ILPC 2027

For many Eastern European economies, the entry into regional global markets has coincided with a profound reorganization of production involving an ever-deeper specialisation of their trade patterns compared to pre-transition era, but away from production of high-value segments, which suggests a "qualitatively division of labour" within Europe. This paper aims to investigate the finance-labour nexus at the firm level and provide firm-level evidence of such nexus. A salient feature of this paper is that it investigates the impact of firms' financial conditions on employment of workers differentiated by typology of contract, thus shedding new light on the evolution of capitalism in highly financialized regimes, where global production networks are key driving force for accumulation.

This analysis is based on data from the Business Environment and Enterprise Survey (BEEPS) conducted by the European Bank for Reconstruction and Development and the World Bank in 2002, 2005 and 2009. The results that emerge from this study is that, contrary to the theorization of temporary jobs as a way to buffer the primary labour force, often endowed with human capital, from market (and financial) shocks, asset liquidations in these firms involved permanent rather than temporary workers and skilled workers rather than unskilled ones.

The paper concludes with a discussion of what theoretical approaches are best suited to explain these results. Important to understand the current modality of articulation of the finance-labour nexus is that among firms that went through mass layoffs, is the fact that firms experiencing sharp changes in their ability to meet fixed assets investments with their internal funds laid off high human capital employees. This result confirms the one that Milanez (2012) recently found in a sample of Californian firms. Both sets of results, although different in the way they measure workers' skill contradict theoretical labor economics predictions that firms lay off workers in inverse order of the degree of human capital. Ultimately, these results question the traditional separation between precarious and non-precarious labour and hint at some fundamental transformation that the process of financialization has initiated in emerging economies. In a broader sense, this study engages with theories of value that attempt to understand the role of skill in contemporary capitalism and its evolution.