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Flexicurity: Meaning, Principles, and Measures

By fezabeka Feb 24, 2013 2570 Words
Assignment 3:
Q: What is Flexicurity? Explore its meaning, principles and measures and explain what the governments of the European Union are seeking to achieve. Explore the degree to which they have been successful for business and for the workforce with special focus upon young workers.

What is Flexicurity?
Flexicurity is one of the social policies for the EU labour market. It aims to strengthen the flexibility and security for the employee and employer in employment. Wilthagen (1998), defines flexicurity as a move from ‘security within a job’ towards ‘security of a job’ Asada (2011, p249). Flexicurity aims to increase the confidence between employees and the employers during their employment.

According to the European commission, (2012) the common principles of flexicurity were investigated; four key components have been set out in order to guide the European Union towards the implementation of flexicurity. The four components are: Flexible and reliable contractual arrangements, effective labour market policies; comprehensive lifelong learning strategies and modern social security systems. (European Commission, 2012)

How has Flexicurity been implemented?
According to Sarfati., H 2003, p265-282, the Denmark flexicurity called “the Danish magic formula” injected flexicurity into its labour market, while research has suggested that the success of flexicurity, in Denmark was due to a joint effort between companies and employees, in order to create a more successful labour market, it instead became a success through the companies and competition between employees.

In the Denmark labour market, the employer benefits by having the authority to dismiss employees with only short notices provided, which creates more flexibility and adaptability to changes within the labour market. At the same time employees continue to feel confident (rather than feel unstable like the employees in UK), this is all due to high compensation schemes and support from the state, in form of active labour market policies, through unemployment. Policies such as education, childcare and the welfare system to support employees when returning back to employment. (Ilsøe 2007)

Flexicurity improves the trust between the employer and employee as the “security”, helps employees to feel a sense of team work rather than fear internal competition. This method should help the “economy” in many countries as employees, will work and help each other by passing knowledge, that they gain through employment to other employees making problem solving easier, employee development quicker helping increase business, success and help improve the “economy”. Iancu (2011 p.177) “Job security can induce employees to be loyal to the employer, to invest in firm-specific human capital, to co-operate, and to pass over tacit knowledge to other employees because they do not have to fear internal competition. All this increases internal functional flexibility.”

The flexibility within flexicurity should in many companies create “flexible” work, where the people working inside the organization can have a private life, as well as succeed in work life. Examples include employees keeping up with development and training with “flexible” working hours. The environment that employees and employers work in needs to be “flexible” enough so that changing jobs is made simpler. (European Commission 2012)

The second part to flexicurity is “security”, in flexibility employees are flexible to leave work and have access to flexible working hours; however there are also needs to security within jobs in order to prevent employees from feeling insecure, which also supports companies to “adjust their production capacity” without leaving any employee redundant. Examples of support that employees receive are - training and development of their skills and talents. (European Commission 2012)

The “life-long learning” schemes and “modern social security” help create faster method of retraining employees; this will help identify early skills that might need to be developed for new potential jobs in the future, which also includes those who are unemployed. This method should decrease the amount of people unemployed, which helps the economy within a country. For example Germany further examples below.

Figure 1

Source from: http://appsso.eurostat.ec.europa.eu/nui/setupModifyTableLayout.do
Although flexicurity has many advantages as stated above, Denmark’s Flexicurity system has had its pros and cons since the financial crisis in 2008. As shown on Figure 1, the unemployment rate under 25 years of age, in Denmark has been increasing (the bars are gradually getting higher as years increase), since the start of the financial crisis in 2008. However when we look at figure 2, the un- employability of under 25 years of age is not the worst, with less changes inputted when compared to other countries such as Germany.

Figure 2

Source from: http://appsso.eurostat.ec.europa.eu/nui/setupModifyTableLayout.do

Figure 3

Source from: http://appsso.eurostat.ec.europa.eu/nui/setupModifyTableLayout.do

Figure 3, shows conflict between unemployment benefits and employment protection. Companies seem to find it difficult to maintain them both. Denmark focusing on high employment benefits, but low employment protection can be linked, to the reason behind why Denmark’s unemployment has been getting lower. Employees will not want to work for a company without any kind of employment protection. (Jorgensen, H., 2011) “Because of high unemployment benefits and relatively high social assistance benefits, domestic demand – and thereby total economic activity in society – is stabilised. Without such economic stabilisers, unemployment would have risen much more”.

