Flexicurity in times of crisis: focusing on the most vulnerable

1. Flexicurity in times of crisis: focusing on the most vulnerable Alena Nesporova International Labour Office, Regional Office for Europe, Geneva

2. Structure of presentation • Most vulnerable groups in the labour market in times of crisis • Do labour market policies matter? • Activation policy: potentials and limits • The role of social security for supporting transitions and economic stabilization • Policy conclusions

3. Most vulnerable groups • Agency workers and other temporary workers • Migrant workers • Young people without work experience • Other groups of workers or jobseekers perceived as less productive: • Women with small children • Older persons • Persons with low skills • Persons with disability or health problems • Members of ethnic minorities, such as Roma or coming from socially disadvantaged environment

4. Temporary employment as % of total employment

5. Do labour market institutions matter? The ILO analysis has shown: No statistical evidence of the impact of employment protection legislation on any decline in economic activity and employment and increase in unemployment and on the higher incidence of temporary employment. Active labour market policies contribute towards an increase in labour market participation and employment and a decrease in unemployment In contrast, high payroll taxes seem to lead to lower labour market participation and employment and higher unemployment. Also longer payment of unemployment benefits seems to reduce participation and employment and increase unemployment, in particular among youth and the longer-term unemployed.

6. Activation policy: potentials and limits • Active labour market policies (ALMP) thus confirmed as a valid tool for labour market inclusion while too long payment of unemployment benefits could create a dependency trap. • However, allocations of EU countries to labour market policies (as % of GDP) differ a lot and the share of ALMP is usually rather low, which also means a limited access to activation programmes. • No correlation found between the level of expenditure on ALMP and the unemployment rate. • Moreover, attention of public employment services (PES) devoted to different vulnerable groups varies and assistance offered does not often match their specific needs. • ALMPs can improve equity and matching in the labour market but have only a limited impact on job creation.

7. The role of social security • Decent income support during transition to a new job very important for the perception of security by workers, acceptance of job loss and for their poverty prevention and alleviation. • Unemployment insurance and social benefits as the so-called automatic stabilizers also contribute to economic stability in times of crisis. • Income support in unemployment should not become a dependency trap, therefore the need for combination with appropriate activation policy and motivation to take up a new job. However, it should contribute to social cohesion and not to marginalization and impoverishment of those who cannot work for any reason.

8. Policy conclusions • Flexicurity is a relevant approach for labour market inclusion of the most vulnerable groups, including in times of crisis. But it is a negotiated approach, unique for each country, which requires trust among all the parties involved. • The determination of national employment and social policies is a matter of concern for both governments and social partners through social dialogue. • Effective activation policy needs • an individual approach of PES to each jobseeker offering services and programmes in line with his/her specific needs • availability of appropriate and effective services and programmes for these groups • monitoring of outcomes and evaluation of impacts of such programmes leading towards their constant improvement • PES working in partnership with private employment agencies, local authorities, education and training facilities, enterprises and trade unions • decent income support during transition to a new job preventing a fall into poverty and motivating to taking up a new job (but appropriate social income needs to be provided to those unable to work)

9. Policy conclusions (cont.) • Such combination of the activation policy with decent income support is not cheap and calls for allocating more resources for employment, labour market and social programmes and ensuring their more effective use, including in times of crisis. Additional resources would bring, apart from significant political and social effects, important positive impacts on the demand side of the economy. • In crisis, strengthening of security is needed also for enterprises, in particular SMEs, through measures assisting them in restructuring (e.g. subsidized training of the staff), improving their access to credits, new technology etc., to help them withstand the crisis and become more competitive and sustainable, able to create new productive jobs. • But high and productive employment depends on the job creation capacity of the economy.There is a need for macroeconomic policy, which would include employment targets and promote the creation of more and better jobs and good employment opportunities for all.