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Flexicurity - an idea whose time has come?

07 March 2013

Andrew Large of the CSSA makes the case for shifting the focus from job security to career security in the employment market

Andrew Large of the CSSA makes the case for shifting the focus from job security to career security in the employment market

It comes to something when even Will Hutton, the doyen of left wing economic thinkers, is arguing that hiring and firing workers should be made easier. Perhaps this shows just how bad things are. More likely, it is more evidence that the drive for growth and jobs, in the UK as in all European economies, is becoming all consuming, as the true impact of austerity begins to be felt.

The cleaning industry has its part to play, and the CSSA has recently published a White Paper on the contribution that cleaning can make to jobs and growth. The paper is published at: www.cleaningindustry.org/filegrab/?ref=80&f=employment-growththe- case-for-cleaning.pdf if you would like to read it. In common with Will Hutton, we are also asking for some targeted changes to employment law, changes that the Coalition is already considering.

Europe has of course been here before. Back in the heady days of 2005 when economic growth seemed to be permanent, the European Commission proposed the concept of flexicurity as a means of continuing the EU social model. Well before then, in the 1990s the Danes had introduced flexicurity as part of their distinctively Nordic take on capitalism.

So what exactly is flexicurity?
As you might have guessed, it is a portmanteau of flexibility and security. The idea is to link together a competitive and flexible labour market with measures to give people the security they need for a long term career. The fundamental change is to move away from “job security” which fixes people in one place, and to focus instead on “career security” which enables people to move between jobs on a career path.

This is a much needed change. The average life of a company in 2012 is around 12 years and falling, whereas in the 1950s it was 40 years or more. In contrast, job security measures mean that in many European countries an employment relationship is more or less permanent. This mismatch is the source of much risk aversion in the recruitment (or not) of new staff.

Flexicurity does three things. It makes it easier to hire and fire workers. It establishes life long learning for all as a means of ensuring that people have the skills that are in demand to be able to find good quality work. It positions the state as the guarantor of both an active labour market policy and the provider of social security during periods of unemployment.

Does it work?
It seems to have made a difference in Denmark. Certainly Danish unemployment is below the EU average and its citizens are among the happiest in the world, according to Gallup polls between 2005 and 2011. Of course, causality is difficult to prove, and other countries with different policies, like Austria and the Netherlands do very well too, but the Danish system seems to produce a freer, yet easier to navigate, labour market.

There are of course challenges. For one thing, the enhanced social security provisions and active labour market policies have an upwards impact on public spending. The increased taxes to pay for it generally affect higher earners (which may or may not be a good thing depending on your point of view). Flexicurity also depends on individuals taking greater responsibility for their own employability, and the application of sanctions (like loss of benefits) if people do not. The political will for this needs to be consistent, otherwise it won't happen. Finally, it also seems to require a social partnership between employers and employees so that both sides of the bargain are committed to the deal. The UK lacks the tripartite institutions to bring Government, Employers and Unions together to create and manage a flexicurity package.

Europe is going to have to change. The European social model is broken, and unaffordable, and its competitor, Anglo-Saxon capitalism, is vilified as benefitting the 1% alone. Perhaps flexicurity offers the answer as a new social model for Europe. One thing seems clear - new ideas are needed because we cannot go on as we are.