The Myth of Flexicurity

The much vaunted ‘flexicurity’ has been thrown into the spotlight once again thanks to the Sustainable Growth Commission, who have recommended that an independent Scotland adopt ‘flexible labour markets [combined] with fair and progressive work and active employment policies’.

But what’s it all about?

The idea, heavily promoted by the European Commission, is most commonly associated with Denmark. Employers, advocates believe, should have the right to easily ‘fire and hire’ workers, and the state should step in with strong welfare protections, and employment ‘activation’ policies to smooth the transition between jobs.

All this ignores the role of trade unions. And that’s not surprising, because the Sustainable Growth Commission, led by the SNP’s right wingers, did not meet with a single trade union. Not even the Scottish Trades Union Congress was invited to contribute. Business was greeted with open arms. It is a far cry from the civic Scotland of 2014.

This matters because analysis by Peter Auer and Kazutoshi Chatani of the International Labour Organisation, has found that countries with a high degree of ‘flexicurity’ have extremely high levels of unionisation and collective bargaining:

“[The analysis] above clearly indicates that flexicurity countries score highest in both dimensions: they have high collective bargaining coverage and harmonious industrial relations which seem to support a labour market model allowing both for flexibility and security."

The Sustainable Growth Commission does not mention a strategy to increase rates of trade union membership, nor does it embrace collective bargaining. Trade unions are mentioned nine times in the entire report - banking is mentioned 49 times, and finance is mentioned 260 times.

The plan amounts to limiting the power of trade unions to prevent dismissal. That is the real meaning of flexible labour markets. 

But flexicurity itself may not even exist. Ronald Jensson, an economic advisor at the OECD, conducted a study in 2013 to determine how truly ‘flexible’ these labour markets were. What he found was that the entire premise that it was easy to fire workers in Denmark was blatantly untrue. Or in his words:

“The whole policy of flexicurity, as it has been promoted all these years by the European Commission, has been based on a statistical illusion. The argument according to which the success of labour market performance in Denmark can be put down to the fact that workers and not their jobs are being protected is simply not correct.”

“Through its system of collective bargaining, Danish workers are being offered robust levels of job protection. The true peculiarity and advantage of the Danish system lies in the fact that Denmark invests heavily in both passive and active labour market policies.”

“It does not lie with employers having the possibility of easy firing.”

The UK on the other hand, does have a very flexible labour market - if you’re an employer. A move towards ‘flexicurity’ in an independent Scotland would mean moving towards a model which promotes insecurity, and without trade unions, it would reduce wages too. Only full employment gives workers real flexibility, and aiming for anything less is a dereliction of duty.

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