Due to rising global competition, new information technologies and increased orientation towards services, the European labour markets have undergone extensive changes in recent years. While globalisation and technological progress will continue to speed ahead and constantly change the needs of employees and enterprises, Europe must establish ways that better address both social protection and economic flexibility, while keeping in mind demographic constraints that affect how the respective economies function.
To alleviate the impact of demographic aging, lifelong learning and higher participation of older employees is crucial. The chart shows that throughout the EU member states, the rate of participation at informal training bypasses that of formal training, sometimes even substantially.
Flexicurity is a welfare state model with a pro-active labour market policy. The term "flexibility" effectively encompasses two different models: numerical flexibility, i.e. the idea of "easier to hire and fire" contracts; and functional flexibility, closely linked to the concept of knowledge society or lifelong learning whereby the European workforce is being prepared for a changing working life, where only a multitude of skills will ensure employment.
According to Modernising Europe's Labour Markets: Flexicurity - Greater Security Through Better Employment Opportunities, an initiative by employers' and business federations in Denmark, Germany, Portugal and Slovenia, flexicurity entails more than the protection of an existing job but rather "generating opportunities to substitute a disappearing job as seamlessly as possible with a new job (external flexibility). In addition to strengthening external flexibility, flexicurity also involves mobility within an existing work relationship in order to address the threat of job losses".
Denmark's low unemployment figures and its low social exclusion rates, coupled with its relatively high output growth, had led the EU to adopt flexicurity as its leitmotiv in its European Employment Strategy. In particular, Integrated Guideline 21 of the Working Together for Growth and Jobs for the period 2005-2008 calls on member states to "...promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners".
Before issuing its communication, the European Commission conducted a broad consultation process, complemented by a major conference in Brussels in April 2007. The communication, which was presented in June 2007, formed the basis for the development of a set of common principles on flexicurity, which were adopted by the Council of Ministers in December 2007.
These common principles contribute positively to ongoing negotiations as well as encouraging reform efforts at national level. Detailed measures must take into account the specificities of each member state and can only be decided by the respective country.
BusinessEurope, of which the Malta Federation of Industry (FOI) is a member, calls for the following actions to stimulate the flexicurity debate for more growth and jobs:
● Dismantle rigid labour legislation
Any complex and rigid labour laws that hinder business growth, restrict job creation and lead to labour market segmentation, should be removed by member states. In fact, it is believed that a simple, transparent and predictable legal framework for internal and external flexicurity would promote job creation if such a framework were to permit companies to make the required employment adjustments when new market opportunities arise.
● Ensure a variety of employment contracts
So as to enable the efficient functioning of labour markets and to respond to the different requirements of enterprises and employees, the availability of a wide array of contractual arrangements should be ensured.
● Promote lifelong learning
As lifelong learning improves the competitiveness and innovative capacity of enterprises while enhancing the productivity and employability of employees, it is vital for firms and their workforces to adapt to the current economic environment. It is essential for an individual to move from security in a particular job to employment security. This is made possible through lifelong learning, which should equip workers to grasp new employment opportunities.
BusinessEurope's member federations, including the Malta Federation of Industry, are introducing initiatives at national, sectoral and enterprise level to foster lifelong learning. National authorities should support firms in their efforts to improve workers' competences. Employees should be committed to undergo training and skills development programmes so as to ensure their employability. In the course of competence development, informal learning is as significant as formal training.
● Implement effective labour market policies
Active labour market policies should seek to keep unemployment at a minimum by engaging jobseekers at an early stage while having an effective system in place to re-integrate those who have been unemployed in the long-term. The activation measures of EU member states must be increased, predominantly to lower the EU long-term unemployment figure. Maximising the cost-effectiveness of active labour market policies would also need a shift of public expenditure to such policies.
● Encourage mobility through modernised social security systems
Should the social security mechanism discourage employment in any way, no labour market policy will ever be effective in activating the workforce. Thus, any unemployment benefit measure must balance an unemployed person's rights and obligations, rather than granting unconditional passive financial packages.
It is also vital that older workers are encouraged to continue on the labour market longer and that early retirement is dissuaded. The latter could be reached, for example, if the number of social security contributions were to have a stronger connection to pension privileges.
