Flexicurity in the crisis or the crisis of flexicurity?Ton WilthagenTilburg University, the Netherlands

wilthagen@uvt.nl www.uvt.nl/reflect

Questions on preconditions of flexicurity – when it all begun

• Geography: is flexicurity only possible in the North Western part of Europe, where certain levels of flexibility and security already exist?

• Size: is flexicurity a “small country thing” – coordination is the problem in large countries (federal structure)

• Personal factor: does flexicurity depend on certain architects/ institutional agents?

• Labour market/business cycle: is flexicurity only feasible in sound economic and labour market conditions?

Is flexicurity a sunny weather concept?

Flexicurity

How about flexicurity in bad weather?

Crisis is natural experiment!

This presentation

1 Flexicurity itself as a paradigm shift in the regulation of labour markets and employment

2 Does the crisis mean a shift?

• the content (modalities) of flexicurity?

• in the coordination and organisation of flexicurity?

• In the performance of flexicurity

• in the flexicurity solutions?

3. And where is this all taking us?

Measuring flexicurity

Source: Chung & Wilthagen, forthcoming

Policy change: significant or not?

Danish flexicurity in crisis

Country

Policy change

No change

•Current policy not working

•Symbolic for the public or EU

•Structural or temporary ?

•Current policy adequate

•Or: change not possible – politics, capacity or money

Flexibility and security modalities (Flexicurity Matrix)

security

flexibility

Job security

(remain in same job)

Employment security (job to job; no job to job)

Income security (social security)

Combination security (work and care)

External - numerical

(hire and fire)

Internal - numerical

(working-time flexicurity)

Functional

(employability)

Variable pay

Flexibility and security modalities (Flexicurity Matrix)

security

flexibility

Job security

(remain in same job)

Employment security (job to job; no job to job)

Income security (social security)

Combination security (work and care)

External - numerical

(hire and fire)

Danish and

Dutch flexicurity

Internal - numerical

(working-time flexicurity)

Functional

(employability)

Variable pay

The crisis and flexibility and security modalitiessecurity

flexibility

Job security

Employment security

Income (social)

security

Combination security (work and care)

External - numerical

(hiring and firing)

Temporary

placement

other firm

Mobility centres;

Worker pools

UB as wage subsidy;

retirement; lower tax

Mortgage support

Internal - numerical

(working-time flexibility)

Shorter working hours; WT

accounts

Multi-employership

Part-time UB; reduced working hours

Take up of leave schemes

holidays

Functional

(employability)

Job rotation

Internships other firm;

Retraining

Retraining for new job

Accreditation

of prior learning

Variable pay Adjust-

ment of wages

Supplement wage new

job

Extra UB;

private

savings

Increased family allowance

Flexicurity Coordination Mechanisms Matrix

Coordination Mechanisms and the provision of flexibility and security

Coordination

mechanism

Associations

social partners

collective

agreements

Networks

of firms, clients,

suppliers etc

Hierarchies

(individual)

firms

State

at various levels

Markets

including

sub markets

Communities

family, neighbourhood

Crucial

condition for

Mechanism

Mutual trust

Representati-vity

Mutual interest

Stakeholdership,

good

employership

Legitimacy

and

enforceability

Transparency

and

information

Inclusiveness and

responsibility

Type of

flexibility

provided

Wage

Functional

Internal

External

Functional

Internal

Wage

External

Internal

External Internal

Wage

Type of

security

provided

Job

Employment

Combination

Employment

Job

Employment

Combination

Job

Income

Combination

Job

Employment

Combination

Income

Combination

Flexicurity Coordination Mechanisms Matrix

Coordination Mechanisms and the provision of flexibility and security

Coordination

mechanism

Associations

social partners

collective

agreements

Networks

of firms, clients,

suppliers etc

Hierarchies

(individual)

firms

State

at various levels

Markets

including

sub markets

Communities

family, neighbourhood

Crucial

condition for

Mechanism

Mutual trust

Representati-vity

Mutual interest

Stakeholdership,

good

employership

Legitimacy

and

enforceability

Transparency

and

information

Inclusiveness and

responsibility

Type of

flexibility

provided

Wage

Functional

Internal

External

Functional

Internal

Wage

External

Internal

External Internal

Wage

Type of

security

provided

Job

Employment

Combination

Employment

Job

Employment

Combination

Job

Income

Combination

Job

Employment

Combination

Income

Combination

Over past year much effort has been put in developing flexicurity indicators

• EMCO (Employment Committee of EU)http://ec.europa.eu/social/main.jsp?catId=102&langId=en

