Flexicurity is a welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...

 model with a pro-active labour market policy. The term was first coined by the social democratic
Social democracy
Social democracy is a political ideology of the center-left on the political spectrum. Social democracy is officially a form of evolutionary reformist socialism. It supports class collaboration as the course to achieve socialism...

 Prime Minister of Denmark Poul Nyrup Rasmussen
Poul Nyrup Rasmussen
Poul Nyrup Rasmussen , informally Poul Nyrup, born 15 June 1943), was Prime Minister of Denmark from 25 January 1993 to 27 November 2001 and is currently President of the Party of European Socialists . He was the leader of the governing Social Democrats from 1992 to 2002...

 in the 1990s.

The term refers to the combination of labour market flexibility
Labour market flexibility
Labour market flexibility refers to the speed with which labour markets adapt to fluctuations and changes in society, the economy or production.-Definition:In the past, the most common definition of labour market flexibility was the neo-liberal definition...

 in a dynamic economy and security for workers.

The Government of Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...

 views flexicurity as entailing a “golden triangle” with a “three-sided mix of (1) flexibility in the labour market combined with (2) social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

 and (3) an active labour market policy
Active labour market policies
Active labour market policies are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects designed to combat widespread unemployment in the developed world during the interwar period...

 with rights and obligations for the unemployed”.

The European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

 considers flexicurity as an integrated strategy to simultaneously enhance flexibility and security in the labour market. Flexicurity is designed and implemented across four policy components: 1) flexible and reliable contractual arrangements; 2) comprehensive lifelong learning strategies; 3) effective active labour market policies; and 4) modern social security systems providing adequate income support during employment transitions.

Flexicurity in Denmark

The Danish flexicurity model has its roots in the nineteenth century, when negotiations among employers and trade unions during the so-called September Compromise of 1899 (also called Labour Market Constitution) laid the ground for a mutually beneficial (profitable and secure) state. The ‘Constitution’ was revised in 1960 and renamed Basic Agreement. It settled the freedom of trade union association as well as the managerial prerogative
Managerial prerogative
Managerial prerogatives are the discretionary powers left at any moment in the hands of managers. Every act which a manager or his subordinates can lawfully do, without the consent of the worker organization, is done by virtue of this prerogative...

 to manage and divide the work including the right to hire and dismiss the labour force at any time necessary. “It is thus important to understand that the Danish model of labour market regulation, including the right to form associations, is based on these voluntaristic principles and that legislation or interference of the state is kept on a minimum. The right of association and the recognition of labour market associations are based on the mutual recognition of conflicting interests.” The Danish tripartite agreements amongst employers, workers, and the state are supported by an intricate system that allows for an active response from the state, which supports the ‘activation’ of workers.

In the early 1990s, Danish policymakers established a fiscal policy aimed at breaking the unemployment trend of the time and was further coupled to the first active labour market policy (ALMP) of 1994 which sought to reduce structural unemployment. Although some believed that the natural unemployment rate had simply increased, the Danish Government sought to improve the situation by implementing what came to be called the flexicurity model. The policy shift thus came about with the 1994 and 1996 labour market reforms, when the introduction of flexibility was linked to security through the continued provision of generous welfare schemes as well as the ‘activation’ of the labour force through a set of ALMPs. Activation in Denmark is regarded as “a right and an obligation”. The effects expected from this combination were twofold: qualification effects of the labour market policies (LMPs) as well as motivational effects through the welfare schemes.

The unemployment benefits and training provision that this system entail place a higher burden of taxation upon the higher-earning members of the Danish society. Denmark currently has high taxation rates which in part pay for generous social benefits. Flexicurity may thus favour low- to middle-income earners. However, this might partially be offset by Denmark’s high-output growth which is coupled to low unemployment figures (2.8% in 2008) and similarly low social-exclusion rates. In recent years, Danes have been consistently ranked as the happiest nation on Earth, which has in part been attributed to aspects of Denmark's flexicurity model.

Flexicurity in the European employment strategy

In the European Commission's approach, flexicurity is about striking the right balance between flexible job arrangements and secure transitions between jobs, so that more and better jobs can be created. The idea is that flexibility and security should not be seen as opposites but as complementary. Flexibility is about developing flexible work organisations where people can combine their work and private responsibilities; where they can keep their training up-to-date; and where they can potentially have flexible working hours. It is also about giving both employers and employees a more flexible environment for changing jobs. Security means ‘employment security’ – to provide people with the training they need to keep their skills up-to-date and to develop their talent as well as providing them with adequate unemployment benefits if they were to lose their job for a period of time.

Flexicurity is also seen as a way to preserve the European social model
European social model
The European social model is a term used to describe a common vision many European states have for a society that combines economic growth with high living standards and good working conditions...

 while maintaining and improving the competitiveness of the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

. It is argued that, in the context of globalisation and technological change which place greater demands on business to adapt continuously, high levels of employment security will not depend only on protection of workers' specific job, but mainly on the means for workers to stay on the job market, manage smooth transitions between jobs, and make progress in their careers.

Furthermore, flexicurity is seen as a strategy to make labour markets significantly more inclusive in some of the European countries, by tackling labour market segmentation between insiders (workers well-established in stable, quality jobs) and outsiders (unemployed persons or in precarious employment who do not benefit from other advantages linked to a permanent contract, frequently youth, migrants, etc.). The relevance of flexicurity to tackle modern labour market challenges has also been recognised by the representatives of social partners at a transnational European level, by European Trade Union Confederation
European Trade Union Confederation
The European Trade Union Confederation is a trade union organization which was established in 1973 to represent workers and their national affiliates at the European level....

 and BusinessEurope.

