COMMISSION STAFF WORKING DOCUMENT Open, dynamic and inclusive labour markets
Date: 2012-04-18
Institutions: European Commission
Subjects: continuing education, employment service, job security, labour flexibility, social-security benefit, work contract

EUROPEAN COMMISSION 

Strasbourg, 18.4.2012  
SWD(2012) 97 final 

COMMISSION STAFF WORKING DOCUMENT 

Open, dynamic and inclusive labour markets 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a job-rich recovery 

{COM(2012) 173 final} 
{SWD(2012) 90 final} 
{SWD(2012) 92 final} 
{SWD(2012) 93 final} 
{SWD(2012) 95 final} 
{SWD(2012) 96 final} 
{SWD(2012) 98 final} 
{SWD(2012) 99 final} 
{SWD(2012) 100 final} 

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COMMISSION STAFF WORKING DOCUMENT 

Open, dynamic and inclusive labour markets 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a job-rich recovery 

TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Introduction .................................................................................................................. 1 

The flexicurity framework: the EU common principles and the four components...... 2 

Main approaches to flexicurity..................................................................................... 3 

Implementing flexicurity.............................................................................................. 4 

Delivery of flexicurity by component during the crisis ............................................. 10 

Performance of flexicurity during the crisis............................................................... 16 

Concluding observations............................................................................................ 21 

This  paper  is  organised  as  follows:  after  an  introduction,  section  2  quickly  presents  the 
different  pillars  of  flexicurity  providing  both  security  and  flexibility,  section  3  outlines  five 
country groups which share commonalities in their flexicurity approaches. Section 4 provides 
examples of recent labour market measures showing how flexicurity is anchored in national 
policy  making,  and  how  social  partners  are  involved.  To  what  extent  flexicurity  measures 
have been continued in the period 2008 – 2010 is discussed in section 5, with observations on 
labour  market  performance  in  section  6.  Concluding  comments  in  the  final  section  of  this 
document support the chapeau communication of the Employment Package. 

Disclaimer:  This  document  is  a  European  Commission  staff  working  document  for 
information  purposes.  It  does  not  represent  an  official  position  of  the  Commission  on  this 
issue, nor does it anticipate such a position. 

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1. 

INTRODUCTION 

Since the mid-2000s, flexicurity has been developed and refined as a policy concept through 
common  work  between  the  European  Commission,  the  Member  States,  social  partners  and 
academic experts.1 The Commission has defined flexicurity as “an integrated policy strategy 
to  enhance  both  flexibility  and  security  within  the  labour  market”.2  The  concept  was 
developed as a comprehensive response to the challenges faced by European labour markets 
and societies in a context of globalisation and technological and demographic change 

The  flexicurity  approach  has  provided  a  framework  supporting  the  implementation  of  the 
European Employment Strategy under both the Lisbon and the Europe 2020 Strategies. The 
flexicurity framework was conceived in a time of relatively favourable economic conditions. 
The crisis and its negative employment and social impacts have heightened existing concerns 
and spurred criticisms of the flexicurity concept, especially from the side of the trade unions 
and in some academic circles. Apprehension from trade unions stems from their feeling that in 
times of crisis all balance has been lost as the term flexicurity has been used when only labour 
market flexibility has been increased, while the crisis has increased the need for employment 
and income security. Questions are also raised whether such a policy approach is still viable 
in  a  context  of  fiscal  tightening:  how  is  it  possible  to  finance  the  security  aspects  of 
flexicurity?  How  is  it  possible  to  cope  with  rising  demand  for  income  support  and  ALMP 
measures?  What  is  the  role  of  activation  measures  (either  train  or  work  first)  in  a  period  of 
low labour demand? What is the role of social dialogue in implementing flexicurity? 

It  is  therefore  important  to  show  the  added  value  of  the  concept  in  a  tangible  form,  while 
adapting  it  to  the  changing  socio-economic  context  characterised  inter  alia  by  higher 
unemployment and tighter budgetary constraints. Furthermore, the crisis has highlighted the 
urgent need to pursue labour market reforms, without reducing the scope for consensus and 
trust between social partners - a key principle for successful flexicurity policies. 

In 2010 the Commission's communication An Agenda for new skills and jobs3 considered that 
the EU common principles of flexicurity remained valid but that a comprehensive debate on 
strengthening  the  four  components  of  flexicurity  was  needed  to  consolidate  the  consensus 
towards  a  new  momentum  in  the  first  half  of  2012.  In  November  2011  a  Stakeholder 
Conference  on  Flexicurity  was  organised  by 
together 
representatives  of  Member  States,  social  partners  and  European  institutions.  Furthermore, 
several surveys and studies, some of them still on-going, allow an informed assessment to be 
made  of  the  implementation  of  flexicurity  and  how  it  could  further  evolve  to  support  job 
creation and reduce poverty. 

the  Commission  bringing 

The purpose of this Staff Working Document is to review the implementation of flexicurity 
and its integration in national policies; identify concrete examples of how flexicurity policies 
and measures have helped weather the crisis and in what ways for the concept of flexicurity 
can be further useful in supporting the modernisation of European labour markets. 

1 
2 
3 

An expert group on Flexicurity was set up by the Commission to elaborate proposals. 
Add reference to 2007 flexicurity communication 
COM(2010)682 final 

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2. 

THE  FLEXICURITY  FRAMEWORK:  THE  EU  COMMON  PRINCIPLES  AND  THE  FOUR 
COMPONENTS 

In  2007,  the  Commission  issued  a  Communication  ‘Towards  Common  Principles  of 
Flexicurity’,  which  aimed  to  raise  awareness  in  the  Member  States  of  the  benefits  of 
introducing  flexicurity  arrangements  for  those  in  work  and  those  out  of  work.  It  did  so  by 
outlining four inter-related components of flexicurity, which comprise: 

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• 

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• 

Flexible  and  reliable  contractual  arrangements.  The  idea  is  to  help  ‘outsiders’, 
who are employed on short-term or irregular contracts or are unemployed (many of 
whom are women, young people and migrants) to find work and to move into stable 
contractual  arrangements.  Modern  work  organisation  should  promote  work 
satisfaction  and  at  the  same  time  make  enterprises  more  competitive.  Flexicurity  is 
also  to  help  ‘insiders’,  who  are  permanent  employees  with  open-ended  contracts, 
prepare themselves for job changes ahead of time in the case of redundancy due to 
economic change. 

Comprehensive  lifelong  learning  (LLL)  strategies.  Lifelong  learning  is  about 
ensuring  that  EU  citizens  have  the  opportunity  to  have  a  high  quality  initial 
education, that they complete at least their secondary education, that they develop a 
broad range of key skills and that they acquire new skills and upgrade existing skills 
throughout their working lives. It is also about ensuring that enterprises invest more 
in  human  capital  and  allow  employees  to  develop  their  skills,  as  well  as  the 
recognition of all types of learning; formal, informal or non-formal. 

Effective  active  labour  market  policies  (ALMPs).  Active  labour  market  policies 
help  unemployed  people  back  to  work  through  job  placement  services  and  labour 
market programmes such as training and job creation. By implementing ALMPs such 
as  an  efficient  job  search  support  and  good  work  incentives,  jobseekers  can  be 
encouraged  to  find  new  employment.  Job  search  courses  and  job  clubs  have  been 
shown to be among the most effective measures to help the unemployed find a job. 

Modern  social  security  systems.  It  is  important  for  EU  governments  to  provide 
adequate unemployment benefits to act as a safety net when people are changing jobs 
and to offer healthcare benefits in case they fall ill as well as pensions for when they 
retire.  Childcare  is  another  important  area  as  it  helps  people  to  combine  work  and 
private  life  and  thus  keep  them  in  the  labour  market.  Maternity  and  parental  leave 
should also facilitate transitions and reconciliation between working and family life. 

There  are  eight  Common  Principles  which  provide  a  general  framework  and  guidance  for 
the implementation of integrated flexicurity strategies in the Member States.  

