The European labour market is under more pressure than ever before. The challenges include the pressure on the economy of the EU to be competitive in a globalize world which requires more flexible labour markets. Employers demand the effective deregulation of the economy in order to make them more competitive in the global market. In contrast with the modern flexible economic aspirations is the principle of the European Social Model. The Nice Summit concluded that the European Social Model is characterized by systems that offer high levels of social protection and at the Lisbon Summit, the Member States envisaged that Europe must become the most competitive knowledge-based economy in the world by 2010 while at the same time remain committed to solidarity and equality.
The European social model emphasizes increased labour security and social cohesion. Workers are demanding more employment security in a climate of rapid structural change and job reallocation. Europe is also confronted with low population growth and an ageing population.
In industrialized countries it is believed that waged employment hinders flexibility and the flexibility is proposed as the remedy against rising unemployment. According to De Gobb(1) the strategy is the lowering of hiring and firing costs by the introduction of flexible work arrangements. The labour market is becoming more flexible primarily through relaxed conditions for the termination of the employment relationship and the introduction of limited term employment.
Flexicurity as a strategy is effective to jointly manage the inherent insecurities of the employer and employees. Employers must manage their risk in a globalize economy by matching a weakening market position due to increased competition and new technological progress with the quantitative and qualitative change in the labour market. The employment security of workers is at risk due to the response of employers to adapt to the requirements of the global market.
The revised Lisbon Strategy of 2005, balanced increased economic growth, productivity and competitiveness with job creation. This can be attained by improving labour market flexibility, while combining it with increased social protection for workers. The Lisbon strategy for growth and jobs highlights the importance to improve the adaptability of workers and enterprises. EU Integrated Guideline No 21 for growth and jobs for the period 2005-2008, promotes “flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners”.
The balance between labour market flexibility and social security is described using the concept of flexicurity. The concept of flexicurity which is a combination of the words flexibility and security is currently the standard strategy of the management of the European labour market. The EU promotes flexicurity as a strategy to be used in the individual Member States to improve labour productivity, increase employment and guaranteed long-term growth and social cohesion.3
The March 2006 Presidency Conclusions of the European Union is an indication that flexicurity principles are at the core of the EU labour market policy. These conclusions guide the Member States to use integrated flexicurity principles in their labour market reform strategies. According to the aforementioned Conclusions, the benefit of a flexicurity strategy is that employees and organizations are more adaptable and responsive to labour market fluctuations. The EU believes that flexicurity increases productivity in the workplace and that the goals of competitiveness, employment and social security can simultaneously be attained.
1. De Gobb, NS, Flexicurity in developing countries: Perceptions anddetermining factors;Employment Policy Department, ILO, Geneva: P6
2. Eurapean Expert Group on Flexicurity, Flexicurity Pathways – Turning hurdles into stepping stones(2007) P14
3. Kaia Philips and Raul Eamets, Approaches to flexicurity: EU models, European Foundation for the improvement of Living and Working Conditions, 2007:P 1
André Beukes is an EU Management Consultant to international companies doing business in Europe. He provides clients with practical business support that makes a real difference doing business in the EU. “Put simply, I am here to help you meet your challenges. I believe in the importance of doing things correctly, meaning risks are reduced and problems are avoided.”