Flexicurity: the concept, its potentials and limits

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Flexicurity the concept, its potentials and
limits

• Ton Wilthagen
• Flexicurity Research Programme
• Tilburg University, the Netherlands
• www.tilburguniversity.nl/flexicurity

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Outline of this presentation

• The flexibility security nexus and the concept
  of flexicuriy
• EU developments
• State of affairs or policy strategy
• Dutch vs. Danish style
• The potentials of flexicurity a comparative view
• regimes and national systems
• preconditions of flexicurity
• The limits and demarcation of flexicurity systems

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Flexicurity todays buzzword in employment and
labour market policy

• Discussed in many countries
• Key issue within EU policy
• Picked up by OECD
• Council of Europe Forum on reconciling
  flexibility and social cohesion
• ILO project on flexicurity in transition
  economies
• Key focus of research in many institutes

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The Flexibility-Security Nexus

• On the one hand there is strong demand for
  further flexibilisation of labour markets,
  employment and the work organisation,
• while at same time an equally strong demand
  exists for providing security to vulnerable
  groups of employees and to other outsiders in the
  labour market, and preserving social cohesion in
  our societies

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Developments in EU policy-making (1)

• Flexibility-security nexus explicitly addressed
  at EU-level
• White Paper on Growth, Competitiveness and
  Employment (1993)
• Green Paper on Partnership for New Organisation
  of Work (1997)
• The key issue is to strike the right balance
  between flexibility and security

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Developments in EU policy-making (2)

• Emergence of a social-policy
• perspective next to already
• existing economic perspective
• Addressed at EU summits in
• Essen 1994
• Florence 1996
• Amsterdam 1997
• Luxembourg 1997

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The European Employment Strategy (1)

• Pursuit of a (new) balance between flexibility
  and security is especially manifest within the
  European Employment Strategy.
• Member States will facilitate the adaptability of
  workers and firms to change, taking account of
  the need for both flexibility and security and
  emphasising the key role of the social partners
  in this respect.
• But what has changed after the 2nd report of the
  European Employment Task Force (Wim Kok) and the
  reconsideration of the Lisbon strategy?

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The European Employment Strategy (2)

• After crisis on progress of Lisbon strategy the
  guideliness on growth and guideliness for
  employment have been integrated (April 2005)
• Notice change of wording in stead of striking
  the right balance the guideline now reads
• Promote flexibility combined with employment
  security and reduce labour segmentation

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Views on flexicurity (1)

• Normative or empirically-oriented concept?
• Flexicurity as a state of affairs or as a type
  of policy?
• If state of affairs then flexicurity policies
  are not necessarily in place
• If flexicurity policies then state of affairs
  may be reached or not (yet)

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Views on flexicurity (2)

• Flexicurity high levels of both flexibility and
  security? Trade-off, balance, interconnection or
  match?
• Flexibility through security and vice versa?
• Flexicurity security for flexible workforces?
• What type of flexicurity and for whom?

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Flexibility versus security dimensions/trade-offs
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Flexicurity as a policy strategy

• Attempting, synchronically and deliberately,
• to enhance
• (in particular) employment security and social
  security, notably for weaker groups in and
  outside the labour market
• flexibility of labour markets, the work
  organisation and labour relations

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Flexicurity as a state

• a (high) degree of job, employment, income and
  combination security that facilitates the labour
  market careers and biographies of workers and
  allows for enduring and high quality labour
  market participation and social inclusion, while
  at the same time providing
• a (high) degree of numerical (both external an
  internal), functional and wage flexibility that
  allows for labour markets' and companies' timely
  and adequate adjustment to changing conditions in
  order to maintain and enhance competitiveness and
  productivity.

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Other important dimensions

• Flexicurity strategies can vary along three other
  dimensions
• Levels at which flexicurity strategies are
  initiated (national, regional, local, industry,
  or company level)
• Actors involved in the flexicurity strategies
  (state, regional and local government
  representatives, social partners, individual
  firm, individual employee)
• Codification of flexicurity strategies (law,
  collective labour agreement, social pact, social
  plan, individual contract, HRM policies).

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Flexicurity Dutch style

• Deliberate and negotiated win win strategies,
  based on trade offs between external and internal
  numerical flexibility and employment security
  rather than job security (crucial role of social
  partners)
• Programme of normalization of forms of atypical
  work part-time, fixed-term and agency work in
  shadow of strong system of dismissal protection
  (1999 Law on Flexibility and Security)
• Paralled by strong economic growth and low
  unemployment 1994-2001 (Dutch miracle). But
  high peaks, low dips!
• Whats next normalization of self-employment?
  Flexibilisation of core-labour?

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Flexicurity Danish style

• Flexicurity as a state, an equilibrium based on
  mother of all deals end of 19th century? Labour
  inherently flexible, dismissal protection
  insignificant
• Flexicurity no big deal in Denmark, label
  picked up après la lettre? But consultations and
  coordination are important and golden triangle
  developed over time
• Paralled by continuous economic growth and low
  unemployment
• Whats next? Steady as she goes? Addressing
  negative effects, pressure on flexibility-security
  nexus?

