The Commission is set to adopt on 27 June a long-awaited paper on ‘flexicurity’, the approach that aims to reconcile flexible labour-market rules with high social protection, in an attempt to guide European states in dealing with the growing pressures of globalisation and demographic change.
The Communication on flexicurity, due to be adopted on 27 June 2007, is the Commission’s attempt to map out possible solutions for member states to provide more and better jobs and tackle the labour-market challenges of the 21st century.
In drafting the paper, which remains non-binding, the Commission sought to avoid giving the impression that it was trying to impose certain measures on member states. Instead of singling out individual countries’ deficiencies, it chooses to define common challenges that European labour markets must tackle. Different EU countries (not just Denmark) have experiences with flexicurity policies, the Commission has pointed out.
Entitled ‘Towards common principles of flexicurity: More and better jobs through flexibility and security,’ the paper is inspired by the responses to a a wide public consultation launched in November last year. As one official put it, it aims to explain “the correct combination of the different aspects that determine the functioning of the labour market”.
The Communication defines some components of successful flexicurity policies, which can be incorporated into any country’s labour-market policies without altering the concept’s underlying principles, namely:
- Flexible and reliable contractual agreements;
- comprehensive lifelong learning;
- effective active labour market policies, and;
- modern social-security systems.
The paper then tackles the difficult task of making suggestions on how to proceed with labour-market reforms. In order to avoid giving advice to specific member states, it defines a typology of four different challenges that labour markets in different countries may be facing, leaving governments to assess which of the recommendations apply to them.
For each of the situations, the authors suggest a ‘pathway’ out of the respective labour-policy impasses, touching on each of the four elements of flexicurity. The typology comprises the following situations:
- Key challenge: Contractual segmentation. The labour market is divided between ‘insiders’ and ‘outsiders’, into workers holding permanent contracts and those on short-term contracts with low levels of social protection. Typically, these countries are marked by a high rate of early retirement. Examples include Spain, Italy, France and Portugal.
Suggestion: Aim towards a more even distribution of flexicurity and security to create ‘entry points into employment’ for newcomers and promote their progress into better contractual agreements.
- Key challenge: Developing flexicurity within the enterprise and offering transition security. A high percentage of large enterprises leads to low job mobility within the workforce. This is the case in Germany, Belgium, Luxembourg and France.
Suggestion: Invest in employability and life-long learning to increase workers’ adaptability to technological change; provide for better and safer transitions from one company to another.
- Key challenge: Skills and opportunity gaps among the working population. In countries with high employment rates, such as the UK, the Netherlands and even in Denmark, the cradle of flexicurity, low-skilled groups have little chance of finding a better job than the one that they currently hold.
Suggestion: Promote opportunities and develop the skills of low-skilled workers in order to enable social upward mobility.
- Key challenge: Improve opportunities for benefit recipients and informally employed workers. This situation is typically encountered in countries that have joined the EU since 2003 and have undergone intensive restructuring, resulting in a high percentage of the potential workforce being dependent on long-term benefits.
Suggestion: Introduce or reinforce active labour-market policies and life-long learning to improve opportunities for benefit recipients to move from informal to formal employment.
Representatives of employers, small businesses and trade unions shared their views on flexicurity in an interview for EURACTIV earlier in June. The interview showed social partners are still at odds over the definition of the concept as well as concerning the role of the EU in employment matters.
Marc Stocker, a senior adviser on economic and financial affairs with BusinessEurope, the European employers' association, was adamant that "social and employment policies are the competence of member states".
But Gerhard Huemer, director for economic and fiscal policy at UEAPME, the European small business association, believes that some degree of harmonisation is necessary at European level: "The EU does have the power to define minimum standards in the field of labour markets and social policies," he said. However, he added that the EU should refrain from legislating beyond those minimum standards. "We see neither the need nor the possibility to solve such questions at EU level."
Ronald Janssen, advisor on labour-market policy at ETUC, the European Trade Union Confederation, urged the EU to take action on what many workers see as social dumping within the EU's borders. The EU, he said "does have the power to build a level playing field to put a stop to internal market competition that is detrimental for workers".
And he expressed fears that the whole flexicurity debate may hide other objectives. "The real agenda hiding behind the 'flexicurity' wording simply seems to be the dismantling of job protection, thereby giving employers even more power to press for lower wages," Janssen said.
European labour markets are faced with a number of challenges:
- Demographic shifts and most notably the ageing of the population, which mean that the financing schemes for retirement will not work as they have done previously;
- the growth of Europe's increasingly skill-based service economy, while traditional employment in crafts, manufacturing and farming declines;
- the increasing segmentation of labour markets across the EU, which leads to parallel labour markets for high-skilled and low-skilled workers, with little chance for workers to climb the career ladder, and;
- globalisation, which puts pressure on the low-skilled labour market.
In order to address these challenges, the Commission published, in November 2006, a Green Paper on the reform of European labour law, which initiated a wide-ranging consultation on the issues. The public inquiry was met with great interest, resulting in around four times as many responses as is normally the case for consultations organised by the Commission's Employment Directorate.
- 27 June 2007: Communication on flexicurity due to be adopted by the College of Commissioners.
- Employment and Social Affairs Commissioner Vladimír Špidla:La Flexicurité en Europe : modernisation du marché du travail européen au 21ème siècle(Speech, 26 June 2007)
- Commission:Green Paper" Modernising labour law to meet the challenges of the 21st century"[22 November 2006] [FR] [FR] [DE]