Peter Auer/ILO/2009 Griffith University, July 28, « The political economy of flexicurity » Peter Auer, Senior Fellow, IILS, ILO Visiting fellow WOS/USYD Negotiating labour market security

Discussion points Flexicurity: what is it? Does it work? Is it accepted? Any relevance for Australia? Peter Auer/ ILO

Flexicurity: what is it? Commenting the film Response to globalization and flexibilization Core I: stable jobs Core II: strong labour market institutions for ensuring good transitions Core III: social dialogue and CB Peter Auer/ ILO

Flexicurity: what is it? Transforming the trade-off between flexibility and security into a complementarity from employment protection to labour market protection life cycle professional trajectories and labour market risks Reform labour laws carefully Building/enhancing labour market policies and institutions (e.g. PES, (A)LMPs including training and education) Using the social dialogue and collective bargaining Peter Auer/ ILO

5 From Job-to labour market security * Protection of a job/task in a setting of employment security ** Protection of employment within single firms but not on any particular job *** Protection of employment in several firms combined with social protection (LM policy, social rights) for protecting transitions=flexicurity

Peter Auer/ ILO Does it work?Clustering flexicurity countries Clustering based on 8 variables that are used as proxies for flexibility and security Flexibility: internal: working time flexibility and modern work organization; external: average employment tenure, EPL (employment protection legislation) for regular and temporary jobs. Security: LMP expenditure for 1% of unemployed, expenditure on social protection and collective bargaining coverage. (z-score clustering with equal weight for each indicator). Sources: European Foundation, OECD, ILO, Eurostat. Values:average when available., otherwise last available: e.g. EPL 2003)

Peter Auer/ ILO Values avg FS (5)Others (10)Difference % points Employment Rate (ER) ,1 +8,9 Full Time Equivalent (FTER) ,2 58,2 +6,0 Women ER66,9 53,8 +13,1 Women FTE55,6 46,9 +8,7 Unemployment rate5,4 7,2 -1,8 Productivity/Hour in Euros 29,4 Eu 27,4 EU +2,0 Eu Productivity/Hour (2000=100) 110,3 107,6 +2,7 Gini coefficient25,1 30,6 -5,5 Social protection effectiveness ( before and after social transfer poverty reduction ) 14,5 8,4 +6,1 Labour Market Policy (expenditure in % of GDP for 1% of unemployment) 0,63 0,28 +0,35 Does it work? Flexicurity countries‘ performance compared And how do they manage the crisis? Unemployment May 2009 (5) 6,0 (10) 8,8// economic growth q4 2008/ q : (5) -1,8 (10) -2,0

Peter Aur/ ILO Is it accepted? Critical and supporting voices : Flexicurity is an appealing concept because it offers a way to restore a positive link between competitiveness and social protection. Globalisation and technological progress require responsiveness to deliver their full benefits, and hence finding new ways to combine social protection and economic flexibility is fundamental to more and higher- productivity jobs. (M. Stocker, advisor to Business Europe, in Euro Activ, September 2007) To prevent « flexicurity » to become « flexploitation » the Commission should take responsiblity for shaping a strong social dimension to the internal market, guaranteeing worker’s rights and worker’s security (John Monks, ETUC, interview at the EU’s Portuguese presidency conference, Sep. 2007) The real agenda hiding behind 'flexicurity' simply seems to be the dismantling of job protection.... ( R. Janssen, from ETUC, Euro-Activ, September 2007).

Peter Auer/ ILO Manifestation in front of Portuguese EUconference on Flexicurity October 2007 : … »the government lies : Flexicurity=dismissals » « No development for Portugal with flexi- curity »

Peter Auer/ ILO Critics of activation French Communist party (PCF) Postcard 50s 10

Peter Auer/ ILO Political economy questions Flexicurity seems to work with different degrees of external flexibility and the „flexicurity countries“ in the EU 15 have good economic, social and labour market performance Why then opposition? Job/employment protection „red line“ for unions Financing of compensatory social protection difficult under tight budgets LM policy often not positively evaluated Resistance to model transfer: no one size fits all and path dependency of reforms An anticipated compromise not in line with adverserial settings/ low trust between the SPs Uncertain applicability in other than European welfare state countries LM Context counts a lot EU Commission as policy driver faces low approuval rates

Peter Auer/ ILO EMP/ANALYSIS EU 15 average: , ,74 (Japan 12 (2000), USA 6,9 (2004) Flexicurity with different employment tenure

Any relevance for Australia? Australia: major recent example of labour market deregulation and reregulation: from work-choices to fair work Australia Difficult way back from Howard government Reform, and interesting political economy Vast exercise of social dialogue New labour market institutions: Both on procedures and laws: CB, FWA, unfair dismissal And substantive policies, programmes and delivery organisations: UI benefits and ALMP (training) Peter Auer/ ILO

Flexicurity debate is relevant for Australia no way around a real dialogue and participation resulting in good procedures and substantive policies for a socially embedded economy, Which provides for labour market security allowing individuals and firms to adjust to the ups and downs of the global economy and to find satisfying personal professional trajectories in performing economies. Peter Auer/ ILO