Labour Market Security and FlexibilityThe future Directions of Flexicurity in the Age of Austerity

Oscar MolinaQUIT – Centre d’Estudis Sociològics sobre la Vida Quotidiana i el Treball

Universitat Autònoma de Barcelona

WOERRC & UACES WorkshopUniversity of Sheffield, 28 May 2015

Outline• How was and what has happened?; The Regulation of

Flexicurity and Reform paths under austerity times– Social partners’ role– Labour Market Outcomes

• Why has happened?; The impact of supra-national institutions– Policy Impact

• What can happen? Rethinking or abandoning Flexicurity– Some policy recommendations

Summary• Low cost Flexicurity model; in MMEs, legal regulation has been the main

instrument to implement flexicurity, CB remaining largely secondary• The crisis has opened a window of opportunity for governments in SE to

push an agressive reform agenda; legitimacy from above (EU), not from below (social partners)

• But paradoxically, the regulatory change most demanded by the Troika, i.e., the single contract, has not been introduced– No gains expected from introducing it

• Reforms during the crisis have served to further weaken the regulatory and protective capacity of CB

• The impact of supranational institutions has accordingly been mediated by domestic politics / interests

• Even though it has been ‘de facto’ abandoned, it survives in the discourse of policy-makers

What About the Single Contract!!!!????

Flexicurity in Spain and MMEs• Spain: from job security with bad working conditions

(dictatorship) to high unemployment rates and high levels of temporary employment

• Social policy expenditure remains low by EU standards – Family support becomes a guarantee

• And the crisis has accentuated the familist character of Southern European welfare states

• Social attitudes that become rooted: – Acceptance of unemployment situations affecting vulnerable

groups; better a bad / precarious job than no job

Flexicurity in Spain and MMEs

• Unbalanced flexibility; high external, low internal

• EF becomes a substitute for technological and organizational innovation

• EF is also a mechanism for social control at the workplace

• Government supports this model as it allows to reduce the unemployment rate

The role of CB

• Generally speaking, CB has had a very limited role as an instrument to implement flexicurity– Structural limitations; predominance of SMEs– EF becomes entrenched in corporate strategies

• There have been attempts to enhance its role (1997, 2006) but only limited success in some sectors and large companies

• The negotiation of internal flexibility is increasingly important, but still does not provide an alternative to EF

Flexicurity in Austerity times

• The onset of the economic crisis poses additional challenges:– Increase in long-term unemployment; particularly

for young workers and over 45– Early school leavers unemployed– Immigrant population

Flexicurity in Austerity times

• Policy responses– First stage (2010-2011);

• Attempts at enhancing the role of internal flexibility through CB

• Marginal changes in labour market rules– Second stage (2012);

• Radical reform of CB• Cuts in duration and generosity of unemployment

protection• Cuts in ALMP• Marginal changes in labour market regulation

Collective Bargaining Coverage

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

2000000

4000000

6000000

8000000

10000000

12000000

14000000

TOTAL Company Sector

Workers Covered by Collective Agreements

Source: Boletín de Estadísticas Laborales

-De-centralization via opting out by company agreements

-Enhances the capacity of the employer to unialterally change working conditions negotiated in collective agreements

-Elimination of automatic extension upon expiry

Unemployment Benefit Coverage

2007 2010 2013 20140

5

10

15

20

25

30

35

40

45

39.2 37.9

31

24.5

-In spite of the fall in coverage,the expenditure on passive policies has increased from 1,45% of GDP in 2007 to 3% in 2012

-Cowding out effect; no money left for ALMP

-The discourse and the policy agenda paying increasing attention to minimum income schemes

Workers Covered by a Contributory Unemployment Protection Scheme as a % of Total Unemployment

Source: Boletín de Estadísticas Laborales

ALMP

2007 2008 2009 2010 2011 2012 2013 20140

1

2

3

4

5

6

7

8

9

7.8 7.97.6 7.7

7.4

5.8

3.84.1

-The policy discourse; have very little impact; Part of the Problem

-Limited resources

-Corruption scandals linked to the management of training courses by both trade unions and employer organizations

-Rationalization and efficiency without evaluation

Millions of Euros spent on ALMP

Source: SEPE

Reforming labour markets

• There is no space for domestic social dialogue under the technocratic model of macroeconomic management imposed on member states

• But this does not mean member states have implemented all the recommendations– Recent reports from both the ECB and the EC recommend

further changes• This is because it is very unlikely it would have any

significant impact on employment creation (small benefit) and in this way avoid conflict (high costs)

Has it made any difference?

2011 2012 2013 20140

5

10

15

20

25

30

14.216

17.3 17.4

24.822.8 23.7 24.2

Part-time Temporary

Part-time and Temporary Employment Rates

Source: EPA, INE

-Everything more or less the same

-After declining, temporary employment is growing again

-(Involuntary) part-time is increasing significantly

-Employment creation in Spain is (again) higher than the EU average

The impact on Precariousness

80

85

90

95

100

105

I tr 2

011

II tr

201

1

III tr

201

1

IV tr

201

1

I tr 2

012

II tr

201

2

III tr

201

2

IV tr

201

2

I tr 2

013

II tr

201

3

III tr

201

3

IV tr

201

3

I tr 2

014

II tr

201

4

III tr

201

4

IV tr

201

4

Precario No precario

-We can accordingly conclude that the reforms have contributed very little to create net employment

-But they apparently have contributed to make more precarious the new jobs created

Precarious Employment Index (1st quarter 2011=100)

Source: Elaboration in the context of the researh project on Evaluation of Employment Policies in Spain

Why has happened? The impact of supra-national institutions

• Austerity has opened a window of opportunity for governments

• International forces and pressures have not determined decisions regarding the regulation of flexicurity– First, few marginal changes have been introduced in

employment regulation – single contract has not been introduced in either country; only profound changes in CB

– But at the same time, in two countries falling within a similar model like Italy and Spain, policy options under fiscal constraints have been different; the case of ALMP (very important in the policy discourse in Italy [Jobs Act] and minimum income schemes (dominate the policy discourse in Spain)

What can happen? Rethinking or abandoning Flexicurity

• Flexicurity ‘de facto’ abandoned, but still of utility in the policy discourse, as the 2012 labour market reform very clearly shows

Policy Recommendations

• Changes in labour market regulation without implementing a fully-fledged industrial policy will have very little impact on the type of employment

• Revitalise and enhance the regulatory and protective role of collective bargaining, especially at company level

• FAnticipation / timely activation

From timely Activation to Anticipation

Activation

IndividualState-individual

BenchmarkingPerpetuates

dualization

Anticipation

CompanyParticipation of

company stakeholders

LearningFocus on vulnerable

groups and their risks

Anticipatory Policies

Policy Learning

Effective use of labour market data

Participation

Focus on Vulnerable groups

• Improve unemployment protection; particularly, making sure conditionality works

• ALMP• Tarrget specific groups• Complement with employment incentives; when there

is a monitoring of the person employed, they are effective• Rationalization cum evaluation

Thank you very much for your attention!