Germany, Norway, France and Sweden seem to be close to each other. Germany has been noticed as one of the few countries, to withstand during the Recession. In Germany, businesses focused on the development of younger children. Students attend less hours of education to make time for part time work related to their field. This will help students gain the experience and skills required in order to be successful in their future jobs.

Those who are employed work fewer hours than those in UK, this is called “flexibility”. Germany wants to maintain the culture of family importance. Part- time work gives access to more people in the country to enjoy work, and earn income; this improves the economy of the country. Giving one of the reasons behind why the country has been stable throughout the recession. (Anderson 2012)

Germany provides that feel of security, as people from a younger age are offered opportunities where they do not feel unable, or unconfident to approach new jobs. Businesses in Germany follow the rule of Flexicurity, therefore the system where students are immediately placed into internship programs to gain skills and expand their knowledge, will help them from not only losing their current jobs, but finding new ones too. (EU, OECD 2011)

Spain on the other hand focuses on “contractual segmentation” this is when there is high employment protection but low protection for those who are unemployed. The implementation of flexicurity can vary from country to country, as the different cultures, national and regional characteristics require different implementations of the “common principles of flexicurity”. Auer, P. (2010) states, “Some of the countries that are associated with flexicurity have experienced worse unemployment increases than other non-flexicurity countries during the crisis.” (p.382)

Measures that Germany have taken to apply Flexicurity in the labour market:

European Commission (2012) “Agenda for new skills and jobs” Germany has prepared employees with the right skills for employment, which as stated above, improves the quality of the job and helps with working conditions while in employment. Support those in unemployment by helping them attract desired future jobs.

European Commission (2012) “New skills for new jobs” Germany supports people throughout different age groups to motivate and encourage people to gain as many skills and become high qualified candidate that makes it easier to find jobs. Germany makes sure that the younger generation from as early as 17, receive training in their specialist core. Therefore it is essential that students know what they want to specialise in from start. So that more effective and matching skills can be gained that match the jobs they will potentially look for in the near future. [Available Online]http://ec.europa.eu/social/main.jsp?catId=102&langId=en

European Commission (2012) “Youth on the move” as stated above it is important to begin with the younger generation, if countries want to improve the future economy. Germany is known to be one Europe’s largest exporters (Anderson 2012), the only country rich enough to support falling into the recession. (BBC 2012) Research and development is one of the important factors in their aims, they believe in having skilled employees who are trained at high standard at what they do. “BMW is a successful brand to take over the world, as one of the most leading manufactures in the world, their cars are not just about cutting edge, brand new technology, breaking new ground, pushing things further, their cars are about doing what's already known...and doing it extremely well." Matt Nesto (2012) [Available online] http://finance.yahoo.com/blogs/breakout/bmw-greatest-car-ever-made-says-top-gear-140906756.html

European Commission (2012) [Available Online]http://ec.europa.eu/social/main.jsp?catId=102&langId=en “Anticipating, preparing and managing company restructuring” when companies expand they will eventually need to restructure the structure within the organisation. This includes, finding new employees and letting go of old employees. Through the recession many companies had to start from the beginning, evaluating what needed to be improved in order to improve what the company was offering to maintain the loyal customers. However most companies such as Banks in UK had to cut costs in order to prevent from bankruptcy, in Germany borrowing money is known as shameful, many Germans do not find borrowing money necessary, which is one of the reasons why Germany did not hit recession as badly as the UK did. (Anderson 2012).

European Commission (2012) [Available Online]http://ec.europa.eu/social/main.jsp?catId=102&langId=en “Supporting working parents” "Juggling work, family and private life is a huge challenge for millions of Europeans, male and female and having children too often costs women their income and their job prospects. (Vladimír Špidla , Commissioner for Employment, Social Affairs and Equal Opportunities).

Recent study suggests that only 62% of women with children are at work compared to 91% of men. Therefore it is important that even after women have children, the maternity provides support so that they can go back to work without gaps in their confidence and skills. Most working mums, who do leave in maternity, refuse to go back to work because due to a decrease in their self-esteem. The commissioners believe that by increasing their maternity leave to 18 weeks will enable them to not only rest but shape back to fitness mentally and physically. Maternity will also be paid normal salary and should not be paid as sick leave. (European commission “Balancing act: improving our work/life equilibrium” 2008 P.2)

Criticisms of flexicurity:
According to Iancu, A (2011), flexicurity has been implemented and changed since the economy crisis in 2008, it has also shown “high increase in unemployment, a relative de-cline in employment, changes in GDP, and a growing public deficit”. (p.176-181)

Bredgaard and Larsen (2007) “The price for a highly efficient and mobile labour market with an extensive safety net might be that a large part of the potentially active population of working age is gradually excluded from the labour market and become welfare recipients.” (p.14)

During the recession in Denmark, a high increase in job changes occurred. Individuals were re-tested for their knowledge and skills, in the area of work they specialised in. This can be a short term effective motivational method of maintaining employees focused however, many employees failing to achieve the required expectations can be left without any jobs. Denmark has failed to support the unemployed, and many are left without jobs for a long period of time.

