Labour Market Flexibility and Employment Protection Regulation in the Baltic States

37 Pages Posted: 1 Jun 2004

See all articles by Raul Eamets

Raul Eamets

University of Tartu - Faculty of Economics and Business Administration; IZA Institute of Labor Economics

Jaan Masso

University of Tartu - Faculty of Economics and Business Administration

Date Written: May 2004

Abstract

There is increasing pressure for the flexibility of labour markets both in current EU member states and candidate countries. The paper aims to estimate the strictness of employment protection regulation, one of the most relevant aspects of labour market flexibility, and the degree of its actual enforcement, for the Baltic States. For the studies on CEE labour markets the novelty in our approach is that we use information from the applicable legislation as well as on the coverage of labour legislation and the practice of law enforcement. The analysis shows that, though overall EPL strictness is close to the average of EU countries, individual and collective dismissals are relatively heavily and temporary forms of employment relatively weakly regulated. Still, the effective flexibility is increased by the larger share of less protected workers and problems with law enforcement, which may be the reason why employers' estimates on the flexibility differ somewhat from the flexibility of formal legislation. The employment protection legislation seems not to have influenced the level of unemployment in the sample of CEE countries. However, it is possible that labour markets of Baltic States will become more rigid if the law enforcement improves, with possible adverse effects in labour market performance.

Keywords: employment protection legislation, labour market flexibility, Baltic States

JEL Classification: J23, J32, J8, K31

Suggested Citation

Eamets, Raul and Masso, Jaan, Labour Market Flexibility and Employment Protection Regulation in the Baltic States (May 2004). IZA Discussion Paper No. 1147. Available at SSRN: https://ssrn.com/abstract=553864

Raul Eamets (Contact Author)

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Road 4-A210
Tartu 51009
Estonia
+ 372 7 376 334 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jaan Masso

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Road 4-A110
Tartu 51009
Estonia
+ 372 7 375 842 (Phone)

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