Flexicurity: Reconciling Equity and Efficieny in European Labour Markets? Prof. Ton Wilthagen Tilburg University, the Netherlands

Which way?

The Appian Way (Via Appia) in Rome: more ways lead to Rome

Main questions to be answered 1)Can flexicurity strategies reconcile equity and efficiency in European labour markets? 2)Which flexicurity pathways and steps can be developed in the EU? 3)What does the future research agenda look like?

The Flexibility-Security Nexus On the one hand there is strong demand for further flexibilisation of labour markets, employment and the work organisation, while at same time an equally strong demand exists for providing security to vulnerable groups of employees and to other outsiders in the labour market, and preserving social cohesion in our societies

The Coordination – Decentralisation nexus Coordination is deemed necessary in view of challenges and issues of ) integration (global markets and other boundary-crossing issues) Decentralisation is deemed necessary in view of challenges of diversification (culture, preferences, tailor-made approaches)

A twofold nexus: two situations of ‘double contingency’

What is flexicurity? A policy strategy to enhance: at the same time and deliberately, the flexibility of labour markets, work organisations and employment relations on the one hand, and security – employment security and income security – on the other. Key principles that underpin a flexicurity strategy are that flexibility and security should not be seen as opposites, but can be made mutually supportive.

Internal and external flexicurity Flexicurity covers transitions, adjustments and solutions within an enterprise (internal flexicurity) as well as transitions from job to job between enterprises and between employment and self-employment (external flexicurity). Both types of flexicurity should include measures that maintain and improve work capacity and offer possibilities to reconcile work and family life and to promote gender equality.

Flexicurity as joint and mutual risk management

Why flexicurity? Need for improved equity in the labour market Problem of asymmetries in many EU labour markets (two-tier labour markets), flexibility at the margin, low income security and limited transition chances/progress in labour market Particular groups – the young, women, older workers and minorities - suffer much higher unemployment At-risk-of-poverty rates too high Targets for school leavers need to be met

Why flexicurity? (2) Need for improved efficiency in labour market Adaptability of companies needs to be enhanced Although recently progress was made, unemployment is still high, especially long-term unemployment and employment growth is relatively slow. At the same one million unfilled job vacancies in the EU exist. Under-investment in life-long learning Productivity gap exists with respect to EU’s main competitors Labour market turnover rates are relatively low in many EU Member States

Some relevant empirical findings Positive (not perfect) relationship between high(er) labour market mobility and employment rates; Job tenure remains relatively high and open ended contracts remain dominant in EU labour markets No negative effect of (social) security on labour market flows No overall negative effect of EPL on employment rates (effect on structure of unemployment)

Some relevant empirical findings (2) Correlation between (occurrence of) forms of flexibility for firms and forms of flexibility sought by workers; Countries with most advanced industrial relations systems and bargaining systems (including relatively high trade-union rates) are best-performers Workers in high EPL countries feel less secure (insecurity paradox); Social security provides more security (feelings) than EPL.

Employment regimes and the flexibility-security nexus

Working-time flexibility and employment security (Chung and Muffels,forthcoming)

Requirements for flexicurity strategies Flexicurity pathways should reflect and respect diversity within the EU. Diversity is not on the decline. Not one way to Rome and one size does not fit all. Flexicurity should be developed as a positive sum game sums. Change can be best designed as integrated and broad policy packages. Flexibility and security should be designed as mutually reinforcing to provide quality response and adjustment, based on European values, to the challenges of globalisation and demographic change.

Developing flexicurity pathways Based on ‘typical’ labour market situations within the EU- not mutually exclusive Departing from different challenges: combinations of ‘transition’needs of different groups on the labour market and adaptability needs of companies

Components of flexicurity: signs for any path to follow Flexible and secure contractual arrangements Effective active labour market policies Reliable and responsive lifelong learning systems Modern social security systems providing income support and facilitating mobility Plus:supportive and productive social dialogue

Pathway 1 Reduce asymmetries between non- standard and standard employment by integrating non-standard contracts fully into labour law, collective agreements, social security and life long learning, and consider making employment in standard contracts more attractive to firms

Pathway 2 Enhance companies’ and workers' adaptability by developing and strengthening transition security

Pathway 3 Address opportunity and skills gaps among the workforce by embarking on a higher road towards a knowledge-oriented economy and deepening investments in skills

Pathway 4 Enhance employment opportunities for benefit recipients, prevent long- term welfare dependence, regularize informal work and build up more institutional capacity for change

Approaches to contractual arrangements Increase the flexibility of normal work, without giving up security (Danish approach) ‘Normalise’ non-standard work (‘track tenure’), without giving up flexibility (Dutch, Spanish and Slovenian approach) Increase emphasis on ‘internal flexicurity’, e.g. development of working-time accounts, self-rostering for employees (Germany, Sweden)

Approaches to active labour market policies Offer transition or change security (Finish and Swedish approach) Turn severance pay into transition budgets (Austrian approach) Secure re-employment (French approach) Extend the scope of ALMPs, make their content more relevant to the labour market (Lithuanian approach)

Approaches to life-long learning Invest in broad LLL programmes (Portugal) Create training facilities that allow for cross-sector mobility (Netherlands) Put productivity, social innovation and the work organisation high on the agenda (Ireland) Same for employability, dual systems of working and training, career guidance (esp. for the young) and accreditation of prior learning (Norway)

Approaches to modern social insecurity Provide broad access, also for non- standard workers, to unemployment benefits Offer high replacement rate during first period Establish optimal balance between rights and duties, sticks and carrots by linking ALMPs closely to UB systems

Approaches to a supportive and productive social dialogue Create awareness of the significant need for change and improvements Strengthen institutional capacity, also by addressing outsiders on the labour market Trust is the key issue! Develop a broad bargaining agenda, broadly supported, monitor its progress Establish the right balance between coordination and decentralisation

Research agenda (1) Do we have enough data for country- comparisons? Too many countries are insufficiently represented. Time to move beyond North-western Europe! Longitudinal data, e.g. for life course approach, are only now being collected and developed Social partners and states are important but research should also focus on markets, firms, networks in contributing to flexicurity More focus on the ‘methodology’ of flexicurity (processes, bargaining) Time to develop designs for proper effect evaluation studies and improve indicators

Research agenda (2) Not enough attention paid to informal systems of flexibility and security.How does informal economy relate to formal economy? Theories on flexicurity should be further developed: reflexive governance and coordination; multi-level studies Legal aspects of flexicurity need to be addressed more Same goes for cultural/values aspects More attention to relationship between inclusion and exclusion in view of flexicurity systems (‘’flexicurity for all?”)