Seasonal and Cyclical Employment Fluctuations. An Example of Employment Adjustments in the Industrial Sector of Central and Eastern European Countries

Abstract

Theoretical background: Labour market theories and theories of cyclical fluctuations are broadly concerned with the problem of employment fluctuations, but they usually clearly separate the problem of cyclical employment fluctuations from its seasonality. This is an unjustified approach, since comparing cyclical employment fluctuations with its seasonality provides insight into the full dynamics of employment fluctuations. Considering that the number of scientific studies that simultaneously address the issue of employment adjustments in economic cycles and seasonality of employment is relatively small and their results are inconclusive, it was considered that the issues raised in the article may provide new generalizations.Purpose of the article: The main objective of the article is to examine the mechanisms of employment adjustment in response to cyclical and seasonal fluctuations in production. In order to achieve the main objective of the article, an empirical study was conducted, which was focused on the identification, assessment and comparison of cyclical and seasonal fluctuations in employment in the industrial sector in the Central and Eastern Europe (CEE) countries in 1q.1995–4q.2021.Research methods: The analyzes of identification and assessment of employment adjustments during economic fluctuations and seasonality of employment in the industrial sector in the CEE countries are based on time series models. The empirical study consists in comparing the conclusions from the analyzes of employment adjustments during fluctuations in economic activity with the conclusions of analyzes of seasonal fluctuations in employment. The research methods were mainly focused on two areas: employment adjustments during cyclical changes in economic activity and seasonal fluctuations in employment.Main findings: The analysis of employment fluctuations in the industrial sector of the CEE countries allowed to formulate three main conclusions. (1) An analysis of labour hoarding showed that in the industrial sector of the CEE countries, labour hoarding was a common employment practice during periods of economic fluctuation, and its level did not differ significantly between countries. Labour hoarding during cyclical fluctuations resulted from the lack of adjustment of the number of employees with a noticeable adjustment of the number of working hours. (2) A research on the seasonality of employment fluctuations showed significant and important seasonality of employment in the industrial sector of the CEE countries, with seasonal fluctuations in the number of workers being smaller than seasonal fluctuations in the number of hours worked. (3) The mechanism of cyclical and seasonal adjustment of employment seems to be related. Changes in the cyclical fluctuations of employment can be explained by its seasonality, so the speed with which employment adjusts to economic fluctuations may depend on its tendency to fluctuate during the year