What is Permanent Employment?

In the United States, permanent employment generally refers to regular full-time employment that often includes benefits, such as health insurance, paid time off and retirement savings plans. Although there’s no legal requirement that full-time employees receive benefits, the general rule is that an employer that offers benefits to some full-time employees must offer them to all such workers. Many American employers, to avoid incurring the cost of benefits packages, make a practice of hiring only part-time or temporary workers, especially in retail and fast food outlets. In addition, many employers have made a practice of characterizing such employment as “regular” instead of “permanent,” to avoid potential legal complications that might arise from terminating a permanent, or tenured, employee.

Permanent employment is sometimes taken to mean guaranteed lifetime employment. While few employers guarantee a job for an employee’s working lifetime, some employment situations, such as partner in a professional law or accounting firm, or tenured professor at a college or university, certainly imply a guarantee. In some countries, government employment is considered permanent employment, and some union jobs, in the United States and elsewhere, are also considered permanent. The fact is, though, that a job’s permanence is contingent upon many factors, not the least of which are the financial health of the employer and the good behavior of the workers.

Some countries, like Japan, don’t have formal policies establishing permanent employment, but the concept is so deeply ingrained in the national culture that employers go to great lengths to avoid laying employees off, sometimes assigning them to do work unrelated to the company’s business. When faced with hard times, Japanese employers will cut their buffer costs by releasing temporary and part-time workers and cutting bonuses and overtime before laying off full-time workers. When the buffers are gone, they’ll cut hours and pay to avoid layoffs. When surveyed, Japanese employers rarely, if ever, report that they’re considering downsizing, even when neighbors like South Korea are projecting significant layoffs.

While guaranteed lifetime employment might seems like a worker’s dream, there are, in fact, some good arguments against it as a national policy. Some taxpayers, for example, might lose respect for a government whose workers tend to consider permanent employment an entitlement, for example. In addition, when private employers, like those in Japan, cut pay instead of laying off workers who could then seek employment elsewhere, they reduce their employees’ purchasing power. Reluctant to hire new workers to whom they’ll feel the obligation of full employment, these companies also keep younger workers out of the labor force. In some cases, workers simply prefer the flexibility of independent contracting, which can allow them to set their own hours and to work from home, as well as to enjoy the freedom to contract with multiple companies instead of just one.