Flexibility and Security

Transcription

1 Flexibility and Security - A Danish flexicurity solution to the employment problems of globalized economies? Henning Jørgensen Professor, Aalborg University Former Director ETUI-REHS Research Department CEPAL, Santiago

2 Portugal International competitiveness 9 8,5 8 7,5 7 6,5 2 Denmark USA Netherlands Finland UK Ireland Sweden Belgium France Germany Norway Austria Spain Business environment score Source: The Economist, Press Release, March 30th, 2005

3 Sectoral employment, 2003 (%) Agriculture, Fishing Mining Manufacturing Electricity, Gas and Water Construction Services 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% PL LT PT SI CZ SK LV HU GR EE IT ES AT IE DE FI MT FR CY BE DK SE UK NL* LU EU EU RO BG * Data from 2002 Data source: Eurostat (2004e) 3

4 Unemployment (%), Denmark Germany EU (average) OECD, Employment outlook,

5 Employment rate 2003 (percentage) Schwitzerland Norway Denmark Sweden Netherlands UK Canada USA Japan Austria Finland Portugal Ireland Germany France Spain Belgium Greece Italy Poland Source: OECD: Employment Outlook

6 80 Employment rates, women, 2003 (%, aged 15-64) employment rate 2003 FTE 2003 Lisbon target MT IT GR ES PL HU BE LU SK IE CZ FR SI LV LT DE EE CY PT AT UK FI NL DK SE EU EU EU BG RO 25 6

7 Older workers employment rate, EU15, 2003 (% population aged 55-64) 80 older workers' employment rate 2003 Lisbon target SI SK PL BE HU LU IT AT FR DE ES GR CZ LV LT NL IE FI CY PT EE UK DK SE EU EU EU EU BG RO 7

8 Unemployment rates, men and women, 2003 (% labour force 15+) 20 women 2003 men LU NL AT CY IE DK PT UK GR SE HU SI CZ IT MT BE ES FR FI DE LV EE LT SK PL EU EU EU EU 25 RO TR BG 8

9 Youth unemployment rate, 2003 (% aged 15-24) women men AT NL IE CY DK PT LU UK SI HU DE LV SE MT CZ FR GR ES BE EE LT IT FI SK PL EU 15 EU 25 RO BG 9

10 The basics of flexicurity The starting point: Flexibility and security are not contradictions, but can be mutually supportive Flexicurity arrangements can be important components in achieving a high level of institutional competitiveness => Link to the Lisbon Strategy of the EU 10

11 Trade-offs or win-win-situations? First, there is not only a trade-off between flexibility and security. The flexibility gains of employers do not necessarily mean a loss of security among employees; similarly, security gains of employees do not necessarily have to go along with flexibility losses among employers. Therefore, the talk about a balance between flexibility and security usually thought of as a compromise between employers and employees does unduly simplify the nexus. (Leschke et al, 2006, p. 3) 11

12 Some examples More combination security (maternaty leave and childcare) can lead to a greater numerical flexibility for women in transitions in to and out of the workforce Job security can induce employees to be loyal to the employer and to invest in firm specific human capital, thereby increasing internal functional flexibility. More income security may stimulate numerical flexibility 12

13 And more examples More numerical flexibility can facilitate structural change and thereby job growth, which provides more job opportunities (employment security) More numerical flexibility may induce employers to invest less in employee training and thereby reduce the employment security of the employees Hire and fire policies may lead to an overall insecurity, thereby lowering not only effective demand, but also fertility. In the longterm the size of the whole workforce could decrease. 13

14 Flexicurity Job protection Low High Social protection Low UK USA Italy High Denmark Germany 14

15 Denmark: Socio-economic and political Context Economic problems and high unemployment during the 80es and beginning of the 90es New Social Democratic lead governments New Policy-Mix of offensive macro-economic policy and active LMP Readjustments of policy in 1995, 1996 and 1999 in accordance with recovery New Liberal-Conservative government in

16 The Danish labour market system A voluntaristic bargaining system (collective agreements since 1899) A political interventionist strategy densely organised labour market negotiated regulation of labour market relations active labour market policies (especially since 1994) generous unemployment benefit system (socializes costs of flexibility) 16

