European Work and Employment Research Centre

Labour trajectories in UK and Spain. Analysis of capabilities in transitions using a mixed-method approach (TRANSICAP)

Summary:
Funded by a Marie Curie Intra- European Fellowship grant (7th Framework programme of the European Commission, ref. FP7-328223), this project was carried out by Dr. Martí López-Andreu and supervised by Prof. Jill Rubery from 2013 to 2015 in the Manchester Business School. In the project the capability approach (CA) is used as a tool to analyse the effect of organisations and institutions on individual’s labour market and life course options comparing the UK and Spain as case studies. A mixed-method design strategy was adopted to identify individuals in which recession and austerity has been a potential turning point in their labour trajectories and to identify the role played by different supports and resources (from the labour market, State and family) in employment transitions and key life course moments in the UK and Spain. The research uses the panel data of EU-SILC to identify employment transitions before and after the 2007 recession in UK and Spain and narrative biographies to analyse the role played by different supports in employment transitions and key life moments.

Detailed project information:
The aim of the TRANSICAP project is to explore the impact of the economic recession of 2007and subsequent austerity policies on employment trajectories in Spain and UK. The project investigates transitions between employment situations (with or without unemployment spells) as "potential turning points". It explores the scope that affected individuals have for effective action, taking into account the real set of options available to them in the context of changing labour market and family conditions and changing employment and welfare policies. The research draws on the Capability Approach (CA) as a methodology to analyse the potential effects of institutional interventions on individual life courses.

To achieve these objectives the project first identified and analysed the main institutional changes in employment regulation and welfare policies in Spain and the UK and their potential effects on life course transitions. Second, employment transitions in the UK and Spain were analysed by age, gender and educational group using the longitudinal rotation sample of the EU-SILC data for three periods: pre-recession (2004-2007), recession (2007-2010) and austerity (2010-2012). This established the groups for which the 2007 downturn and its aftermath in the form of austerity policies could be considered a “potential turning point”, leading to a “critical transition”. Third, the transition analysis was used to generate profiles of those facing critical turning points. These profiles were then used to select fifteen interviewees for each country for the qualitative stage. Each interviewee was affected by key employment transitions such as job loss or drastic involuntary change in working conditions (salary and working time). The narrative biographies explored the effects of changes and trends in labour markets, employment regulation and wider social policies on individual trajectories.

The research found that despite different institutional starting points in the UK and Spain, in the ‘austerity period’ (from 2010 onwards) some common features emerged. First, both reduced employment regulation. The UK started with a low level of protection but weakened this further by extending eligibility requirements for unfair dismissal protection, limiting rights for transferred employees and increasing fees for cases taken to employment tribunals. In Spain where protections were stronger, reforms reduced redundancy rights for permanent contract employees, allowed easier renewal of temporary contracts, and introduced new permanent contracts for the under 30s with very limited protection. Spain also followed the UK in allowing scope for wider wage inequality by prioritising firm-level collective agreements over sector agreements and ending the automatic extension of collective agreements if no new agreement is reached. Both developments open opportunities for downgrading of conditions and widening wage levels within sectors. Austerity has also led to major cuts to public services in both countries. In Spain these are concentrated on education and health and in the UK on local authorities’ budgets, thereby affecting elderly adult social care. In other areas there was more variation; the UK’s reform programmes have reduced both in-work and out-of-work benefits, including housing benefit and childcare tax credits and intensified pressure on benefit claimants to seek and accept any type of work, reinforced by more frequent benefit sanctions. In contrast Spain has only made more marginal changes to unemployment benefits.