Flexicurity prevents those who are employed above 25 years old, from falling into being unemployed, feeling insecure etc. The increase in unemployment might include immigrants from third-world countries who are under skilled. There seems to be a gap between, (unemployed and skilled and the type of job you have) (with those unemployed and under skilled). Is there anything that can be done with under-skilled immigrants, apart from kicking them out of the country? There should be courses sponsored by organisations, skilled developed, so that even though they might not be able to find a job in “Denmark”, they can go back to their country if safe and secure a job there. (Bredgaard and Larsen 2007).

Conclusion
In conclusion there are positive and negative facts/ opinions stated in the above essay. One might say that they are as broad as the policy itself. One might also say that Flexicurity has been developed in order to prevent economic and social problems from arising, however it should also be focused to help organisations understand the deeper needs of workers. The strategy if continued to be implemented and adapted to suit individual needs will be a success. Flexicurity and globalisation can help bring countries together, increase the welfare of poorer countries. If Germany has succeeded in maintaining companies strong through the recession, then different countries can use similar methods to bring countries together, and eventually work as one team.

List of References
Anderson, Richard 2012 Business reporter, BBC News “German economic strength: The secrets of success” httop://www.bbc.co.uk/news/business-18868704 (Article) [Accessed 26.12.2012 ]

Asada, T., et al., (2011) “Sustainable Capitalism: Full – employment flexicurity growth with real wage rigidities” Journal of economic Behaviour & Organization. 77 248-264 [online] Available: http://pdn.sciencedirect.com [Accessed 22 .12.2012)

Auer, P., (2010) “What’s in a name? The rise (and fall) of flexicurity” 52 (3) 371-386. [online] Available http://jir.sagepub.com. [Accessed: 23.12.2012]

Bredgaard, T. and Larsen, F., (2007) Comparing flexicurity in Denmark and Japan [online] Available from (SAGE):https://learning.westminster.ac.uk [Accessed 22.12.2012)

Cartsten, J., (2011) The Flexibility of Flexicurity: The Danish Model reconsidered. Economic and industrial democracy. April 32 (4) 721-737 [online] Available from (Business Source Complete):http://eid.sagepub.com/content/32/4/721.full.pdf+html [Accessed 28.12.2012]

European Commission., (2012) Employment, Social Affairs and Inclusion. [Online] Available from: http://ec.europa.eu/social/main.jsp?catId=102&langId=en [Accessed 27.12.2012)

Inacu, A., (2011) The Economic Effectiveness of the flexicurity policy in the EU. Economics, Management and Financial Markets 6 (2) pp.176-181 [online] Available from (Business Source Complete) [Accessed 29.12.2012]

Ilsøe, Anna (2007) “The Danish Flexicurity Model- a lesson for the US?” School of Advanced International Studies (SAIS) [Accessed 22.12.2012]

Jorgensen, H., (2011) Danish Flexicurity in crisis – or just stress tested by the crisis? International Policy Analysis (March) p.5 [online] Available from: Business Source Complete)http://library.fes.de/pdf-files/id/07911.pdf [Accessed 23.12.2012]

Nesto, Matt., (2012) BMW: The Greatest Car Ever Made Says Top Gear’s Hammond [Available Online] http://finance.yahoo.com/blogs/breakout/bmw-greatest-car-ever-made-says-top-gear-140906756.html [Accessed 29.12.2012]

Social connections. Society at a glance: OECD 2011
[Online Available] http://www.oecd.org/els/socialpoliciesanddata/societyataglance2011-oecdsocialindicators.htm [Accessed 25.12.2012 ]

www.bbc.co.uk (15th may 2012) “Eurozone avoids recession after strong German Growth” http://www.bbc.co.uk/news/business-18068747 [Accessed 30.12.2012]

Wilthagen, Ton 2008 “Flexibility and Social Protection” AIAS, University of Amsterdam (PDF) [Accessed 24.12.2012 ]

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