monitoring flexicurity policies in europe from three different viewpoints

Andranik Tangian First Meeting of Flexicurity Research Network, Copenhagen, June 8-9, 2006

1

Monitoring flexicurity policies in Europe from three different viewpoints

Privat dozent, Dr.Sc., Dr. Andranik Tangian Hans Böckler Foundation, D-40476 Dü[email protected]

Based on papers www.boeckler.de/pdf/p_wsi_disk_145.pdf

also: 122.pdf, 131.pdf, 137.pdf, 141.pdf, and 143.pdf


2

Agenda

1. Flexicurity as flexibility-security trade-off

2. Tracing flexicurity trade-off with a matrix

3. Monitoring flexicurity in a vector space

4. Neo-liberal perspective

5. Trade-unionist viewpoint

6. European-welfare-state viewpoint

7. Policy implications

8. Conclusions


3

1.1 Flexicurity as flexibility-security trade-off: Definition

[Flexicurity is] a policy strategy that attempts, synchronically and in a deliberate way, to enhance the flexibility of labour markets, work organization and labour relations on the one hand, and to enhance security — employment security and social security — notably for weak groups in and outside the labour market on the other hand

(Wilthagen 1998–2004)


4

1.2 Flexicurity as flexibility-security trade-off: Flexibility types

External numerical flexibility, easiness of ‘hiring and firing’

Internal numerical flexibility, easiness to change working hours

Functional flexibility, easiness to charge employees with different work

Wage flexibility, easiness to adjust the wage to individual performance

Externalization flexibility, easiness to hire workers without employment contracts


5

1.3 Flexicurity as flexibility-security trade-off: Security types

Job security, protection against dismissals and major changes of working conditions

Employment security, equivalent vacant jobs, training, work-work transitions

Income (social) security, unemployment & health insurance, pensions, maternity leave

Combination security, compatibility of work with other activities, work-life balance

2.1 Tracing flexicurity trade-off with a matrix: Wilthagen & Tros 04

Job security Employment security

Income security Combination security

External numerical flexibility

Firm-firm job pools

Facilities work-work transitions

Older enterployees

Retirement arrangements

Internal numerical flexibility

Part-time work

Flexible retirement

Part-time enterployees

Flexible retirement Part-time retirement

Flexible age (pre-pension

Flexible working hours

Leave facilities

Functional flexibility

Education/training

Adaptation in working hours/ tasks

Education/training

Seniority/bridge works

Job rotation

Age-aware cereer and job structures

2.2 Tracing flexicurity trade-off with a matrix: Dutch law

The Dutch Law on Flexibility and Security 1.1.99 (Wilthagen & Tros 2004)

Flexibility Security

Adjustment of the regulation of fixed-term employment contracts: after 3 consecutive contracts or when the total length of consecutive contracts totals 3 years or more, a permanent contract exists (previously this applied to fixed-term contracts that had been extended once)

Introduction of so-called presumptions of law which strengthen the position of atypical workers (regarding the existence of an employment contract and the number of working hours agreed in that contract); the existence of an employment contract is more easily presumed

………………………………………………………………………………………

Policy measures are aimed at either flexibility or security but the matrix elements require both simultaneously

Strictness of EPL, in %

Social security, in %

Util

ity

3 Monitoring flexicurity in a vector space

Pareto-worsening is indepen-dent of the utility function:Knowledge of social utility function is not always necessary

4 Neo-liberal perspective S

oci

al s

ecu

rity,

in %


Deregulation-only instead of flexicurity (except NL and DK in mid 1990s)Explanation: Flexibilization disqualifies workers from social benefitsViolation of flexicurity concept


10

5.1 Trade-unionist viewpoint: Critics of neoliberals

At the neo-liberals’ playing field everything can be bought and sold by default (!)

Social health (= the right to remain at work) is exchanged for a treatment (= social security): give your hand, and get a prosthesis instead

Flexicurity leads to liberalization but also is an indirect governmental donation to firms from the tax-payer’s money


11

5.2 Trade-unionist viewpoint: Definition of flexicurity

[Flexicurity is] a social protection for flexible work forces as ‘an alternative to pure flexibilization’ (Keller and Seifert 2004)


Social security, in %

Util

ity

5.3 Trade-unionist viewpoint:No trade-offs

lexico-graphic preference (absolute priority of one factor over another) has no trade-offs

So

cia

l sec

urit

y, in

%


5.4 Trade-unionist viewpoint: PlotAverage improvements in social security of flexibly employed due to transitions from regular employment does not make trade unions very happy: Gains are smaller than losses and winners are fewer than loosers


14

5.5 Trade-unionist viewpoint: Inconsistency with neo-liberals

Preferences of neoliberals and trade unions differ in the type of preference (a lexicographic preference with no trade-offs)

Wilthagen and Tros (2004): “Some recent studies are pessimistic that appropriate trade-offs can be found between flexibility and security”


