku poprzedzającym badanie,
staż pracy (łączny – również poprzednie prace – czy krótszy niż 3
lata)
Cechy aktualnej pracy respondenta: skala statusu zawodu (ISEI –
International Socio-Economic Index of Occupational Status),
stanowisko kierownicze, branża firmy zatrudniającej respondenta
(sezonowe – rolnictwo, budownictwo, hotele; handel; pozostałe
branże); wielkość firmy (do 10 i powyżej 50 pracowników)

19. FTE and poverty / deprivation
Wskaźniki charakteryzujące gospodarstwa domowe
respondentów:
Ubóstwo dochodowe: sytuacja, w której ekwiwalentny dochód do
dyspozycji w gospodarstwie domowym (po transferach socjalnych)
jest niższy od 60% mediany ekwiwalentnych dochodów do
dyspozycji w badanych gospodarstwach.
Deprywacja materialna: występują co najmniej 3 spośród
następujących 9 przejawów trudności materialnych: brak środków
na sfinansowanie tygodniowego wypoczynku rodziny raz w roku,
jedzenie mięsa lub ryb co drugi dzień i ogrzewanie mieszkania
odpowiednio do potrzeb; brak telefonu, telewizora kolorowego,
pralki automatycznej , samochodu; kłopoty z terminowym
uiszczeniem czynszu, opłat za gaz, elektryczność, wodę, itp., bądź
spłatą rat kredytów i pożyczek.

20. Wykluczenie finansowe dotyczy gospodarstw, w których –
zgodnie z deklaracją respondentów – żaden z członków nie
posiada bieżącego rachunku bankowego i nie ma dostępu do
kredytu (w postaci karty kredytowej, pożyczki na dowolny cel
czy możliwości dokonywania zakupów w ratach), ponieważ:
• gospodarstwa nie stać na pokrycie opłat za prowadzenie konta
czy rat kredytu
• bank odmówił założenia rachunku bądź udzielenia pożyczki
członkom gospodarstwa
• w ocenie respondenta, gdyby ktoś z członków gospodarstwa
podjął próbę założenia konta bądź uzyskania kredytu,
spotkałby się z odmową.
Informacje pozwalające obliczyć powyższy wskaźnik dostępne
były jedynie dla roku 2008 – analogiczne pytania nie były