Not just Black and White, but different Shades of Grey: Legal Segmentation in Labour Law and Labour Market Segmentation around the World

Dr. Irene Dingeldey
Mr. Jean-Yves Gerlitz

Supporting the assumption that a division of workers into ‚insiders and outsiders’ is an oversimplifi-cation of labour market segmentation, we go back to the analysis of national regulations of employ-ment protection. We distinguish three functions of labour law that have developed in specific historical phases: starting with the standard-setting function to counter exploitation in the course of industrialisation, followed by the privileging function and the development of the Standard Employment Relationship (SER) in developed industrial capitalism, again followed by the equalising function to react to flexibilisation of employment relationships in the wake of deindustrialisation. Especially the standard-setting and privileging functions were based on legal systems emphasising specific distributive principles (merit, status, equality). Together with diverging power relations and international influences quite different national types of employment protection developed that can be captured in a theoretical framework.
We suppose that the types of employment protection exert in- and exclusive (employment rate) as well as segmenting (forms of employment) effects. For example, we expect to find more inclusive but segmented labour markets associated with the universalist type based on high standards, low privilege and high equality. Here a strong protection independently of status welcomes a variety of employment forms and facilitates the access of marginal groups. In contrast, we assume that the paternalist type with high standards, high privileges and low equality gives incentives to work within the SER while disregarding non-standard employment, resulting in exclusive, but lowly segmented labour markets.
To test our assumptions, we first combine data of the Cambridge Labour Regulation Index (CBR-LRI) on employment protection with own indicators to identify types of employment protection around the world based on the three functions. In a second step, we analyse the association of employment protection types and labour market segmentation using employment rates and employment types from national Labour Force Surveys. Combining the analysis of legal norms of employment protection with labour market structures we may find that the respective ‘worlds of labour’ do cluster quite differently than Esping- Andersen’s ‘worlds of capitalism’.