How Companies Use Flexible Forms of Employment

An analysis of the IAB Establishment Panel shows, however, that a replacement process of this kind has only occurred in relatively few establishments. In fact, a greater number of companies have, on the contrary, deployed flexible forms of employment less and instead expanded their core workforce. For example, between 2012 and 2017 only 5.4 per cent of firms reduced their permanent staff and increased the number of temporary employees, while 8.3 per cent grew their permanent workforce and simultaneously cut the number of personnel on fixed-term contracts. Of the companies that make use of flexible forms of employment an above-average number face uncertain business developments. This suggests that these companies’ employment strategy is a hedge against uncertainties in future labour demand. Using regulation to make the deployment of flexible forms of hiring more difficult could thus contribute to lower employment if companies are not prepared to shoulder the risk of taking on staff permanently.