Combining flexibility and security: the
new labour market paradigm?
Labour market reforms and macro-economic policies 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
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.”
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.”
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).
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:
 Financial:

flexibility within firm through multi-tasking.
variation of pay, according to performance.
Security
 Job:
employment protection legislation, etc.
 Employment:
 Income:
protection of income through social security etc.
 Combination:
 Labour
employability (education, training, ALMPs).
work-life balance.
market: access to employment through high levels of
employment.
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:
 Workers:
flexibility is precondition for security.
security is precondition for flexibility.
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.
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
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
 Some
of (long term) unemployment benefit criteria
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
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
 Less
public support for vocational training and education
personalised assistance, more standardization
 Sanctions

and availability and mobility rules tightened (work first)
reduction employment security
The Netherlands

Law on flexibility and security end 1990s
 Reduction
 Equal
employment protection
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
 Government
early retirement
proposes easier dismissal, more working time
flexibility, longer working hours, restricted access to
unemployment benefits and improved access to vocational
training.
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.
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
 Right
wage  income security
to request flexible working time arrangements and
better maternity and other parental leave rights 
combination security, work-life balance through employeeoriented flexibility
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?