Flexicurity : The Solution for Employment in Europe

Flexisecuritatea: Soluia Ocuprii n Europa

Authors:
Professor Assistant Daniela Pasnicu, PhD, CSII USH -(danielapasnicu@yahoo.com)
Vasilica Ciuca, PhD, CSI, INCSMPS (silviaciuca@incsmps.ro)
Key Words: flexicurity; employment; social security; labour market flexibility; flexicurity indices;
internal flexibility; external flexibility; functional flexibility; labour market segmentation.

Abstract:
The term flexicurity is frequently used to describe the labour market reforms in the
European Union and in other countries (the USA, Japan, Latin American countries, etc.). The
concept refers to a labour market on which the employees can easily be employed and be fired
(the flexibility side), but where generous benefits are provided for he protection of the
unemployed (the security side). The paper contents is: a presentation of the new challenges
which the labour market is facing with, an analyses of the definitions and dimensions for the
flexicurity and the presentation of the components of the flexicurity and the common principles
of the flexicurity according to the European Commission .
1. Flexicurity, as a reply to globalisation and demographic changes
Along the decades, the Europeans way of living and working has undergone numerous
changes. The competitive pressures, the development of new products and services, the evolution
of structural changes have intensified. New economies appear which find new markets for their
products and represent new markets for the European Union as well. This creates major
challenges for the enterprises and employees in Europe. Acquiring new qualifications becomes
very important and the number of employees who perform various tasks during their active life
and work for various employees is increasing.
Four important factors can be emphasised: the rapid rhythm of European and international
economic integration; the rapid development of the new technologies, especially in the field of
information and communication; the European societys demographic ageing, together with a
relatively low average unemployment rate and a high level of long-term unemployment, which
jeopardises the support for social protection systems; and the development of labour market
segmentation in several countries, in which protected employees coexist with unprotected ones
(insiders and outsiders1).
Adjusting to the new changes requires a more flexible labour market combined with
security levels that address both the new employees needs and those of the employers. Europe
must create better jobs, control the change and the new social risks. The labour market
segmentation and poor jobs must be reduced and sustained integration and the accumulation of
skills must be promoted. Women, the young and the immigrants are already the majority of the
outsiders, and the elderly employees are faced with a series of difficulties in keeping or finding
a job2. Even the employees with a permanent contract can feel threatened because, under the
conditions of a more rigid labour protection legislation, they face difficulties in moving to a
better job.
The policies to fight asymmetry on the labour market, which include, obviously, gender,
age and ethnic group, should have as objectives social cohesion, the fight against poverty and
1

The insiders (who have a job and who must be helped to move from one job to another) and the outsider (who
do not have a job and must be helped to enter and stay on the labour market).
2
OECD (2006): Live longer, work longer. See also OECD (2007) Employment Outlook.

39

social exclusion by distributing incentives towards finding a job and granting safe incomes to all
the inhabitants. The poverty risk rates are still quite high and vary considerably among countries,
very low values being reached by 10% of the population, and very high values by 20% of the
population. Indeed, it is necessary to reduce the initial segmentation by promoting a common
system of values, including assistance, equal opportunities, participation, solidarity and dignity.
Although, as a result of implementing the Lisbon Strategy revised in 2005, employment in
the EU has increased, and unemployment has decreased constantly, yet it is still very high and
unevenly distributed in the Member States. Thus, in 2007, in EU there was a number of almost
17 million unemployed persons, a ratio of 16% of the population threatened by poverty and a
million vacancies, under the conditions of intensifying the adaptability to the companies
needs. Also, in comparison with the main competitors in the European Union, there is a
considerable discrepancy of productivity, both in terms of productivity per employee, and in
terms of productivity per man-hour. Taking into account these aspects, achieving the objective
regarding the rate of employment of 70% in the EU imposes a rethinking of the way in which
to solve the problem of economic inactivity. Although globalisation is useful to economic and
employment growth, the change requires rapid answers both for companies and for employees.
In order to achieve the Lisbon objectives regarding more and better jobs, employees and
employers, unions and owners, organisations and governments, national economies and regional
trading blocs are faced with new challenges: on the one hand, the development of a strong
demand for rendering the labour markets, employment and labour organisation more flexible at
a superior level, and on the other hand, of a firm demand for ensuring the employees security,
especially of those in uncertain, precarious situation (marginalised on the labour market or
unemployed). The labour market reply to these new challenges induced by the globalisation,
demographic ageing process is comprised in a relatively new concept: flexicurity. The political
concept, through which the European Union proposes to adapt the European labour market to
the new challenges, was imported from English, where it results from the combination of two
terms that reflect fundamental needs on the labour market, namely flexibility and security. The
integrated concept of flexicurity would be a means to reconcile on the labour market the two
elements, intrinsically related to the rapid changes which the companies and employees must
face in the middle of the globalisation process. Vladimir Spidla3 in the discourse launching the
Report on flexicurity states that: If Europe is to face seriously and efficiently the challenges of
globalisation and those of a workforce that is decreasing rapidly, flexicurity must be a main
concern. Employees must be able to move easily and confidently from one job to another.
The Member States are asked to promote flexicurity and reduce labour market
segmentation. Also, the European Commission has been asked, together with the Member States
and Social Partners, to develop a set of common flexicurity principles, as reference document
useful in achieving more open, responsive labour markets and more productive jobs4. At
individual level, it is the need for employment security that increases rather than the one of job
security, in the context in which fewer and fewer people have the same job for life. Companies,
especially SMEs, need to be able to adapt their workforce to the changes due to economic
conditions. They must be able to recruit personnel with better skills, ho will be more productive
and adaptable, leading to an increased competitiveness and innovation.
The European citizens accept the need for change and adjustment. 76% of them agree that
having the same job, with the same employer, for your entire active life is old-fashioned. 76%
of them also consider that being able to change jobs easily is a good and useful thing nowadays.
72% of the citizens support the idea of making work contracts more flexible in order to
encourage the creation of new jobs. Finally, 88% of the citizens say that periodical training
improves the opportunities to find a job5.
3