Flexicurity has therefore been adopted as a leitmotiv of the European employment strategy
European employment strategy
The Treaty of Amsterdam introduced the concept of a European Employment Strategy , following on from the integrated strategy for employment launched at the Essen European Council in December 1994....

 and the revised Lisbon Strategy
Lisbon Strategy
The Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process, was an action and development plan devised in 2000, for the economy of the European Union between 2000 and 2010....

 for Growth and Jobs. In particular, the Guideline No.21 of the Integrated Guidelines for Growth and Employment (adopted by the European Council
European Council
The European Council is an institution of the European Union. It comprises the heads of state or government of the EU member states, along with the President of the European Commission and the President of the European Council, currently Herman Van Rompuy...

 and setting the objectives for the periods 2005-2008 and 2008–2010) calls on Member States to “…promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners”.

A key Communication from the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

 “Towards Common Principles of Flexicurity: More and better jobs through flexibility and security" was published in June 2007 defines flexicurity as an 'integrated approach' based on four interacting components.

Recognising the principle of a “no size fits for all" the European Commissions advocated for a progressive implementation of national, tailor-made, flexicurity strategies in all EU Member States supported by mutual learning, along the lines of commonly agreed principles. Such common principles were adopted on 5 December 2007 by the Employment and Social Affairs Council.

At the Council's request, the European Commission has launched the “Mission for flexicurity", consisting of representatives of the French Presidency and the preceding Slovenian Presidency of the European Union and of the European social partners. The Mission took place between April and July 2008 in France, Sweden, Finland, Poland, and Spain, seeking to promote the implementation of flexicurity in different national contexts by raising the profile of the flexicurity approach and its common principles and by helping the relevant labour market actors to take ownership of the process. The Mission also had the objective of promoting the exchange of good practice and mutual learning between Member States. It reported to the Council in December 2008.

Flexicurity featured prominently in the Commission's response to the crisis, in the European Economic Recovery Plan of November 2008 and its follow up Communication “Driving economic recovery" of March 2009.

Most recently, the European Council of June 2009 concluded that “in the current situation [of crisis], `flexicurity' is an important means by which to modernise and foster the adaptability of labour markets."

Current state

Upon the adoption of the common principles of flexicurity, the Council called on the Member States to take them into account in drawing up and implementing “national flexicurity pathways". Progress in the implementation of flexicurity strategies is reported by Member States in their National Reform Programmes and is monitored by the European Commission in the framework of the European Employment Strategy.

The 2011 Euro Plus Pact
Euro Plus Pact
The Euro-Plus Pact, also initially called the Competitiveness Pact or later the Pact for the Euro, is a 2011 plan in which the member states of the European Union make concrete commitments to a list of political reforms which are intended to improve the fiscal strength and competitiveness of each...

 calls for its promotion in the Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...

The Common Principles of Flexicurity
(1) Flexicurity is a means to reinforce the implementation of the Lisbon Strategy, create more and better jobs, modernise labour markets, and promote good work through new forms of flexibility and security to increase adaptability, employment and social cohesion.

(2) Flexicurity involves the deliberate combination of flexible and reliable contractual arrangements, comprehensive lifelong learning strategies, effective active labour market policies, and modern, adequate and sustainable social protection systems.

(3) Flexicurity approaches are not about one single labour market or working life model, nor about a single policy strategy: they should be tailored to the specific circumstances of each Member State. Flexicurity implies a balance between rights and responsibilities of all concerned. Based on the common principles, each Member State should develop its own flexicurity arrangements. Progress should be effectively monitored.

(4) Flexicurity should promote more open, responsive and inclusive labour markets overcoming segmentation. It concerns both those in work and those out of work. The inactive, the unemployed, those in undeclared work, in unstable employment, or at the margins of the labour market need to be provided with better opportunities, economic incentives and supportive measures for easier access to work or stepping-stones to assist progress into stable and legally secure employment. Support should be available to all those in employment to remain employable, progress and manage transitions both in work and between jobs.

(5) Internal (within the enterprise) as well as external flexicurity are equally important and should be promoted. Sufficient contractual flexibility must be accompanied by secure transitions from job to job. Upward mobility needs to be facilitated, as well as between unemployment or inactivity and work. High-quality and productive workplaces, good organisation of work, and continuous upgrading of skills are also essential. Social protection should provide incentives and support for job transitions and for access to new employment.

(6) Flexicurity should support gender equality, by promoting equal access to quality employment for women and men and offering measures to reconcile work, family and private life.

(7) Flexicurity requires a climate of trust and broadly-based dialogue among all stakeholders, where all are prepared to take the responsibility for change with a view to socially balanced policies. While public authorities retain an overall responsibility, the involvement of social partners in the design and implementation of flexicurity policies through social dialogue and collective bargaining is of crucial importance.

(8) Flexicurity requires a cost effective allocation of resources and should remain fully compatible with sound and financially sustainable public budgets. It should also aim at a fair distribution of costs and benefits, especially between businesses, public authorities and individuals, with particular attention to the specific situation of SMEs.

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