A Bad Start? Fixed-Term Contracts and the Transition from Education to Work in West Germany

Abstract

Fixed-term contracts in Europe have recently become the subject of both policy and research interest, seen as particularly relevant in the transition from school to work. Some commentators argue that fixed-term contracts have an integrative function in the transition from school to work, providing a ‘bridge’ to the labour market. A contrasting perspective is that they hinder successful integration into the labour market by leading to a repeating cycle of fixed-term jobs and unemployment. We investigate this issue in Germany, a country with a regulated labour market and a ‘co-ordinated’ transition from education to work. Using life history data we consider who gets a fixed-term contract at the beginning of working life in Germany and how this affects their subsequent labour market career. Our first key finding is that fixed-term contracts are found among those for whom the school-to-work transition is not so co-ordinated, including both high-skilled and low-skilled labour market entrants. Our second finding is that, after five years, the unemployment rates of those who started with fixed-term contracts and those who started with permanent contracts converge. Beginning working life with a fixed-term contract does not clearly signal a ‘bad start’ in Germany.