- There are costs of long notice periods in the form of reduced efficiency. You can say that it is good that there is a notice, so that the employee has time to adapt. But how long that time should be is difficult to answer, says Peter Fredriksson who is professor of economics at Uppsala University.

It is still the case that it seems to benefit the future career to have time to settle down and look for a new job. Higher pay and roughly two weeks shorter unemployment is what Peter Fredriksson and his colleagues have come up with.

In this part of the RJ project, the researchers have used the Arbetsförmedlingen's register, which all employers must report to if they want to notify at least five people. They have then linked it to other statistics, for example income registers.

55+ the right age group to investigate

The researchers are examining civil servants who were around 55 years old at the time of the warning. The collective agreements in Sweden give some 55-plus workers a longer notice period: those who have been at the same workplace for more than 10 years are entitled to six months' notice.

- Since there is such a threshold effect, it is grateful to study. In general, 55-year-olds and those who have turned 54 are not that different in other respects, says Peter Fredriksson.

Notice periods occur throughout the OECD, but there is no one who has credibly investigated how they affect the individual, reasons Peter Fredriksson. On the other hand, it is fairly certain that those who are dismissed and have to look for a new job can count on lower incomes for a long time to come. It is a stable result that repeats itself in many studies. On average, it is about 25 percent lower labor income over a five-year period, and the effect lingers for decades.

This can be felt by society during crises and mass redundancies. But how the corona crisis and its effects on unemployment affect those who are made redundant, Peter Fredriksson does not want to speculate.

- One must be careful to transfer the previous results to this rather exceptional crisis which has hit hard against some parts of the service sector.

Can apply for a job during the notice period

The exact explanation for longer notice periods producing better outcomes on the labor market is not entirely clear. But the likely explanation, according to Peter Fredriksson, is that you can look for a job during the notice period.

- They get a longer adjustment period and avoid unemployment, which might be seen as a negative signal when looking for a new job, he says.

The project will run during 2021 and in the continued research, Peter Fredriksson and his research colleagues will investigate the connection between notice period and health.

- Previous research has shown that layoffs have negative effects on health. The question we want to answer is whether these effects are reduced by having a long notice period, for example that stress is reduced, says Peter Fredriksson.

TEXT: Thomas Heldmark