Peter Auer/ILO/2009 Griffith University, July 28,2009 1

« The political economy of flexicurity »

Peter Auer, Senior Fellow, IILS, ILOVisiting fellow WOS/USYD

Negotiating labour market security

Discussion points

Flexicurity: what is it?Does it work?Is it accepted?Any relevance for Australia?

Peter Auer/ ILO 2009 2

Flexicurity: what is it?

Commenting the filmResponse to globalization and flexibilization Core I: stable jobsCore II: strong labour market institutions for ensuring good transitionsCore III: social dialogue and CB

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Flexicurity: what is it?

Transforming the trade-off between flexibility and security into a complementarityfrom employment protection to labour market protectionlife cycle professional trajectories and labour market risksReform labour laws carefullyBuilding/enhancing labour market policies and institutions (e.g. PES, (A)LMPs including training and education)Using the social dialogue and collective bargaining

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From Job-to labour market security

Time

Job security* employment security** labour market security*** * Protection of a job/task in a setting of employment security

** Protection of employment within single firms but not on any particular job

*** Protection of employment in several firms combined with social protection (LM policy, social rights) for protecting transitions=flexicurity

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Does it work?Clustering flexicurity countries

clustering flexicurity

AT

DK

FI

EL

IE

NL

PT

UK

BE

FRDE

IT

ES

SE

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5

Flexibility

Secu

rity

Clustering based on 8 variables that are used as proxies for flexibility and security Flexibility: internal: working time flexibility and modern work organization; external: average employment tenure, EPL (employment protection legislation) for regular and temporary jobs. Security: LMP expenditure for 1% of unemployed, expenditure on social protection and collective bargaining coverage. (z-score clustering with equal weight for each indicator). Sources: European Foundation, OECD, ILO, Eurostat . Values:average 2000-2006 when available., otherwise last available: e.g. EPL 2003)

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Values avg. 2000-2006

FS (5) Others (10) Difference % points

Employment Rate 15-64 (ER)

72.0 63,1 +8,9

Full Time Equivalent (FTER) 15-64

64,2 58,2 +6,0

Women ER 66,9 53,8 +13,1

Women FTE 55,6 46,9 +8,7

Unemployment rate 5,4 7,2 -1,8

Productivity/Hour in Euros

29,4 Eu 27,4 EU +2,0 Eu

Productivity/Hour (2000=100)

110,3 107,6 +2,7

Gini coefficient 25,1 30,6 -5,5

Social protection effectiveness(before and after social transfer poverty reduction)

14,5 8,4 +6,1

Labour Market Policy (expenditure in % of GDP for 1% of unemployment)

0,63 0,28 +0,35

Does it work? Flexicurity countries‘ performance compared

And how do they manage the crisis? Unemployment May 2009 (5) 6,0 (10) 8,8// economic growth q4 2008/ q1 2009 : (5) -1,8 (10) -2,0

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Is it accepted? Critical and supporting voices:

Flexicurity is an appealing concept because it offers a way to restore a positive link between competitiveness and social protection. Globalisation and technological progress require responsiveness to deliver their full benefits, and hence finding new ways to combine social protection and economic flexibility is fundamental to more and higher-productivity jobs. (M. Stocker, advisor to Business Europe, in Euro Activ, September 2007)

To prevent « flexicurity » to become « flexploitation » the Commission should take responsiblity for shaping a strong social dimension to the internal market, guaranteeing worker’s rights and worker’s security (John Monks, ETUC, interview at the EU’s Portuguese presidency conference, Sep. 2007)

The real agenda hiding behind 'flexicurity' simply seems to be the dismantling of job protection.... (R. Janssen, from ETUC , Euro-Activ, September 2007).

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Manifestation in front of Portuguese EUconference on Flexicurity October 2007 : … »the government lies : Flexicurity=dismissals » « No development for Portugal with flexi-curity »

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Critics of activation

French Communist party (PCF)

Postcard 50s

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Political economy questionsFlexicurity seems to work with different degrees of external flexibility and the „flexicurity countries“ in the EU 15 have good economic, social and labour market performance Why then opposition?

• Job/employment protection „red line“ for unions• Financing of compensatory social protection

difficult under tight budgets• LM policy often not positively evaluated• Resistance to model transfer: no one size fits all

and path dependency of reforms• An anticipated compromise not in line with

adverserial settings/ low trust between the SPs• Uncertain applicability in other than European

welfare state countries• LM Context counts a lot• EU Commission as policy driver faces low

approuval rates

Peter Auer/ ILO 2008 12EMP/ANALYSIS 209 12

Figure 1.1 Average Job Tenure in Years EU-15 for 1992 and 2005

Un

ited

Kin

gd

om

Ire

lan

d

De

nm

ark

Sp

ain

Au

stri

a

Fin

lan

d

Ge

rma

ny

Sw

ed

en

Ne

the

rla

nd

s

Lu

xem

bo

urg

Ita

ly

Fra

nce

Be

lgiu

m

Po

rtu

ga

l

Gre

ece

0

2

4

6

8

10

12

14 1992 2005

EU 15 average: 1992 10,48 2005 10,74 (Japan 12 (2000) , USA 6,9 (2004)

Flexicurity with different employment tenure

Any relevance for Australia?Australia: major recent example of labour market deregulation and reregulation: from work-choices to fair work AustraliaDifficult way back from Howard government Reform, and interesting political economy

Vast exercise of social dialogueNew labour market institutions:

• Both on procedures and laws: CB, FWA, unfair dismissal

• And substantive policies, programmes and delivery organisations: UI benefits and ALMP (training)

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Flexicurity debate is relevant for Australia

no way around a real dialogue and participation resulting in good procedures and substantive policies for a socially embedded economy,Which provides for labour market security allowing individuals and firms to adjust to the ups and downs of the global economy and to find satisfying personal professional trajectories in performing economies.

Peter Auer/ ILO 2009

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