Basic Conception of the Indices

If the generosity of social protection is to be measured for different types of employees, it first needs to be clarified which specific features of social safety schemes affect and potentially restrict benefits and eligibility. At-kinson and Micklewright (1991) provide a list of such institutional features for unemployment benefits: (a)

benefits are not paid to those who quit a job voluntarily, (b) during the initial phase of unemployment no benefit is paid (waiting days), (c) actively seeking for a job is required, (d) suitable job offers may not be refused, (e) eligibility is tied to a certain amount or duration of past contributions, (f) benefit amount is related to past earn-ings, (g) benefits are paid only for a limited duration.

Since it is welfare dualism which is at the heart of this study, I focus only on the latter three features–which are also applicable to sickness benefits–because these will differ in their impacts on atypical and standard employees, whereas the former items affect all employ-ees in the same way (and thus cannot cause dualism).

Especially condition (e) is important for atypical em-ployees: if access to benefits is restricted to those who earn a minimum amount, work a minimum number of hours or exceed a minimum job tenure, it will lead to the exclusion of numerous non-standard workers due to their lower working time and shorter contract terms.

Conditions (f) and (g), too, are particularly disadvanta-geous for atypical workers because they result in lower benefit amounts and shorter durations if these depend on previous contribution records as usually is the case.

Yet there is one fundamental difference between condi-tion (e) and condicondi-tions (f) and (g). Whereas (e) refers to conditions determining if at all a claimant’s past con-tributions suffice to become eligible, (f) and (g) define how much is going to be disbursed once all qualification requirements of condition (e) have been met. That is, conditions (f) and (g) do not take effect until condi-tion (e) is fulfilled. The rules deciding on eligibility and the rules determining amount and duration of benefits are profoundly different aspects of how social securi-ty schemes operate which, in my view, should not be mixed up or blended into one single measure as is done, for instance, by Esping-Andersen’s decommodification

index. More precisely, the reason why I consider such a procedure flawed is that including both aspects in one index would imply that a high score in one dimension could possibly compensate for a low score in the other.

That is obviously false: high and long potential bene-fits have no use if a claimant gains no access to them.

Nor is universal access to benefits valuable if payouts are negligible. Therefore, when computing a compos-ite generosity index, accessibility should be kept sep-arate from amount and duration of benefits to avoid that both wrongly offset each other. Rather, the various single features restricting accessibility should form one single index of their own which is described in the next paragraphs.

The attention researchers pay to accessibility, i.e.

condition (e), has so far been modest. The decommodi-fication index includes as explicit accessibility indicator only the minimum number of work weeks required for eligibility, while there are three indicators measuring the generosity of payments. The index is also weighted by the benefit’s coverage rate which may act as a proxy for the strictness of access, but it does not tell much about the design of access conditions. Since the original focus of the decommodification index, and the major frac-tion of welfare state research in general, has been on standard workers with long-lasting job tenures and full-time work who normally have no difficulties accessing unemployment or sickness benefits,¹ there has been no marked interest in eligibility rules. Once, however, the situation of atypical workers is made the focal point of a study, accessibility must be given special importance.

The study at hand is thus taking into particular account the design and restrictiveness of accessibility rules by proposing an index exclusively measuring the strictness of access requirements. This index is called accessibility index to differentiate it from the broader notion of el-igibility which also comprises additional requirements

1 There are only two cases in which standard workers are likely to be excluded from benefits. The first is when they lose their job or fall sick within their probation period. The second is when they fail to meet conditions (a) to (d) as stated by Atkinson and Micklewright (1991). These conditions, howe-ver, are not a subject of this study.

unrelated to preceding work periods (such as job search efforts, availability etc.). Accessibility, more narrowly, refers only to employment criteria that need to be met prior to benefit receipt which pose the main obstacle to atypical workers’ chances to receive welfare handouts.

One essential part of the index is the minimum number of hours (or minimum earnings in some coun-tries) that must be reached within a given time span if an atypical worker is to receive a benefit. A high hours threshold is thus most detrimental to part-time workers whose working time is naturally more likely to be less than the required length. Another part of the index is the minimum number of weeks in employment prior to benefit receipt a claimant has to certify. This is most important to employees on fixed term contracts whose tenure might fall short of the required amount of weeks.

Yet in most countries eligibility rules do not demand minimum weeks to be fulfilled by one continuous, un-interrupted stint, but set a greater time frame within which the required weeks in employment can be accu-mulated on various jobs. This time frame is the third part of the accessibility index.

