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Muntz over Flexsecurity

20 november 2007

Readers of the business and employment pages will have noted that the European Commission is currently in the throes of adopting a Communication on flexicurity, hopefully by the end of the year.

But what does flexicurity actually mean? The hybrid word seeks to combine a concept of both security and flexibility within the labour market. Media and other commentators frequently suggest that the concept is based on the “Nordic model” of employment, and specifically that of Denmark, but in fact the European Commission is quite clear in its pronouncements on the matter that there can be no “one sizefits all”. As for the word itself, it was first introduced to political circles in the Netherlands back in 1996, and by the year 1999 was part of Dutch employment law, with the full agreement of the social partners.

Four principal models
In order to achieve flexicurity, different countries will need to put different emphases on different angles within their own labour markets. It is commonly agreed that there are four principal models within the EU: the Nordic approach, the Anglo-Saxon model, the German/continental approach and finally that of Southern Europe. Each has its own benefits and peculiarities. The key will be to combine the best of each in a fashion appropriate to individual countries. It is clear that national debates will be needed to find out just what works where.

A set of guiding principles
Perhaps the easiest way to think about flexicurity is as a set of guiding principles rather than a rigid model. Certainly, that is the message that the European Commissioner for Employment, Social Affairs and Equal Opportunities Vladimir Špidla was keen to put across in his recent speech to an EPC Policy briefing meeting. He stressed that flexicurity in Europe is designed to modernise the labour market so countries can compete in a globalised world while safeguarding the European social model. And he added that in his opinion flexibility and job security can be mutually reinforcing in a “positive sum game” benefiting both business and workers. But commentators and politicians alike agree that there is no single remedy applicable in all Member States.

Ideal world
In the ideal world, flexicurity enables workers to reconcile their work and family lives (the much discussed work-life balance) whilst also giving them the opportunity of entering, remaining and progressing in the labour market, instead of just staying in the same job for life. At the same time, it delivers enterprises a skilled, adaptable labour force that can compete in the global market.

Lisbon Strategy
It is important to put flexicurity within the context of the Lisbon Strategy, the action and development plan established for the European Union in March 2000. As Commissioner Špidla emphasized, flexicurity is “not an alibi” to make the labour market more flexible, nor should it be seen as a threat to workers’ security. Rather, it allows them to adapt to change and manage the transition between jobs. Nor is it intended to be a pretext to introduce a new bureaucratic process at the European level either, he said, but rather an aspect of the Lisbon Strategy, as human capital must be at the centre of economic planning.

Combat poverty and social exclusion
So at its best flexurity will encourage workers to follow “less linear career paths” whilst encouraging market segregation and breaking down the barriers between those who have secure jobs “inside” the labour market, and those on the “outside” trying to get in. As such, the intention is that it will help to combat poverty and social exclusion.

Eurobarometer
European citizens know that they need to adapt to change: according to a recent survey conducted by Eurobarometer, 76% think a job for life is a thing of the past, 72% believe work contracts should be more flexible, and 88% think lifelong learning would improve their employability. Clearly, a change of mindset is underway, with employers realising that in order to fill skills gaps they need to attract many individuals who have traditionally found it difficult to enter the labour market, such as the young, the elder worker, the long term unemployed and women, in particular returning mothers. It is a process which some have referred to as “levelling up”.

Flexibility inadaption of social benefits
It is clear that those countries that protect “insiders” too much end up defeating their own objectives given that those with the most stringent labour laws also have the highest levels of unemployment lowest active working population (‘insiders’) and often the highest level of unemployment. It is difficult to see how the objectives of the Lisbon Strategy will ever be achieved where social arrangements are built exclusively around the permanent contract and flexibility is seen as something less favourable – not to be promoted. Flexicurity requires flexibility inadaption of social benefits, in employment contracts, and in dismissal laws if the effective transition from job to work security is to be achieved.

The Commission Communication combines four elements

  • flexicurity in work contracts,
  • an active labour market,
  • education and lifelong learning,
  • and the right to work and social protection.

The next stage in the political process is that each EU Member State will be asked to initiative a national debate on flexicurity, based on three common principles:

  • using flexicurity to reduce the gap between those “inside” and those “outside” the labour market;
  • encouraging flexicurity within each business and between businesses;
  • and finally, and most importantly, ensuring a climate of confidence between business and social partners, which is vital if flexicurity is to work.

Eurociett
So what is the position of EUROCIETT, the Brussels based European Confederation of Private Employment Agencies, on the proposals? Broadly, the feeling is that this is a discussion that needs to take place and the Commission’s Communication is an appropriate starting place. Specifically, there needs to be a broad-ranging debate on the reform of national labour markets based on a flexicurity approach, taking into account the important role of private employment agencies. They are at the heart of the discussion.

Agency work
Agency work provides an essential stepping-stone to the labour market and facilitates upward transitions for workers. It also offers an essential pathway to facilitate transitions from unemployment to work, between household and work, between different labour contracts and between education and work. Research illustrates that 30 to 40 percent of agency workers find a permanent job within a year. By facilitating such transitions, agency work reduces the segmentation between the outsiders (being the (long-term) unemployed and excluded workers) and the insiders (being the people in employment). In this context, it needs to be clarified that workers in flexible forms of employment are not to be considered as outsiders in the labour market.

Political discussion
Of course, the adoption of principles of flexicurity will bring with it a wide variety of management challenges, both country and industry specific. At the moment it is still at the stage of the political discussion, but there is a long learning curve ahead in terms of practical application. What will be key will be a spirit of co-operation. Some have talked of turning hurdles into stepping stones but however you want to put it the potential is there for us all to move forward – together.

Bron: Vedior, 20 november 2007

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