Labour Market Attachment Following Major Workforce Downsizings: A Comparison of Displaced and Retained Workers

In plant downsizings, attention tends to be paid to displaced workers, while the retained are considered ‘fortunate survivors’. Exploiting a comprehensive Finnish employee-employer dataset, this study examines both displaced and retained workers and compares their seven-year labour market attachment after downsizing. Advanced statistics, including trajectory analysis, are used to identify groups characterized by ‘immediately weakening’, ‘gradually weakening’ and ‘strong’ employment. Workers displaced in major downsizings have a significantly higher risk of immediately weakening employment than those retained. Sequence analyses were performed for those on weakening employment trajectories and it was found that the pathway ‘unemployment – unemployment pension – old age pension’ was quite common among displaced workers but also among those retained. The results support the segmentation theory hypothesis of a dualism in outcomes, but surprisingly there is little difference in the labour market outcomes of retained and displaced workers in the long run