Flexicurity

Question 1

History of labour market policy in the EU

Answer 1

• European Economic Community created in 1957
• aim of the market - political and economic integration of Europe
• 1970’s- employment and social matters rose to attention
• 1974 - ‘social action’ programme created directives e.g. equal pay/ anti-discrimination
• Early 1980’s- recession stopped social action programme
• social policy revived by creation of the single european market 1993

Question 2

Key Directives (6)

Answer 2

• The Equal Treatment Directive (1976) - ban discrimination on the grounds of sex in all
  aspects of employment
• Working Time Directive (1993): legal requirement for paid holidays and limits on
  working time
• Equal Rights and Treatment for Part-Time Workers (1997): part-time workers should not be
  discriminated against and should be entitled to equal treatment on a pro-rata basis
• Fixed-Term Contract Workers Directive (1999): fixed term workers should not be treated less
  favourably than comparable permanent workers
• Parental Leave Directive (1996):
• Framework for Equal Treatment in Employment and Occupations Directive (2000): there should
  be no unequal treatment on grounds of religion or belief, disability, age and sexual orientation

Question 3

Political Economy of Flexibility

Answer 3

• 1980s governments, employers and European Commission have emphasised the importance of organisational and labour
  market flexibility

-Flexibility was necessary approach to address organisational and
labour market rigidities which were believed to have a negative impact on economic
performance (productivity, employment levels, job matching)
 Rigidities – any type of institution that interfered with the functioning of the market
(minimum wage, trade unions, unemployment insurance benefits etc.)
 Flexibility was thought to be the solution to high levels of unemployment
 Zero sum game between flexibility and security

Question 4

Flexible work organisations

Answer 4

• Reorganising production and service delivery
   Using team-based production methods
   Expanding the content of jobs (functional flexibility)
   Multi-skilling
   Increasing ‘numerical flexibility’ (supplementing the core workforce with fixed-term, casual and
  self-employed workers)
   Using performance-based payment methods (pay flexibility)
   Reducing the influence of trade unions and collective bargaining

Question 5

Flexible employment

Answer 5

‘Non-standard’ employment: Part-time, fixed-term, temporary (agency, casual
employment), self-employment
 Flexible hours of work: flexi-time, zero hours contracts
 Promised benefits for employers include:
 Ability to adjust ‘headcount’ during the day, month, year
 Greater freedom to dismiss workers
 Lower labour costs
 Avoiding certain HR tasks (e.g. if an agency is supplying workers)
 Adjusting to external shocks (e.g. economic crises, drops in demand)
 Yet these forms of employment come with major trade-offs for job quality

Question 6

Regulating Work (Employment protection legislation)

Answer 6

Employment protection legislation (EPL) regulates individual and collective dismissals
and the use of temporary contracts by employers.
 It sets limits on employers’ ability to dismiss their employees and provides workers with
rights relating to redundancy consultation and severance payments (redundancy
payments).

Question 7

The potential negative effects of EPL (4)

Answer 7

 restrictions on dismissal
and entitlements to severance payments may discourage firms from hiring workers
 Employers supposedly take into consideration the potential future costs of dismissing
workers
 Strong EPL reduces flows into and out of unemployment and employment, resulting in
longer periods of unemployment than would otherwise occur (Blanchard and Portugal,
2001).
 Weaker EPL will lead to downward pressure on the wages of employees, increased hiring
activity, improved flows and a lessening in the extent of long-term unemployment.

Question 8

EPL in practice

Answer 8

Achieving flexibility was thus a key policy component of many governments
 In the wake of the ‘Great Recession’, the results of flexibility informed many of the policies used by governments in developed economies to address the impact of the
crisis
 Extended ‘probation periods’ (i.e. Extending the time before an employee can claim unfair
dismissal)
 Cut severance pay and compensation for unfair dismissal
 Weakened trade unions’ consultation rights
 Increased employers’ freedom to determine the criteria for dismissals

Question 9

Arguments in favour of EPL

Answer 9

 EPL cushioned the initial impact of the Great Recession on employment
 Lower levels of EPL did not reduce unemployment but increased it, especially in the
short term (Adascalitei and Pignatti-Morano, 2016)
 Constraints on dismissal may lead managers to introduce more efficient and skillintensive forms of work organisation
 There is evidence of a positive association between employment protection and
productivity growth (e.g. Storm and Naastepad, 2009), which might offset any negative
consequences of EPL for unemployment.
 Weak employment protection may undermine the cooperation and participation of
workers that is needed for productivity-enhancing investments in skills and work
organisation (Buchele and Christiansen 1999)

Question 10

Employment protection legislation (EPL)

Answer 10

is a set of rules that constrain the ability of employers
to dismiss workers. Increased labour market flexibility implies weaker employment
protections.

Question 11

Labour Market Rigidity

Answer 11

– any type of institution that interfered with the functioning of
the market (minimum wage, trade unions, unemployment insurance benefits etc.)

Question 12

Directive

Answer 12

– EU legal instruments that bind the EU countries as to the results to be
achieved. They have to be transposed into the national legal framework and thus leave
margin for manoeuvre as to the form and means of implementation. (Different from
Regulations, Decisions and Recommendations)

Question 13

Social dumping

Answer 13

• practice, undertaken by self-interested market participants, of
  undermining or evading existing social regulations with the aim of gaining a short-term
  advantage over their competitors.