15

6.1 European-welfare-state view-point: micro-census simulation

Estimate the national average of Net-Income Replacement Rate (NRR) for unemployed to show how social benefits compensate the loss of previous earnings

Individual answers of unemployed are (normatively) computed with the OECD Tax-Benefit Models

The empirical data on personal situations are available from EuroStat‘s Labour Force Survey


16

6.2 European-welfare viewpoint: 103950 groups „interviewed“

22 European countries 7 years: 1995, 1997, 1999, 2001 - 2004 5 age levels: 20±5, … , 60±5 years 3 Family types: single, one-earner couple,

and two-earner couple Number of children: 0-4 6 wage levels: 40, 50, 67 , … , 200% APW 9 levels of duration of unemployment: 0,

<1, 1-2, 3-5, 6-11, … , 48 and more months

6.3 European-welfare viewpoint: Total decline in 2004

6.4 European-welfare viewpoint: Cause is the structural change


19

7.1 Policy implications: Inconsistency of EU policies

European Welfare-State policy Flexibilization for sustainable development Flexicurity (trade off between flexibilization

and social security) Policy Make Work Pay (trade-off between

income protection and gain from work) Civil Society Policy coordinated with NGO’s

and trade unions


20

7.2 Policy implications: Two proposals

The bottle-neck is the social security system

Social security, as it is, can hardly be improved (institutional improvements fail)

Possible solution: basic income (BI) together with flexinsurance (FI)


21

7.3 Policy implications: Basic Income

A flat income paid by the state to all citizens regardless of their earnings and property status

Traces of this model appear in social security branches like child care allowances (Kindergeld in Germany paid to all parents) or old-age provisions (Switzerland)


22

7.4 Policy implications: Flexinsurance

The employer's contribution to social security is proportional to the flexibility of the contract. Thereby a higher risk of becoming unemployed is compensated

Such progressive contributions stimulate employers to hire employees more favorably, without however rigidly restricting the labour market flexibility


23

7.5 Policy implications: BI & FImake EU policies consistent

Development of European Welfare Policy

Additional budget comes from flexinsurance higher taxes of high-earners (to subtract the

flat income) and funds released from an army of civil servants

currently working in social security

Fair compensation of Flexibilization according to the Flexicurity policy

Facilitates the Make Work Pay policy (moving to work always brings a gain)


24

8 Conclusions: Flexicurity indices and empirical observations

Flexicurity indices allow us to monitor flexicurity policies from neo-liberal, trade-unionist and European-welfare-state perspectives.

Flexicurity does not hold up to its political promises and theoretical declarations from three viewpoints

A possible solution assumes a radical reform of the European social security systems (Basic Income) and a „regulation of the deregulation“ of labour markets with Flexinsurance

Permanent employment Fixed-term employment Collective dismissals Late 1980s Late 1990s Late 1980s Late 1990s Late 1990s Score 0–6 Score 0–6 Score 0–6 Score 0–6 Score 0–6 Germany 2 7 2 8 3 8 2 3 3 1 Austria 2 6 2 6 1 8 1 8 3 3 Belgium 1 5 1 5 4 6 2 8 4 1 Switzerland 1 2 1 2 0 9 0 9 3 9 Czech Republic 2 8 2 8 0 5 0 5 4 3 Danemark 1 6 1 6 2 6 0 9 3 1 Spain 3 9 2 6 3 5 3 5 3 1 Finland 2 7 2 1 1 9 1 9 2 4 France 2 3 2 3 3 1 3 6 2 1

Annex 1: OECD’s index Strictness of EPL (1999, 2004)


26

Annex 2.1: Subindices of Social Security

1. Unemployment insurance

2. Public pensions

3. Paid sick leave

4. Paid maternity/parental leave

5. Paid holidays (usually not considered)

Annex 2.2: Social Security subindex of Unempl. Insurance

Conditions Employment type

Per

man

ent f

ull-

tim

e

Per

man

ent p

art-

tim

e

Fix

ed-t

erm

ful

l-tim

e

Fix

ed-t

erm

par

t-ti

me

Ful

l-ti

me

self

-em

ploy

ed in

ag

ricu

ltur

e

Ful

l-ti

me

self

-em

ploy

ed

not i

n ag

ricu

ltur

e

Par

t-tim

e se

lf-e

mpl

oyed

in

agri

cult

ure

Par

t-tim

e se

lf-e

mpl

oyed

no

t in

agri

cult

ure

Germany 12 months in last 3 years or 6 months if a seasonal worker

2(5) 2(5) 2.5(6) 2.5(6) 6(12) 6(12) 6(12) 6(12)

Austria 52 weeks in past 24 months and earnings 309 EUR

2(5) 2.5(6) 3(8) 3(8) 6(12) 2(5) 6(12) 2.5(6)

…………………………………………………

Size of employment groups, in % to total employment (EuroStat)

Annex 2.3: Security index. Accounting the size of employ-mentgroups

(Germany)

monitoring flexicurity policies in europe from three different viewpoints

Documents