The European commissioner for social affairs published simultaneously with the Report on social inclusion a
Report on flexicurity, 2005.
4
Presidency conclusions, European Council 23/24 March 2006 and 8 March 2007
5
European Employment and Social Policy, Special Eurobarometrer 261, October 2006

40

2. Flexicurity definition and scope

The concept of flexicurity is based, first of all, on the previously mentioned idea that the
two sides, flexibility and security, are not contradictory, but support each other, especially in the
context of the new challenges (such as globalisation) with which both the developed countries
and the emerging ones are faced. It can be defined as an integrated strategy for the simultaneous
consolidation of flexibility and security on the labour market.
Flexibility, on the one hand, represents successful movements (transitions) during ones
life: from school to work, from a job to another, from unemployed or inactive to employment
and retirement. It is not limited by an increased freedom for companies to recruit or dismiss and
it does not imply the fact that unlimited contracts are obsolete. This is about the employees
progress to better jobs, upward mobility and the optimum development of talent. Flexibility
refers both to flexible labour organisations, capable to adapt rapidly and efficiently to the new
production needs and to facilitating the combination of labour and private personal
responsibilities. Security, on the other hand, is more than just job security, it represents the
persons endowment with competences which make them able to progress in their active life and
help them find a new job. It also represents adequate unemployment benefits to facilitate their
transition to a new job. Finally, security also refers to other professional training opportunities
for all employees, especially for those with poor skills and for the elderly.
Flexicurity = flexibility + security
Flexicurity refers to achieving a correct balance between flexible wok agreements and a
safe transition between jobs so as to create better jobs. The idea is that flexibility and security
must be seen as complementary, not as opposites.
Because the concept is relatively new, the relevant literature is still developing and there is
not only one definition of the concept yet which is universally accepted and neither are there the
methods for the quantitative characterisation thereof. The term flexicurity is found in the
literature with several definitions:
a) flexicurity as political strategy (conceptual in A. Tangian6),
b) flexicurity as business state on the labour market (metaphoric definition in Tangian),
c) flexicurity as social protection and deregulation policy (Keller and Seifert (2004),
Klammer (2004, 2005),
d) flexicurity as analytical concept (instrumental definition in A. Tangian),
e) flexicurity as atypical labour regulation7,
f)
flexicurity based on the Danish golden triangle of P. Kongsoj Madsen etc.
In fact, researchers such as Thomas Bredgaard Flemming Larsen Per Kongshj Madsen,
Ton Wilthagen and Frank Tros, Keller and Seifert, Andranik Tangian or Guy Standing etc.
Mainly provide the following definitions (meanings) of flexicurity, with possible overlapping
and partial intersections:
In the more detailed definition formulated by Wilthagen and Tros (2004), Flexicurity is
definite as an instrument to analyse the developments of flexibility and security, 4 aspects are
identified for the flexibility side and 4 aspects for the security side. These aspects can be
considered sub-parts. As analytical framework, flexicurity is used in analysing flexibility and
security and in comparing the national labour market systems.
The 4 aspects of flexibility are: (1) Numerical flexibility (adapting the number of
employees), (2) functional flexibility (among various tasks), (3) working time flexibility and (4)
payment flexibility.
6
Tangian Andranik (2006) European flexicurity: concepts (operational definitions), methodology (monitoring
instruments), and policies (consistent implementations) WSI-Diskussionspapier Nr. 148 October 2006
7
Wilthagen T. (2004) Balancing flexibility and security in European labour markets Paper presented at the
Conference on Recent Developments in European industrial relations, organised by the Dutch Socio-Economic
Council (SER) within the framework of the Dutch EU presidency The Hague, 7-8 October 2004

