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Notifications and job losses on the Swedish labour market

Ann-Christin Jans

Stockholm, Swedish Institute for Social Research, 2002 (Swedish Institute for Social Research 54) ISBN 91-7604-091-7
Bogomtale fra forlaget.

Abstract for doktorafhandlingen:

Structural change in an economy implies that labour and capital are moved away from outmoded activities and into more productive ones. The political aim in Sweden for several decades has been to facilitate structural transformation while also protecting workers who may have to carry the burden in the shape of unemployment and earnings losses. This thesis evaluates the consequences to the individuals of job losses on the Swedish labour market during the economic downturn of the 1990s. More specifically five questions are addressed: 1) Are all redundancies reported to the county labour market boards actually carried out? 2) Who are the affected workers? 3) What happens following job loss? 4) Does advance notice of redundancy help the affected workers to avoid unemployment or, if they do become unemployed, does the length of the notice reduce the duration of their unemployment? and 5) How are annual earnings affected by job loss? These questions are analysed using a new and uniquely rich longitudinal database, the Notified Workers Database, comprising all workers resident and employed in two Swedish counties in November 1991. The ongoing situation of workers is traced from 1989 to 1996. The database is unique in that it enables us to follow and compare the workers notified of forthcoming redundancy from the moment when the job loss actually occurs.
The first study - Do all notifications lead to job losses ? - examines the extent to which published notifications of forthcoming redundancies were actually realised. According to the results presented here, between 25 and 40 per cent of the redundancies preliminarily announced did not materialise. The number announced was reduced as a result of negotiations between the unions and the employers, and later by the employers’ withdrawal of some of the threatened dismissals. One of the main results to emerge was that where negotiations resulted in a reduction in the number of job losses, men’s jobs were more likely to be saved than women’s.
The second study is entitled – Which workers are made redundant workers and what are their destinations after job loss? The results of the investigation show that workers who were given advance notice of redundancy differ in several respects from those who did not receive such notice. As regards transitions immediately after the job loss, substantial differences are found in the group of notified workers. For example, women are more likely than men to become part-time unemployed, to receive disability pensions or to embark on a course of education.
The third study concerns Unemployment duration following job loss. Unemployment following job loss was analysed using of a piecewise-constant proportional competing-risks hazard model. The results indicate that workers notified of coming redundancy were as likely as non-notified unemployed workers to leave unemployment for a new job, but significantly more likely to do so in order to participate in labour market programmes. Longer periods of notice reduced the risk of becoming unemployed, but had no positive effect for workers who did become unemployed.
The fourth study, Earnings after job loss, examines the consequences of job loss on earnings. Particular attention is paid to the role of previous length of service (seniority), of the industry of the lost job, and of individual heterogeneity. The results show that losing a job often means lower earnings in the next job, as much as 2-4 years later. The explanation may be that an individual’s earning power is tied to a particular job in the form of specific skills, i.e. skills that are not transferable to other employers. The results show that the assumption of full skill specificity may be too strong. Workers who find new jobs in their previous industry enjoy significant returns to length of service in the lost job, whereas no significant such returns are found for workers who switch to other industries. The results can be interpreted as meaning that workers receive some compensation for skills that are not entirely firm-specific and not entirely general, but that are specific to firms producing similar products and services.
Læs i øvrigt også interviewet af Katarina Hjördisdotter fra april 2002: