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SMEs and the European Economic and Social Model

7th April 2006, Graz

Reiner HoffmannDeputy General Secretary

European Trade Union ConfederationBrussels

5th Craft, Trade and SME Summit

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“A majority believe, meanwhile (in France, but also in many other EU member states), that social progress and globalised capitalism are incompatible. This is of course a mistaken but widespread belief. (…) for the people, flexibility is a substitute for precarious working conditions, for insecurity in their life plan.”

Alain Tourain, Frankfurter Allgemeine Zeitung (FAZ), 29 March 2006

The ETUC can quite see the prospects of globalisation, but does not underestimate the risks. Also the risks inherent in a totally one-

sided interpretation of “Flexicurity”.

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“The Americans pushed through draconian social reforms, completely did away with social assistance, and created flexible working conditions. This is pure Darwinism, for individuals it means: ‘Sink or swim’. “

• Jeremy Rifkin, American publicist and economic journalist, adviser to EU Commission President Barroso.

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“Germany and France should grasp concrete initiatives which are directly related to the concerns of citizens. They should combat unemployment, whilst coordinating economic policies in the Eurozone and taking into account growth as well as employment as part of the objectives of monetary policy.”

• Nicolas Baveres, historian and economist, economic lawyer in Paris, in: Das Handelsblatt 28. März 2006

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The Rise of ‘flexicurity’ in Europe

Since the mid 1990’s some Commission documents call for combining flexicurity and security.

EES Guideline no.21: Promote flexibility combined with employment security and reduce labour market segmentation.

Vladimir Špidla underlined the importance of flexicurity strategies for employment and growth at Informal Ministerial Meeting on 20 June 2005.

Kok report: “Labour markets must be made more flexible while providing workers with appropriate levels of security.”

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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.”

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“The European Social Models have to include: (…) Greater efforts to define some common principles and aims for social reforms in Europe, such as “Flexi-curity”, re-establishing consumer and investor confidence, and support for the project of European integration, involvement of stakeholders (social partners) in the reform process”.

• UEAPME: The European Social Model and the European economic reform agenda, p.3

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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)

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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 of income through social security, etc.

Combination: work-life balance.

Labour market: access to employment through high levels of employment.

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Lack of consensus on what flexicurity is about

Wide spectrum of actors has embraced flexicurity as an abstract concept, but no consensus on:

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 of income through social security, etc.

Combination: work-life balance.

Labour market: access to employment through high levels of employment.

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Social partners’ contribution towards the implementation of “flexicurity”

Parental leave agreement.

Agreement on part-time work.

Agreement on fixed-term contracts.

Social partners work programme I & II

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