11 Examples of Job Security

John Spacey, May 30, 2020

Job security is the chance that you will be out of work due to contract termination, dismissal, layoffs or other actions by your employer. The following are illustrative examples of different levels of job security.

Freelancing, Contract Work, Temps

Many jobs are specifically structured with little or no job security with contracts that treat workers not as employees but as a business-to-business relationship. For example, large firms in the "sharing economy" that use concepts of peer-to-peer commerce to avoid employment laws for workers who resemble employees. Such employees are typically paid a piece rate such that their income is volatile and unpredictable.

Culture

Job security is greatly influenced by national culture. For example, Japan has a culture of lifetime employment whereby dismissal is taken extremely seriously such that it is rare. It should be noted that Japan has massively shifted to a freelancing and temp model due to the costs, inflexibility and motivational issues associated with lifetime employment.

Laws

Laws that make it difficult and expensive to dismiss or layoff employees. This is a benefit for employees that has costs and risks for employers such that it can have chilling effects on employment and salary levels. Generally speaking, these laws are stronger in the European Union than in the United States.

Economy

Job security mostly relates to economic conditions such that layoffs occur at a large scale due to a recession, depression or other economic problems. As an illustration, the following chart is the average earning loss percentage due to unemployment for selected countries in 2016. Greece and Spain arguably have stronger employment laws than the United States but had far higher earning losses due to unemployment. This was attributable to economic conditions in these nations at the time.

Germany	1.42
Switzerland	2.40
Japan	2.68
Norway	2.85
Canada	3.80
United States	4.25
Spain	15.81
Greece	21.68

Unions

Labor unions work to increase the job security of their members and are often successful in this respect.

Public vs Private

Generally speaking, public sector jobs are far more secure than private sector jobs. Businesses are fundamentally exposed to economic disruptions, recessions and depressions such that they quickly layoff employees as revenue falls. State and local governments may be sensitive to falling tax revenues but this tends to be a slower and less severe decline. National governments can print money and often do so in an economic crisis. In theory, they are far less likely to engage in layoffs. When government layoffs do occur certain branches of government tend to remain secure such as education, healthcare and law enforcement.

Industries

Many industries have a cyclical nature characterized by periods of boom and bust. These industries generally offer less job security than non-cyclical industries. For example, the construction industry may increase hiring as real estate prices rise and the economics of development projects become more attractive. If real estate prices go into decline, projects will be cancelled or deferred and layoffs may occur.

Organizational Culture

Some firms have a culture of setting high performance expectations and regularly dismissing employees based on their performance reviews. This is viewed as a means to fight mediocrity and stay competitive.

Employee Performance

Employees who are viewed as high performers by their employers are far less likely to experience dismissal or layoffs. As such, high productivity can be viewed as a type of job security.

Relational Capital

Employees who are influential and well-connected in their organization and industry may be less likely to ever face dismissal or layoffs.

Academic Tenure

Academic tenure is a type of indefinite contract that is awarded to university professors to encourage academic freedom. This is often used as a example of employment terms that offer unusually high job security.