What is and do we need to measure flexicurity?

I would like to very briefly give an inside on the topic that is my PhD focus. Here only the description of the flexicurity concept will be given, however, as I am econometrician, storytelling is not my specialty and won’t be the target of the thesis. What I would like to do is to work on creation of model that could absorb effects under the concept of flexicurity on labour market outputs (as employment, social equality and others). Maybe will create a “Flexicurity Rating”, that could be the third world wide rating used after Global Competitiveness and Doing Business (#joke, but who knows…).

Flexicurity concept was developed in the Netherlands in 1990s when it was applied in labour market reforms. Many changes were needed because of the high unemployment and low growth level (like in Latvia now?!), as well as rising inflation that was compensated by wage increases. In 1982 the leaders of the most important national trade union Wim Kok and the most important employers association Chris van Veen together with Government reached a historic agreement and started the working time reduction, however, not a general reduction for everybody (for instance, setting a new working time – 36 hours a week) but instead they agreed that this would be implemented through flexibility, which provided different forms to be chosen. As follows, during the 1982 the average working week hours decreased down to 38. It came from more free days, every 14 days one afternoon free etc. The part-time work was promoted, especially for women with children, and that increased the participation rate of women significantly. The external flexibility was introduced by more temporary contracts and broader use of Dispatched Work Agencies services. In 1998 only 56% of the workforce had a regular full-time job, 37% worked part-time (75% of them women) and 13% had a fixed-term contracts. Unemployment was reduced from 9.3% in 1985 to 4% in 1999[1]. About the social security it said, that the longer flexible contract (part-time or fixed-term, or other) lasts, the stronger the security of the worker should be, as well as the responsibility of the employer, and it does not matter on the form of the contract that was eventually chosen.

At the same time, most often the beginning of flexicurity concept is related to the Danish Golden triangle. However, I will not focus on explaining it in this blog post, but the idea really has the same goals here.

danish triangle

In 2000 the Lisbon strategy for growth and jobs were signed. Revised in 2005 it incorporated Integrated Guidelines for growth and jobs for the period 2005 – 2008, where the flexicurity principle was first encouraged in the European Union level by the following guideline: “Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners (Integrated Guideline No 21)”[2]. The employment security in definition is underlined, because now the emphasis is for securing the person with a job not only with a particular income level through social assistance.

The further driving force for implementing the flexicurity in Europe were actions done by European Commission, covered in the report “Flexicurity Pathways: Turning hurdles into stepping stones” that was written by European Expert Group on Flexicurity in 2007 ,where four precisely defined flexicurity policy components are presented and since then the clear flexicurity concept is met:

1. Flexible and reliable contractual arrangements, (from the perspective of employer and the employee, of “insiders” and “ outsiders”) through modern labour laws, collective agreements and work organisation;

2. Comprehensive lifelong learning (LLL) strategies to ensure the continual adaptability and employability of workers, particularly the most vulnerable;

3. Effective active labour market policies (ALMP) that help people cope with rapid change, reduce unemployment spells and ease transitions to new jobs;

4. Modern social security systems that provide adequate income support; encourage employment and facilitate labour market mobility. This includes broad coverage of social protection provisions (unemployment benefits, pensions and healthcare) that help people combine work with private and family responsibilities such as childcare.

 

The same year European Foundation for the Improvement of Living and Working Conditions did a research “Approaches to flexicurity: EU models” where European Union countries were analysed and grouped by their labour market characteristics and implemented flexicurity models. The factor analysis and cluster analysis were applied. From the factor analysis it was found that the Nordic countries together with the Netherlands and the UK have higher flexicurity and social security indicators than other countries. Meanwhile, the new Member States together with the Mediterranean countries have lower figures for both flexicurity and security.

Adaptability/flexibility versus social security in EU Member States, 2006

 Flexicurity 2006

Source: European Foundation for the Improvement of Living and Working Conditions “Approaches to flexicurity: EU models”, table No 10, page 29

As a result of cluster analyses, six different country groups were formatted:

  1. Old EU Member States (Austria, Belgium, France, Germany and Luxembourg) represent a continental model of social and economic activities. Social protection is relatively high, the tenure is also relatively high, which hints at a rigid labour market with low mobility;
  2. The Netherlands and the UK represent fairly liberal and flexible labour markets. The proportion of part-time workers is particularly high, unemployment is low;
  3. Denmark, Finland and Sweden represent benchmarking models in flexicurity debates;
  4. Baltic states (Estonia, Latvia and Lithuania), Ireland and Cyprus represent labour market with high flexibility but low social protection;
  5. Greece, Italy, Malta, Portugal and Spain (Mediterranean group) are characterised by poor labour market adaptability, low income protection, and high unemployment;
  6. New Member States (Czech Republic, Hungary, Poland, Slovakia, Slovenia) are also characterized by low labour market adaptability and high long-term unemployment.

Someone will think that by now everything has been researched and actions should be taken, but someone will see that it is not so. Why? Because still no one can really answer to following questions:

? What is the level of flexicurity in labour market of particular country ?

? Is a concrete economic policy initiative beneficial to flexicurity of labour market ?

? What is the countries’ position among others on its progress towards flexicure labour market ?

and so on… ?

Therefore, I welcome all of you to leave your comments if you have anything to say. Please give me a constructive (both positive and negative) feedback or come up with ideas for my research. I have started interesting calculations together with my supervisor, where we research if Fuzzy Logic Approach could be used for measuring the flexicurity. First results are optimistic and I will definitely share my finding with you soon.

[1] http://pdf.mutual-learning-employment.net/pdf/ind-exp-paperNL1000.pdf

[2]http://europa.eu/legislation_summaries/employment_and_social_policy/community_employment_policies/c11323_en.htm

@ agneesze

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