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

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

3

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

4

Expenditures social security 1960 (%GDP)

5

Austria Belgium France Germany Italy Netherlands0

5

10

15

20

25

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

6

Expenditures social security 1960 - 1974

7

Austria Belgium France Germany Italy Netherlands0

5

10

15

20

25

1960

1974

Expenditures social security 1960 – 1980

8

Austria Belgium France Germany Italy Netherlands0

5

10

15

20

25

1960

1974

1980

“DUTCH DISEASE”Case study

9

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”

10

11

•Disability pension

•Unemployment •benefits III

•Unemployment •benefits II

•Social welfare

In- and outflow disability pensions

12

•Inflow

•Outflow

Total expenditures social security (% NNP)

13

Composition of expenditures (% GDP)

14

1960 1965 1970 1975 19800

2

4

6

8

10

12

14

16

18

Unemployment

Sickness

Disability

Health insurrance

Child support

Cheating…..

15

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

16

Expenditures social security 1950-2002 (%GDP)

Expenditures came down from 19% GDP in 1983 to 11% in 2008

17

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

18

FLEXIBILITY & FLEXICURITYConcept and practice

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… “Social protection for flexible work forces” (Klammer and

Tillman, 2001)

“A policy strategy that attempts - synchronically and in a deliberate way –

1. to enhance the flexibility of labour markets, the work organisation and labour relations,

2. and to enhance security – employment security and social security – notably for weaker groups in and outside the labour market.” (Wilthagen and Rogowski, 2002)

23

One more definition…. Flexicurity is…

1. 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

2. 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 Working hours Holidays Study leave Sabbatical Maternity Parental Family care (emergency) Older workers Disability – diminished

capacity

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)

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

SECURITY

FLEXIBILITY

JOBSECURITY

EMPLOYMENTSECURITY

INCOMESECURITY

COMBINATIONSECURITY

EXTERNAL QUANTITATIVE FLEXIBILITY

INTERNAL QUANTITATIVE FLEXIBILITY

FUNCTIONAL FLEXIBILITY

LABOUR COST/WAGE FLEXIBILITY

FLEXICURITY FRAMEWORK IN THE NETHERLANDS

Case study

32

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

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

707580859095

100105110

Total employmentCBS Netherlands, index 2000 =

100

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

28

29

30

31

Average hours working weekCBS Netherlands

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

1.05

1.06

1.07

Average number of employment arrangements

1999 2000 2001 2002 2003 2004 2005 2006 2007 20088090

100110120130140

Temp Employment Agencies total working hours

CBS Netherlands, index 2000 = 100

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Proportion employment men-women

Women

Men

37

Developments Netherlands

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

60708090

100110120130

Full time and part time workMen & women, CBS

Netherlands, index 2000 = 100

Full Time

Part Time

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

60708090

100110120130

Full time and part time workMen, CBS Netherlands, index

2000 = 100

FT men

PT men

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

60708090

100110120130

Full time and part time work Women, CBS Netherlands, index

2000 = 100

FT women

PT women

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Proportion full time - part timeCBS Netherlands

Part Time

Full time

38

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

0%10%20%30%40%50%60%70%80%90%

100%

Proportion flexible employment

Flexible

Fixed

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

50

60

70

80

90

100

110

Fixed & flexible contractsCBS Netherlands, index 2000 =

100

Fixed

Flexible

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

• +

• Source: IP Flexum 2006• -

• +• Flexibility -

• Italy

• Belgium

• Finland

• Germany

• Spain

• Netherlands

• Denmark

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