A large “gig economy” of temporary workers is hindering wage growth for all workers and contributing to slower wage growth in Europe, according to a new study from the Vienna University of Economics and Political Science.
Lukas Lehner, a researcher at the Institute for the Economics of Inequality at the Vienna University of Economics and Political Science, and his colleagues found that temporary work is a regular feature of modern society.
Temporary work means lower wages. This means cost savings for employers. The benefits of temp work disproportionately benefit employers, not workers. The incentives for companies to cut costs by switching roles to temp work make all jobs more precarious.
The number of involuntary casual workers has increased many-fold over the past two decades, with high levels of involuntary casual workers across Europe.
This pool of involuntary temporary workers competes with permanent workers for the labour supply, increasing the latter’s sense of job insecurity and weakening their bargaining power.
Their empirical work demonstrates the economically important point that competition between involuntary temporary workers and permanent workers is holding down wage growth in Europe.
“Our analysis shows that the dual structure of the labor market has significant macroeconomic implications. Despite the recent upswing in wage growth, the entrenchment of non-regular employment calls for macroeconomic policies that take into account the labor market structure,” the researchers wrote.
