Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Monitoring flexicurity policies in Europe from three different viewpoints Privat dozent, Dr.Sc., Dr. Andranik Tangian Hans Böckler Foundation, D Düsseldorf Based on papers also: 122.pdf, 131.pdf, 137.pdf, 141.pdf, and 143.pdf

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Agenda 1.Flexicurity as flexibility-security trade-off 2.Tracing flexicurity trade-off with a matrix 3.Monitoring flexicurity in a vector space 4.Neo-liberal perspective 5.Trade-unionist viewpoint 6.European-welfare-state viewpoint 7.Policy implications 8.Conclusions

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Flexicurity as flexibility- security trade-off: Definition [Flexicurity is] a policy strategy that attempts, synchronically and in a deliberate way, to enhance the flexibility of labour markets, work organization and labour relations on the one hand, and to enhance security — employment security and social security — notably for weak groups in and outside the labour market on the other hand (Wilthagen 1998–2004)

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Flexicurity as flexibility- security trade-off: Flexibility types External numerical flexibility, easiness of ‘hiring and firing’ Internal numerical flexibility, easiness to change working hours Functional flexibility, easiness to charge employees with different work Wage flexibility, easiness to adjust the wage to individual performance Externalization flexibility, easiness to hire workers without employment contracts

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Flexicurity as flexibility- security trade-off: Security types Job security, protection against dismissals and major changes of working conditions Employment security, equivalent vacant jobs, training, work-work transitions Income (social) security, unemployment & health insurance, pensions, maternity leave Combination security, compatibility of work with other activities, work-life balance

2.1 Tracing flexicurity trade-off with a matrix: Wilthagen & Tros 04 Job securityEmployment security Income securityCombination security External numerical flexibility Firm-firm job pools Facilities work-work transitions Older enterployees Retirement arrangements Internal numerical flexibility Part-time work Flexible retirement Part-time enterployees Flexible retirementPart-time retirement Flexible age (pre- pension Flexible working hours Leave facilities Functional flexibility Education/training Adaptation in working hours/ tasks Education/training Seniority/bridge works Job rotation Age-aware cereer and job structures

2.2 Tracing flexicurity trade-off with a matrix: Dutch law The Dutch Law on Flexibility and Security (Wilthagen & Tros 2004) FlexibilitySecurity Adjustment of the regulation of fixed-term employment contracts: after 3 consecutive contracts or when the total length of consecutive contracts totals 3 years or more, a permanent contract exists (previously this applied to fixed-term contracts that had been extended once) Introduction of so-called presumptions of law which strengthen the position of atypical workers (regarding the existence of an employment contract and the number of working hours agreed in that contract); the existence of an employment contract is more easily presumed ……………………………………………………………………………………… Policy measures are aimed at either flexibility or security but the matrix elements require both simultaneously

Strictness of EPL, in % Social security, in % Utility 3Monitoring flexicurity in a vector space Pareto- worsening is indepen- dent of the utility function: Knowledge of social utility function is not always necessary

4Neo-liberal perspective Social security, in % Strictness of EPL, in % Deregulation- only instead of flexicurity (except NL and DK in mid 1990s) Explanation: Flexibilization disqualifies workers from social benefits Violation of flexicurity concept

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Trade-unionist viewpoint: Critics of neoliberals Ü At the neo-liberals’ playing field everything can be bought and sold by default (!) Ü Social health (= the right to remain at work) is exchanged for a treatment (= social security): give your hand, and get a prosthesis instead Ü Flexicurity leads to liberalization but also is an indirect governmental donation to firms from the tax-payer’s money

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Trade-unionist viewpoint: Definition of flexicurity [Flexicurity is] a social protection for flexible work forces as ‘an alternative to pure flexibilization’ (Keller and Seifert 2004)

Strictness of EPL, in % Social security, in % Utility 5.3Trade-unionist viewpoint: No trade-offs lexico- graphic preference (absolute priority of one factor over another) has no trade-offs