Only few studies examine the lock-out effect of contribution requirements, the most recent and exten-sive of which is Leschke (2008). Based on micro data from the mid-1990s, she compares entitlements to un-employment benefits and minimum income support of full-time, part-time, and fixed term workers in Den-mark, Germany, Spain, and the United Kingdom. Al-though she does not distinguish between means-tested and non-means-tested benefits, her results nonetheless give a valuable hint as to the adverse effects of strict qualification requirements on the odds of atypical em-ployees to become eligible. Using descriptive statistics, Leschke shows that the coverage rate of atypical workers is at least 10 percentage points below that of standard workers in all considered countries (the only exception being temporary workers in the UK).² A multivariate regression analysis further corroborates this result. She

2 If all unemployed are considered irrespective of their official registration status.

BASIC CONCEPTION OF THE INDICES 63

finds that shorter working hours, shorter tenures, and a lower income significantly diminish the chance to qual-ify for benefits.³ Even if personal and job characteris-tics (such as age, qualification, occupation, and wage) are controlled for, a direct, negative effect of part-time work on accessibility can be identified in Denmark, the UK, and Germany. For fixed term work a similar nega-tive impact is detected only in Spain. Once temporary employment is interacted with part-time employment however, a negative effect emerges also in Germany and the UK. The hypothesis that atypical employees are less likely to qualify for benefits is thus largely confirmed by Leschke’s study. Some older, less extensive studies report similar results (Cebulla 2002, Ghysels/Thirion/ Cantil-lon 1999, Immervoll/Marianna/Mira D’Ercole 2004).

Besides accessibility, it is amount and duration of payouts that define a social protection arrangement.

Both dimensions, duration and amount, can be reason-ably joined into one single index due to their compen-satory nature; a high benefit amount would allow one to build up financial reserves which can be consumed should the benefit term end before a recipient goes back to work. The same logic also holds when reversed: if a benefit is too low to establish substantial savings, it can be made up for by a longer duration. Based on these two, compensatory dimensions, I therefore propose two more indices: the benefit index for atypical employees and the benefit index for standard employees. Both in-dices consist of measures of benefit amount and dura-tion, but each adapted to the respective situation of ei-ther atypical or standard workers. Establishing distinct indices for each type of employee is necessary since the question whether or not there are differences in welfare entitlements between both groups is at the heart of this thesis.

As to the determination of benefit amounts paid out to the recipients, most countries fix them as a per-centage of the previous wage, but not without attach-ing some additional strattach-ings to this rule, resultattach-ing in a

3 The only exception is Denmark where former income is found to have no impact on benefit receipt.

more favourable treatment of either group. For exam-ple, some countries apply varying percentage rates de-pending on income. Also widespread is to set minimum or maximum amounts to guarantee a basic rate to low pay earners while capping benefits for the more well-off. Pure flat rate benefits tend to be more generous for atypical employees in terms of percentage replacement rates. Likewise, the rules on benefit duration may in practice lead to very different entitlement periods for atypical and standard workers. Since benefit duration is frequently defined as a function of the previous length of employment, non-standard workers are very likely to receive payments only for a shorter time span than stan-dard ones. As with benefit amounts, however, the intro-duction of minimum, maximum, or flat-rate terms is able to amplify or extenuate this disparity. Other factors determining benefit amounts and durations unrelated to employment status (such as age or number of house-hold members) are disregarded in this study.

Leschke (2008), who used ECHP data from 1993 until 2000, does not cover the duration of benefits, but examines empirically the amount disbursed to job seek-ers broken down by their former employment status.

Unsurprisingly, former part-time employees are paid on average roughly 50 to 100 Euros (in purchasing power parities) less than their full-time peers, yet converted to net replacement rates, part-time employees’ mean ben-efits are even somewhat higher than standard employ-ees’. Leschke thus concludes that redistribution towards part-time workers takes place in all considered coun-tries. For temporary workers, she is not able to detect any notable difference in benefits compared to standard workers in any country other than Spain. In the ensuing multivariate analysis, controlling for gender, age, house-hold situation, and job characteristics, she finds signifi-cant negative effects for part-time workers in Germany and fixed term workers in Spain. The assumption that, as a general rule, atypical employees do not receive the same benefits as standard employees is hence confirmed only on an absolute basis. Furthermore, an addition-al penaddition-alty on atypicaddition-al workers’ benefits beyond their personal and job characteristics seems not pervasive.

It must be kept in mind, however, that Leschke does not take into account benefit duration and lumps to-gether unemployment benefits with minimum income support. If dualism will still remain absent even when the analysis distinguishes between first and second tier benefits and the duration is also considered, is open to question. The next section gives more technical defini-tions of unemployment and sickness benefits, then pro-poses an operationalisation of each benefit system by identifying measurable indicators and a way to merge them into composite indices.