The Paradox of the Baltic States: Labour Market Flexibility but Protected Workers?

Abstract

This article assesses the strictness of employment protection legislation and its actual enforcement in the Baltic States. We use information from the applicable legislation as well as employer surveys, data on the coverage of labour legislation and the practice of law enforcement. Overall strictness is close to the average of EU countries and relatively well aligned with EU regulations; individual and collective dismissals are relatively heavily and temporary forms of employment relatively weakly regulated. However, effective flexibility is increased by problems of enforcement: there is much evidence of violations of statutory regulations at enterprise level. In addition, the proportion of the workforce actually covered by the regulations is relatively low. In the Baltic States temporary employment is more widespread, implying a higher level of flexibility than the EU average.