• European Commission: composite indicators on contractual flexibility, life-long learning, ALMP and modern social security

• By academics: various indicators (sometimes mixing up ‘efforts’ and ‘states’ indicators), among which dynamic indicators (Ruud Muffels)

1. Strictness of employment protection 9. Net replacement ratios in the first as well as after 5 years

2. Diversity of and reasons for contractual and working arrangements

10. Unemployment trap, seen as a measure of benefit levels

3. % of adult population between 25 and 64 participating in education and training

11. Employment rate, total, for women, and for older workers

4. Educational attainment of age cohorts

45-54 and 25-34

12. Youth unemployment ratio (15-24 years)

5. Expenditure on active and passive labour market policies as a % of GDP

13. Long-term unemployment rate

6. Expenditure on active and passive labour market policies per unemployed person

14. Growth in labour productivity

7. No. of participants in active labour market policies, by type of measure

15. Quality in work

8. Share of young or adult unemployed not offered job or activation measure within 6 or 12 months

16. At risk of poverty rates

Draft flexicurity Background indicators2007 Communication

Measuring flexicurity (state, policy)

Measuring flexicurity performance (in view of crisis and in general)

Measuring flexicurity performance in times of crisis

• Economic growth/recovery?• (Un)employment rates, change of these rates?• Labour market participation levels?• Unemployment duration/long-term unemployment rates?• Mobility/labour turnover/job to job rates?• Speed/chance of reintegration back into the labour

market?• Job destruction/creation rates?• Position of weak groups (temp workers)?• Investments in ALMP/LLL• Income replacement rates• Subjective assessment of job/income insecurity?

Unemployment rates in the EU

Change in part-time employment as a share of total employment between 2008Q2 and 2009Q

Part-time work increases due to shorter working hours schemesand reduction of working-time

How should this be evaluated?

Employees with temporary contracts

Solutions: how about the pathways to flexicurity?

• Flexicurity pathway 1: dealing with flexibility at the margin

• Flexicurity pathway 2: securing transitions from job to job

• Flexicurity pathway 3: access to learning and good transitions for all

• Flexicurity pathway 4: comprehensive social security supporting transitions to regular work

Need for specific ‘crisis pathway’?

To conclude with

Back to the question: flexicurity in crisis times or thecrisis of flexicurity?

• Face of flexicurity might change, but rather temporarily than in a structural way

• From Danish/Dutch external flexibility + employment security to continental (German, Belgian etc) combination of internal flexibility + job security

• A (temporary) shift ‘powered by’ the State and less by the social partners

• European Commission wishes to continue flexicurity post 2010

Commission’s Communication on release of Employment in Europe 2009

• European labour markets will be changed profoundly by the crisis and the transition to a low carbon, knowledge-based economy, and workers and companies must be given the necessary means and incentives to successfully adjust to these changing realities in ways which favour inclusion, equity and social justice. Flexicurity, combined with comprehensive active inclusion policies, remains the right approach to both modernising labour markets and ensuring a successful recovery.

To conclude with• Who will be the carriers of flexicurity other than traditional

social partners?

• Flexibility will spread, notwithstanding future labour shortages; traditional securities will not expand.

• Flexi-quality will be precondition for future flexicurity: quality, productivity and sustainable use of both human and natural resources

• Much interest coming from countries outside EU (which often already have high levels of flexibility and are lacking security, but not in all cases)

• Better indicators and monitoring are essential!