According to these principles, flexicurity is a means to create more and better jobs, modernise 
labour  markets  and  promote  good  work  through  new  forms  of  flexibility  and  security.  It 
involves the combination of the above mentioned four components. It has to be tailored to the 
specific  circumstances  of  each  Member  State  and  progress  should  be  monitored.  It  should 
promote open, responsive and inclusive labour markets in which transitions pay. Both internal 
(within  enterprises)  as  well  as  external  flexicurity  are  equaly  important  and  should  be 
promoted.  Flexicurity  should  support  gender  equality,  notably  by  allowing  reconciliation 
between  work  and  family  (flexible  working  time  arrangements,  smooth  transitions,  etc.).  It 

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requires broad-based dialogue among all stakeholders and social partners should be involved 
in  the  design  and  implementation  of  flexicurity  policies.  Finally,  it  requires  a  cost-effective 
allocation of resources compatible with sound and financially sustainable public budgets. 

Since 2007 the Common Principles including the four components have been the framework 
underpinning  the  labour  market  policies  in  the  EU  Member  States,  leading  to  a  number  of 
countries  developing  integrated  flexicurity  approaches.  Under  the Europe  2020  strategy,  the 
2010  Employment  Guidelines,  agreed  by  the  Member  States  and  adopted  by  the  Council, 
urged Member States to integrate and apply the flexicurity principles in  their labour market 
policies  and  recommended  that  measures  to  enhance  flexibility  and  security  should  be  both 
balanced  and  mutually  reinforcing.4  The  2011  Annual  Growth  Survey  (AGS)  identified 
balancing security and flexibility as one of the priority measures to mobilise labour markets 
and create job opportunities.5 More recently, the 2012 AGS reiterated that the implementation 
of  balanced  flexicurity  policies  can  help  workers  to  move  successfully  between  jobs  and 
labour market situations.6 

3. 

MAIN APPROACHES TO FLEXICURITY 

The  third  common  principle  acknowledges  that  there  is  no  one  size  fits-all  approach  to 
flexicurity, since they should be tailored to the specific circumstances of each Member State. 
The  27  Member  States  are  characterised  by  very  different  modalities  and  combinations  of 
flexibility  and  security  elements,  reflecting  the  diversity  of  European  employment  regimes. 
However, Member States may be classified into clusters based on a number of commonalities. 
Taking  account  of  the  existing  literature,  in  2006  the  Commission  identified,  according  to 
prevailing  combinations  of  policies  and/or  institutions,  five  different  flexicurity  approaches 
within the European Union:7  

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4 

5 
6 
7 

The Anglo-Saxon system, covering the UK and Ireland, features a high degree of 
flexibility,  relatively  low  security  and  low  taxation.  These  countries  have  looser 
employment  protection  legislation,  making  it  easier  for  enterprises  to  restructure  in 
the  face  of  changing  economic  circumstances.  Countries  in  this  grouping  spend 
intermediate-to-low  amounts  on  labour  market  policies  aimed  at  helping  the 
unemployed back to work. Cash transfers are primarily oriented to benefits linked to 
regular  employment.  The  model  is  characterised  by  weak  unions,  moderate  to  high 
rates of unemployment and comparatively high disparities in wages. 

The Continental system, covering Austria, Germany, France, Luxembourg and 
Belgium,  is  characterised  by  intermediate-to-low  flexibility,  intermediate-to-high 
security  and  intermediate-to-high  taxation.  These  countries  rely  extensively  on 
insurance-based  benefits  and  have  stricter  employment  protection  legislation. 
Although union membership is in decline in most countries, the unions remain strong 
and  are  regularly  included  in  processes  of  decision-making  and  implementation. 

Guideline  7  urges  Member  States  to  integrate  the  flexicurity  principles  endorsed  by  the  European 
Council into their labour market policies and apply them; the Guideline also makes explicit reference to 
the four components of flexicurity 
COM(2011) 11 final 
COM(2011) 815 final 
Employment  in  Europe  2006,  Chapter  2  'Flexibility  and  security  in  the  EU  labour  market',  DG 
Employment, European Commission 

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• 

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• 

These  countries  tend  to  have  higher  levels  of  long-term  unemployment  than  the 
Anglo-Saxon  countries  but,  thanks  to  higher  levels  of  redistribution  via  taxes  and 
transfers, they have lower numbers of people in or at risk of poverty. 

The  Nordic  system,  comprising  Denmark,  Netherlands,  Sweden  and  Finland,  is 
characterised  by  high  security,  intermediate-to-high  flexibility  and  intermediate-to-
high  taxation.  These  countries  have  Europe’s  highest  levels  of  social  protection 
expenditure  and  universal  welfare  provision.  The  strictness  of  employment 
protection  legislation  tends  to  be  low,  but  accompanied  by  extensive  active  labour 
market  policies  and  generous  social  assistance.  They  see  comparatively  high  levels 
of  employment,  low  long-term  unemployment  rates,  high  job  turnover  and  a  much 
higher  sense  of  security  among  the  population  than  in  other  European  countries. 
Social partners tend to play an important role in decision-making. 

The Mediterranean system, covering Spain, Italy, Portugal, Greece, Cyprus and 
Malta,  features  low  flexibility,  relatively  low  security,  and  no  clear  pattern  of 
taxation. These countries generally have strict employment protection legislation for 
workers on open-ended contracts, while a growing number of people with part-time 
and/or  fixed-term  contracts  (especially  women,  ethnic  minorities  and  the  young) 
enjoy very little if any employment security at all. The social protection expenditure 
of these countries tends to be concentrated on old-age pensions, with low coverage of 
unemployment benefits. Countries in this system reveal high levels of unemployment 
and a wider incidence of poverty and social exclusion.  

The  Eastern  European  system,  covering  the  Baltic  States,  Poland,  Hungary, 
Czech  Republic,  Slovakia,  Slovenia,  Romania  and  Bulgaria  are  characterised  by 
low levels of employment security, intermediate-to-high flexibility and intermediate-
to-high  taxation.  With  lower  levels  of  employment  protection  legislation  than  the 
Mediterranean  system,  the  provision  of  social  assistance  in  these  countries  is  also 
weaker.  The  countries  in  this  system  tend  to  have  high  long-term  unemployment 
rates, with unemployment particularly high among young and older workers. 

These clusters – relying on a modelisation - present a simplification of the variety of the EU 
labour  markets  and  empirical  evidence  supports  them  less  than  when  they  were  identified.8 
They can nevertheless be helpful in analysing further the implementation of flexicurity during 
the recent years and what concrete measures have been developed to help weather the crisis.  

4. 

IMPLEMENTING FLEXICURITY  

One  of  the  criticisms  addressed  to  flexicurity  has  been  that  it  is  a  complex  concept,  too 
abstract and that is subject to a certain ambiguity. It is therefore important to identify tangible 
ways in which flexicurity has taken form. 

8 

There is an extensive literature trying to map different flexicurity  models, most of which have drawn 
comparable  conclusions,  though  the number  of  clusters and  their  composition  may  vary.  The  clusters 
were  defined  mainly  on  the  basis  of  commonalities  in  labour  market  rules,  institutions  and  practices, 
rather  than  on  the  basis  of  labour  market  outcomes,  which  have  been  in  some  cases  different  for 
different  countries  within  the  same  cluster.  Also,  in  some  cases,  the  nature  or  intensity  of  reforms 
undertaken since 2006 by different countries within the same clusters has differed (as also illustrated by 
country  examples  throughout  this  document)  and  the  cluster  analysis  does  not  aim  to  be  a  perfect 
substitute for a country-by-country analysis. 

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Several  studies9,  some  of  them  still  on-going,  have  identified  a  large  number  of  concrete 
labour  market  policy  measures  considered 
flexicurity  practices.  The  research  of 
EUROFOUND identifies more than 230 public and social partner based instruments, a high 
share  of  which  were  either  initiated  or  amended  in  the  course  of  the  crisis,  pointing  to  the 
validity  of  flexicurity  in  times  of  economic  hardship.  Some  initiatives  were  innovative  and 
creative.  However,  more  information  is  still  needed  regarding  the  effectiveness  of  the 
measures. 

