Worker Representation and Temporary Employment in Germany: The Deployment and Extent of Fixed-Term Contracts and Temporary Agency Work

Abstract

This study examines the potential impact of works councils and unions on the deployment of fixed-term contracts and agency temps. We report inter al. that works councils are associated with a higher number of temporary agency workers when demand volatility is high while the opposite holds for fixed-term contracts. These disparities likely reflect differences in function, with agency work being more directed toward the protection of a shrinking core and fixed-term contacts being as much a port of entry as a buffer stock. We are also able to identify the number of new hires with a fixed-term contract as well as the number of FTC conversions (into regular employment) and renewals, the correlates of which flows are broadly consistent with the stock data.

Keywords: complementarity, demand volatility, collective bargaining, agency temps, fixed-term contracts, stepping stones, buffer stocks, labor market duality, extensive/intensive margins, works councils, unions, Germany

JEL Classification: J21, J23, J41, J48, J51, J63, K31