Employment contracts that provide ongoing job security without a fixed end date, typically including protections against arbitrary dismissal. Permanent employment is contrasted with fixed-term contracts, gig work, and at-will employment.
Secure employment enables long-term financial planning, reduces chronic stress associated with income uncertainty, and allows workers to invest in housing, families, and communities rather than remaining contingent on the next contract.
Employment protections can lock workers into jobs they would prefer to leave, reducing labor market dynamism and the career exploration that leads workers to roles that best match their evolving skills and preferences.
When firms expect workers to stay, they invest more in training and development, and workers reciprocate with firm-specific skills and organizational knowledge that are productive but only valuable if the relationship persists.
Job security protections reduce employers' ability to restructure rapidly in response to market changes, potentially preserving unproductive roles and slowing the reallocation of labor to more productive uses.
Labor market evidence from countries with strong employment protections shows that security and productivity are compatible; worker loyalty and lower turnover costs can offset the inflexibility that critics emphasize.
Strong dismissal protections make employers reluctant to hire workers in the first place, particularly during uncertain periods, contributing to structural unemployment and the exclusion of outsiders from core labor market opportunities.
Well-designed employment protection that extends to all workers, rather than protecting incumbents while leaving temporary and gig workers unprotected, can reduce labor market segmentation and inequality.
In practice, employment protection creates two-tier labor markets where insiders with permanent contracts enjoy high security while outsiders cycle through precarious temporary and informal work, deepening inequality rather than reducing it.