Each of those policy measures or  instruments can  provide various forms  of security  and 
various  forms  of  flexibility.  Striking  the  right  balance  between  flexibility  and  security 
dimensions  determines  the  perception  that  stakeholders  have  of  the  implementation  of 
flexicurity. Measures combining external flexibility and employment security seem to be most 
prevalent. In general, measures combining these flexicurity dimensions include those that aim 
at replacing traditional job protection by measures enhancing the employability of outsiders of 
the  labour  market  while  easing  hiring  and  lay-off  procedures  and  costs  for  the  employers, 
backed up by active labour market policies. This back-up tends to be government programmes 
to help unemployed find a fixed term or permanent job by (temporarily) offering subsidies to 
employers  or  reducing  their  social  security  contributions,  while  ensuring  compliance  with 
state aid rules. 

In a second big group of measures, external flexibility is combined with job security. These 
measures  often  contain  elements  to  facilitate  hiring  and  laying  off,  which  is  combined  with 
incentives for employees to maintain their existing jobs. Most of these measures are related to 
new  regulations  on  types  of  employment  contracts  in  terms  of  their  duration.  Prominent 
examples  are  legal  regulations  obliging  companies  to  provide  workers  with  an  open  ended 
contract after repeated use of fixed-term contracts or after a certain period of time has elapsed 
(see box for examples combining various forms of security and flexibility). 

External flexibility and job security 

Various forms of flexibility and security 

Measures  combining  external  flexibility  and  job  security  are  often  aimed  at  preventing abuse  arising  from  the 
use of successive fixed-term contracts, for example by requiring objective reasons justifying the renewal of such 
contracts,  maximum  duration  or  maximum  number  of  repeats  (see  also  the  Council  directive  on  fixed  term 
work).10 In the Netherlands this has been made operational by labour laws dictating a maximum of either three 
fixed-term contracts or three years of use. After this has elapsed the fixed-term labour contract will by law be 
considered as open-ended with the according degree of employment protection.11 

Labour  pool  companies  make  possible  the  combination  of  external  flexibility  with  specific  job  security  in 
several  Member  States  including  Germany,  France,  Belgium,  The  Netherlands,  Sweden  or  Finland.  The 
commonality of these measures is that a pool organisation composed of several employers usually from the same 
activity branch and/or located in the same area is voluntarily formed. This pool hires workers, trains them and 
sends them to the companies during their period of activity peaks. Throughout this cycle, workers keep on being 

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11 

Measuring  the  impact  of  flexicurity  policies  on  the  EU  labour  market,  Final  Report,  June  2011,  by 
Institute for Advanced Studies Vienna; Social Partners and flexicurity in contemporary labour markets, 
Synthesis report, May 2011, by E. Voss, A. Dornelas, A.Wild and A. Kwiatkiewicz. Evaluation of the 
first phase of flexicurity (2007-2010): Interim Report, by GHK, 10 February 2012; The second phase of 
flexicurity: an analysis of practices and policies in the Member States (forthcoming), October 2011, by 
EUROFOUND 
Council Directive 1999/70/EC concerning the framework agreement on fixed-term work concluded by 
ETUC, UNICE and CEEP. 
The Commission is currently evaluating the functioning of the Council Directive on fixed-term work. 

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employed  and  paid  by  the  pool  company  as  such,  guaranteeing  them  a  permanent  income,  even  in  times  of 
inactivity.  In  most  of  the  examples,  such  initiatives  are  partly  or  fully  subsidised  by  the  national  or  regional 
administration.  In  Belgium,  the  employees  in  the  pool  are  entitled  to  indefinite  contracts  offered  by  the  pool 
organisation. In some cases, however, the pool is used only as a platform for exchange of information and good 
practices and for short-term employee mobility. 

External flexibility and employment security 

Creating a secure framework for labour market transitions can help workers by providing employment security 
while delivering flexibility to firms. To this end, in 2011 France introduced regulation called career security 
contract (CSP) which offers workers, who lose their jobs in economic redundancies, 80% of previous wages. 
This protection holds for a period of up to maximum one year. Participating in this CSP, which is voluntary to 
the employee, means laid off workers will need to enlist in an intensified 'return to work' programme. Workers 
will have to accept the first job offer made to them. Actual take-up rates of the new CSP so far have been low as 
workers feared that needing to accept any first job offer could mean moving across the country. 

At a regional level, the Austrian Work Placement Foundations (Implacement Arbeitsstiftung) have proven to 
be  good  examples  to  remedy  structural  problems  in  the  labour  market.  There  are  currently  45  placement 
foundations in Austria. These foundations target fast growing sectors where there is relatively little labour supply 
and aim to match the enterprises’ personnel needs with unemployed people, trained and qualified in accordance 
with their specific needs. They offer training and a comprehensive service package including career guidance, 
job search, and work experience programmes that can last up to three years (four in case of jobseekers that are 
above 50 years of age). The participating companies report their demand to the local public employment office 
which looks for suitable candidates from the pool of registered unemployed candidates. During the training, the 
participants  receive  financial  support  amounting  to  the  unemployment  benefit  from  the  public  employment 
service. As a final step, the trainees are employed in the company. 

Overall,  work  placement  foundations  provide  firms  with  the  skilled  labour  that  they  are  seeking,  specifically 
trained  for  their  needs.  During  the  training  period,  the  company  does  not  have  any  wage  or  related  costs  and 
saves  costs  for  training  and  HR  administration.  In  return,  employers  give  job-seekers  the  opportunity  to  gain 
qualifications  that  hold  out  the  promise  of  employment  at  the  end  of  the  training  process.  Work  foundations 
promote greater occupational, remunerative and regional mobility. This is also a good example where a support 
measure can be implemented without tremendous cost burden for one single stakeholder as several stakeholders 
share the financial burden of the measure. 

In Spain the labour market reform approved in September 2010, inspired by the reforms in the severance pay 
reforms  in  Austria,  has  foreseen  the  creation  of  a  worker's  capital  fund  that  will  enter  into  force  in  2012. 
Instead  of  paying  the  total  amount  of  severance  pay  at  dismissal,  employers  would  pay  regularly  an  amount 
equal to a certain number of day's wages per year into this fund. The employee may benefit from this fund in the 
event of dismissal, geographical mobility, for training purposes, or in the case of retirement. The money is kept 
in the worker's account in the case that the worker changes employer voluntarily. As a transitional arrangement, 
until the creation of the Capital Fund, part of the severance payment of dismissal of permanent contracts (eight 
days  per  year  of  service)  will  be  funded  through  recourse  to  the  government  Fondo  de  Garantía  Salarial, 
FOGASA, created in 1985.  

External flexibility and income security 

In Estonia, the first policy document to tie together the four major elements of flexicurity was the explanatory 
note to the new Employment Contracts Act (in 2008). As the unemployment insurance came into force in 2002 
and labour market services were reformed in 2006, the 2008 act dealt  mostly with individual labour relations. 
The  original  act  i.e.  the  one  accepted  by  social  partners,  addressed  also  the  security  of  workers  during 
unemployment with a more generous unemployment insurance benefits system but these changes were cancelled 
as a crisis measure. In addition, the Act also increased the opportunities for lifelong learning. 

