Member of the European Commission responsible for Employment, Social Affairs
and Equal Opportunities
Informal Ministerial Meeting: “Flexicurity”
Ladies and Gentlemen,
Three months on from the Summit Meeting at Hampton Court, which lent new momentum to social Europe, I am pleased to have been invited by the Austrian Presidency to take part in a debate on the concept of “flexicurity”.
We can learn a lot from Austria. With the help of “flexicurity”, Austria has succeeded in combining labour market flexibility and social security.
My idea of flexicurity is based on three points:
Firstly, I see it as a policy which is geared more to the protection of people than to the protection of jobs. By way of illustration: when a ship sinks, the most important thing is not to save the ship but to save the people on board.
Secondly, new types of security must be developed if we want Europe to benefit from technological change and globalisation. At the same time, greater flexibility in the social and economic fields is essential if we are to overcome the new challenges. Here is one example: freedom of movement within Europe makes the labour market more flexible; the portability of pension entitlements facilitates freedom of movement by creating security for the workforce.
Promoting flexibility and linking it with new kinds of security could be Europe’s contribution to the debate on the connection between economic performance and social cohesion.
Thirdly, “flexicurity” is based on the cohesion of the social system as a whole. Systems of protection, the role of the State and the social partners, employment policy and opportunities for lifelong learning, among other things, must be aligned with each other.
Denmark and Austria are two good examples: the labour market in these countries is more flexible than elsewhere, and yet the workforce enjoys effective social protection and benefits from a very dynamic employment and training policy involving the social partners and extensive decentralisation.
Two questions arise:
How can employees be made better able to adjust to change while at the same time making real progress in their careers?
How can we ensure that flexibility is not confined only to some employees and does not mean that they will have to accept mediocre jobs offering little prospect of promotion and low wages in the long term?
Let me give you an example:
A third of people whose jobs are not secure find permanent employment after just a year. For 16% of them, the situation does not improve, 20% leave paid employment and 30% of those in low-paid jobs are no longer working after seven years.
The reasons for these changes are well known. A job for life with the same company is largely a thing of the past in Europe. Employment in the services sector has risen sharply, while industrial production has undergone considerable change -we are all aware of that.
There have also been changes in the way in which work is organised and in forms of employment: part-time work, fixed-term contracts, temporary contracts and so-called “economically dependent” work pose new challenges for the regulation of the labour market.
Although these different forms of employment make it easier to find work, companies are resorting increasingly to temporary contracts in order to overcome the uncertainties and cyclical fluctuations of demand and select the best employees.
However, the flexibility needed in this area will only be successful if employees have prospects in the labour market. The Social Fund and the future “Globalisation Adjustment Fund” attempt to equip employees with the necessary qualifications and make them fit to tackle the new challenges they face. We also need to ensure compliance with basic standards — as regards working hours, for example — and I hope that we can achieve a balanced compromise on the Working Time Directive under the Austrian Presidency.
The lessons we learn from flexicurity are to be incorporated into the Green Paper on the Future of Labour Law, which I will be presenting in the first half of this year.
First of all, the regulation of the labour market must be integrative. The new forms of employment must not be excluded from protection of any kind. Options in terms of flexible working hours must be used to tackle the demographic challenges.
The adaptability of the workforce must also be strengthened. The question of switching from one job to another must be addressed, primarily by the social partners.
We will also have to give constructive thought to the fraught relationship between mobility and national social security systems, bearing in mind that 2006 is European Year of Workers' Mobility. The EU does not have the authority to harmonise the systems in the Member States. Nor will we cast doubt on their individuality. However, we will support efforts in favour of reform and will ensure that basic entitlements are upheld.
I have given close attention to successful examples of “flexicurity”: the countries which score well in terms of employment and growth are those which have introduced coherent and comprehensive reforms while taking account of social protection and employment policy.
At Hampton Court, the point was forcefully made that we have to preserve our values while shaping social policy in such a way that it contributes to European competitiveness.
Let me finish with an illustration. Globalisation is not a new phenomenon. It had its birth in Europe, being instigated by people like the Portuguese seafarers and Columbus and Amundsen. It is something we can handle.
Today’s modern, globalised society is a product of historical, social and technological change. It is dynamic and powerful like an aircraft. With an untrained pilot it can be very dangerous. But if we ensure that the pilot is well trained and well equipped, the passengers can gain a great deal from the aircraft. The training and equipping of pilots is synonymous with our society’s social model.
Notwithstanding the need for flexibility, Europe will be successful and competitive only if we are able to tailor social security systems to the new situation.