Employees who do not know their labour contract term and the implications for working conditions: Evidence from Japanese and Spanish microdata

In this paper, we analyse the relationship between employees who do not know the length of their labour contract (hereafter, DNK employees) and working conditions. In developed countries, labour standards regulations generally require employers to provide a labour contract with a clearly defined duration to protect the fundamental rights of workers. However, the data reveal that in the developed countries on which we focus, Japan and Spain, non-negligible proportions of employees, 8% and 11%, respectively, do not know the duration of their labour contracts. Utilizing 2012 data from the Employment Status Survey for Japan and the Economically Active Population Survey for Spain, we find that whether workers are ignorant of their contract term commonly depends on their human capital level. Women, single people, younger and older workers and less-educated workers are more likely not to know their labour contract duration. Compared with other employees, DNK employees are more dissatisfied with their current job, more likely to search for other jobs and less likely to seek more work in their current jobs. We find that DNK employees suffer from a wage penalty for non-standard status and have less access to job training, as occurs in Japan, and that specific attributes, such as immigrant status, tend to be closely related to DNK status, as occurs in Spain. Overall, DNK employment is related to poor working conditions, which indicates the importance of educating workers about labour laws to maintain the welfare of disadvantaged workers.