Social security, in % Strictness of EPL, in % 5.4Trade-unionist viewpoint: Plot Average improvements in social security of flexibly employed due to transitions from regular employment does not make trade unions very happy: Gains are smaller than losses and winners are fewer than loosers

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Trade-unionist viewpoint: Inconsistency with neo-liberals Ü Preferences of neoliberals and trade unions differ in the type of preference (a lexicographic preference with no trade-offs) Ü Wilthagen and Tros (2004): “Some recent studies are pessimistic that appropriate trade-offs can be found between flexibility and security”

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, European-welfare-state view- point: micro-census simulation Ü Estimate the national average of Net- Income Replacement Rate (NRR) for unemployed to show how social benefits compensate the loss of previous earnings Ü Individual answers of unemployed are (normatively) computed with the OECD Tax-Benefit Models Ü The empirical data on personal situations are available from EuroStat‘s Labour Force Survey

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, European-welfare viewpoint: groups „interviewed“ Ü 22 European countries Ü 7 years: 1995, 1997, 1999, Ü 5 age levels: 20±5, …, 60±5 years Ü 3 Family types: single, one-earner couple, and two-earner couple Ü Number of children: 0-4 Ü 6 wage levels: 40, 50, 67, …, 200% APW Ü 9 levels of duration of unemployment: 0, <1, 1-2, 3-5, 6-11, …, 48 and more months

6.3European-welfare viewpoint: Total decline in 2004

6.4European-welfare viewpoint: Cause is the structural change

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Policy implications: Inconsistency of EU policies Ü European Welfare-State policy Ü Flexibilization for sustainable development Ü Flexicurity (trade off between flexibilization and social security) Ü Policy Make Work Pay (trade-off between income protection and gain from work) Ü Civil Society Policy coordinated with NGO’s and trade unions

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Policy implications: Two proposals Ü The bottle-neck is the social security system Ü Social security, as it is, can hardly be improved (institutional improvements fail) Ü Possible solution: basic income (BI) together with flexinsurance (FI)

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Policy implications: Basic Income Ü A flat income paid by the state to all citizens regardless of their earnings and property status Ü Traces of this model appear in social security branches like child care allowances (Kindergeld in Germany paid to all parents) or old-age provisions (Switzerland)

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Policy implications: Flexinsurance Ü The employer's contribution to social security is proportional to the flexibility of the contract. Thereby a higher risk of becoming unemployed is compensated Ü Such progressive contributions stimulate employers to hire employees more favorably, without however rigidly restricting the labour market flexibility

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Policy implications: BI & FI make EU policies consistent Ü Development of European Welfare Policy Additional budget comes from l flexinsurance l higher taxes of high-earners (to subtract the flat income) and l funds released from an army of civil servants currently working in social security Ü Fair compensation of Flexibilization according to the Flexicurity policy Ü Facilitates the Make Work Pay policy (moving to work always brings a gain)

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Conclusions: Flexicurity indices and empirical observations Ü Flexicurity indices allow us to monitor flexicurity policies from neo-liberal, trade-unionist and European-welfare-state perspectives. Ü Flexicurity does not hold up to its political promises and theoretical declarations from three viewpoints Ü A possible solution assumes a radical reform of the European social security systems (Basic Income) and a „regulation of the deregulation“ of labour markets with Flexinsurance

Annex 1: OECD’s index Strictness of EPL (1999, 2004)

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, Annex 2.1: Subindices of Social Security 1. Unemployment insurance 2. Public pensions 3. Paid sick leave 4. Paid maternity/parental leave 5. Paid holidays (usually not considered)

Annex 2.2: Social Security subindex of Unempl. Insurance

………………………………………………… Size of employment groups, in % to total employment (EuroStat) Annex 2.3: Security index. Accounting the size of employ- ment groups (Germany)