Flexicurity in international comparison Flexicurity models of EU 25

European Social Model Effective regulation of economic competition Trade unions and interest coordination (mostly on branch level) Workers protection Social cohesion

High unemployment compared with US Employment is not increasing Demographic situation is bad Service sector underdeveloped Immobile labour force Rigid labour market Labour market in Europe

Lisbon agenda Lisbon strategy: 1) Knowledge based economy, new technologies, R&D 2) New social model of Europe, investments to human capital. 3) Macroeconomic policy to support economic growth

Lisbon agenda Recent developments in concept: key question is how to increase competitiveness of labour markets (more employment, flexibilisation of labour markets) and how to keep current social protection system (modernisation of European social model)

Labour market fexibilty Labour market flexibility shows how fast labour market reacts to the changing macroeconomic condition (adjustment speed of to the external shocks)

Labour market flexibility Numerical flexibility is the employers’ ability to adjust the number of employees to the current needs of production. Working time flexibility is the employers’ ability to modify the number and distribution of working hours with no change in the number of employees. Functional flexibility is the employers’ ability to move their employees from one task or department to another, or to change the content of their work. Wage flexibility enables employers to alter wages in response to the changing labour market and competitive conditions.

Labour market SECURITY Employment protection Income protection Combined protection (reconciling family and work)

Solution is FLEXICURITY Initial idea: shift from job security to employment security (Dutch professor H. Adriaansens, 1995 We need to find balance between social security and labour market flexibility Flexicurity

Baltic States versus Denmark Labour market flexibility Social protectionActive labour market policy Danish model Baltic States

Indicators Data (available for all EU 25 countries) Mainly data from Eurostat (year 2003) Number of indicators in the analysis was limited (only 25 countries) We used statistical criteria for choosing indicators into the model + previous studies (literature overview) + intuition

VariableAdaptability/ flexibility Income security Social security Total expenditure on social protection (% of GDP) Total expenditure on social protection per head Tenure Unemployment insurance Easiness of finding new job Mobility Training Life-long learning Part-time workers Long-term unemployment rate Unemployment rate of the young Employment rate of years old Ratio of 80/20 income quantiles Gini coefficient pov_ At-risk-of-poverty rate after social transfers0.8901

LV EE LT HU CZ SK PL MT CY IE PT UK ES IT EL BE DK NL SE FI LU DE FR SI AT R 2 = 0,11

Cluster analysis … purpose is to group objects based on their characteristics. Objects are classified so that –there is high within-cluster homogeneity and –high between-cluster heterogeneity.

Clusters EL, IT, PT, SK AT, BE, FR, DE, LU, FI MT, PL, ES CZ, HU, SI DK, SE, UK, NL EE, LV, LT, CY, IE

EL, IT, PT, SK AT, BE, FR, DE, LU, FI MT, PL, ES CZ, HU, SI DK, SE, UK, NL EE, LV, LT, CY, IE Total expenditure on social protection (% of GDP) Total expenditure on social protection per head Tenure Unemployment insurance Easiness of finding new job Mobility Training Life-long learning Part-time workers Long-term unemployment rate Unemployment rate of the young Employment rate of years old Ratio of 80/20 income quantiles Gini coefficient pov_ At-risk-of-poverty rate after social transfers

Adaptability Social security Baltic Flexicurity Old Europe ? Mixed