The joint labour market analysis of the European social partners, entitled Key Challenges Facing European Labour Markets, was presented by BusinessEurope president Ernest-Antoine Seillière to the European Council in December 2007. This constitutes the main contribution of the European social partners to the debate on flexicurity. Negotiated over one year, the report explains current trends on European labour markets, identifying key challenges and presenting recommendations to policymakers and social partners on how to address them. National governments are urged to join forces with the national social partners to modernise labour markets based on the flexicurity approach. As the common principles of flexicurity endorsed by the European Council must be put into practice to get European labour markets up to speed for the 21st century, it is hoped that these recommendations would assist in steering reform efforts at both European and national levels.
Among the recommendations presented, the report focused on creating more and better jobs by urging member states to:
● Design a holistic and balanced combination of policies for employees and enterprises that would address both flexibility and security dimensions. This would comprise labour law and contractual arrangements, effective and high quality active labour market policies, lifelong learning policies, efficient and sustainable social protection systems, and social dialogue. To ensure the success of flexicurity policies, these must be complemented by sensible macroeconomic policies, sufficient allocation of financial budgets and the existence of a healthy business environment offering good working conditions;
● Work together with social partners when designing policy measures, and ensure that their capacity is developed where needed;
● Incorporate the range of policy measures into the National Reform Programme;
● Support implementation efforts of the different flexicurity measures at a suitable level.
The FOI shares the views of the employers' and business federations that for labour markets to be modernised, any related policy must be integrated within a comprehensive reform strategy focused on job creation and economic growth, which would go beyond the labour market and also comprise measures related to tax, education and innovation, industrial relations and competition policy, public finances and better regulation.
The OECD employment strategy emphasises the relationship between macro-economic policy and labour market development. The central engine for more and better jobs must remain economic growth. However, despite Europe's current favourable economic situation, Europe still lags behind important competitors. In fact, over the last decade, the EU's average annual growth was 1 per cent behind that of the US and the rate of productivity growth in the US has been quicker than in the EU, thus widening further the US's lead. The appropriate regulatory framework must assist in strengthening rather than hindering or restricting enterprises' competitiveness. Only then would it be possible for sustainable employment growth to be achieved.
• Mr Muscat is the director general of the Malta Federation of Industry.
To alleviate the impact of demographic aging, lifelong learning and higher participation of older employees is crucial. The chart shows that throughout the EU member states, the rate of participation at informal training bypasses that of formal training, sometimes even substantially.
Flexicurity is a welfare state model with a pro-active labour market policy. The term "flexibility" effectively encompasses two different models: numerical flexibility, i.e. the idea of "easier to hire and fire" contracts; and functional flexibility, closely linked to the concept of knowledge society or lifelong learning whereby the European workforce is being prepared for a changing working life, where only a multitude of skills will ensure employment.
According to Modernising Europe's Labour Markets: Flexicurity - Greater Security Through Better Employment Opportunities, an initiative by employers' and business federations in Denmark, Germany, Portugal and Slovenia, flexicurity entails more than the protection of an existing job but rather "generating opportunities to substitute a disappearing job as seamlessly as possible with a new job (external flexibility). In addition to strengthening external flexibility, flexicurity also involves mobility within an existing work relationship in order to address the threat of job losses".
Denmark's low unemployment figures and its low social exclusion rates, coupled with its relatively high output growth, had led the EU to adopt flexicurity as its leitmotiv in its European Employment Strategy. In particular, Integrated Guideline 21 of the Working Together for Growth and Jobs for the period 2005-2008 calls on member states to "...promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners".
Before issuing its communication, the European Commission conducted a broad consultation process, complemented by a major conference in Brussels in April 2007. The communication, which was presented in June 2007, formed the basis for the development of a set of common principles on flexicurity, which were adopted by the Council of Ministers in December 2007.
These common principles contribute positively to ongoing negotiations as well as encouraging reform efforts at national level. Detailed measures must take into account the specificities of each member state and can only be decided by the respective country.
