Cracks in the system: Europe social security 1970 - 2000

1. Cracks in the system: Europe social security 1970 - 2000

2. Subjects • First: 1950 – 1970 • Ingredients for changing circumstances • Case study: “Dutch disease” • 1980 – 2000 Revision of social security • Framework for sustainability: flexicurity

3. 1950 - 1970 Rebuilding Europe High economic growth (average 4.1%) Low unemployment (average < 3%) Gradual development of social security arrangements & institutions: • Unemployment • Sick leave • Disability pension • Retirement pension • Welfare • Child support • Health Controllable level of expenditures on social security

4. Initial concept and basis social security continental Western-Europe 1950-1980 Mostly based on (non-extended) family with one breadwinner Tendency to cover “each risk” – limited personal risk Open-end arrangements: cradle to grave Wage related Division between general social security and employee insurances Sharp division responsibilities employer – Social Security Institution Mostly financed by contributions employer – employee

5. Expenditures social security 1960 (%GDP)

6. Ingredients for changing circumstances: 1970’s Oil crises (‘73, ‘79) Increased world competition (Japan, S.E.-Asia) Industrial rationalisation Stagflation Increasing unemployment Society used to growth Strong – defensive – trade unions 2nd emancipation wave Changing family concept: individualism

7. Expenditures social security 1960 - 1974

8. Expenditures social security 1960 – 1980

9. Case study “dutch disease”

10. Case study “Dutch disease” Strongly increasing number of social benefits: • Rising number of unemployment benefits • Rising welfare arrangements • Fast rising (long term) disability pensions Mismatch labour market (policies) Unbalances between rights and obligations in social security Limited control on eligibility “calculating behaviour”

11. Disability pension • Unemployment • benefits III • Unemployment • benefits II • Social welfare

12. In- and outflow disability pensions • Inflow • Outflow

13. Total expenditures social security (% NNP)

14. Composition of expenditures (% GDP)

15. Cheating…..

16. Solutions: Revision 1980-2000 Strengthening labour market & employment policies: flexibility & redistribution of employment Reducing benefit percentages (overall) Reducing (wage related) benefit periods (unemployment benefits) Reducing (life-long) rights (disability pension) Strengthening eligibility control Subsidised labour programmes Extending employers’ responsibilities Rehabilitation programmes Activating social security & “ability-approach” Other organisation - strong government influence Flexicurity

17. Expenditures social security 1950-2002 (%GDP) Expenditures came down from 19% GDP in 1983 to 11% in 2008

18. Group assignment Do you see a danger for “explosion” of the Turkish social security, comparable to “Dutch disease”? If so: where and why? If not: why not? 20 minutes discussion 5 minutes prepare report 5 minutes presentation 15 minutes plenary questions and discussion

19. Concept and practice Flexibility & Flexicurity

20. Subjects • Definition of flexicurity • Flexibility: different interests of employees and employers • Flexibility: economic context • Labour protection • Dealing with different interest positions • Flexicurity: areas of change • The “golden triangle” • Case study: flexicurity framework in the Netherlands • International comparison • Assignment: perspective for flexicurity in Turkey

21. Definitions…. Flexibility: • Elimination of barriers of formal or customary rules that lead to rigidity on the labour market (both supply and demand side). Security: • Regulation and facilities providing workers with safety in employment and income.

22. Definitions of Flexicurity… • “Socialprotectionforflexibleworkforces” (Klammer and Tillman, 2001) • “A policystrategythatattempts - synchronically and in a deliberateway – • to enhance the flexibility of labourmarkets, the workorganisation and labour relations, • and to enhancesecurity – employmentsecurity and socialsecurity – notablyforweakergroups in and outside the labourmarket.” (Wilthagen and Rogowski, 2002)

23. One more definition…. Flexicurity is… • a degree of job, employment, income and combination security that facilitates the labour market careers and biographies of workers with a relatively week position and allows for enduring and high quality labour market participation and social inclusion, - while at the same time providing • a degree of numerical (both external and internal), functional and wage flexibility that allows for labour markets' (and individual companies') timely and adequate adjustment to changing conditions in order to maintain and enhance competitiveness and productivity.” (Wilthagen & Tros 2004)

