Labour Market Security during the Crisis in Central and Eastern Europe: The Role of Skills and Institutions

Varieties of Capitalism literature (Hall and Soskice, 2001, Hancke, Rhodes and Thatcher, 2007) as well as Asset Theory of Social Policy Preferences (Iversen and Soskice, 2001, Iversen, 2005) argue that types of skills coupled with labour market institutions have profound effect on labour market security. Workers with transferable skills are able to adapt to economic shifts and enjoy higher unemployment security, because the value of their skills in many companies increases the likelihood of quickly finding similar job, if the current one is lost. Employees with non-transferable skills are more vulnerable to economic downturns. Labour market institutions can compensate the lack of adaptability by strengthening employment and/or unemployment security.

The above argument faces two challenges. First, as Streeck (2012) argued, the discussed approaches simplify multi-dimensional notion of "general" and "specific" skills. In addition to transferability (i.e. ease of replacing employers as viewed by employee) we should also explore the effects of depth of skills. The latter refer to the extent to which work is accessible to (can be sufficiently well performed by) a large number of potential employees. If a position cannot be accessed without significant prior training or experience, then such work requires deep skills. Difficulties in replacing such employees imply that they should enjoy higher employment security in comparison to workers that rely on “shallow” skills. Hence, we could expect that deeper skills should provide insurance against being fired, whereas transferability of skills should protect against long-term unemployment. 

The second challenge is related to the effectiveness of labour market institutions in the Central and Eastern Europe (CEE). Theoretical explanations of complementarities between types of skills and labour market institutions rely on the experience of the advanced capitalist economies.  However, previous research (Paas & Eamets 2006, Bohle & Greskovits 2012 among others) casted doubts on the extent to which labour market institutions actually produce the expected results in the CEE.

The paper seeks to test the effects of types of skills on labour market security (as illustrated in Figure 1) and explore the extent to which these effects are moderated by existing labour market institutions in 7 CEE countries (Czech Republic, Estonia, Hungary, Lithuania, Poland, Slovakia, Slovenia). Empirical analysis relies on the results of European Social Survey, carried out in 2010. Dependent variables – employment and unemployment security – are measured as perceived likelihood of losing one’s job and finding another one. Transferability of skills is operationalised as perceived number of other firms that could make use of ones skills set. Depth of skills is measured as reported length of additional training another employee with adequate qualifications would need to carry out respondents‘ work properly.