17 The Danish flexicurity system Strong rotation between jobs The primary axe of the Flexicurity model Flexible labour market Lowjob security Quick structural adaptation Social security The social partners Active labour market and educational policies Income security High percieved job security Employment security 17

18 Job turnover and shift of employment 2001, Denmark Number of jobs/ employment Number of jobs/ employment Job turnover Job creation Job destruction Shift of employment New jobs Dismissals Number of wage earners Source: AErådet on behalf of IDA Number of jobs Number of persons Percentage 12,1 11,4 Percentage 30,8 30,2 18

19 Italy Greece Average tenure Source: Auer & Casez, Japan Portugal Sweden France Luxembourg Belgium UK Denmark The Netherlands Ireland Finland Spain Germany USA Year

20 Job-to-job mobility

21 But: The Danes love it 21

22 Work motivation high in Scandinavia Question: I would be glad to work even if I did not have a need for the money Country Sweden Denmark Norway Switzerland Japan Germany USA Hungary Portugal UK France Netherlands Cyprus Ireland Spain Czech Rep. Slovenia Bulgaria Agree (totally or partly) % Percentage Difference Index % 1) ) Difference between agree and disagree Source: International Social Survey Programme (ISSP),

23 Protection for people in ordinary employment ,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Source: OECD: Employment Outlook Sweden USA UK Denmark Ireland Belgium Italy Finland Greece Japan France Spain Germany The Netherlands Portugal Index

24 Level of economic well-being Source: Gallie & Paugam (2000) 24 Portugal Greece Italy Spain UK France Germany Ireland Belgium Netherlands Denmark Employed Unemployed Level of economic well-being

25 Unemployment insurance system Net compensation ratio 2002 Source: OECD (2002) 25 Italy Greece Spain France Ireland Portugal Germany Austria Finland UK Belgium Luxembourg Netherlands Sweden Denmark NRR

26 Transfers 2005 Denmark. Gross amount per month Gross amount/month % of unemployment benefit level Unemployment DKK 100% benefits (1905 ) Peoples pension DKK 67% ( folkepension ) (1279 ) Social DKK 60% assistance (1153 ) Start help DKK 39% (for immigrants) (743 ) Source: Jurainformation 26

27 Expenditures for active labour market policy 2005 Denmark Net herlands Belgium Germany Finland France Sweden Spain Portugal Austria Switzerland Active Passive Norway Ireland Italy Canada UK Japan USA Spending as percent of GDP 27

28 Comprehensive childcare coverage Childcare coverage rates 0 3 years DE IT AT UK ES PT NL FI BE FR DK SE Data source: OECD (2001) Source: Benchmarking Working Europe

29 Structure of tax and contribution receipts 29

30 LMP Reform 1993/1994 * Content: - from rules to needs - individual action plans Steering - regionalization - the social partners in pivotal positions 30

31 Activation in Denmark Before 1994 Measures Work After 1994 Measures Arbejde Work 31

32 More people to work 2002/2003 Individual and flexible contacts with the unemployed person Job plan Offers guidance and qualification trainee service wage subsidies 32

33 Some basic figures for Danish flexicurity: the security of the wings 20 procent of the workforce experience unemployment each year Flexible labour market 30 procent change jobs each year 13 percent of the workforce complete a CVT-courses each year CVT Social security ALMP 11 procent in ALMP each year 33

34 Denmark: the Phillips curve flattened out! 25 Wage increase (percentage) Labour market policy reform Source: ADAMs databank Unemployment (percentage) 34

35 Public finances in Denmark, % of GDP General government expenditure Denmark Total OECD Tax and non-tax receipts Denmark Total OECD Budget balances Denmark Total OECD Government debt Denmark Total OECD

36 Challenges to the Danish Flexicurity : bad integration of immigrants into the labour market (employment rate only 47 Danes 77) new labour market policy arrangements weaken active and tailor-made measures ( municipalization ) From 2007 reduced role of the social partners, which might create demotivation reduced public support for vocational training and further education will reduce mobility 36

