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Purpose – To ease adjustments in the labour market, many countries have softened their legislation since the 1970s by introducing flexible labour contracts or by making their use easier. The purpose of this paper is to document labour management of temporary contracts during the last 20 years in Belgium, compared to the situation in its neighbouring countries. The authors investigate the determinants of the use of flexible labour contracts and the consequences of their introduction on labour dynamics. Design/methodology/approach – A dynamic Probit is considered to model the use of fixed term labour contracts (FTCs) and standard dynamic labour demand equations are used to test the impact of labour contracts on the labour adjustment at the firm level, using a panel of around 8,000 firms during the period 1998-2005. Findings – The results indicate that some firms follow labour management based on a core (indefinite term contracts – ITCs) and a peripheral component (FTCs) and manage temporary contracts on a "permanent" basis, from a long run perspective. Estimates also confirm a much faster temporary contracts employment adjustment, while ITCs adjustment does not depend on whether firms employ FTCs. ITCs short-term employment elasticity with respect to wages suggests that workers protection against redundancies is strengthened when firms manage work organisation with both types of contracts. In contrast to ITCs, FTCs are used to meet unexpected demand shocks. Originality/value – This paper contributes to the growing literature on the impact of the introduction of new flexible contracts on the labour demand at the firm level. [ABSTRACT FROM AUTHOR]

Purpose – The paper aims at providing evidence on the impact on employment of outward foreign direct investment, particularly from developed countries into low-wage countries, which is a major concern in many developed countries. Design/methodology/approach – The effects of foreign production undertaken by Belgian foreign-oriented companies on employment in Belgium are investigated by performing econometric tests for complementarity or substitution between home and affiliate employment. The data are from the Amadeus database and consist of a sample of 254 Belgian parent companies with foreign affiliates in low-wage and other high-wage European countries during the 1999-2007 period. Findings – The results show that, given the size of parent production in the home country, Belgian multinational enterprises with foreign affiliates in higher-wage European countries tend to employ more labour at home the more they produce in the host country. This probably reflects the needs of foreign affiliates in higher-wage European countries for management and supervisory services from parent companies. Another explanation might be that Belgian outward FDI is largely vertical. In contrast, no evidence is found about employment reallocation between parents and affiliates operating in lower-wage European countries. Originality/value – The paper provides evidence on overall effects on employment in Belgium of its outward foreign direct investment for the period 1999-2007, i.e. using the most recent data available. In contrast to many other studies, statistical diagnostic tests were carried out to choose the appropriate model to best fit the data. [ABSTRACT FROM AUTHOR]