Internal flexibility and job (and income) security 

In Germany, Working time accounts were widely exploited by German companies between summer 2008 and 
autumn 2009 to combat the adverse impact of the economic crisis and may have been an alternative to the use of 
short-time work in the adjustment process during the 2008-2009 recession. If employees work fewer hours than 

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their contractual obligation, working time accounts ensure that this debt will be balanced later; in this case, firms 
give  a  credit  to  their  employees  (full  salary),  and  they  receive  a  compensation  once  demand  improves  (in  the 
form of labour). It is estimated that about one third of the companies in Germany with more than 20 employees 
have  used  working  time  accounts  to  maintain  employment  levels  during  the  crisis.  In  2009,  the  reduction  in 
working hours that was due to working-time accounts was about half of the size of the reduction that was due to 
short-time work. About half of the firms that used short-time work also used working time accounts, whereas it 
is estimated that one in ten firms that used working time accounts also made use of short-time work. The use of 
working  time  accounts  provides  for  the  adaptation  of  labour  to  production  needs.  Its  use  is  previous  to  the 
possibility of using short-time work. In case of working-time accounts, the State doesn't pay any compensation. 
As well as the introduction of short-time working, the use of flexible working time accounts is said to be one 
reason why adverse effects on employment were avoided at both the company and the macroeconomic level. 

In  Italy  the  Solidary  Contract  (Contratto  di  Solidarietà),  modified  in  2009,  made  use  of  company-level 
arrangements based on the principle of solidarity among current employees who reduce, all at the same extent, 
their working hours in order to avoid dismissals or to allow the recruitment of new employees. The company-
level agreement grants a reduction of working hours (maximum 60%), corresponding to an equal reduction in 
wage. This income loss is compensated by public employment services. In 2009, the government increased the 
annual amount paid into the fund for job-security agreements to € 40 million. Consequently, for the period of 
2009-2011, the wage supplement has been raised to 80% of the wage reduction. The job security agreements can 
last for an initial period of maximum 24 months, which can be extended for 24 further months (36 months for 
Southern  Italy).  At  the  end  of  the  maximum  period,  a  new  job-security  agreement  for  the  same  units  can  be 
agreed following an at least 12 months production resume period. The agreements create a win-win-win situation 
for employees, employers and unemployed. As the reduction in pay of employees is not reflected in their social 
security contributions (this difference is also financed by the national government), incumbent employees enjoy 
reduced  working  times  with  minimal  income  loss  while  new  jobs  are  created  for  the  unemployed.  Employers 
deciding to use job security agreements benefit from a reduction of the amount of social security contributions to 
be  paid  for  the  workers  using  the  scheme.  One  drawback  of  the  scheme  is  reported  to  be  the  complexity  of 
related procedures. 

Social partners have found ways in collective bargaining to support both flexibility and security at the same time. 
In  Germany,  sectoral  employers  have  the  power  to  oppose  increases  in  minimum  wages  if  they  can  argue 
increased  levels  would  be  harming  employment  in  their  sectors;  in  specific  cases  they  can  opt  out  of  the 
bargaining agreement which has been reached collectively and which still holds in other dimensions. Operating 
this way, firms or sectors have the flexibility to better follow labour productivity developments in their wages, 
avoiding employment threatening 'gaps' between wages and productivity. The way it is organised, employment 
in these firms is protected. 

Functional flexibility and employment security 

Skillnets in Ireland funds and facilitates training through 60 networks of private sector companies, in a range of 
sectors  and  regions.  Each  network  delivers  training  that  is  relevant  to  both  member  company  and  specific 
industry  needs  (see  www.skillnets.ie).  This  is  an  example  where  lifelong  learning  and  human  capital 
accumulation  is  used  to  ensure  employment  security.  Skillnets  is  a  state  funded,  enterprise-led  support  body 
dedicated  to  the  promotion  and  facilitation  of  training  and  upskilling  as  key  elements  in  sustaining  Ireland's 
competitiveness.  The  organization  supports  and  funds  networks  of  enterprises  to  engage  in  training  under  the 
Training Networks Program (TNP). These networks, now referred to as 'Skillnets', are led and managed by the 
enterprises themselves to design, manage and deliver specific training programs across a broad range of industry 
and  service  sectors nationwide.  Since  1999,  Skillnets  has  facilitated  over  60,000 Irish  enterprises,  in  over  350 
networks to improve the range, scope and quality of training and allowed over 275,000 employees to upskill and 
meet their work related training needs.  

94% of companies funded by Skillnets are classified as SMEs. In a 2010 survey with member companies, more 
than four out of five companies (82%) agreed that Skillnets training helped them to fill skill gaps whilst 68% 
agreed that it improved productivity. A high proportion of companies reported that Skillnets training helped to 
achieve market developments such as enhancements to products and services (70%). 84% agreed that Skillnets 
training represents good value for money and 89% agreed that they would recommend to other companies to join 
a Skillnet network. 

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Though  most  of  the  measures  have  been  taken  by  governments,  social  partners  have  also 
themselves taken initiatives or have been involved in the government actions. In fact, one 
of the important aspects highlighted in the initial Commission Communication on flexicurity, 
and  re-iterated  subsequently,  is  the  importance  of  the  involvement  of  social  partner 
organisations in giving shape to flexicurity policies and their implementation.  

In  the  first  phase  of  the  crisis,  the  contribution  of  the  social  partners  to  implement  internal 
flexicurity  was  considerable.  The  short  time  work  arrangements  and  collective  bargaining 
opening clauses, are some direct examples (see also section 5). These efforts have cushioned 
the shock of the recession, controlled wage costs thus protected the competitiveness of firms 
and  as  a  consequence  avoided  a  steeper  decline  in  employment.  The  involvement  of  all 
relevant stakeholders in the design and implementation of flexicurity policies can be seen as 
an important precondition for reforms leading to a win-win situation delivering both security 
and  flexibility.  However,  those  involved  should  not  allow  the  current  short  term  focus, 
induced by the economic crisis, to eclipse the long term view needed to observe and steer the 
process of structural reforms in the flexicurity approach. 

The  findings  of  the  project  implemented  by  the  European  cross-industry  social  partners 
between 2010/2011 on the Implementation of the Flexicurity Concept in the EU12 concludes 
that the level of social partners' involvement has depended very much on existing traditions of 
social  dialogue  and  social  partner  involvement  and  cultures  of  labour  relations.  As  a  result, 
the integration of social partners in the decision making process and shaping reforms ranges 
from strong to weak.   

Flexicurity measures initiated by social partners 

In  Finland,  in  response  to  the  recent  economic  crisis,  Tripartite  Flexicurity  Committees  (Kolmikantainen 
joustoturva-työryhmä) have been formed at a sectoral or company level, which can be considered as a pioneering 
measure that is explicitly labelled as flexicurity. These working groups try to identify the needs for amendments 
in the existing labour market support system and potential new tools necessary to cope with the economic crisis 
and changing working environment. In doing so, a relatively strong emphasis is put on the need to address these 
challenges in the flexicurity spirit (ETUC, BusinessEurope, UEAPME and CEEP, 2011). 

Recently, social partners in Spain reached an Agreement for employment and collective bargaining for the years 
2012-2014 that has been able to improve the internal flexibility in terms of working-time, functional flexibility 
and to link wages to the situation and results of firms, and in particular productivity. This much improves long 
term  employment  security  for  workers  because  viability  of  firms  is  ensured  by  preventing  wage-productivity 
gaps which could eventually lead to bankruptcies and termination of business activities.  

The  Employers’  Associations  for  the  Bavarian  Metalworking  and  Electrical  Industries  and  IG  Metal  in 
Germany initiated an action programme called Employment Bridge Bavaria (Beschäftigungsbrücke Bayern) 
to ensure employability and vocational training for young skilled workers and engineers. Young skilled workers 
and engineers are hired therefore by a special company which posts these people to other companies. Hereby, the 
targeted young people are encouraged to opt for a technical training. The programme, expected to last until 2012, 
is funded by the regional government of Bavaria and involved social partners together (Source: ETUC, Business 
Europe, UEAPME and CEEP, 2011). 

