flexicurity. the danish experience - mads peter klindt
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Mads Peter Klindts presentation under Arbetsmarknadskonferensen.TRANSCRIPT
Centre for Labour Market Research (CARMA)
Aalborg University, Denmark
Flexicurity: The Danish Experience
Mads Peter Klindt, Research FellowCentre for Labour Market Research (CARMA)
Aalborg University [email protected]
Presentation at the FORES labour market conference in STOCKHOLM
March 24, 2010
Outline of the presentation
• The Danish flexicurity-model• Nordic flexicurity profiles• The dynamics of flexicurity: some empirical
findings concerning labour market mobility• Time to turnaround? Some policy
recommendations for the Swedish government
The ‘Golden Triangle’ of Flexicurity
Active labour market policies
Traditional nexus between flexibility
and security (since 1899/1907)
Motivational effect of ALMP(1994/2001)
Qualification effect of ALMP (1994)
Flexible labour market
Generousunemployment
benefits
Source: Madsen (2006)
Flexicurity version 2.0
Unem-
ployment
Benefits
Flexible
Labour
Market
Education
and
CVT
Service, monitoring
and control
Job trai-ning
Source: Klindt (2010)
Nordic flexicurity-profiles
Source: Nordic Council of Ministers (2010)
Dynamics of flexicurity
• Moderate to low EPL reduces labour market segmentation and improves employer’s ability to adjust to changes through hiring and firing (flexibility).
• So, when hiring and firing is cheap, employers are less hesitant to hire; especially, this has an positive impact on youth employment rates.
• Good UB provides economic security for unemployed persons (security) and reduces the political pressure for better job security
• High and long lasting UB can create functional disincentives (such as reduced search intensity), however, it a has positive effect on workers’ willingness to take the risk of job-to-job mobility
• Furthermore, the negative incentives stemming from UB can largely be offset by ALMP through balanced systems of rights and duties.
Labour turnover
European Commission (2009)
Labour market segmentation and EPL
Source: European Commission (2006)
Youth unemployment
Source: European Commission (2009)
Mobility from temporary employment to other statuses (from one year to the next)
Source: Nordic Council of Ministers (2010)
Belgium
Finland
France
Hungary
Ireland
Netherlands
Spain
Austria
Czech Republic
Denmark
Sweden
Slovakia
Germany (West)
Great Britain
Italy
Greece
Slovenia
Northern Ireland
Poland
Portugal
Germany (East)
0
10
20
30
40
50
60
70
80
90
0 1 2 3 4 5 6
Job mobility: Experiences and attitudes
Average number of job transitions per person
Sha
re o
f w
ork
forc
e w
ith a
pos
itive
vie
w o
n jo
b m
obili
ty
R2 = 0,8401
R2 = 0,6195
Source: Own calculations based on Eurobarometer 64.1 (2005)
Policy-recommendations for the Swedish government
• The Swedish government has reduced the generosity of the UB, halved the UB-duration, but maintained a high degree of EPL
• These steps, together with increased self-financing in the UI-funds, may jeopardize Swedish workers’ willingness to take the risk of job-to-job mobility, and may result in a less dynamic labour market.
• From a flexicurity-perspective, Sweden should rather have preserved its UB system (generous benefits and collective risk pooling) while at the same time it should have reduced EPL to lower the economic burden on private enterprises.
• “Workers will be more inclined to take risks associated with job transfers if benefits are adequate during transition periods and if prospects for new and better jobs are real (…) if these conditions are met, dismissal procedures can be made considerably lighter, less costly and less time consuming” (European Commission, 2007)
Unemployment insurance in Denmark and Sweden
Com
pen
satio
n ra
te
90 %
80 %
Duration
300 days 4 years
70 %
Denmark also has problems…
Gap between registered and surveyed unemployment
Source: AE-raadet (2010)