EU: Commission proposes 'flexicurity' principles
In June 2007, the European Commission proposed that the EU member states adopt a set of common principles on "flexicurity", which is an approach to labour market policy and employment law that combines flexibility with security. It has also outlined a set of "typical pathways" that member states could follow to achieve flexicurity. The European Council is planning to adopt flexicurity principles, based on the commission's proposals and contributions by other stakeholders, by the end of the year.
On this page:
What is flexicurity?
Social partner involvement
Flexicurity principles
Pathways to flexicurity
Next steps
Reactions
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Key points
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In recent years, "flexicurity" has become increasingly central to the EU's employment policy and its Lisbon growth and jobs strategy. Flexicurity is conceived as an integrated approach to achieving the goal of "more and better jobs" by combining flexibility in labour markets, work organisation and employment relations with both employment security and social security.
The European Council summit in March 2006 invited the European Commission, member states and social partners to explore new ways of "enhancing common principles" on flexicurity and the commission launched a debate to feed into the preparation of a communication on the subject. This included an informal tripartite social summit on flexicurity in October 2006 and a formal tripartite summit in March 2007, along with further input from the European Council in March 2007 and a "stakeholder conference" on the subject in April.
The outcome of this debate is a communication entitled Towards common principles of flexicurity: More and better jobs through flexibility and security (PDF format, 90K) on the European Commission website), issued on 27 June.
What is flexicurity?
The communication defines flexicurity as "an integrated strategy to enhance, at the same time, flexibility and security in the labour market".
Flexibility, according to the commission, is about successful moves ("transitions") during people's lives: from school to work; from one job to another; between unemployment/inactivity and work; and from work to retirement. It is not "limited to more freedom for companies to recruit or dismiss, and it does not imply that open-ended contracts are obsolete". It is about the progress of workers into better jobs, "upward mobility" and "optimal development of talent". Flexibility is also about "flexible work organisations, capable of quickly and effectively mastering new productive needs and skills, and about facilitating the combination of work and private responsibilities".
Security, the communication states, is more than "just the security to maintain one's job". It relates to equipping people with the skills that enable them to progress in their working lives, and helping them find new employment. It is also about "adequate unemployment benefits to facilitate transitions". Finally, it includes training opportunities for all workers, especially low skilled and older ones.
The commission argues that companies and workers alike can benefit from both flexibility and security. Benefits include better work organisation, the upward mobility resulting from increased skills, and investment in training that "pays off" for enterprises while "helping workers adapt to and accept change".
The communication reports that the commission and the member states, drawing on experience and analytical evidence, have reached a consensus that flexicurity policies can be designed and implemented across four "policy components":
- flexible and reliable contractual arrangements (from the perspective of the employer and the employee, and of labour market "insiders" and "outsiders") through "modern" labour laws, collective agreements and work organisation;
- comprehensive lifelong learning (LLL) strategies to ensure the continual adaptability and employability of workers, particularly the most vulnerable;
- effective active labour market policies (ALMPs) that help people cope with rapid change, reduce spells of unemployment and ease transitions to new jobs; and
- modern social security systems that provide adequate income support, encourage employment and facilitate labour market mobility. This includes broad coverage of social protection provisions (unemployment benefits, pensions and healthcare) that help people combine work with private and family responsibilities such as childcare.
According to the commission, economic analysis confirms that these four components can be mutually supportive, and improve the employment rate overall, cut the "at-risk-of-poverty" rate, and enhance "human capital".
Social partner involvement
The communication argues that the active involvement of representatives of employers and employees is a key factor in ensuring that flexicurity "delivers benefits for all". It also describes it as essential that "all stakeholders involved are prepared to accept and take responsibility for change".
According to the commission, integrated flexicurity policies are often found in countries where dialogue between social partners, and between social partners and public authorities, has played an important role. The social partners are "best placed to address the needs of employers and workers and detect synergies between them", for example work organisation or the design and implementation of LLL strategies.
Social partner support for the core objectives of the Lisbon strategy is described as "an important asset" and translating this support into concrete policy initiatives is identified as a responsibility of both governments and social partners. A comprehensive flexicurity approach, as opposed to separate policy measures, is "arguably the best way to ensure that social partners engage in a comprehensive debate on adaptability".
Experience shows that a partnership approach is best suited to developing a flexicurity policy, but it is "up to the relevant stakeholders, as autonomous organisations, to decide for themselves how to participate in social dialogue on flexicurity policies".
At national level, flexicurity could, the communication suggests, provide the framework for a "process to establish national objectives for adaptation and change in the area of employment, productivity, flexibility and security". This could be initiated by public authorities, while seeking the commitment of the social partners and of other stakeholders as appropriate. A national dialogue could be set up with representatives of employers, workers, the government and other parties, with the task of formulating a set of policy approaches or negotiating a package of measures. This could lead to the adoption of a "national integrated flexicurity strategy".
The commission also encourages the member states to work with the social partners with a view to including their approaches to flexicurity in the "national reform programmes" that governments have to draw up as part of the EU's Lisbon strategy.