37 Those outside - Who are they? 37

38 New structural reform 2007 Towards one-tier system: Joint entrance for all kinds of unemployed people in jobcentres (common for municipalities and public employment service) From 14 to only 4 regions: From steering bodies to mostly monitoring agencies From corporatist steering to state-municipality steering: Reduced role of the social partners Strong, big municipalities in pivotal positions More rule-based efforts More standardized measures Erosion of regionalized labour market policy The social partners without much power and motivation 38

39 The Labour Market Steering System in Denmark 2006 Parliament Central Minister of Employment National Employment Board Arbejdsmarkedsstyrelsen Labour Market Administration Evaluations Goals Resources Regional Arbejdsformidlingen (AF) Employment Service Regional Labour Market Board County Municipalities Educational Institutions Unemployment Offices Firms 39

40 The Labour Market Steering System in Denmark from 2007 State financing unemployment benefits and efforts Minister of Employment BER Regional service Monitoring of effects and results Region of employment RBR Jobcentres S B K C K LBR Municipal financing of assistance and efforts KB 40

41 Danish LMP: from beautiful swan to ugly dugling? LMP no longer owned by the social partners? LMP only for the strong ones? From qualification measures to shortest possible way to job? Towards a unified benefit system? Leaving Danish flexicurity behind? 41

42 Economic security and employment employment rate EE LT LV GR US CZ SK HU SI PL IT JP UK PT ES AT IE DE LU 0,5 0,6 0,7 0,8 0,9 1 FR BE NL DK FI SE y = x R 2 = economic security index Source: Andrew Watt: Transfer no. 4,

43 Economic security and unemployment unemployment rate PL SK y = x R 2 = CZ LV EE GR IT DE ES BE FR FI 5 US SI JP UK IE AT PT NL LU DK SE 0 0,5 0,6 0,7 0,8 0,9 1 economic security index Source: Andrew Watt: Transfer no. 4,

44 Exporting Danish flexicurity? You cannot copy a system You can learn from the approach You can make use of elements in a political strategy 44

45 Why do ideas travel? The new institutionalists speak of isomorphic mechanisms Coercive (rarely) Normative Mimetic (perhaps: but norms only direct imitation) (yes!) 45

46 Imitation and invention go hand in hand a) Imitation a first cognitive step b) Imitation weakens the original attraction of the invention c) Imitiation has to be adapted to national institutional settings and traditions multiple and intertwined processes 46

47 Looking for national solutions: - Translation is a vehicle - Imitation its motor - Fashion sits at the wheel or you can use flexicurity as inspiration! 47

48 Three policy principles of flexicurity Policy design: integrate flexibility and security Social dialogues: deliberative processes Outcomes: principles of sustainable employment, protected mobility, and social cohesion 48

49 Flexicurity pathways a) Reduce gabs between standard and nonstandard employment relationships integrate standard contracts into normal regulations b) Make transitions possible develop the security of the wings c) Invest in skills and competences invest in life-long learning d) Enhance employment opportunities invest in labour market and social policies 49

50 One Latin America example of moving towards flexicurity Recalibrating the labour inspectorate ( Inspeccion de Trabajo ) could help: - to develop adaptation potentials - to develop social protection - more effective regulations - common decision-making processes - training and developing programmes - labour market policy arrangements 50

51 Works better with a safety net! 51

52 52

53 The Danish pension system Public pension State pension ( folkepension ) (tax financed) Supplementary statutory pensions (contribution based fully funded) Basic amount Supplementary pension provision Wage earners supplementary pension (ATP, since 1964) earnings-related SP (special pension - 10 years) LD (contributions from ) Special public support arrangements for pensioners Heating allowance and other personal forms of support Housing benefit for pensioners Private pensions Collective Individual Different forms of tax reductions and discounts labour market pensions (since 1989-) Other private pensions 53

54 Distribution of income (2001) Incomes 80/20 1 Gini-coefficient Denmark Sweden UK Germany 3,0 3,4 4,9 3, EU-15 4,4 28 1) lowest fifth in relation to highest fifth Source: Eurostat (2004) 54

55 The new EU flexicurity chart of Europe Source: Employment in Europe