Question 14

The Danish Model (Flexicurity)

Answer 14

Flexibility and security are not contradictions but can support one another - flexicurity
-1990s in Denmark: enhance both labour market flexibility and security in order reduce
unemployment
GOLDEN TRIANGLE
1) flexible hiring and firing rules
2) active labour market policies
3) generous social safety net

• showed high levels of success in Denmark lowering unemployment

Question 15

From flexibility to ‘flexicurity’

Answer 15

2005- flexicurity achieved prominence in the EU’s social policy agenda and came to be
understood as a means of delivering ‘security through flexibility […] by adapting the labour force to flexible employment, primarily by lifelong learning’.
- Globalisation and technological change, it was claimed, had let to job security becoming an
outmoded policy objective: policy makers were instead urged to promote ‘employment
security’ by improving workers’ ability to make labour market transitions through active
labour market policies and lifelong learning opportunities that would enable workers to
enhance their ‘employability’.
- Measures designed to provide workers with a modicum of job security were also regarded as
having potentially harmful consequences.
 The Commission claimed that protections against economic dismissal perpetuated dualism in
the labour market, encouraging ‘recourse to a range of temporary contracts with low
protection – often held by women and young people – with limited progress into open-ended
jobs’ (European Commission, 2007: 12).

Question 16

The framework within which EU member states are expected to develop policies to
secure flexicurity comprises four pillars:

(intended to provide orientation to EU member states’ labour market policies)

Answer 16

Flexible and reliable contractual arrangements from the perspective of the employer and the
employee, of ‘‘insiders’’ and ‘‘outsiders’‘
 Comprehensive lifelong learning strategies to ensure the continual adaptability and
employability of workers
 Effective active labour market policies that help people cope with rapid change, reduce
unemployment spells and ease transitions to new jobs
 Modern social security systems that provide adequate income support, encourage employment
and facilitate labour market mobility

Question 17

Implications of flexicurity policy

Answer 17

Generosity of unemployment benefits and ALMPs remains low in many countries
(especially in those countries where unemployment levels are high)
 Unemployment systems target primarily standard workers with long contribution
periods
 Although the role of UB as ‘automatic stabilizers’ did work in some (Nordic) countries, in
the majority of countries they failed to do so
 Reasonable access to social benefits was marginal concern in responses to the economic
crisis
- broad conceptual definition made it ambiguous and therefore able to be altered

Question 18

Present Developments in the EU

Answer 18

 In the aftermath of the crisis the main policy innovation adopted by the EU - European
Semester
 The semester aims to ensure policy coordination across the EU and covers 3 blocks of
economic policy coordination:
 structural reforms, focusing on promoting growth and employment in line with the Europe
2020 strategy
 fiscal policies, in order to ensure sustainability of public finances in line with the Stability and
Growth Pact
 prevention of excessive macroeconomic imbalances

The Semester has re-kindled interest in the concept of flexicurity and explicitly uses it in
country specific recommendations
 If the beginning of debates about flexicurity, more attention was paid to the flexibility
aspect, nowadays, it seems that the Commission is emphasizing more security aspects

Question 19

Conclusions

Answer 19

Flexibility can have a number of meanings depending on the level of analysis we focus
on
 Greater flexibility for employers can mean greater insecurity for workers
 Flexicurity is a key policy that drives much of the change we see nowadays in national
labour markets. It has substantial implications for job quality.
 Economic success is not necessarily incompatible with strong employment rights

Question 20

Flexicurity

Answer 20

• integrated strategy to
  enhance, at the same time, flexibility and security in the labour market’
• flexicurity has been presented as an appropriate policy response to
  economic uncertainty and labour market instabilities stemming from apparently agent-less forces associated with globalisation and technological change.
  -greater labour market and contractual flexibility are needed if employers are to meet new
  competitive challenges, but in return workers should be provided with forms of support, such
  as access to benefits and lifelong learning, that will enable them to make successful
  transitions between jobs or between unemployment and employment.
• Weaker job security is
  thus supposed to be offset by improved security in the labour market (European Commission,
  2007).
• The allocative efficiency of the labour market should be enhanced as a result.

Question 21

The 2008 economic crisis

Answer 21

• unemployment increased from 7.1 to 9% from 2007-9 on average across Europe BUT some states suffered more
• national govs responded by putting measures in place that were designed to assist workers that lost their jobs
• The european commission urged member states to develop policy in line with ‘flexicurity’

BUT
pressures on public finance and implementation of austerity measures have limited freedom to m

Question 22

The European Commissions approach to flexicurity

Answer 22

• gradual de-emphasising of social rights in favour of the prioritisation of economic objectives

Question 23

how the flexicurity concept still plays a role within the European Semester

Answer 23

The EU’s crisis emphasis on austerity measures and structural reforms might be thought to have reduced attention to the ‘security’ component of flexicurity, thus leading to a demise of the concept. Looking at the goals of the Lisbon Strategy and the European Semester between 2007 and 2016, the conclusion is that whereas the flexicurity concept seemed to receive less attention through 2013, the term has been used more frequently in the 2015 EU policy documents.