41

The external numerical flexibility is the employers capacity to adjust the employment
volume to the current needs. Mainly, this is given by the ease/difficulty in employment and
dismissal and by the extent to which limited contracts can be used.
The internal numerical flexibility expresses the employers capacity to change the used
amount of labour factor within the firm, without resorting to new employment (for instance, by
changing the number and distribution of man-hours, by introducing time counter systems etc.)
The functional flexibility is the ease/difficulty in changing labour organisation within a
company by rotating positions, giving employees multiple tasks, etc.
The payment flexibility reflects the capacity to adjust the basic and supplementary
payment according to individual performances and the companys economic status.
Andranik Tangian introduces here a fifth aspect namely flexibility through outsourcing,
which is the ease/difficulty in employing personnel without work contracts, but with commercial
contracts.
Aspects of security
In the specialised literature, several aspects of security on the labour market are presented.
Guy Standing enumerates seven types of security. Wilthagen, Tros and Lieshout reduce them to
the following four types of security8:
Job security represents the employees protection against dismissals and major changes in
the working conditions (the main subject of the legislation regarding the employment protection)
related to a specified job.
Employment security represents the fact of ensuring employment, but not necessarily with
the same employer and providing equivalent jobs, corresponding to the individual qualifications
and the previous working conditions. The professional insertion capacity can be increased by
means of providing professional education and training opportunities.
Income security reflects the income protection level in case paid work is discontinued.
Guy Standing considers it more generally as income protection through the minimum wage
mechanism, salary indexation, comprehensive social security, including progressive taxation,
providing the elderly with commissions.
Combined security is providing conciliation between paid work and other social
responsibilities and obligations (the equilibrium between working time and spare time, between
work and family, etc.).
The flexibility-security connection
The mix in various combinations of the types of flexibility and security leads to a variety of
flexicurity models9. Making the connection and achieving the balance between flexibility and
security on the labour market, Wilthagen builds a matrix which includes various aspects of these
two elements, succeeding in creating a comprehensive image of the flexicurity models. Thus, the
flexicurity policy is seen as an increase in the types of flexibility compensated with
improvements in the four types of security.
Security
Flexibility

Tabel no. 2
The compromise (trade-off) flexibility versus security
Job Security
Employment
Income Security
Combined
Security
Security

Wilthagen T. Tros F., Lieshout Harm van (2003) Towards flexicurity?: flexibility and security in EU member
states Invited paper prepared for the 13th World Congress of the International Industrial Relations Association
(IIRA), Berlin September 2003
9
Bredgaard Thomas & Larsen Flemming (2007) Comparing Flexicurity in Denmark and Japan, Centre for Labour Market
Research at Aalborg University (CARMA)

42

External
flexibility

Internal
flexibility

numerical

numerical

Functional flexibility

The flexibility of the

labour cost/payment

- Types of work
contracts
- The legislation in
the field of
employment
protection
- Early retirement

- Reduced working
weeks/part-time
contracts

-Attractive jobs
- Professional
training
- Leasing
workforce
- Subcontracting
-Outsourcing
- Local adjustments
of labour costs
- Demultiplication/
lowering payments
to social insurance

- Employment
services/Active
policies on the labour
market
- Professional
training/Continuous
learning
- The legislation in
the field of
employment
protection
- Professional
training/Continuous
learning
- Professional
training/Continuous
learning
- Job rotation
- Teamwork
- Multiple
qualifications
- Changes in the
social insurance
payment system
- Employment
subsidies
- Labour rewards

- Unemployment
benefit
- other social
benefits
- Minimum wages

Protection
against
dismissals

- Part-time
supplementary
benefits
- Grants for
education
- Sick leave
benefits

- Various types
of dismissal
schemes
- Part-time
pensions

- Payment
systems according
to performances

Agreements
regarding the
voluntary
working time

- The collective
work contract
- Lower payment
for the reduced
working week

Agreements
regarding the
voluntary
working time

Source: Wilthagen, T. and F. Tros (2004). "The Concept of Flexicurity: A new approach to regulating
employment and labour markets Transfer 10(2): 166-186

