Paper on the identification of the flexicurity profile of Member States using micro-economic data
Order form No. VC/2011/0817
Final Report - October 2011
Research Project for the European Commission
The performance of the labour market has been one of the primary interests of policymakers in many countries around the world, and the importance of this issue has been further enhanced by the current financial and economic crisis. In this context, a well-functioning labour market has to strike a balance between two principles. On the one hand, a sufficient level of flexibility of the labour market makes it possible for employers to adjust their firms’ labour force in order to react to changes in product demand and technological progress; employees may also benefit from flexibility if overall productivity and labour demand is increased. Furthermore, labour market flexibility may reduce or even prevent a segregation of the labour market if barriers to labour market entry are lowered. On the other hand, a certain level of security is important for the well-being of workers, and it may also be beneficial for employers as it reduces uncertainty and hence facilitates investment and production decisions. The combination of these two principles has lead to the term “flexicurity”. At the level of EU policy making, the European Employment Strategy (EES) has recognized the importance of flexicurity principles. In particular, the EES pursues the goal of achieving high levels of employment, enhanced productivity as well as stronger social cohesion through the implementation and the strengthening of a set of common flexicurity principles, i.e. flexibility and security in the labour market. These principles are organised along the following four dimensions: 1. Life-long learning (LLL), 2. Active labour market policies (ALMP), 3. Modern labour laws and labour turnover (MLL), 4. Modern social security laws (MSS). The European Union (EU) Member States have implemented these principles to varying degrees. However, there is a lack of studies which offer detailed and comparable evidence on the realisation of flexicurity. Therefore, the aim of the present paper is to provide empirical cross-country evidence that allows an informed assessment of the implementation of the flexicurity dimensions of the EES.