Central to flexicurity policies is their integrated nature; all parties relevant to labour market 
functioning  do,  or  at  least  should,  take  part  in  agreeing  and  implementing  policies,  but  also 
many thematic policy areas are included, ranging from labour law to unemployment benefits 

12 

For more information see http://www.erc-online.eu/content/default.asp?PageID=514  

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and  training.  This  integrated  nature  means  that  views  from  all  stakeholders  on  all  topics 
should be included in policy reforms. This implies that economy-wide agreements can take a 
long  time  to  materialize  but  if  and  when  achieved,  substantial  economy-wide  gains  can  be 
generated.  Certainly  the  added  pressure  of  the  current  economic  crisis  has  diverted  focus 
away from structured approaches to more ad-hoc measures vis-à-vis labour market outcomes. 
The  text  box  below  reports  on  a  number  of  Member  States  showing  a  comprehensive 
approach to flexicurity. 

In  order  to  help  Member  States,  at  EU  level,  a  common  language  has  been  developed,  in 
terms  of  flexicurity  pillars  (ALMP,  lifelong  learning,  contractual  arrangements  and  modern 
social  security),  common  goals  have  been  articulated  concerning  improving  labour  market 
functioning and fighting segmentation and common instruments have been identified in terms 
of various types of securities and flexibilities. 

Comprehensive flexicurity strategies 

Denmark  demonstrated  in  the  1990s  how  an  integrated  policy  approach  can  lead  to  favorable  labour  market 
outcomes.  In  the  fifteen  years  leading  up  to  2008  Denmark  reduced  its  unemployment  rate  by  almost  three 
quarters  –  from  9  to  2.5%  –  adding  considerably  to  employment  security.  Of  course,  part  of  this  was  due  to 
positive macro economic trends which helped job creation and reduced unemployment but active labour market 
policies (ALMPs) and the benefits system saw clear reforms. Furthermore, wage bargaining and income taxation 
were reformed in support of job creation. Benefits were made more difficult to access through stricter eligibility 
criteria while benefits themselves were shorted in time and job-seeking requirements were installed taking away 
passive  elements  which  had  been  present  in  the  system.  ALMPs  changed  their  focus  to  more  human  capital 
investments. 

In  Estonia,  different  opinions  emerged  linked  to  the  coherence  between  the  four  components  of  flexicurity: 
government representatives argued that all components are taken into account in the policy making process and 
that the connections between them are thoroughly analysed whereas the social partner perspective was that the 
four components of flexicurity have been dealt with rather separately and that this is a serious shortcoming. In 
2008,  the  explanatory  note  to  the  new  Employment  Contracts  act  tied  together  the  four  major  flexicurity 
elements.  

In Poland, on-going reforms refer to all four components of flexicurity. Reforms were taken first in the areas of 
lifelong learning and effective active labour market policies, subsequently complemented with measures relating 
to  flexible  and  reliable  contractual  arrangements  and  modern  social  security  systems.  The  2009  report  on  the 
implementation of the NRP discusses significant issues related to the implementation of an integrated model of 
flexicurity. 

In  Austria,  flexicurity  is  seen  as  an  overarching  strategy.  This  is  exemplified  by  the  fact  that  some  measures 
alternately  appear  as  related  to  different  flexicurity  components  in  the  2011  NRP  ;  for  example  the  training 
guarantees  can  be  listed  as  a  lifelong  learning  or  active  labour  market  policy  measure  and  the  social  security 
coverage  for  self-employed  and  freelancers  is  mentioned  under  contractual  arrangements  and  social  security 
measures. It is in the areas of lifelong learning and social security modernisation that there has been the greatest 
renewed policy emphasis as a result of the EU flexicurity strategy. Although efforts and expenditure may have 
focused  (particularly  in  the  crisis  years)  on  ALMP  measures,  there  is  arguably  greater  policy  stability  in  this 
area, whereas responses to the policy challenges in the field of LLL and social security took longer to develop, 
and  are  in  some  cases  (e.g.  the  lifelong  learning  strategy)  not  yet  finalised  and  in  need  of  further  work. 
Flexicurity  considerations  feature  highly  in  collective  bargaining  and  because  of  the  strong  interlinkages  of 
social partners in policy making the focus here has been rather similar. 

Since  mid-2010,  also  Spain  has  performed  a  considerable  reform  effort,  aimed  at  reducing  labour  market 
segmentation  and  increasing  flexibility  at  company  level,  improving  the  functioning  of  active  labour  market 
policies, enhancing the adjustment of wages to local conditions. Major steps include the reform of employment 
protection legislation passed in June 2010, the overhaul of active labour market policies in February 2011, the 
reform of collective bargaining system with a view to de-centralise wage setting in June 2011, and the pension 
reform  passed  in  July  2011  to  extend  the  statutory  retirement  age  and  increase  the  contribution  period.  Most 
recently,  on  10  February  2012,  the  Spanish  government  presented  to  Parliament  new  labour  market  measures 

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which  include  changes  to  employment  protection  legislation,  the  collective  bargaining  system,  internal 
flexibility,  job  incentives  and  labour  market  intermediation  services.  The  Social  partners  have  also  reached  a 
wage moderation agreement until 2014 that includes agreed ways to implement internal flexibility. 

In  the  context  of  its  adjustment  programme,  Portugal  is  passing  a  major  reform  package,  agreed  with  all  the 
employers' organisations and only one of the trade unions, touching upon the employment protection legislation, 
working  time  arrangements  and  the  wage-setting  system.  A  draft  law  will  also  thoroughly  revise  the 
unemployment insurance system, while action on streamlining and strengthening active labour market policies 
and education policies is taking place with a view to speeding up transition to employment, and facilitateing job 
matching. 

5. 

DELIVERY OF FLEXICURITY BY COMPONENT DURING THE CRISIS 

Flexible and reliable contractual arrangements 

One of the more cited outcomes of the crisis in policy terms has been the key role played by 
internal flexibility instruments to help weather the crisis. A good number of them have tried to 
achieve increased income security and job security.   

The  short  time  work  arrangements  (STWAs)  are  the  clearest  and  best  documented 
instrument used to support labour demand and protecting jobs. In one way or another 20 
Member  States  made  use  of  these  arrangements  where  government  subsidies  were  given  to 
either firm or worker to compensate for loss of income resulting from a temporary reduction 
in  working  time  in  response  to  crisis-induced  reductions  in  output,  all  of  this  intended  to 
maintain  existing  job  relations  and  skills.  Some  of  these  arrangements  were  phased  out  in 
2011 because of the need for more austerity in public finances. Specifically considering crisis 
induced measures, it is found that many of these include job security. 

Evaluation studies from OECD13 and those initiated by the European Commission14 show that 
as  a  result  many  jobs  were  saved.  Estimates  range  around  a  million  jobs  saved.  Possible 
downsides to  using  these STWAs are the  fiscal costs (although  these  have  to  be considered 
against unemployment and social benefits saved) and the presumption that the reductions in 
firm  output  are  temporary  after  which  they  will  resume  their  pre-crisis  levels.  In  this  sense 
using  STWAs  could  obstruct  necessary  changes  to  the  economy's  production  structure  that 
may  prove  necessary  in  the  longer  term.  Properly  targeting  this  measure,  thereby  avoiding 
jobs  get  subsidised  which  would  have  survived  anyway  even  without  subsidies  (avoiding 
deadweight losses), is another challenge in designing these arrangements. Some experts have 
also pointed to the fact that STWA have coexisted with external flexibility for non-permanent 
forms of work and that it has made visible the dualism of the labour market. 

These problems can be minimised by including a number of criteria for a public contribution 
to STWA: firms being required to prove the economic necessity of using STWAs; firm-level 
social  partners  having  to  agree  to  the  use  of  these  arrangements;  provisions  that  the  cost  of 
absorbing  the  productivity  loss  should  be  shared  roughly  equally  by  workers,  firms  and 

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14 

OECD,  Hijzen  and  Venn,  'The  role  of  short  time  work  schemes  during  the  2008-9  recession',  OECD 
Working paper 115, 2011 
Research voor Beleid Panteia, 'Short time working arrangements during the crisis and lessons to learn', 
draft version December 2011 

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government; temporary character of fiscal support for the use of STWAs; subsidies should be 
paid back by the firm if after use workers still get dismissed; and finally, the time not worked 
should be used for training activities. 

