Combining flexibility and security: the new labour market paradigm?

1. Combining flexibility and security: the new labour market paradigm? Labour market reforms and macro-economicpolicies in the Lisbon agenda Brussels, 20-21 March 2006 Maarten Keune and Maria Jepsen European Trade Union Institute for Research, Education and Health and Safety http://www.etui-rehs.org

2. The rise of ‘flexicurity’ in Europe I • Since mid-1990s some Commission documents call for combining flexibility and security. • EES Guideline No 21: Promote flexibility combined with employment security and reduce labour market segmentation. • Vladimír Špidla underlined the importance of flexicurity strategies for employment and growth at Informal Ministerial Meeting, 20 January 2006. • Kok report: “Labour markets must be made more flexible while providing workers with appropriate levels of security.”

3. The rise of ‘flexicurity’ in Europe II • John Monks, General Secretary, ETUC “The Lisbon Strategy will never work if policy-makers decide that economic policy should take precedence over social policy. … That has clearly not been the case in some outstanding European success story countries such as Denmark, Finland, Sweden and Austria. They have promoted “flexicurity”, a concept the ETUC supports. This promotes good standards which help growth and change.” • Therese de Liedekerke, UNICE Social Affairs Department: “… our values can only be sustained if competitiveness is achieved and the issue of flexicurity is at the heart of efforts to restore a positive link between competitiveness and social protection.”

4. Flexicurity: reasons for its popularity. • Promises a solution for labour market promises that bridges the capital labour divide, a win-win strategy catering to the needs of employers and employees. • Attractive also as a way to move away from the singular flexibility-oriented discourse of the late 1980s and early 1990s. • Can create consensus among political opposites. • Is closely linked to country cases that are seen to be successful in labour market terms (NL, DK, AT).

5. Multiple possibilities to combine flexibility and security • Flexibility • External: lay-offs, temporary work, fixed term contracts. • Internal: adjustment of length of work (overtime, flexible scheduling of working time, working time accounts). • Functional: flexibility within firm through multi-tasking. • Financial: variation of pay, according to performance. • Security • Job: employment protection legislation, etc. • Employment: employability (education, training, ALMPs). • Income: protection ofincome through social security etc. • Combination: work-life balance. • Labour market: access to employment through high levels of employment.

6. Lack of consensus on what flexicurity is about • Wide spectrum of actors has embraced flexicurity as an abstract concept, but no consensus on: • what types of flexibility and security should be addressed and how. • how to achieve security. • how to reach a win-win situation. • what flexicurity can solve (insider-outsider, agg. employment). • Different focus • Commission: from job security to employment security; social security extended to atypical jobs. • Employers: flexibility is precondition for security. • Workers: security is precondition for flexibility.

7. Germany: Hartz reform I • Mainly about getting the unemployed into jobs through: • Ich AG self employment grant. • Personnel Service Agencies (PSA) providing temporary employment to unemployed. • Mini and Midi jobs, facilitating low-wage, short hours employment . • New benefit (ALG II) for long-term unemployed with strict take-up rules (any job is suitable), tight eligibility criteria, low benefits. • Limited training, decline number training places.

8. Germany: Hartz reform II • Caters to employers’ flexibility demands (flexible employment and flexible employees) and expects this to lead to employment creation. • More marginal, insecure and flexible employment • Little attention to employability. • No attention for the creation of more regular employment •  Unbalanced approach, focusing on external flexibility and with little improvement in security

9. France: reforms under present government • Increase overtime limits and working time flexibility • Easier dismissal (equirement to previously consult unions and negotiate working time reduction abolished) • Extra assistance re-employment (long term) unemployed • Tightening of (long term) unemployment benefit criteria • Some reduction non-wage labour costs (certain categories) • Individualises and strengthens re-employment assistance in SMEs (< 1000 employees) (already existed for large ones) • Higher unemployment benefit after economic firing (limited groups, about 10%). • More flexible contracts for small enterprises (CNE), young people (CPE) older workers (above 57) •  increases mainly flexibility, some employment security

10. Denmark • Basic system: • Historically combines high social security with low employment protection. • Since mid-1990s strong individualised activation and ALMP, more adult education and some reduction benefit period (but still long!). • About 3% GDP on passive policies, about 1.5% GDP ALMPs. •  more employment security, less income security • Recent trends: • Reduced public support for vocational training and education • Less personalised assistance, more standardization • Sanctions and availability and mobility rules tightened (work first) •  reduction employment security

11. The Netherlands • Law on flexibility and security end 1990s • Reduction employment protection • Equal treatment part-time workers in law, social security • Flexibilisation TWA sector, more rights to TWA workers • Recent reforms: • Tightening disability benefit criteria • Employability agreement (in-company training, equal opportunities and job opportunities for disabled) • Disincentives early retirement • Government proposes easier dismissal, more working time flexibility, longer working hours, restricted access to unemployment benefits and improved access to vocational training.

12. Sweden • High levels of security and employment prevail. • Emphasis in debate is on providing security in moments of inevitable change. • During the 1990s some more flexibility by introduction temporary contracts, as well as trial periods, TWA. • In 2001 some modifications to re-employment rights, seniority rules, with both (minor) positive flexibility and security effects. • Opposition and employers demand changes to labour market policies, September elections.

13. United Kingdom • After profound deregulation of Thatcher era, since 1997 modest degree of re-regulation under New Labour, partially as effect EU Directives • Welfare-to-work: compulsory activation, training, placement  employment security • Minimum wage  income security • Right to request flexible working time arrangements and better maternity and other parental leave rights  combination security, work-life balance through employee-oriented flexibility

14. Conclusions • Flexicurity is useful way to examine labour market reform • The emphasis of reforms is on increasing flexibility, with much less attention to security (exept SE). • Reforms focus on re-employment of the unemployed, not on the creation of more standard employment. • ‘New’ security: (i) the vague notion of employment security, amounting to re-employment assistance; (ii) extension of rights to non-standard rights. • Few innovative initiatives, largely ‘old wine in new bottles’ • Flexicurity obscures flex-flex trade offs • What about promoting growth and employment creation?