24. Different interests in flexibility Employee Employer Working hours Work schedule Place of work Qualification level Experience level Adaptability level Contract conditions & form Contract duration Contract termination Labour costs – (wage flexibility) • Working hours • Holidays • Study leave • Sabbatical • Maternity • Parental • Family care (emergency) • Older workers • Disability – diminished capacity

25. More on employer’s interest • Working hours: • Daily • Weekly • Monthly • Yearly • Working schedule: • Day time • Day shifts • Week shifts • Working place • Probation period • Contract form: • open-end contract • part-time contract • fixed-term contract • temporary work contract • Contract duration • Contract termination • Procedures • Notice period • Qualification level • Experience level • Adaptibility level • Labour costs (wage flexibility) • Performance appraisal • Output-related • Turnover-profit-related

26. Economic context for flexibility Economic needs vary Technology has made economic developments go faster – smaller world Labour market needs (demand side) must “breath optimally” with economic needs in order to: • Optimise economic performance • Optimise conditions for sustainable employment • High employment level is best condition for growing income

27. Determinants for flexibility: labour protection (Regulation for) Contract forms Regulation for private temporary employment agencies Probation period Protection against dismissal • General procedures – external authorisation? • Dismissal prohibition for certain groups and/or circumstances Employer‘s period of notice Employee‘s period of notice Leave schemes Unilateral transfer of personnel by employers Limitation of the employee’s liberty to switch employers Regulation for business take-overs

28. Dealing with different interest positions By law • Directive & descriptive • Framework: minimal requirements and provisions/conditions By collective bargaining agreement: • Directive & descriptive • Framework: minimal requirements and provisions/conditions By individual agreement Flexibility and security are excellent themes for trade-offs: negotiations

29. Playground for Flexicurity • Legislative: • Labour laws & regulation • Labour market policies • Life-long-learning and educational facilities • Health & safety regulation • Collective bargaining laws & regulation • Works councils regulation • Economic laws (business take-overs) • Social security laws and regulation • Tax policies • (Regulation for self-employment) • Infrastructure: • Sound vacancy registration • Active flex/temp agencies • Facilities for adult education & training • Adapted control system • (child care facilities) • Culture: • Awareness employers • Willingness employees

30. The “Golden Triangle”

31. Flexibility – Security Matrix

32. Case study Flexicurity framework in the Netherlands

33. Previously… Starting point • Dual system of dismissal law for (open-end) employment contracts, “preventive nature” • Before dismissal, employers have to address either: • The public employment service • Or the lower courts • High level of “a-typical workers”: • Workers in temporary employment agencies without contract • “0-hour contracts” and minimal (flexible) contracts Flexicurity debate started in 1995 Bi-partite, tri-partite and parlementary deliberations and negotiations Concluded in Law on Flexibility and Security 1999

34. Flexicurity - flexibility measures: More possibilities for (consecutive) temporary contracts Maximum length of time for temporary work scrapped Notice period is set on one month in principle Shortened and easier dismissal procedures Employees have a conditional right to expand/reduce their working hours. Facilitations for improved combinations of ‘work and care’. More possibilities for employers to make the length of the workdays and workweeks dependent on business activity More possibilities for sectors and companies to make tailor made arrangements for contracts and working time, deviating from law standards

35. Flexicurity - security measures: Strengthening position of “a-typical workers”: • Assuming existence of an employment contract • Conditional assumption of agreed working hours Minimum pay of 3 hours when a worker is called for work 0-hour contracts: employers have to resume paying for non-worked hours after six months Temp-agency-worker get normal employment contract after the first 26 weeks Requests to terminate employment contract of occupationally disabled employee must be accompanied by a reintegration plan Collective Bargaining Agreement for workers in temporary work agencies

36. Results Netherlands

37. Developments Netherlands

39. International comparison – part time work

40. International comparison – temporary contracts

41. International comparison: market penetration temp agencies

42. International comparison: number of temp agencies

43. International comparison: Flexicurity arrangements Security + Denmark Belgium Netherlands Finland Germany Flexibility - + Spain Italy Source: IP Flexum 2006 -

44. Group assignment How does Turkey score in a flexibility & flexicurity framework Could more flexibility and flexicurity help in making Turkey’s labour force more competitive? Can it reduce unregistered employment? Do you see opportunities? Where? What is essential? 30 minutes group discussion 5 minutes prepare report 5 minutes presentation