Successful experiences with the use of working-time accounts, e.g. in Germany, show that 
there  is  a  possibility  to  use  firm-based  instruments  that  help  foster  flexibility  in  the  use  of 
labour,  helping  firms  to  be  more  competitive,  and  at  the  same  time  being  an  instrument  of 
resilience and job security in terms of temporal dampening of demand. These experiences are 
now being also introduced in other Member States (e.g. Portugal). 

However, the crisis has also increased concerns about growing labour market segmentation 
resulting from the rise in the use of (involuntary) fixed term employment and successive 
fixed-term contracts in some Member States, which – rather than acting as a stepping stone 
– can trap workers for many years in precarious employment. This leads not only to low job 
security,  reduced  access  to  training  and  reduced  opportunities  for  career  advancement  and 
wage  progression,  but  also  has  an  impact  on  wider  opportunities,  for  example  access  to  a 
mortgage, saving for a pension or making long-term decisions about family formation.  

One of the major reasons for segmentation is the inadequate dovetailing of regulations of the 
various  contractual  forms:  disparities  in  employment  protection  rights  for  permanent  and 
fixed term contracts have been identified as a, if not the, key source of segmentation. During 
the crisis, a number of Member States started reviewing their labour laws to reduce protection 
for  permanent  contracts  with  a  view  to  making  hiring  more  attractive.  The  latter  has  been 
particularly the case in some countries of the Mediterranean and Eastern European groups. 

Reducing labour market segmentation - Single open ended contract 

The economic crisis has put into spotlight the issue of labour market segmentation. Job losses were concentrated 
to a large extent on workers with fixed term contracts. As one round of fixed term contracts was finished, it was 
followed for many workers by unemployment rather than another fixed term contract. 

In  2011  the  Commission  proposed  to  address  the  issue  through  the  introduction  at  Member  State  level  of  a 
“single open  ended  contract”  to  encourage employers  to hire workers on  a  more permanent basis. No  specific 
contract examples have been proposed but only a general direction. Ideally, a single open ended contract would 
provide  flexibility  to  employers  while  preventing  segmentation.  All  workers  would  be  protected  by  such  a 
contract against lay-off at will, by forms of legal and/or monetary protection – clarity about this protection would 
be available from day one of the contract. Furthermore, these protection rights would build up continuously with 
job tenure until a maximum, and there would be no ex-ante time limits specified in the contract. 

The  issue  has  been  debated  at  length  in  some  Member  States  though  as  such  it  has  not  been  adopted  in  any. 
However the debate has succeeded in focusing attention on the problem and has triggered at debate on the ways 
to improve the design of contractual arrangements to address the segmentation problem. 

Active labour market policies 

Active  labour  market  policies  are  a  key  component  of  flexicurity  in  facilitating  transitions 
from an unemployment situation towards a job. The crisis has challenged the use of ALMPs 
because of the severe increase in the numbers unemployed and the decrease in labour demand 
may cast doubts on the effectiveness of measures. Furthermore, the limits in the availability of 

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funds due to fiscal consolidation have raised an additional challenge just when the demand for 
such funds has risen with increased numbers of unemployed.  

Overall, spending on ALMPs as a proportion of GDP has increased across the EU as a result 
of greater use of existing schemes as well as newly introduced active labour market policies. 
An analysis of this indicator for the five flexicurity clusters shows the Nordic and Continental 
clusters devoted the highest proportion of GDP to ALMP, with an average 0.8% and 0.7% of 
GDP  spent  on  these  measures  respectively.  These  are  the  two  flexicurity  clusters  with 
spending  above  the  EU  average  (0.6%).  In  2009  the  other  three  flexicurity  clusters  (the 
Eastern European, Southern, and Anglo Saxon clusters) each spent substantially less with an 
average of 0.3% of GDP on ALMP measures. A major source for ALMP funding during the 
crisis  has  been  the  European  Social  Fund,  which  for  some  Member  States  provided  a 
significant  contribution  to  limited  national  budget  allocations,  in  particular  for  training 
measures, including in the context of short-time work arrangements. 

Before the crisis, between 2005 and 2008, expenditure on ALMP remained rather stable for 
the EU, as well as among the Continental and Eastern European clusters. The Nordic cluster 
experienced a decline in expenditure between 2006 and 2008 (consistent with falling rates of 
unemployment). Such a decline was also evidenced in the Anglo-Saxon and Southern clusters 
between 2005 and 2006. All clusters experienced a rise in ALMP expenditure between 2008 
and 2009 as a result of the economic crisis and subsequent rises in unemployment. The lowest 
rates of increase during this period can be found in Anglo-Saxon and Southern clusters which 
traditionally place less emphasis on ALMP spending. Figure 1 illustrates these findings. 

Figure 1. Spending on active labour market policies (as % of GDP) 

Source: Eurostat 

Within ALMPs, the trend has been towards a stronger use of hiring subsidies. There has also 
been  a  strengthening  of  the  conditionality  of  unemployment  benefits  to  the  participation  in 
ALMPs. In some cases, even some income-support benefits provided after the exhaustion of 
unemployment benefits now require some kind of participation in activation measures. 

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Modern social security systems 

The  modernisation  of  social  security  systems  is  of  particular  relevance  to  the  flexicurity 
agenda. One obvious link is that improvements or expansions in social insurance systems (for 
example  to  extend  unemployment  benefit  durations)  can  serve  to  balance  potential 
liberalisation  in  contractual  arrangements  by  providing  greater  income  security  during 
transitions.  

Social insurance systems can be adapted to the economic cycle to build up greater reserves to 
provide  additional  income  support  in  times  of  higher  unemployment  (and  therefore  more 
difficult  transitions).  Beyond  that,  passive  measures  including  income  support  have  an 
important role to play as automatic stabilisers during recession, but if badly designed, can also 
affect  incentives  to  work  and  go  against  the  notion  of  “making  work  pay”  (especially  if 
coinciding with high tax wedge on low-paid labour). 

Between 2005 and 2009 the Continental and Nordic clusters were responsible for the highest 
proportions of GDP spent on such measures (each spending 1.5% of GDP by 2009, compared 
to an EU average of 1.4% - see figure 2). The Anglo-Saxon cluster also reached this figure by 
2009, following a rapid increase from a low level since 2008 (largely as a result of the crisis 
and  rising  unemployment).  In  common  with  most  other  flexicurity  clusters,  the  Continental 
and Nordic clusters saw a consistent reduction in the proportion of GDP spent in these areas 
between  2005  and  2008,  followed  by  a  significant  increase  in  2009. This  is  consistent  with 
declining rates of unemployment (and indeed declining early retirement) during these earlier 
years  and  increases  in  unemployment  following  the  crisis,  necessitating  higher  income 
maintenance  payments.  Figure  2  summarises  the  figures  which  reflect  developments  in 
numbers of income support users as well as crisis induced support schemes. 

Figure 2. Expenditure on income support and early retirement (as % GDP) 

Source: Eurostat 

Increasing  conditionality  of  unemployment  and  other  benefits  is  intended  to  make  the 
unemployed and inactive groups more pro-active in their efforts to seek work or retrain, with 
sanctions  applied  in  case  of  non-compliance.  However,  whether  such  effects  are  achieved 
depends  on  there  being  adequate  provision  of  effective  active  labour  market  measures  and 
training  opportunities  to  support  those  who  cannot  find  work  and,  ultimately,  on  adequate 

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demand  in  the  labour  market  to  give  people  a  chance  of  finding  work  after  participating  in 
ALMP measures. However, ALMP budgets have mostly not grown to reflect the increase in 
the  number  of  unemployed.  Moreover,  conditionality  also  risks  that  the  most  vulnerable 
groups, who need the most support, are de-motivated and put off trying to find work and fall 
back  to  inactivity.  There  needs  to  be  flexibility  in  the  approach,  individualised  support  for 
those that need it, and adequate fall-back systems to avoid long-term exclusion. 

