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26-27.5.2008A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm1
On the European Readiness for Flexicurity: Empirical Evidence with OECD/HBS Methodologies,
and Reform Proposals
Andranik Tangian Hans Böckler Foundation, D-40476 Düsseldorf
andranik-tangian@boeckler.de
26-27.5.2008A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm2
Agenda
1 Flexicurity approach2 Operationalisation3 Findings4 Reform proposal 5 Conclusions
26-27.5.2008A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm3
Towards Common Principles of flexicurity (Europ. Commission 07)
Claim: More and better jobs through flexibility and security
Flexicurity = Flexibility compensated by advantages in social security
Social security is understood as employment security
Employment security should be guaranteed by lifelong learning
External numerical flexibility, legal framework for ‘hiring and firing’ and use of atypical forms of employment
Internal numerical flexibility, legal and contractual framework to adjust working hours
Functional flexibility, scope to employ workers in different jobs
Wage flexibility, scope to adjust wages
Externalization flexibility, scope to use workers without employment contracts
Flexibility forms
26-27.5.2008A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm5
Criteria of precariousness
Income: 2/3 of the median wage of the full-time employed
Employment stability, employment with a minimum of interruptions
Employability, capacity to be employed as a prerequisite for employment stability; among other things can be secured through lifelong learning
Data structure derived from EWCS (European Foundation 2007)
Internal numerical flexibilityNumber of working hours per week: as one will/not as one will
Overwork, more than 10 hours a day, number/month (q14e)
Number of working hours every day (q16aa): variable/constant
Number of working days every week (q16ab): variable/constant
Starting and finishing hours (q16ac): variable/constant
Working time arrangements (q17a): set by the company, choice from several option, reasonable adaptability to individual wishes, or full adaptability
Working time planning (q17b): on the same day, the day before, several days in advance, several weeks in advance, no changes of schedule
Two ways of scaling of variablesNormalization (HBS method): min, max → 0,100
Standardization (OECD method): μ, σ→ 0,100
min
max min
100x xy %x x
−= ⋅ .
−
100xy %μσ−
= ⋅
( )
23788
1
237882
1
1 (mean)23788
1 (standard deviation)23788 1
ii
ii
x
x
μ
σ μ
=
=
=
= −−
∑
∑
Factual indices (HBS method)
………………………………………………
Factual indices (OECD method)
……………………………………………..
26-27.5.2008A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm11
Rank correlation for indices made with OECD/HBS methodologies
Aggregated flexibility 0.9182External numerical flexibility 0.9994Internal numerical flexibility 0.9774Functional flexibility 0.9902Wage flexibility 0.9237Aggregated precariousness 0.9335Precariousness of income 0.7161Precariousness of employment stability 0.9921Precariousness of employability 0.9365
Factual ≠ institutional flexibility
Strictness of employment protection legislation ~
external numerical flexibility (OECD 2004)
Work with no contract ~
outside legislation (EWCS 2005)
United KingdomSwitzerlandSwedenGermany…Turkey
0.41.11.61.8...4.9
130 of 875 = 15%26 of 847 = 3%1 of 968 =0.1%
32 of 911 = 4%…
302 of 454 = 67%
Flexibility–Precariousness dependence (HBS method)
No country in the South-East (flexicurity) corner
Flexibility-precariousness dependence is statistically certain: Regression on 23788 employees with P-value=0.0000
Conclusion:flexicurity is hardly attainable in practice
Flexicurity domain:
no country
Flexibility–Precariousness dependence (OECD method)
No country in the South-East (flexicurity) corner
Flexibility-precariousness dependence is statistically certain: Regression on 23788 employees with P-value=0.0000
Conclusion:flexicurity is hardly attainable in practice
Flexicurity domain:
no country
Flexibility is worst for employability
Operationalisation: Data for the composite indicator of decent work
Indicator of decent work (HBS)
…………………………………………………..
Observations:
Bad qualification possibilities
Poor career and modest income
Importance for job satisfaction
Most important:job stability
Disregarded:income
Negatively regarded:training, good management and creativity
……………………………………………
Indicator of decent work (HBS)by the type of contract
Atypical employees have poorer working conditions than the European average
Reform proposals
flexinsurance to steer flexicurity policy
basic income modelto resolve policy contradictions
workplace taxto equalize working conditions
analogy with regulation of immigrantsto regulate the outsiders from the mainstream
constraining financial markets to keep the labour market under control
Flexinsurance
Employer's contribution to social security is proportional to the flexibility of the contract
Compensation of unemployment risksMotivation to hire employees more favorably with no rigidly restricting labour market flexibility
Flexible instrument to regulate deregulation: adjustments need no new legislation
Moral aspect: social justice
Existing prototypes of “dismissal taxes” Progressive: American experience rating
Flat: Austrian Abfertigungsrecht
Basic income model
A flat income paid by the state to all citizens regardless of their earnings and property status
Additional budget 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
Existing elements of the basic income model Kindergeld in Germany paid to all parentssome old-age provisions in Chili and Switzerlandthe idea of minimal wage
Workplace tax
The worse working conditions, the higher the tax payed by the employer
stimulation to improve working conditionscompensation of health and safty risks at workstimulates to equalize working conditions of flexibly employedfinance the bonus for employees with bad working conditions
Prototype: green tax which stimulates enterprises to consider the natural environmentindexing working conditions as an instrument (~‘measuring social pollution’)
Analogy with regulation of immigrants
Quotas for atypical contracts (~immigration quotas)
Justification of necessity of the atypical contract (~ obligation to explain why not own nationals)
Issuing a permanent contract after a number of successive temporary contracts (~ permanent residence after a few temporary residences)
These measures are aimed at reasonably constraining employment flexibility without excluding it in case of real necessity.
Constraining financial markets
Having liberalised financial markets, Europe loses control over labour markets:
Foreign investments actually mean export of jobsEmployers are given a legal instrument for exerting pressure on European governments: ‘If you do not relax employment protection according to our requirements, we shall move jobs abroad’
Since the way out is generally where the way in, financial markets must be constrained in order to restore the control
Conclusions
Methodology: OECD and HBS methods to construct composite indicators, new visual tools
Empirics Indices of flexible, precarious and decent work derived from 4th EWCS
Critics on the EC concept of flexicurityCommission’s flexicurity strategy cannot be consistently implemented
Consistent implementation of flexicurityFlexinsurance, workplace tax, constraining financial markets, basic income
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