On the European Readiness for Flexicurity: Empirical Evidence with OECD/HBS Methodologies, and Reform Proposals

Transcription

1 On the European Readiness for Flexicurity: Empirical Evidence with OECD/HBS Methodologies, and Reform Proposals Andranik Tangian Hans Böckler Foundation, D Düsseldorf 1 A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm

2 Agenda 1 Flexicurity approach 2 Operationalisation 3 Findings 4 Reform proposal 5 Conclusions 2 A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm

3 Towards Common Principles of flexicurity (Europ. Commission 07) Claim: More and better jobs through flexibility and security Flexicurity = Flexibility compensated by advantages in social security Social security is understood as employment security Employment security should be guaranteed by lifelong learning 3 A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm

4 Flexibility forms External numerical flexibility, legal framework for hiring and firing and use of atypical forms of employment Internal numerical flexibility, legal and contractual framework to adjust working hours Functional flexibility, scope to employ workers in different jobs Wage flexibility, scope to adjust wages Externalization flexibility, scope to use workers without employment contracts

5 Criteria of precariousness Income: 2/3 of the median wage of the fulltime employed Employment stability, employment with a minimum of interruptions Employability, capacity to be employed as a prerequisite for employment stability; among other things can be secured through lifelong learning 5 A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm

6 Data structure derived from EWCS (European Foundation 2007)

7 Internal numerical flexibility Number of working hours per week: as one will/not as one will Overwork, more than 10 hours a day, number/month (q14e) Number of working hours every day (q16aa): variable/constant Number of working days every week (q16ab): variable/constant Starting and finishing hours (q16ac): variable/constant Working time arrangements (q17a): set by the company, choice from several option, reasonable adaptability to individual wishes, or full adaptability Working time planning (q17b): on the same day, the day before, several days in advance, several weeks in advance, no changes of schedule

8 Two ways of scaling of variables Normalization (HBS method): min, max 0,100 x x =. x x min y 100% max min Standardization (OECD method): μ, σ 0,100 x μ y = 100% σ 1 μ = i= σ = i x i i= 1 ( x μ) 2 (mean) (standard deviation)

9 Factual indices (HBS method)

10 Factual indices (OECD method)..

11 Rank correlation for indices made with OECD/HBS methodologies Aggregated flexibility External numerical flexibility Internal numerical flexibility Functional flexibility Wage flexibility Aggregated precariousness Precariousness of income Precariousness of employment stability Precariousness of employability A.Tangian. On the European Readiness for Flexicurity. OECD Seminar on Innovative Approaches to Turning Statistics into Knowledge, Stockholm

12 Factual institutional flexibility United Kingdom Switzerland Sweden Germany Turkey Strictness of employment protection legislation ~ external numerical flexibility (OECD 2004) Work with no contract ~ outside legislation (EWCS 2005) 130 of 875 = 15% 26 of 847 = 3% 1 of 968 =0.1% 32 of 911 = 4% 302 of 454 = 67%

13 Flexibility Precariousness dependence (HBS method) No country in the South-East (flexicurity) corner Flexicurity domain: no country Flexibilityprecariousness dependence is statistically certain: Regression on employees with P-value= Conclusion: flexicurity is hardly attainable in practice

14 Flexibility Precariousness dependence (OECD method) No country in the South-East (flexicurity) corner Flexicurity domain: no country Flexibilityprecariousness dependence is statistically certain: Regression on employees with P-value= Conclusion: flexicurity is hardly attainable in practice

15 Flexibility is worst for employability

16 Operationalisation: Data for the composite indicator of decent work

17 Indicator of decent work (HBS) Observations: Bad qualification possibilities.. Poor career and modest income

18 Importance for job satisfaction Most important: job stability Disregarded: income Negatively regarded: training, good management and creativity

19 Indicator of decent work (HBS) by the type of contract Atypical employees have poorer working conditions than the European average

20 Reform proposals flexinsurance to steer flexicurity policy basic income model to resolve policy contradictions workplace tax to equalize working conditions analogy with regulation of immigrants to regulate the outsiders from the mainstream constraining financial markets to keep the labour market under control

21 Flexinsurance Employer's contribution to social security is proportional to the flexibility of the contract Compensation of unemployment risks Motivation to hire employees more favorably with no rigidly restricting labour market flexibility Flexible instrument to regulate deregulation: adjustments need no new legislation Moral aspect: social justice Existing prototypes of dismissal taxes Progressive: American experience rating Flat: Austrian Abfertigungsrecht

22 Basic income model A flat income paid by the state to all citizens regardless of their earnings and property status Additional budget from flexinsurance higher taxes of high-earners (to subtract the flat income) and funds released from an army of civil servants currently working in social security Existing elements of the basic income model Kindergeld in Germany paid to all parents some old-age provisions in Chili and Switzerland the idea of minimal wage

23 Workplace tax The worse working conditions, the higher the tax payed by the employer stimulation to improve working conditions compensation of health and safty risks at work stimulates to equalize working conditions of flexibly employed finance the bonus for employees with bad working conditions Prototype: green tax which stimulates enterprises to consider the natural environment indexing working conditions as an instrument (~ measuring social pollution )

24 Analogy with regulation of immigrants Quotas for atypical contracts (~immigration quotas) Justification of necessity of the atypical contract (~ obligation to explain why not own nationals) Issuing a permanent contract after a number of successive temporary contracts (~ permanent residence after a few temporary residences) These measures are aimed at reasonably constraining employment flexibility without excluding it in case of real necessity.

25 Constraining financial markets Having liberalised financial markets, Europe loses control over labour markets: Foreign investments actually mean export of jobs Employers are given a legal instrument for exerting pressure on European governments: If you do not relax employment protection according to our requirements, we shall move jobs abroad Since the way out is generally where the way in, financial markets must be constrained in order to restore the control

26 Conclusions Methodology: OECD and HBS methods to construct composite indicators, new visual tools Empirics Indices of flexible, precarious and decent work derived from 4th EWCS Critics on the EC concept of flexicurity Commission s flexicurity strategy cannot be consistently implemented Consistent implementation of flexicurity Flexinsurance, workplace tax, constraining financial markets, basic income