Although some groups do very well out of atypical employment arrangements (e.g. successful 
entrepreneurs, high-skilled freelance workers, etc.), many people who are self-employed, in 
part-time or fixed term contracts continue to be inadequately covered by social protection as 
well  as  often  being  rewarded  unfavourably  (levels  of  pay,  holiday  rights,  etc.)  compared  to 
people in full-time permanent contracts doing the same or similar jobs.  

The  Hartz  reforms  undertaken  during  the  2000s  in  Germany  were  an  example  of  strengthening  benefit 
conditionality.  At  the  core  of  the  Hartz  reforms  was  the  introduction  of  a  so-called  'mutual  responsibilities 
approach in social security'. This meant the social security system would be aimed more at stimulating a return 
to work (more employment security) while income security continued to be available. In this approach, on the 
one hand PES organisations provide unemployment benefits when needed combined with increased frequencies 
of face-to-face contact, strengthened follow-up and generally becoming more accountable for their results, while 
on the other hand, jobseekers receiving benefits need to show clear job-search efforts, which are monitored, and 
sanctions  may  be  used  for  non-compliance.  Furthermore,  benefit  durations  were  made  time-limited  and 
conditionality  was  introduced  linking  training  and  job  search  effort  more  directly  to  receiving  benefits. 
Evaluations  show  that  jobseekers  found  jobs  quicker  and  PES  offices  delivered  more  targeted  and  efficient 
services at the same or lower costs.  

Lifelong learning  

In  addition  to  a  good  macro  economic  situation,  employment  security  is  to  a  large  extent 
generated  by  ensuring  continued  human  capital  accumulation  throughout  workers'  careers. 
Relying  only  on  initial  education  undergone  before  the  beginning  of  one's  working  life  is 
insufficient  in  modern  European  economies  with  constantly  changing  technological 
production processes. Whether education and training activities are of a nature specific to the 
firm or sector influences firm incentives to make the required investments. Some of the short 
time work arrangements have used training participation as a criterion. Typically, this sort of 
training activities has been firm-specific. 

The  economic  crisis  seems  to  not  have  had  a  major  impact  on  education  and  training 
participation  rates  among  employed  persons  (see  figure  3).  During  the  2008-2010  period, 
worker  participation  in  training  or  education  per  flexicurity  country  group  have  remained 
more  or  less  constant  (Anglo-Saxon,  Mediterranean  and  Central  European)  or  continued  to 
grow  (Nordic).  In  the  Continental  group  an  increase  in  participation  has  been  registered  in 
2009,  most  likely  related  to  the  participation  in  short  time  work  arrangements  which 
contained  training  requirements.  Again,  the  ESF  proved  to  be  an  important  funding 
instrument in the Member States for such activities. 

Considering levels, clearly workers in the Nordic, and to a somewhat lesser degree the Anglo-
Saxon group, obtain a considerable portion of their employment security from high levels of 
human  capital  accumulation  through  education  and  training  participation.  For  the  other 
country groups, employment security via education and training seems to play a lesser role. 

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Figure 3. Participation in education and training among employed persons 

Source: Eurostat 

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6. 

PERFORMANCE OF FLEXICURITY DURING THE CRISIS 

Flexicurity was intended to help create more and better jobs. It is therefore important to see 
how  the  various  flexicurity  regimes  have  weathered  the  crisis  and  how  flexicurity  policies 
have helped in terms of better labour market outcomes, such as employment, unemployment, 
segmentation, income protection and polarisation. This section discusses these themes in turn. 

From an aggregated perspective the crisis has had a varied impact on Member States' labour 
markets.  The  various  country  groups  replicate  also  this  disparity  in  the  way  the  crisis  has 
manifested itself in terms of employment, unemployment and segmentation. 

If  we  examine  unemployment,  between  April  2008  and  December  2011,  the  EU-level 
unemployment rate increased by 4 pp to a historic high of 9.9%. Considering the big drop in 
GDP and general economic activity, this rise in unemployment is moderate compared to other 
parts  of  the  developed  world;  the  US  for  example  witnessed  a  stronger  initial  increase  in 
unemployment even though GDP reductions were similar to those in the EU. 

Figure 4. Unemployment impact of crisis various over countries  

Within the EU, looking at the flexicurity country groups, some patterns emerge in the labour 
market  performance  over  the  crisis  period.  The  countries  in  the  Nordic  and  Continental 
countries  groups  have  seen  smaller  unemployment  increases,  while  Central/Eastern 
Europe  witnessed  EU-average  levels  of  unemployment  growth  during  the  crisis  and  the 
Mediterranean  countries  experienced  large  (PT)  to  very  large  unemployment  increases  (EL, 
ES),  see  Figure  4.  There  are  some  exceptions  to  the  above  pattern  with  DK  and  the  Baltic 
states  with  unemployment  growth  above  their  respective  country  group  average,  and  IT 
below.  

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Another  important  aspect  is  how  unemployment  is  turning  into  long-term  unemployment. 
Previous  to  the  crisis  there  was  a  general  trend  towards  the  reduction  of  long-term 
unemployment  rates.  This  trend  has  been  generally  reversed,  but  it  can  be  noted  that  the 
increase  has  been  particularly  steep  in  the  case  of  the  Anglo-Saxon  cluster  and  that  Nordic 
and Continental countries have seen a slower increase in the long-term unemployment 
rate  than  the  other  groups  of  countries.  This  would  appear  to  show  that  they  are  still  more 
successful in supporting transitions back to the labour market. 

Figure 5. Long-term unemployment rates (2001-2010)  

Source: Eurostat 

The crisis has triggered a reduction in the EU employment rate from 2007-2010 of 2.9 pp. 
After  the  crisis  period  2008–2010  the  Nordic  and  Continental  groups  show  the  highest 
employment  rates.  The  higher  unemployment  rates  in  DK  pushed  Nordic  employment  rates 
down  but  they  are  still  at  the  highest  level  compared  to  other  groups  in  the  EU.  The 
Continental group is the only group which managed to increase its employment rates over this 
period. 

Figure 6. Employment rates for flexicurity clusters (age group 15-64 years old) 

Source: Eurostat 

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Analysing  labour  market  segmentation  is  difficult  as  it  can  not  be  observed  directly.  The 
numbers of workers in fixed term contracts in some cases can provide a useful but often only 
partial  insight  into  the  issue,  since  a  fixed  term  contract  is  not  necessarily  an  unfavourable 
contract for every worker. He or she may switch easily to a permanent contract after a fixed 
term contract, using it as a stepping stone, or it may well match his or her preferences. Still, 
labour  market  segmentation  can  be  caused  by  repetitive  use  or  over-use  of  fixed  term 
contracts,  so  that  it  causes  scarring  effects,  repeated  unemployment  spells  between  contract 
periods and a generally unbalanced development of work and private life. Using involuntary 
fixed  term  as  an  indicator  work  does  provide  a  better  insight  regarding  segmentation  and 
over-use  of  fixed  term  contracts  as  people  are  increasingly  likely  to  want  to  work  in  a 
permanent job, especially after they have done a series of fixed-term contracts leaving them to 
experience the downside of repeated fixed-term contract use. 

Southern and Eastern European clusters are characterised by high levels of involuntary fixed 
term workers (between 70-80%, see figure 7), suggesting segmented labour markets. Workers 
are  trying  but  not  finding  access  to  permanent  employment.  Nordic  and  Continental 
countries have lower levels of workers with involuntary fixed term contracts and these 
two groups showed an improvement since 2009. 

Figure 7. Proportion of those in fixed term employment that ‘could not find permanent job’ 

Source: Eurostat 

When  we look at  income  protection,  mainly  delivered  through  unemployment  benefits,  we 
see  that  the  crisis  has  put  social  security  schemes  under  stress,  and  has  revealed  strong 
variation  across  the  EU  in  their  capacity  to  provide  adequate  income  support  (i.e.  acting  as 
automatic stabilizers) and to cover the new unemployed. 