The analysis of transitions and potential turning points in trajectories revealed higher transitions both to unemployment and to non-standard employment, the latter affecting both new labour market entrants and those already in employment. In the UK in the recession period the risk of unemployment spread quickly to those on permanent contracts. Transitions to part-time and non-standard employment increased for new entrants and also for men already in the labour market who had previously been less affected than women. During austerity this trend towards more flexible employment was reinforced by changes in regulation and budget cuts in the public sector. This increased work precariousness especially for women and involved higher transition rates to part-time and temporary contracts. In this context, self-employment is becoming a more frequent option for new entrants to employment, especially for those with higher education while entry into temporary contracts is increasing for women with lower education. In Spain the patterns were different. During recession job loss skyrocketed for men across all occupations and there were sizeable increases in inflows to part-time employment for young workers and to self-employment for older women. The reforms of the labour market and of the public sector during austerity did not halt transitions to unemployment, the risk of job loss rose for temporary contracts, and the trend for those in employment towards part-time and low working hours increased.

In this context of lower employment security the research highlights how both the labour market and the state are providing less support or less reliable support for those facing transitions such as job loss or drastic change in working conditions. Labour market trends and changes in employment regulation are eroding paid employment as a provider of resources to support the life course. In both countries just having a job is increasingly insufficient to provide adequate financial resources to achieve personal and employment aims. This situation existed previously in the UK but is being reinforced during recession and by the further deregulation of employment and the erosion of in-work benefits. Before the crisis in Spain the main problem was high unemployment rather than low pay and short working hours but post recession and austerity these are now growing features of the labour market. In critical transitions this erosion of resources and rights derived from employment often interacts with the changing nature of welfare and benefits. The cutbacks in working tax credits, household benefits, etc. in the UK worsened the situation for working families (especially for working mothers) and narrowed their employment and personal options. In the case of Spain employers appear to be using new reforms to provide jobs on low salaries and reduced working hours, as workers can receive some compensation through benefits. The reforms allow unemployment benefit recipients to work part-time and for partial redundancy to be financed by unemployment benefits to compensate for reduced hours.

Overall, in both countries the impact of reforms to employment regulation, the public sector and the welfare system has been to reduce collective support in the labour market, whether from the law or trade unions, thereby reinforcing trends towards more individualized employment relations. The latter is important as the research shows that despite different institutional settings in the two countries both employment regulations and union action are crucial in providing access to resources that offer individuals opportunities to respond to turning points by medium and long term strategies. The erosion of support from labour market institutions means that often the only options are to seek and accept support from the immediate family or the family of origin. These developments mean that support for transitions depends upon contingent household and family resources and relationships which presents a clear danger for social equality. Furthermore, the state’s role in providing support for social reproduction is also in decline. This development has key importance for women’s work. In the short term there is evidence of mothers being increasingly reliant on support from grandmothers to have any chance of employment or retraining. This strategy is, however, based on an unsustainable model of care provided by the extended family, just at a time when older women are becoming more engaged in wage work, in part due to pressure from pension reforms. In the UK those facing lower incomes due to changes to tax credits found themselves trapped on a low income as extending hours of work involved paying more for already expensive care services.

The research provided important insights into the effects of recession and austerity on critical transitions. Changes in context were affecting the level and nature of resource available, thereby enhancing or limiting real options in transitions. The results are pessimistic and show the need to rethink current trends in employment regulation and policy making. It shows how, in the period analysed, trends in labour market, employment regulation and welfare have prevented some individuals from returning to their previous employment path and that options for readjusting the life course were dependent on the availability of resources drawn from other spheres such as family of origin, partners, etc. The CA approach focuses its analysis not only on what a person achieves, but also and primarily on the various functionings among which he or she can choose. The project found that in the two countries analysed the set of institutional interventions have not provided enough resources to individuals affected by a potential turning point to enhance their ‘capability set’ (what a person can be and do). Therefore, the research enhances knowledge for policy makers and stakeholders about the effects of the changes in institutions and companies on individuals’ lives. It highlights that the EU’s aims of social inclusion are not only at risk due to the rise of unemployment but because of growing precariousness (low wages and working hours, underemployment, etc.) in the labour market coupled with eroded institutional supports for the life course and for conciliation between working, personal and family life. Innovative policies at institutional and company level should be developed in order to enhance options for those facing potential turning points and to allow individuals to re-orientate their careers in a changing context.

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The European Work and Employment Research Centre was established in 1994 to build upon and develop expertise in comparative and inter-disciplinary research in the area of work and employment.

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