Employment and Decent Work in the Era of Flexicurity

1
Employment and Decent Work in the Era of
Flexicurity

• Robert Boyer
• PSE - PARIS-JOURDAN SCIENCES ECONOMIQUES
• (Joint research unit CNRS-EHESS-ENPC-ENS)
• 48, Boulevard Jourdan 75014 PARIS, France
• Phone [phone] Fax (33-1)
  43 13 62 59
• e-mail robert.boyer_at_ens.fr
• web site http//www.jourdan.ens.fr/boyer
• Development Forum on Productive Employment and
  Decent Work, panel 3 Labour Market Flexibility
  and Decent Work, New-York, United-Nations, ECOSOC
  Chamber, 8-9 May 2006

2
Introduction

• A basic question
• How to promote decent work and productive
  employment in the era of globalization and
  flexibility?
• The method
• 1.What do theoretical advances tell?
• 2.Do international comparisons show the
  superiority of flexibility strategies for OECD
  countries?
• 3.What are the constraints and opportunities for
  developing countries?

3
I. Theory A reappraisal of the
flexibility/security debate

• The inadequacy of the typical pure competition
  model
• 1 In a stochastic world , it is not rational to
  adapt instantaneously.
• 2.In a complete macroeconomic model, the maximum
  speed of adjustment of employment may generate
  structural instability.
• 3.Similar results for capital adjustments.
• 4. To take risks and accept changes, individuals
  have to benefit from a minimum degree of
  security.

4
Figure 1 Why the competitive equilibrium theory
is not suited for assessing the impact of the
security brought by welfare systems
The market view  security introduces a distance
with respect to the general equilibrium that is a
Pareto optimum.

• The institutionalist view
• Full security may be contradictory with the
  requirement of a capitalist economy.
• No security at all may create instability in the
  employment relation and institutional
  equilibrium.
• In between, some security may be optimum for
  economic performance as well as for welfare.

5

• The externalities associated to the various forms
  of security have to be taken into account
• 1 Income security a contribution to demand and
  an impact upon expectations.
• 2.Employment security an incentive to investment
  in firm specific skills.
• 3.Representation security more commitment and
  acceptance of technical change.
• 4.Life security significant impact upon
  productivity and welfare.
• 5.Skill security more productivity and
  adaptability to changes

6
Figure 2 How various securities may enhance
dynamic efficiency
7

• From possible static inefficiency to a
  contribution to dynamic efficiency and growth.
• 1 Security is a cost in the short run..
• 2but also an investment in a form ofsocial
  capital...
• 3hence a possible contribution to an endogenous
  process of growth.

8
Figure 3 - A reconciliation of two opposed
visions of the impact of welfare
9
II. Empirical evidence for OECD economies
flexicurity and not only flex-flexibility

• 1.Job security contributes to workforce
  redeployment

10
Figure 4 Quality of job prospects and
insecurity, selected European countries,
1995-2000 (percentage)
Source ILO (2004), World Employment report
2004-05, p. 206.
11
II. Empirical evidence for OECD economies
flexicurity and not only flex-flexibility

• 1.Job security contributes to workforce
  redeployment
• 2.Labor market policies can reduce job insecurity

12
Figure 5 Job insecurity and spending on labor
market policies, selected OECD countries, 2000
Source ILO (2004), World Employment report
2004-05, p. 207.
13
II. Empirical evidence for OECD economies
flexicurity and not only flex-flexibility

• 1.Job security contributes to workforce
  redeployment
• 2.Labor market policies can reduce job insecurity
• 3.Small open economies have more active
  employment policies

14
Figure 6 Spending on labor market policies
increases with openness, selected industrialized
countries, 1970-2000
Source ILO (2004), World Employment report
2004-05, p. 190.
15
II. Empirical evidence for OECD economies
flexicurity and not only flex-flexibility

• 1.Job security contributes to workforce
  redeployment
• 2.Labor market policies can reduce job insecurity
• 3.Small open economies have more active
  employment policies
• 4.Active welfare may complement innovation policy

16
Figure 7 Changed in MFP growth and change in
business RD intensity
Source Bassanini A., Scarpetta S., Visco I.
(2000 27)
17
II. Empirical evidence for OECD economies
flexicurity and not only flex-flexibility

• 1.Job security contributes to workforce
  redeployment
• 2.Labor market policies can reduce job insecurity
• 3.Small open economies have more active
  employment policies
• 4.Active welfare may complement innovation policy
• 5.A whole spectrum of configurations for workers
  secutity

18
Table 1 Employment or employability protection?
A typology of OECD countries late 1990s and
early 2000s
Source ILO (2004), World Employment report
2004-05, p. 209.
19
III. More security for workers in developing
countries

• 1.Constraints and opportunities for productive
  employment and decent work

20
Table 2 Obstacles and opportunities for decent
work in developing countries
21
III. More security for workers in developing
countries

• 1.Constraints and opportunities for productive
  employment and decent work
• 2.The ambiguous impact of globalization on labor
  standards

22
Figure 8 Chances and constraints on productive
employment and decent work
23
III. More security for workers in developing
countries

• 1.Constraints and opportunities for productive
  employment and decent work
• 2.The ambiguous impact of globalization on labor
  standards
• 3.A method for drawing a dividing line between
  flexibility and security

24
Figure 9 A growth diagnostics approach to
employment creation
25
III. More security for workers in developing
countries

• 1.Constraints and opportunities for productive
  employment and decent work
• 2.The ambiguous impact of globalization on labor
  standards
• 3.A method for drawing a dividing line between
  flexibility and security
• 4.The institutional setting in order to promote
  the related configurations

26
Table 3 The paths to workers security
27
III. More security for workers in developing
countries

• 1.Constraints and opportunities for productive
  employment and decent work
• 2.The ambiguous impact of globalization on labor
  standards
• 3.A method for drawing a dividing line between
  flexibility and security
• 4.The institutional setting in order to promote
  the related configurations
• 5. Some developing countries do suceed

28
Table 4 Some developing countries are quite
successful in enhancing security
29
(No Transcript)
30
IV. Conclusion

• 1.Modern theorizing a minimum workers security
  is required given the specificity of the wage
  labor nexus.
• 2.For OECD countries flexicurity delivers better
  outcomes than conventional flexibility
• 3.Employment diagnosis and alternative
  institutional designs opens some strategy for
  developing countries

31
Many thanks for your attention

• Robert BOYERPSE, CNRS, E.H.E.S.S.48, Boulevard
  Jourdan 75014 PARIS, FranceTél.  (33-1)
  43 13 62 56
• Fax  [phone]
• e-mail  boyer_at_pse.ens.fr
• web site http//www.jourdan.ens.fr/boyer/