Table 1 below illustrates for selected countries the extent to which gross disposable incomes 
of  households  (GDHI)  have  been  sustained  in  the  first  and  second  phases  of  the  crisis.  It 
shows that it is mainly in the Continental and the Nordic countries, and the Czech Republic 
that  incomes  were  well  sustained  during  both  periods,  despite  important  initial  economic 
shocks  –  as  indicated  by  severe  drops  in  GDP.  Elsewhere  the  picture  is  mixed.  In  some 
countries (UK, Spain, Portugal), automatic stabilizers played their smoothing role in the first 
phase running 2007-2009, but this effect was not continued in the period 2009-2011.  

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Table 1. Economic shocks and effects on gross disposable household incomes, selected countries 

2007-9 

2009-11 

GDP

GDHI

GDP

GDHI 

Anglo-Saxon 

United Kingdom  

Continental 

Austria  

Germany  

France  

Belgium  

Nordic 

Denmark  

Netherlands  

Finland  

Sweden  

Mediterranean 

Spain  

Greece  

Italy  

Portugal  

and 

Estonia  

Latvia  

Hungary  

Slovenia  

Eastern 
Central 
European 

Czech Republic  

Poland 

-5,4

-2,5

-4,1

-2,8

-1,9

-6,3

-1,8

-7,3

-5,8

-2,9

-3,4

-6,1

-2,5

-17,4

-20,4

-6,0

-4,7

-1,7

6,8

1,9

-0,5

0,4

1,7

5,2

-0,8

-0,6

3,9

5,1

5,1

-2,7

-2,5

4,9

-6,2

-15,5

-5,6

2,2

3,5

8,1

2,4

5,3

6,7

3,1

4,5

3,0

3,5

6,8

9,8

0,7

-8,8

2,1

-0,5

10,4

4,1

2,7

2,4

4,6

8,1

-1,1 

-0,8 

1,6 

1,3 

0,1 

5,9 

-1,0 

1,1 

5,1 

-6,2 

-12,4 

-1,0 

-3,5 

-1,9 

-3,3 

: 

-0,3 

0,9 

5,8 

Figures represent percentage change in given periods. Source: National Accounts 

Furthermore,  the  crisis  revealed  strong  variations  in  the  capacity  of  unemployment  benefit 
schemes  to  absorb  the  shock  and  to  allow  for  adjustments  in  terms  of  benefit  duration  and 
conditionality. In some countries, tight conditionality combined with short durations had the 
effect  of  pushing  people  from  unemployment  benefits  towards  social  assistance  schemes  as 
employment opportunities contracted. In other countries, recent data indicates that there is an 
increasing gap between the number of unemployed and the number of benefit recipients (over 
all types of schemes), indicating that an increasing number of people are not covered at all.  

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A final dimension worth considering in performance of flexicurity is the effects the crisis has 
had on the jobs structure. Jobs are structured in terms of occupations, like managers, machine 
operators  and  crafts  workers,  and  in  terms  of  economic  sectors,  like  financial  services, 
construction  or  manufacturing.  Jobs,  or  occupation  and  sector  pairs,  have  shown  a  clear 
pattern of polarisation over the economic crisis; jobs in the middle earnings quintiles have 
been  terminated  very  clearly  while  jobs  both  in  the  lowest  highest  quintiles  have  seen  no 
changes or even growth, see figure 8. 

At  country  level,  it  seems  Mediterranean  countries  including  CY,  ES,  EL  and  PT  show 
stronger patterns of polarisation, while Nordic (SE, FI, NL) and Continental groups (AT, BE, 
DE, LU) show less polarisation and more upgrading in job structures, i.e. job growth in higher 
earnings quintiles and job losses in lower quintiles.15 

Figure 8. Changes in numbers of jobs by wage quintiles, 2008Q2 – 2010Q2, in thousands 

15 

http://ec.europa.eu/social/main.jsp?catId=113&langId=en&pubId=6176&type=2&furtherPubs=yes  

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7. 

CONCLUDING OBSERVATIONS 

The  experience  of  recent  years  has  confirmed  flexicurity  as  a  framework  and  a  tool  to 
understand and implement employment policy-making and to identify good and bad practices. 
It continues to be a useful concept within the employment agenda, supporting Europe's effort 
to build open, dynamic and inclusive labour markets. The following points stand out: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Labour market segmentation remains a serious concern and the wide variety of the 
employment  impacts  from  similar  declines  in  economic  activity  shows  that 
segmentation matters. Employment losses were far more serious in more segmented 
labour markets and also largely concentrated on the young which tended to have the 
greatest share of fixed term contracts.  

There  is  evidence  that  countries  that  reformed  their  systems  -  for  example  by 
shifting  the  emphasis  from  protection  in  the  job  to  improving  unemployment 
insurance  -  offered  better  employment  protection  and  facilitated  labour  market 
adjustment.  Similarly,  those  countries  that  allowed  workers  at  the  lower  end  to 
combine income support with the taking up of jobs - notably if efforts were made to 
facilitate  further  positive  transitions  to  avoid  that  people  were  stuck  in  low 
productivity job – saw better outcomes. 

During  the  crisis,  internal  flexibility  (or  internal  flexicurity)  -  through  the  use  of 
short  time  work  arrangements,  working  time  accounts,  use  of  temporary  opt-out 
clauses,  as  well  as  other  forms  of  managing  labour  market  adjustment  through 
investment in training of employed workers - has proved itself to be just as important 
as external flexibility.  

Countries with the best experience before, during, and successfully exiting the crisis, 
are indeed those that balance flexibility in adjustment to the crisis related shocks and 
structural  change  with  employment  security  measures.  Among  those  are  Member 
States in the Nordic and Continental groups. However the Nordic group has seen 
rapidly rising unemployment and rather jobless recoveries and the Continental group 
rather divergent experiences, possibly so extensive that they no longer really form a 
coherent cluster. 

Flexicurity  is  both  about  structural  reforms  and  social  investments.  What  is 
important  at  this  juncture  is  to  agree  on  the  need  to  undertake  and  implement  the 
labour  market  reforms  that  can  help  put  back  Europe  on  the  path  to  recovery  and 
growth. In some cases the favourable impacts of reforms may take several years to 
see their full impacts and implications. The reforms in unemployment benefits show 
the  importance  of  doing  it  as  part  of  implementing  an  integrated  policy  package;  a 
comprehensive  approach  delivers  stronger  labour  market  results  than  individual 
measures would. 

Discussions  with  Member  States  and  the  November  Stakeholder  conference  have 
provided  important  inputs  when  considering  the  future  for  flexicurity.  Through  the 
work  of  the  Employment  Committee  a  common  body  of  concepts,  in  terms  of 
flexicurity  pillars  (ALMP,  lifelong  learning,  contractual  arrangements  and  modern 

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(7) 

(8) 

social  security)  and  common  principles  has  been  developed,  feeding  into  the 
implementation of the Europe 2020 strategy 

The  current  analysis  shows  that  there  is  a  high  number  of  measures  which  include 
multi-stakeholder  cooperation  and  which  are  characterised  by  an  explicit  definition 
of the flexibility and security dimensions - leading to an agreed upon and accepted 
combination of the two. Furthermore, the new perspective on the benefits of internal 
flexibility instruments places a renewed onus on a reinforced social dialogue at all 
levels,  including  firm  level,  that  contributes  to  the  design,  implementation  and 
monitoring of flexicurity. 

The concept of flexicurity translates into concrete policies and practices. Ongoing 
initiatives in the field can be described with their expected effectiveness in terms of 
jobs and income security, and not necessarily at great (public) costs. Central to these 
examples is a renewed balance between various forms of flexibility combined with 
appropriate  forms  of  security.  Because  not  all  can  be  delivered  by  national 
stakeholders,  some  flexicurity  measures  and  mutual  risk  management  can  be 
generated  by  new  partnerships  between  local  governments,  social  partners, 
networks of firms (notably SME's) and communities. 

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