Job security is the probability that an individual will keep his or her job; a job with a high level of job security is such that a person with the job would have a small chance of becoming unemployed.
Factors affecting job security include the economy, prevailing business conditions, and the individual's personal skills. It has been found that people have more job security in times of economic expansion and less in times of a recession. Also, some laws (such as the U.S. Civil Rights Act of 1964) bolster job security by making it illegal to fire employees for certain reasons. Unemployment rate is a good indicator of job security and the state of the economy and is tracked by economists, government officials, and banks.
Typically, government jobs and jobs in education, healthcare and law enforcement are considered very secure while private sector jobs are generally believed to offer lower job security and it usually varies by industry, location, occupation and other factors. To some extent, job security also varies by employment laws of each country. Personal factors such as education, work experience, job functional area, work industry, and work location play an important role in determining the need for an individual's services, and impacts their personal job security. Since job security depends on having the necessary skills and experience that are in demand by employers, which in turn depend on the prevailing economic condition and business environment, individuals whose services are in demand by employers will tend to enjoy higher job security.
In the United States
Job security in the United States depends more upon the economy and business conditions than in most countries because of the capitalist system and the minimal government intervention in businesses. Job security in the United States can vary a lot since the supply and demand for jobs depends on the economy. If the economy is good, companies experience more demand for their products and create more jobs, which increases job security. However, in periods of economic slowdown or recession, companies try to cut costs and layoff workers which decreases job security. Importantly, employment in the United States is at will, meaning that apart from certain limited exceptions, an employee's job security is generally at the mercy of the employer.
In the aftermath of the dot com boom, computer related jobs experienced low job security whereas the situation was just the opposite prior to that. Since 2005 automotive sector jobs have experienced very low job security, and since 2007, real estate and mortgage related jobs have seen a big decrease in job security.
A growing number of American men have dealt with their unemployment and feelings of job insecurity by not returning to work. In 1960 5% of men ages 30–55 were unemployed whereas roughly 13% were unemployed in 2006. The New York Times attributes a large portion of this to blue collar and professional men refusing to work in jobs that they are overqualified for or do not provide adequate benefits in contrast to their previous jobs.
According to data from the 2010 National Health Interview Survey, 32% of all of current workers experienced job insecurity, defined as being worried about becoming unemployed. Job insecurity was higher for men than women, workers aged 30–64 compared with other age groups, divorced or separated workers compared with other relationship statuses, and workers having less than a high school diploma compared to workers having more education. Workers in the construction industry had the highest prevalence rate of job insecurity (55%).
Immigration and outsourcing
Immigration and overseas outsourcing may decrease job security for people in certain occupations. For example, telephone call center positions in the information technology sector are increasingly being outsourced to India where the same roles can be filled at a lower cost. job security is consider in Somalia as clan based.
The main difference vis-à-vis the United States is the system of indefinite contracts. In most European countries many employees have indefinite contracts which, whilst not guaranteeing a job for life, make it very difficult for the employer to terminate a contract. Employees who have legally acquired these rights, for example because they have been with a company for two years continuously, can only be dismissed for disciplinary reasons (after a number of formal warnings and subject to independent appeal) or in the case of a company undergoing restructuring (subject to generous laws on redundancy payments and often with retraining paid for by the company). In Spain, for example, such employees are entitled to 45 days redundancy pay per year worked. The high cost of redundancy payments is in practice what gives employees job security.
Whilst employees who have such legally-binding, indefinite contracts are in the enviable position of knowing that they (and their family) have complete financial security for the rest of their lives, it is important to realise that these obligations work both ways. In some countries such as Germany a company may prevent an employee (whose occupational training they have paid for) from leaving to take up a better post elsewhere until compensation is agreed. Even an employee of a company which is known to be about to fold may find themselves compelled to stay with the company until the end even if they are offered work with a different firm.
Every company will have a mix of employees on different types of contract. Indefinite contracts can also exist for seasonal work. These so-called discontinuous contracts mean that a hotel, for example, may dismiss its staff in the autumn, but it must take the same people back on again the following spring.
The proportion of the workforce on indefinite contracts has fallen across Europe in response to increased competition and globalization. Companies may dismiss an employee just before they reach the two-year mark and then re-hire them as a new employee. Many economists argue that greater labour market flexibility is necessary. Economics professors argue that the threat of unemployment is necessary to maintain incentives to high productivity. Meanwhile, John Kenneth Galbraith has argued that some established economics professors simultaneously seek tenure. Jobs which are not backed by an indefinite contract are still poorly-regarded in many European societies, often disparagingly described as "precarious" or "McJobs", even when the company has good prospects.
In less regulated European economies, such as the United Kingdom, it is much cheaper to sack permanent employees. In Britain, employees are only entitled to a legal minimum of one week's redundancy pay per year worked (one and a half weeks for workers over 40). Instead, private- and public-sector employees who feel they have been unfairly dismissed have the right to take the company to an Employment Tribunal in order to be re-instated or to obtain extra compensation. It is not necessary to go through the normal court system.
In Sweden, employment contracts can be time-limited, and can be extended for new time-limited periods, or not, without reason. This is only allowed for the first two years of employment. At expiration the employee will stand without job and without compensation if no extension takes place. Most unemployed people, if they get a job, get a time-limited contract in Sweden.
In all European Union countries an employee retains their existing contractual rights if their company is taken over under the Acquired Rights Directive (in the UK, known as TUPE) so the years spent working for the old company would count when calculating redundancy payments, etc.
Measuring job security
- Job security score
A job security score is a numerical expression of an individual's unemployment risk based on a statistical analysis of a person's individual demographics, such as location, industry, and occupation, as well as external factors, such as technology, outsourcing, and overseas competition, which is captured in macroeconomic data and trends. Job Security Score also represents the creditworthiness of an individual based on their ability-to-pay by predicting an individual's probability of unemployment risk. It is similar to the Credit Score, which represents the creditworthiness of an individual based on their willingness-to-pay by evaluating an individual's probability of paying debts in a timely manner. The Job Security Score is a patent-pending payment risk scoring technology that was first developed by Scorelogix , a pioneer in consumer risk analytics.
- Job Security Index
Job security index is a measure of job conditions. Developed by Scorelogix, Job Security Index is represents how economic factors, internet and computers, international trade and competition, outsourcing, off-shoring, job migration, etc., are impacting the demand and supply of employment. A higher Job Security Index for a region, such as a ZIP code, county or metropolitan statistical area (MSA), indicates that people in that region have a better opportunity of finding jobs and remaining employed. A lower Job Security Index for a ZIP or county means that job are relatively difficult to find and keep. Typically, cities and counties that have a larger concentration of government jobs or education related jobs have a higher Job Security Index values as these jobs are less impacted by the economy.
- Computer programmers half in jest consider complicated or badly documented software as added "job security" because it would be difficult to replace them with programmers unfamiliar with the software.
- First Employment Contract (a French contract that provoked massive protests before being finally repealed)
- Contingent work
- Louis Uchitelle and David Leonhardt. "Men Not Working, and Not Wanting Just Any Job". The New York Times. July 31, 2006
- Alterman, T; Luckhaupt, SE; Dahlhamer, JM; Ward, BW; Calvert, GM (June 2013). "Job insecurity, work-family imbalance, and hostile work environment: Prevalence data from the 2010 National Health Interview Survey". Am J Ind Med 56 (6): 660–669. doi:10.1002/ajim.22123. PMID 23023603.
- "Affluent Society", John K. Galbraith, 1969, 2nd edition, pp 81, ISBN 0-395-92500-2
- "Job Security". The Jargon File. version 4.4.2. Retrieved 2008-04-10.