The matrix can be used as an instrument in identifying various flexicurity policies or

combinations of flexibility and security in certain schemes. Also, it can help to identify certain
stylised relations between flexibility and security within the various national labour market
models10. Yet, there are certain limits associated with the countries that can fall into his matrix.
Madsen gives the example of the USA which, by emphasising numerical and payment flexibility,
in comparison with other aspects of security, cannot be placed in the matrix, because there is no
synchronous attention to the flexibility and security aspects11.
Andranik Tangian, within the flexicurity concept developed, emphasises that the concept
(of flexicurity) promotes the idea of compensating the labour market deregulation (rendering it
more flexible) with advantages in employment and social security. Metaphorically speaking,
Tangian characterised flexicurity by analogy with the Prague spring motto of socialism with a
human face"12 from 1968.
The (metaphoric) definition: flexicurity is rendering flexible (deregulating) the labour
markets with a human face, compensated through social advantages, in particular, for the
groups in a poor condition. The definition emphasises the fact that flexicurity differs from an
unconditioned deregulation, introducing compensatory measures into social security and
employment activation measures. The specific meanings (definitions) of flexicurity can depend on
rendering more flexible the suggested steps, the temporal succession of the deregulation measures,
the social advantages specially proposed. Regarding a potential consensus in balancing these
10

Bredgaard Thomas Larsen Flemming Madsen Per Kongshj (2005) The flexible Danish labour market a review
CARMA Aalborg University CARMA Research papers 2005:01
11
Madsen, Per Kongshj. 2006b. Flexicurity: A New Perspective on Labour Markets and Welfare States in Europe. The
Case of Denmark. Danish National Centre for Labour Market Research (CARMA)Aalborg University
12
Tangian Andranik (2006) European flexicurity: concepts (operational definitions), methodology (monitoring
instruments), and policies (consistent implementations)1 WSI-Diskussionspapier Nr. 148 October 2006

43

factors, the issue is related to negotiations among governments, employees and unions, similarly
to collective agreements.
Following the analyses of the definitions given by Wilthagen and Tros (2004) which he
considers liberal and the union definition (Keller and Seifert, 2004), Tangian13 reaches the
conclusion that they say nothing about how to express quantitatively the flexicurity policies for
empirical analyses, monitoring and optimisation. In this respect, Tangian created the operational
definition of flexicurity reflecting both the neo-liberal and the unions points of view.
The (liberal) definition) Flexicurity is a political strategy which attempts, synchronically
and deliberately, to increase labour markets flexibility, labour organisation and work relations, on
the one hand, and to strengthen security (social security and employment security), especially for
disadvantaged groups on or outside the labour market, on the other hand (the definition of
flexicurity as a compromise between flexibility and security) Wilthagen and Tros (2004, p 170).
The authors emphasise that flexicurity is not a simple social protection for the flexible
workforce, but that the flexicurity policies aim at increasing the competitiveness of European
economies through an increased liberalisation. Consequently, the increase in security is not a
main objective, but rather a means to reach a compromise between employers (who aim at
deregulating labour markets) and employees (who want to protect their rights). The authors
describe flexicurity as flexibility versus security.
The (union) definition Flexicurity is a social protection for the flexible workforce
understood as an alternative to pure flexibility, but not at the expense of relaxing the employment
protection for regular employees (Keller and Seifert, 2004) and as a deregulation only of the
labour market policy (Klammer, 2004, 2005). According to the union concept of flexicurity, the
focus should be on improving the employment and social security of flexible employees. The
unions consider that rendering the employment relations more flexible could be difficult to
compensate and it is not adequate to give up the labour rights in exchange for social advantages.
The unions point of view includes the following questions: Can social guarantees compensate
for the loss of the job? Doesnt flexibility destroy the career perspectives? Is it fair to receive
charitable benefits instead of being paid for their contribution to the national economy? Would
the employees be able to rely on security more than on their labour rights? Do you give up your
hand and get prosthesis in return?
The (operational) definition: a country characterised by flexibility and security on the
labour market (flexicure country) is one whose spatial vector is located near the high flexibility
high security area at the edge of a flexibility-security rectangle, and a flexicurity policy
corresponds to the countrys vector in the same plane. (Tangian, 2006).
3. The components of flexicurity
The Commission and the Member States, based on analytical experience and proof, have
reached a consensus, namely that flexicurity policies can be designed and implemented along
four components:
o Flexible and trustworthy contract agreements
The idea is to help the unprotected workers, the outsiders, who are already employed on
short term or with irregular contracts or unemployed (many of them being women, young
persons and immigrants) find a job and obtain a stable contractual agreement. The modern
organisation of labour should promote labour satisfaction and at the same time make companies
be more competitive. Flexicurity also helps the insiders, the protected workers, who are
employed permanently with unlimited work contracts, prepare alone, in time, for the change in
job in the case of an excess due to economic change.
o Comprehensive life-long learning strategies