BusinessEurope, of which the Malta Federation of Industry (FOI) is a member, calls for the following actions to stimulate the flexicurity debate for more growth and jobs:
● Dismantle rigid labour legislation
Any complex and rigid labour laws that hinder business growth, restrict job creation and lead to labour market segmentation, should be removed by member states. In fact, it is believed that a simple, transparent and predictable legal framework for internal and external flexicurity would promote job creation if such a framework were to permit companies to make the required employment adjustments when new market opportunities arise.
● Ensure a variety of employment contracts
So as to enable the efficient functioning of labour markets and to respond to the different requirements of enterprises and employees, the availability of a wide array of contractual arrangements should be ensured.
● Promote lifelong learning
As lifelong learning improves the competitiveness and innovative capacity of enterprises while enhancing the productivity and employability of employees, it is vital for firms and their workforces to adapt to the current economic environment. It is essential for an individual to move from security in a particular job to employment security. This is made possible through lifelong learning, which should equip workers to grasp new employment opportunities.
BusinessEurope's member federations, including the Malta Federation of Industry, are introducing initiatives at national, sectoral and enterprise level to foster lifelong learning. National authorities should support firms in their efforts to improve workers' competences. Employees should be committed to undergo training and skills development programmes so as to ensure their employability. In the course of competence development, informal learning is as significant as formal training.
● Implement effective labour market policies
Active labour market policies should seek to keep unemployment at a minimum by engaging jobseekers at an early stage while having an effective system in place to re-integrate those who have been unemployed in the long-term. The activation measures of EU member states must be increased, predominantly to lower the EU long-term unemployment figure. Maximising the cost-effectiveness of active labour market policies would also need a shift of public expenditure to such policies.
● Encourage mobility through modernised social security systems
Should the social security mechanism discourage employment in any way, no labour market policy will ever be effective in activating the workforce. Thus, any unemployment benefit measure must balance an unemployed person's rights and obligations, rather than granting unconditional passive financial packages.
It is also vital that older workers are encouraged to continue on the labour market longer and that early retirement is dissuaded. The latter could be reached, for example, if the number of social security contributions were to have a stronger connection to pension privileges.
The joint labour market analysis of the European social partners, entitled Key Challenges Facing European Labour Markets, was presented by BusinessEurope president Ernest-Antoine Seillière to the European Council in December 2007. This constitutes the main contribution of the European social partners to the debate on flexicurity. Negotiated over one year, the report explains current trends on European labour markets, identifying key challenges and presenting recommendations to policymakers and social partners on how to address them. National governments are urged to join forces with the national social partners to modernise labour markets based on the flexicurity approach. As the common principles of flexicurity endorsed by the European Council must be put into practice to get European labour markets up to speed for the 21st century, it is hoped that these recommendations would assist in steering reform efforts at both European and national levels.
Among the recommendations presented, the report focused on creating more and better jobs by urging member states to:
● Design a holistic and balanced combination of policies for employees and enterprises that would address both flexibility and security dimensions. This would comprise labour law and contractual arrangements, effective and high quality active labour market policies, lifelong learning policies, efficient and sustainable social protection systems, and social dialogue. To ensure the success of flexicurity policies, these must be complemented by sensible macroeconomic policies, sufficient allocation of financial budgets and the existence of a healthy business environment offering good working conditions;
● Work together with social partners when designing policy measures, and ensure that their capacity is developed where needed;
● Incorporate the range of policy measures into the National Reform Programme;
● Support implementation efforts of the different flexicurity measures at a suitable level.
The FOI shares the views of the employers' and business federations that for labour markets to be modernised, any related policy must be integrated within a comprehensive reform strategy focused on job creation and economic growth, which would go beyond the labour market and also comprise measures related to tax, education and innovation, industrial relations and competition policy, public finances and better regulation.
The OECD employment strategy emphasises the relationship between macro-economic policy and labour market development. The central engine for more and better jobs must remain economic growth. However, despite Europe's current favourable economic situation, Europe still lags behind important competitors. In fact, over the last decade, the EU's average annual growth was 1 per cent behind that of the US and the rate of productivity growth in the US has been quicker than in the EU, thus widening further the US's lead. The appropriate regulatory framework must assist in strengthening rather than hindering or restricting enterprises' competitiveness. Only then would it be possible for sustainable employment growth to be achieved.
• Mr Muscat is the director general of the Malta Federation of Industry.