Flexicurity principles
The core of the communication is a set of proposals for eight EU-wide "common principles" on flexicurity. The commission argues that, while flexicurity policies and measures must reflect the very different situations in the various countries, all EU member states face the same challenge of "modernisation and adaptation to globalisation and change". Therefore, to facilitate national debates within the common objectives of the Lisbon strategy, "it seems appropriate to reach a consensus at EU level" on a series of "common principles of flexicurity". These principles could be "a useful reference in achieving more open and responsive labour markets and more productive workplaces" and help member states establish and implement flexicurity strategies.
The eight possible common principles identified by the commission are as follows:
(1) Flexicurity involves: flexible and reliable contractual arrangements (from the perspective of the employer and the employee, and of insiders and outsiders); comprehensive LLL strategies; effective ALMPs; and modern social security systems. Its objective is to reinforce the implementation of the EU growth and jobs strategy, create more and better jobs, and strengthen "European social models", by providing new forms of flexibility and security to increase adaptability, employment and social cohesion.
(2) Flexicurity implies "a balance between rights and responsibilities" for employers, workers, job-seekers and public authorities.
(3) Flexicurity should be adapted to the specific circumstances, labour markets and industrial relations of the member states. Flexicurity is "not about one single labour market model or a single policy strategy".
(4) Flexicurity should reduce the divide between insiders and outsiders on the labour market. Current insiders need support to be prepared for and protected during job-to-job transitions. Current outsiders, including those out of work, among whom women, the young and migrants are over-represented, need "easy entry points to work and stepping-stones to enable progress into stable contractual arrangements".(5) Internal (within the enterprise) as well as external (from one enterprise to another) flexicurity should be promoted. "Sufficient" flexibility in recruitment and dismissal must be accompanied by secure transitions from job to job. Upward mobility needs to be facilitated, as well as mobility between unemployment/inactivity and work. "High-quality workplaces with capable leadership, good organisation of work, and continuous upgrading of skills" are among the objectives of flexicurity. Social protection needs to support, not inhibit, mobility.
(6) Flexicurity should support gender equality by promoting equal access to good-quality employment for women and men, and by offering possibilities to reconcile work and family life as well as providing equal opportunities to migrants, young, disabled and older workers.
(7) Flexicurity requires "a climate of trust and dialogue" between public authorities and social partners, where "all are prepared to take responsibility for change, and produce balanced policy packages".
(8) Flexicurity policies have budgetary costs and "should be pursued also with a view to contribute to sound and financially sustainable budgetary policies". Further, they should aim for a fair distribution of costs and benefits, especially between businesses, individuals and public budgets, with particular attention to the specific situation of small and medium-sized companies. At the same time, "effective flexicurity policies can contribute to such an overall objective".
Pathways to flexicurity
The commission states that the implementation of the common flexicurity principles in the member states requires the establishment of carefully planned and negotiated "combinations and sequences" of policies and measures. Member states vary considerably in their socio-economic, cultural and institutional composition, so the specific combinations and sequences will also vary. While flexicurity is not about a single labour market model or single policy strategy, best practices from throughout the EU provide good opportunities for member states to learn from each other by analysing what works best in their national situations.
The communication identifies four broad, "typical" combinations and "sequencings" of the policy components of flexicurity, which the commission believes can help tackle the typical challenges that countries face on the way to flexicurity. These four "flexicurity pathways" and the challenges they seek to address "do not – and indeed cannot – reflect the concrete situation of any specific country" but each pathway, or a combination of them, addresses specific challenges that are pertinent to several member states, the commission argues.
The four pathways (described in greater detail in an annex to the communication) are as follows:
- "Tackling contractual segmentation." This typical
pathway is of interest to countries where the key challenge is segmented labour
markets, with insiders and outsiders. It aims to distribute flexibility and
security more evenly across the workforce. It would provide "entry ports" into
employment for newcomers and promote their progress into better contractual
arrangements.
- "Developing flexicurity within the enterprise and
offering transition security." This is of interest to countries with relatively
low "job-flows". It would increase investment in employability to allow workers
to "update their capabilities" continuously and thus be better prepared for
future changes in production methods and work organisation. It would also "look
beyond the actual job and the actual employer", by putting in place systems that
provide safe and successful job-to-job transitions in the event of company
restructurings and redundancy.
- "Tackling skills and opportunity gaps among the
workforce." This pathway is of interest to countries where the key challenge is
large skills and opportunity gaps among the population. It would promote the
opportunities for low-skilled people to enter employment and develop their
skills in order to obtain a "sustainable position" on the labour market.
- "Improving opportunities for benefit recipients and informally employed workers." This is of interest to countries that have experienced substantive economic restructuring in the recent past, resulting in high numbers of people on long-term benefits with "difficult perspectives of returning to the labour market". It aims to improve opportunities for benefit recipients and for shifting from informal to formal employment through the development of effective ALMPs and LLL systems, combined with an "adequate level" of unemployment benefits.
