Flexicurity Within just a few years, 'flexicurity' has taken centre stage in the policy debate on employment, labour market and economic reform, at both European and national levels in the European Union. The word itself is a combination of 'flexibility' and 'security', and yet it is open to a number of different definitions - and this is where many arguments arise. 

This factsheet outlines the evolution of flexicurity, its interpretation by different interest groups, and the European Trade Union Confederation (ETUC) position. European trade unions are alarmed that the principle is being redefined to justify the erosion of established job security rights, without at the same time reinforcing the social welfare network and collective bargaining - equally crucial elements in the flexicurity equation.

A more detailed analysis of the issues surrounding flexicurity can be found in the ETUC leaflet: The Flexicurity debate and the challenges for the trade union movement.

What is Flexicurity? The ETUC position

The ETUC believes that the central aim of any labour market reform must be:
 to promote stable employment relationships;
 to halt and reverse the trend towards precarious, low-quality, low-paid work (so-called 'McJobs'), and a casualised and insecure workforce;
 to invest in human resources through lifelong learning, vocational training, transfer of qualifications and tailored support for workers between jobs;
 to offer greater flexibility for workers, through the reorganisation of working time, for example, to enable them to reconcile work and family responsibilities;
 to establish gender equality in the workplace;
 to empower workers through a higher level of information and consultation;
 to strengthen social dialogue and collective bargaining systems;
 to create more and better jobs, through close coordination with job-friendly macroeconomic policies.

The flexicurity debate comes at a time when the EU should be examining ways to upgrade work organisation, workers' rights and job protection systems in Europe, not to lower the level of protection itself. What Europe needs is 'smart' reforms, centred on the vision of a fairer and more inclusive labour market.

The EU has to invest in worker mobility and higher skills to meet the challenges of a global market. But Member States must also ensure that when workers leave a company or service they are well prepared and equipped for new employment. This means anticipating restructuring or reform and investing in innovation and internal mobility and redeployment.

The ETUC fears that flexicurity is being interpreted as a licence for easier dismissal and the expansion of precarious and casual forms of working. Trade unions are totally opposed to this approach, which will produce a more segmented labour market, and social exclusion for the most vulnerable workers.

Interpretations of flexicurity

The European Commission (in its June 2007 Communication [1]) defines flexicurity as "a comprehensive approach to labour market policy, which combines sufficient flexibility in contractual arrangements - to allow firms and employees to cope with change - with the provision of security for workers to stay in their jobs or be able to find a new one quickly, with the assurance of an adequate income in between jobs." It sees this as a way of equipping European labour markets to respond to globalisation.

Some business and political figures have gone further, to seek to create a distinction between 'job security' - meaning protection within a specific job - and 'employment security' - used to denote the right to employment in general. They argue that flexicurity should entail cutting back on job security in favour of policies aimed at forcing workers to become more 'adaptable' and move more easily between employers, thus making it easier and cheaper for companies to undertake restructuring and relocation.

The ETUC believes this to be a false distinction and rejects the view that one can be traded off against the other. In the 21st century, the right of all workers to both job and employment security should be unquestioned. Job protection, whether legal or through collective bargaining practice, is the precondition that enables workers and trade unions to negotiate on the terms and conditions of change.

The impact of employment protection legislation

Despite the arguments put forward, there is little evidence that employment protection legislation (EPL) is really an obstacle to job creation or labour market flexibility. Figures show that European companies already have considerable scope for adaptation, with a job creation rate of over 8% in Spain, Ireland, Italy and Sweden; and 3-4% of jobs destroyed each year across the EU-15, regardless of job protection measures.

The Danish model

Denmark is the most commonly used example of flexicurity in action, and of one of Europe's most successful economies and inclusive societies. Business and some EU leaders claim this is due to minimal job protection.

But is this really the case? Let's look more closely at the Danish model.

Recent Eurostat figures [2] show that Denmark has the highest employment rate in the EU (77.4%). Its expenditure on social protection per head of population is second only to Luxembourg, yet employers' social contributions are the lowest in the EU-25. Public spending on active labour market policies is also the highest in Europe, amounting to almost 4.5% of GDP. Although statutory job protection is lower, this does not mean that workers can be fired at will.

Most significantly, Denmark - like other Nordic countries - has a very strong tradition of trade union organisation and collective bargaining, covering 80-90% of workers. Trade unions negotiate job protection through collective agreements covering the different sectors of the economy and reaching out to a vast majority of workers. In particular, Danish collective bargaining agreements oblige employers to notify retrenched workers well in advance.

Advance notification

Research has shown [3] that early warning of severance is an important factor in successfully finding new employment. Notification periods in Denmark and Sweden are higher than in France, Germany and Italy (see below). Sweden has one of the longest advance notification periods in Europe and, like Denmark, one of the highest employment rates.

'Transition security'

Transition security is the term recently coined to indicate support for workers during the period between jobs, especially when unemployment arises from restructuring or relocation.

This is crucial to enabling unemployed workers to move swiftly into a new job, and maintain their living standards in the meantime. In Sweden, collective agreements at industry level have set up `career transition' funds financed from the business sector and jointly managed by social partners. These funds provide notified workers with training, jobsearch assistance, or paid internships in other firms, even while they are still formally employed by the company that is firing them. The aim is to provide immediate help and support, and not to let people disappear into unemployment. But this, of course, presupposes that firms are obliged to provide a period of advance notification during which this kind of active support is offered.

Transition security also relies on a level of social welfare that enables people to support themselves, and their families, while finding - and if necessary retraining for - appropriate work. Good, state-run social benefit schemes give workers security between jobs. And public spending on active labour market policies is a sign of investment in education and training, suited to the needs of individuals, that is key to enabling workers to adapt to new tasks.

Experience shows that transition security is most effective where workers have the backing of robust labour law and/or strong trade unions.

While there are many positive lessons to learn from the Nordic systems, this does not mean there is only one way of doing things, or that the approach would automatically be successful in other countries with other cultures. The ETUC believes there may be varied ways to achieve the common objectives of Social Europe. In particular, the ETUC draws attention to models of negotiated internal flexicurity, where workers move between jobs inside the same company.