©David Rooney

Does part-time work pay?

Once regarded as a career path to nowhere, part-time employment has become increasingly attractive to a growing number of workers.
OECD Directorate for Employment, Labour and Social Affairs

In 2007, even before the economic crisis hit, and before employers started shaving working hours to spare jobs, one in four women and almost one in ten men in OECD countries worked part-time. Most of them did so because they wanted to, not because they had to. In the Netherlands, for example, where the share of people working part-time is particularly high at almost 37%, less than 4% of part-timers would rather work full-time.

While part-time workers are still penalised with lower wages, less training, fewer opportunities for career advancement and less job security than full-timers, there are some upsides. Part-time jobs tend to have more family-friendly working hours, better working conditions and less stress. Many workers, and particularly those who might otherwise not have been able to enter the labour market–students, mothers and older workers–seem happy with these trade-offs. And the spread of part-time work in many countries has not led to worsening job quality. In fact, in countries where part-time work is most widespread, the penalties to part-time work tend to be smaller, without losing any of the benefits.

The growth in part-time work over the past two decades has not come at the expense of full-time employment, though a closer look reveals that prime-age women may indeed be substituting part-time for full-time work. Still, overall employment rates tend to be higher in countries where part-time jobs are widespread. This is largely because the growth in part-time work reflects the fact that more young people, women and older men are participating in the labour market. And, since the 1990s, most OECD countries have introduced new laws to encourage high-quality, part-time work opportunities and reduce involuntary part-time employment. These laws, backed by international agreements by the International Labour Organisation and the European Commission, require employers to provide part-time workers with wages and conditions comparable to those of full-time workers, allow full-time workers to reduce their hours in certain circumstances, or give existing part-timers preferential treatment when hiring full-time.

But there are downsides to part-time employment too, which may affect people’s welfare in the long run. On average, parttimers face a poverty rate that is more than twice as high as that among full-time workers. In some countries, not only are part-time workers less likely to have a permanent contract, they might not be covered by unemployment insurance. In Finland, Japan, Korea, the Netherlands and Sweden, for example, workers must meet a minimum number of hours or days of work to be eligible to claim unemployment insurance; in Norway, Poland, the UK and the US, eligibility is based on earnings.

While high-quality, part-time employment may be better for both individuals and society than unemployment or being out of the labour force, it might discourage full-time employment. Long periods of parttime work could damage individuals’ career prospects and increase their risk of poverty in retirement. And once workers move into part-time jobs, many of them stay there for long periods of time. About two-thirds of part-timers stay in part-time employment for more than one year. In countries where part-time work is widespread, the vast majority of people who remain in a parttime job for at least two consecutive years do so voluntarily. On average, only about 15% of part-timers take up or return to full-time employment each year; slightly less move out of employment altogether.

But international comparisons suggest that the relative lack of career prospects offered by part-time jobs may not be the main barrier to moving towards full-time employment. Although part-time workers living in a poor household voluntarily stay in part-time employment less frequently than those not living in poverty, they do not necessarily move into full-time work. One reason is that national tax and benefit systems reduce incentives to take up a full-time job. Across the OECD countries for which data are available, the average marginal effective tax rate, which measures how much of a given change in gross earnings is taxed away through income tax, social security contributions and benefit withdrawal, is close to 50%–which means that almost half of any increase in total gross earnings obtained by working more hours is offset by higher social contributions or increased income taxes and reduced benefits. Add to that possible increases in childcare or other costs, and the enticement of full-time work diminishes even more.

Quality part-time employment could be a boon to ageing societies in OECD countries, since it opens the labour force to people who might otherwise be shut out from it. Young people still in school, women who care for parents or children, people with health problems and older workers looking for a gradual transition into retirement can all benefit from part-time work. But as the ranks of part-time workers swell, policymakers should ensure that tax systems–and prospective employers–do not create obstacles to moving into fulltime employment. They should also watch out for employment policies that might discriminate against part-time workers. In many countries, for instance, many training and employment programmes are reserved for the unemployed or require fulltime participation that makes attendance impossible for those in a job, albeit parttime. Governments need to make certain that those who do want to work full-time are helped to do so through support from employment services. Part-time work should not lead to a dead end.

References

OECD (2010), “How good is part-time work?”, OECD Position Paper, July, available at www.oecd.org

OECD (2010), OECD Employment Outlook 2010: Moving beyond the Jobs Crisis, Paris.

OECD (2009), “Spotlight: Jobs Crisis”, in OECD Observer No 274, October.

European Directive on Part-time Work in 1997

ILO Convention (C156) and Recommendation (R182) on Part-time Work in1994

Visit www.oecd.org/employment and www.oecd.org/els/employment/outlook

©OECD Observer No 280, July 2010



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