The model of flexicurity – a combination of easy hiring and firing, high benefits for the unemployed and a pro-active labour market policy – could solve many of Europe’s unemployment problems, experts at a conference agreed.
The concept of flexicurity rests on the assumption that flexibility and security are not contradictory, but complementary and even mutually supportive. It brings together a low level of protection of workers against dismissals with high unemployment benefits and a labour market policy based on an obligation and a right of the unemployed to training. The concept of job security is replaced by employment security. Social dialogue between employers and employees is an important aspect of the flexicurity model.
While flexicurity sounds like the right answer to the challenges of today’s accelerated economy, doubts arise as to the transferability of the concept to economies other than the Scandinavian ones where it was born. Flexicurity may be understood as a re-interpretation of those countries’ one hundred year tradition of social dialogue. Such a tradition does not exist in many countries, for example in Central and Eastern Europe. In other countries – mainly the Mediterranean ones – employer/trade union relations have historically been much more confrontational. It remains to be tested whether those countries will as easily accept the disappearance of the antagonism between labour and capital as the Nordics seem to have.
Employment Commissioner Vladimir Špidla stressed that each country's economy has its particularities, and that solutions which may have worked for one country are not always transferable to another: "[...] There is no confrontation between national 'models'. No country just works according to one 'model'. I prefer to speak of 'social systems', which have their own coherence, and which include social security, labour market and 'governance'.
"Some seem to be better in tune with our times challenges and demands than others: Such was the case with Italy and France in the sixties, with Germany in the seventies and eighties, and with the Dutch 'Polder' model in the nineties, and today it is the case with the models of Denmark, Finland and Austria."
"The Nordic 'flexicurity', which has quickly become 'this month's special offer' in the supermarket of ideas, is first of all this overall coherence between social security systems, the respective roles played by the government and the social parties, between employment policy and the workings of the labour market."
Mr. Špidla used the example of the Finnish success story to illustrate that monocausal interpretations often do not work: "Remember that Nokia used to be a corporate group with activities in the rubber industries, in forestries and in cable manufacturing. It has become one of the world leaders in information technologies. That means that flexicurity is just one element of these shifts affecting economies. It cannot be understood without looking at the phenomenon as a whole."
Poul Nyrup Rasmussen is now president of the European Socialists and an MEP. A policy along the lines of flexicurity is, according to Mr. Rasmussen, best adapted to the global age, where due to ongoing structural changes jobs do not exist long enough to keep people employed for a lifetime. The answer would be, Mr. Rasmussen said, "to equip people to adapt to constant change", which should include lifelong learning, an active labour market policy involving an obligation as well as a right to training, and high, tax-financed unemployment benefits to help people bridge prolonged breaks between jobs. Such an approach, he said, has been the key to economic growth in Denmark.
Mr. Rasmussen dismissed the finance and employment programme of Germany's conservative contender to the chancellorship, Angela Merkel. The German conservative opposition's vision, which is based on a rise in consumer taxes such as VAT and flirts with the idea of a flat tax while cutting and setting time limits on unemployment benefits would, according to Mr. Rasmussen, have adverse effects. "After the Schröder reforms, this would be a step back from the global to the industrial age with its rigid employment structures and little flexibility."
A number of of expert speakers addressed an audience at a Brussels event organised by the European Policy Centre on 14 September 2005. They looked back at the policy of 'flexicurity', which was implemented in Denmark in the early 1990s, and with some variations, in other Nordic countries.
This policy is widely discussed as a model for other European economies with high unemployment rates - such as Germany and France - because it cut unemployment in Denmark by 50% within five years.
Flexicurity is a model that is based on 'social dialogue', and it was initially promoted by social-democrat politicians such as Poul Nyrup Rasmussen, Danish Prime Minister from 1992 until 2001.
The UK Presidency will hold an informal summit of the EU's heads of state on 27 - 28 October in Hampton Court Palace, Surrey, with a view "to discuss how to maintain and strengthen social justice and competitiveness in the context of globalisation; Europe’s place in the world; and the security of our citizens".
EU official documents
- Commissioner Vladimir Špidla:La "flexicurité" est-elle en tête des priorités de la DG Emploi ?(14 September 2005)
- MEP Poul Nyrup Rasmussen:Speech at the European Police Centre(14 September 2004)
- MEP Poul Nyrup Rasmussen:Speech in EP debate on Economy, Employment, Social Policy(26 May 2005) [FR] [FR] [DE]
NGOs and Think-Tanks
- European Policy Centre:'Flexicurity' on the labour market: are the EU-25 speaking the same language?(14 September 2004)
- European Policy Centre:Working Paper 20: The Nordic model: a recipe for European success?(September 2005)
- Aalborg University:The flexible Danish labour market - a review, (Thomas Bredgaard, Flemming Larsen, Per Kongshøj Madsen)