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Dutch and Danish performance (source Netherlands
Bureau for Economic Policy Analysis)

• Denmark Netherlands
• Unemployment Nov 2004 5. 4.7
• Expend. activation policy
• ( GPD 2000) 1.6 1.7
• Participation rate 79.4 76.4
• Average Unemploy. Benefit 68 66
• Maximum duration
• Unemployment benefit 4 years 5 years
• Inflow Unemployment
• scheme (2000) 19.6 5.2
• Long-term unemployment 19.9 29.2
• Job transitions (1980-1993) 30 16

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Dutch focus strongly on companies
responsibilities by using financial incentives

• System of gate-keeping

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Danish advocate let it flow approach, bridges
no barriers, voluntary corporate social
responsibility

• System of open gates

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In search of the best of both worlds

• Potentials

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Employment regimes and the flexibility-security
nexus
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A flexicurity index of European countries
(Tangian 2004)

• Definition of flexicurity is limited to flexible
  employment Flexicurity is the employment and
  social security of atypically employed, that is,
  other than permanent full-time
• highest rate of flexicurity Netherlands
• highest all security Sweden
• lowest level of flexicurity Portugal, Czech
  Republic and United Kingdom
• lowest level of all security United Kingdom,
  Spain

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European Employment Strategy indicators on
flexibility and security

• the number of transitions between non-employment
  and employment and within employment by type of
  contract during 1 year.
• People still in employment highest score
  Luxembourg, Belgium and Portugal, lowest score
  Spain and Ireland
• Transition unemployment paid work highest
  score Austria, Germany and Spain, lowest score
  Italy.
• Transition inactive persons into paid employment
  highest score Denmark, lowest score Greece and
  Italy,

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(2) Diversity of contractual and working time
arrangements

• Proportion of part-time, fixedterm and
  self-employed workers
• Highest score
• The Netherlands (notably part-time work),
• second Spain (notably fixed-term work).
• Question of free choice!

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(3) Transitions by type of contract

• (not incl. new member states)
• Largest share of workers that still have
  permanent contract after 1 year France and
  Luxembourg, lowest share Spain, Germany and
  Ireland
• Transition from fixed-time work to permanent
  employment most smoothly in Luxembourg, Portugal
  and the UK
• Transition from non-employed to permanent
  employed easiest in the Netherlands, UK and
  Denmark

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We can have the cake and eat it too!
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Preconditions for Flexicurity Strategies (1)

• Platforms for
• co-ordination
• consultation
• negotiation (at central and lower levels)
• Role of social partnership and trust
• (negotiated flexibility)
• Extending the scope of collective bargaining
• Acceptance of employment security rather than job
  security

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Preconditions for Flexicurity Strategies (2)

• Decentralisation of labour market policy
• (co-ordinated decentralisation)
• Need for certain architects
• Sense of urgency and basic levels of flexibility
  and security
• Favourable labour market conditions? Country
  size?

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Preconditions of flexicurity (3)

• Good practices appear not necessarily limited to
  one country or one cluster of countries
• trade-offs may involve wide range of
  flexibility/security modalities
• different actors at different levels may trigger
  flexicurity strategies, although the national
  government and social partners appear key players
  (law and collective agreements are the main
  vehicles)
• Not one road towards flexicurity !

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Flexicurity for all (1)?

• In practice one European Social Model does not
  exist there are many social models
• National social systems have clear geographical
  and institutional demarcations
• Flexicurity systems achieve balance between
  interests of insiders and outsiders in labour
  market, but not for all outsiders?
• International labour market mobility and its
  promotion (enlargement of EU, draft Service
  Directive) are feared to disrupt balance of
  existing flexicurity systems

• Limits and
• demarcations

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Flexicurity for all (2)?

• Niklas Luhmann in latest books inclusion can
  only be found when and where exclusion is
  possible
• Presence of non-integratable groups represents a
  symbolic correlate for building up a social order
  and its preconditions
• The domain of exclusion is highly integrated, but
  in a negative sense exclusion in one area
  correlates with exclusion in other areas

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Flexicurity for all (3)?

• Case of Denmark outstanding labour market
  performance, but low-ranking on integration of
  ethnic minorities in labour market. Combined
  with very strict asylum procedures and
  regulations. Golden triangle or iron trident?
• Case of Netherlands much larger share of
  minorities, but position of some minorities fails
  to improve and complaints of discrimination and
  (recently) intolerance are mounting. Asylum
  policies now very strict and national and sector
  regulations in labour market to counteract
  social dumping and welfare tourism

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Flexicurity for all (4)?

• Flexicurity a highly exclusive party? Or are
  other, broader factors at play?
• Just published report by Dutch Council of
  Economic Advisors negative attitude towards
  non-nationals hinders innovation.