13

Hartmut Seifert and Andranik Tangian Globalization and deregulation: Does flexicurity protect atypically
employed? (2006)

44

Life-long learning is the insurance that all the European citizens have the opportunity to
have a high quality initial education, that they complete secondary studies, develop key
competences and acquire new ones and improve their competences during their active life. It is
also about making sure that companies invest more in the human capital and about allowing
companies to develop competences.
o Active policies on the efficient labour market
The active policies on the labour market help the unemployed return to work through
placement services and labour market programmes such as professional training and the creation
of jobs. By implementing the active measures policies such as an efficient support in finding a
job and larger rewards for work, those looking for a job can be encouraged to find a new
employer.
o The modern social security systems
It is important for the EU governments to provide adequate unemployment benefits that
will act as a real help when people change their job and to provide health support if they become
ill as well as pensions when they retire form active life. Childcare is another important issue,
helping people combine work and private life and thus remain on the labour market.
Flexicurity also involves an aggregation strategy which means that all the components
should be considered together and simultaneously, not selectively.
4. The common principles of flexicurity
While the policies and measures regarding flexicurity must reflect the various situations with
a national specificity, all the EU member states must be able to face the same challenges of
modernisation and of the process of adapting to change and globalisation. In order to facilitate
the national debates within the common objectives of the Growth and Job Strategy, it seems
appropriate to reach consensus at European Union level on the common principles of flexicurity.
According to the European Commission, the common principles of flexicurity are the
following14:
1.Flexicurity implies trustworthy and flexible contractual agreements (from the perspective
of the employer, the employee, the other stakeholders); comprehensive strategies regarding lifelong learning; active policies of the labour market; modern social security systems. The
objectives thereof aim at strengthening the implementation of the Growth and Job Strategy,
create more and better jobs, strengthen the European social models, by providing new forms of
flexibility and security in order to increase adaptability, employment and social cohesion.
2.Flexicurity implies maintaining an equilibrium between the right and obligations of
employers, employees, of those looking for a job and public authorities.
3.Flexicurity must be adapted to the specific conditions, to the labour markets and industrial
relations of the Member States. This should not represent a singular model of labour market or a
single political strategy.
4.Flexicurity aims at decreasing the distance between those on the labour market and those
outside it. The former need support in order to be trained and protected in the intervals between
two jobs. The latter category which includes the unemployed, where women, the young and
minorities are dominant, needs to be granted easy access to the labour market and obtain stable
work contracts.
5.Both the internal flexicurity, the one inside the company, and external flexicurity, the one
between one company and another, must be promoted. As much flexibility in recruiting
workforce and in dismissals as possible must be accompanied by a progress from one ob to
another which is as safe as possible. An upward mobility must be facilitated, both in the
14

Towards common principles of Flexicurity: more and better jobs trough flexibility and security, European
Commission, July 2007.

45

unemployment intervals and in those of inactivity and employment. High quality jobs with an
efficient management, a good labour organisation, a permanent increase in competences are also
part of the flexicurity objectives. Social protection should be a support for workforce mobility, it
should not have an inhibitor effect on it.
6.Flexicurity must support the equality of gender by promoting equal access to employment
both for men and for women, by providing opportunities to reconcile professional life with
family life and by ensuing equal opportunities for migrants, the young, persons with disabilities
and the elderly.
7.Flexicurity needs a confidence climate and a permanent dialogue between the public
authorities and social partners, within which everyone is ready to take on responsibilities for
change and where balanced sets of policies can be created.
8.The flexicurity policies have budget costs and must be encouraged to contribute to
sustainable budget policies. They also aim at achieving a correct allocation of costs and benefits,
especially among businesses, public and individual budgets, with a special focus on the
particular status of the Small and Medium-Sized Enterprises.
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scandinavian welfare state. CARMA Research paper 2005:2.
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International Labour Office, Geneva May 2003 International Labour Organization 2003 ISBN 92-2114271-X.
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st

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6.
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12.

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