The commission suggests that the member states, taking account of their own particular situation and institutional background, should study – in consultation with social partners and other stakeholders – their specific challenges and the typical pathways that can help to address them, in order to "design their own comprehensive pathway towards better combinations of flexibility and security".
The communication also looks in more depth at the national experience of flexicurity (with examples given in an annex) and the "financial dimension" of the issues.
Next steps
The communication aims to facilitate a comprehensive debate between the EU institutions, member states, social partners and other stakeholders, to enable the European Council to adopt, by the end of 2007, a set of common principles on flexicurity. These principles should "inspire and contribute to" the implementation of the EU's integrated guidelines for growth and employment, which seek to implement the European employment strategy. The commission–council joint employment report for 2007/08 will focus on the extent to which member states are developing comprehensive policy strategies covering the four components of flexicurity.
In its analysis of this year's Lisbon national reform programmes, the commission will make initial comments on the way in which the member states might benefit from the common principles and pathways to design their own specific flexicurity policies. Member states will be invited to use their future national reform programmes to report explicitly on their flexicurity strategies. The commission will monitor these strategies and report on progress. It will also propose a "strengthened and more focused mutual learning programme" to ensure that member states benefit from flexicurity policies that work.
As it sees a key role for social dialogue in the establishment and implementation of successful flexicurity strategies, the commission invites the European social partners to engage in a dialogue at EU level on the basis of the common flexicurity principles to be approved by the European Council. This debate should "complement, and feed into, the core role of social partners in their respective national contexts". The 2008 tripartite social summit could focus on flexicurity.
Reactions
Launching the communication, Vladimír Špidla, the EU commissioner for employment, social affairs and equal opportunities, said: "Flexicurity is the best way to ensure that European citizens can enjoy a high level of employment security so they can find a good job at every stage of their active life in a rapidly changing economic environment ... flexicurity provides a balance between rights and responsibilities, for workers and companies as well as for public authorities. The flexicurity approach is about creating the positive interplay between flexibility and security. We now need social partners to work together on making sure this is a winner for Europe's economies, workers and businesses."
The initial responses of the main EU-level social partner organisations reflect the positions they expressed during the debate that fed into the commission's communication. Broadly speaking, employers' organisations stress the flexibility aspect of flexicurity, while trade unions give priority to security for workers and are concerned about flexicurity being used to make it easier to dismiss workers or to undermine good-quality jobs.
The European Trade Union Confederation (ETUC) responded to the flexicurity communication by expressing its readiness to discuss a "modern approach to reform, investing in lifelong learning, gender equality, social dialogue, collective bargaining and good-quality jobs". However, ETUC "regrets the bias in the communication against the protection and stability of jobs, which is a key worker right as well as the basis for productive enterprises. Reforms should complement and not replace job protection systems with measures promoting transition into rewarding jobs."
For ETUC, flexicurity must incorporate security as well as flexibility, backed by strong social protection. It should also help workers to reconcile their work and family lives, and give them "more choice and autonomy" in the workplace, while access to lifelong learning should be a priority. ETUC also stresses the importance of a stronger role for the social partners and collective bargaining at both European and national level.
John Monks, ETUC general secretary, said: "We are worried about the current expansion of precarious jobs in Europe. Giving companies more freedom to dismiss, which appears to be the core idea of the communication, will only make matters worse. More and better jobs for all is the real solution to labour market segmentation and social exclusion, and not more precarious jobs for all."
BusinessEurope, representing private sector employers, stated that the flexicurity communication marks the start of "an essential debate on the modernisation of European labour markets", arguing that companies "need modern labour markets to be able to adjust in the face of increased international competition". However, it regrets that the "cautious" communication is not "more ambitious in promoting reform". For BusinessEurope, flexicurity is vital "to improve the competitiveness of Europe and to ensure the sustainability of European social systems". Further, "while the competence lies first and foremost with the member states, social partners also have a key role to play in the design and implementation of flexicurity policies."
According to Ernest-Antoine Seillière, the president of BusinessEurope: "Flexicurity provides the right framework to correct structural weaknesses on European labour markets. Member states must not miss this opportunity to create more jobs and provide more security."
Portugal took over the EU presidency for a six-month term on 1 July, and is responsible for seeking agreement on the common flexicurity principles by the end of the year. The issue was on the agenda of an informal meeting of EU employment and social affairs ministers on 5–6 July. Participants agreed that it is "essential to strike a comprehensive and balanced approach, with adequate mixes of flexibility and security as well as a balance between the different dimensions of the debate". They also stressed that "European developments should incorporate the diversity of situations and reform strategies in member states". The Portuguese presidency has organised a conference on 13–14 September to "deepen the discussion on the possibility of reaching common principles on flexicurity and the way to make them operative at the European level".
The outcomes of the flexicurity principles debate, and of the consultation process over the commission's green paper on modernising labour law to meet the challenges of the 21st century, which also espouses a flexicurity approach, are likely to shape EU employment and social policy in the coming years.
This article was written by Mark Carley, editor, European Employment Review.
European Employment Review 403 (EER 403) contents
