European Labour Law and Flexicurity

Università della Valle D’Aosta

Université de la Vallée d’Aoste

Facoltà di Scienze Politiche e delle Relazioni Internazionali

European Labour Law and Flexicurity

Aprile 2009

Content table

1. Introduction……………………………………………………..4

1. Communication on Flexicurity…………………………………7

1. Green Paper on the ‘Modernisation of Labour Law’……….21

1. Directive on Working Time…………………………………...31

1. Directive on Temporary Agency Workers…………………...45

1. Directive on Part-Time Workers……………………………..55

1. Directive on Parental Leave…………………………………..61

1. Framework Agreement on Telework………………………...71

Introduction

The academic and political debate on the reform of labour market institutions in Europe has been increasingly dominated in the recent years by the buzzword ‘flexicurity’, which stands for a political strategy designed to achieve at the same time enhanced flexibility in work relationships and security of employment for dependent workers. Drawing from the successful Dutch and Danish examples, the European Commission has posed the flexicurity model as an overarching paradigm for all the member States in the European Union (EU) and specified its contents in an important Communication issued in June 2007 with the ultimate aim of promoting a cascade of labour market reforms at national level which could be imprinted to a commonly accepted pattern.

In fact, if we only focus on the European level, it can be argued that flexicurity created a more collaborative climate among the political forces, namely the member States and the social partners. Discourses on wide agendas for the regulation of labour and the recalibration of related welfare state provisions seem to converge on the use of flexicurity as a common reference point for national policy-making. From the analysis of documents of the European Commission and the Council, and position papers of various interest organisations, no one really questions the general agreement on the opportunity to reconcile the needs of both workers and employers through different configurations of exchange between levels and kinds of flexibility and security, whose contents can be suggested, discussed and coordinated at the European level.

However, below the consensual surface, flexicurity covers an impressive number of substantially divergent interpretations of goals and instruments for policy intervention in the European labour markets. On the basis of the different party majorities that constitute them, national governments take diverse positions with regard to the practical implications of flexicurity policies, by conferring greater importance to either flexibility or security or by emphasising one policy instrument over others – e.g. hard-law regulation, instead of soft guidelines. On their part, the social partners attach their specific interests to a particular vision of the role of the European level, either as a potential supranational regulator of common standards for labour laws – typically, the Trade Unions -, or as a disseminator of ideas and policy suggestions to the Member States with no function of interference in national labour markets - the employers’ associations.

In this perspective, the present work aims to provide some basic material for a systematic study of the EU politics of flexicurity, i.e. the processes of confrontation of positions and coalition-building among the most relevant political actors at EU level with regard to proposed policy interventions related to the flexicurity model. From the analysis of the negotiations for important EU acts – of legislative and non-legislative nature - it is possible to gain useful insights on the real challenges underlying the declaratory consensus on the flexicurity model, on the distribution of political costs and benefits of flexicurity policies from the point of view of the stakeholders, on the political conditions that are necessary to fulfil in order to have European-level regulations accepted.

Therefore, seven among the most relevant acts concerning particular aspects of flexicurity are taken here into consideration and schematically analysed in the form of synthetic files. Starting from the 2007 Communication on Flexicurity and the responses to the related Green Paper on the ‘Modernisation of Labour Law’, a retrospective path will be followed in search for Council’s directives and framework agreements between the EU social partners that dealt with substantial aspects of a flexicurity model. This is the case of the not yet concluded directive on Working Time, of the newly approved directive on Temporary Agency Workers, as well as older pieces of legislation aimed at setting minimum European regulation for the status of Part-time Workers, the concession of Parental Leave, or the forms in which Telework can be performed..

The single files are designed to record a similar pattern of facts and details, which are meant to highlight: a) the content of the proposed act; b) the main contending issues on which negotiations have insisted; c) how were controversies among different positions and interests politically settled; d) the specific positions of the main negotiating actors during the bargaining. In particular, the positions of a traditional bunch of member States are analysed, namely the United Kingdom, France, Germany and Italy, and of the main European associations of employees and employers, respectively the European Trade Unions Confederation (ETUC) and Business Europe (former UNICE)[1]. To this aims, official documents and position papers have been collected to reconstruct the motivations and rationale for conduct of single actors, that have mainly been complemented by articles on specialised journals and newspapers as well as occasional interviews conducted by the author.

On the whole, the files resulted not only limited to neutrally record facts and statements, since they have been all somehow ‘digested’ by the author and re-elaborated in the effort to emphasise what appeared to be the recurrent cleavages, discussions, alliances, discursive refrains in the course of the negotiations. Nevertheless, no theoretical interpretation is meant to be provided by this work that has the sole purpose of constituting a useful basis for further research works.

This Working Paper has been written by Federico Pancaldi and is part of the wider project “Tra flessibilità e sicurezza: le nuove sfide delle politiche europee del lavoro”, coordinated by dott. Patrik Vesan of the Università della Valle d’Aosta, faculty of Political Sciences and International Relations. The author wishes to thank the Patrik Vesan, for stimulation and useful discussions on the single issues, Clara Mughini at Cevifop and Carlo Bittarelli at the European Parliament for crucial insights and documents.

Communication on Flexicurity

Extended name: Towards Common Principles of Flexicurity: More and better jobs through flexibility and security, COM(2007) 359 final, Brussels, 27.6.2007.

Scope of the Communication

After the European Spring Council of March 2006, the Commission was requested to elaborate a set of common principles on the model of flexicurity. The declared aim was to provide a “useful reference” for Member States in order to help them facing the most urgent challenges in the labour and social domain, namely the need to achieve “flexibility combined with employment security, and avoid labour market segmentation, in order to meet the needs of companies and workers”[2]. A secondary objective can be traced back to the governance architecture at EU level. Given the scarce commitment dedicated by Member States to social policy, flexicurity would also tackle the need of achieving “parallel progresses” in the economic, labour and social domains within the Lisbon Strategy, thus creating mutual feedbacks among traditionally separated policy areas.

The final outcome produced a framework for a policy strategy which should both act as a source of inspiration for Member States and be integrated into the existing policy processes for labour and social policy. More in detail, the Communication identified the flexicurity model being composed by four main aspects (the “components”):

- flexible and reliable contractual agreements;

- effective active labour market policies;

- comprehensive life long learning schemes;

- modern social security systems.

By simultaneously intervening in such directions, the national governments should regard the agreement with the social partners (social dialogue) as a indispensable key to the effectiveness of both the ascending (consensus-building) and the descending (implementation) phase of the policy.

Given the general principles, the Communication takes stock of the deep structural differences in the conditions of European labour markets and attempts to provide some more detailed recommendations (pathways), albeit not referred to any particular country. Four pathways and some best practices are described by the Commission, each addressing the most sensible challenges to be tackled for an effective transition to the flexicurity model.

1) contractual segmentation: the main effort prescribed is directed to enhance outsiders’ possibilities to enter and stay in the labour market by rending contractual arrangements ‘stepping stones’ to permanent employment rather than ‘stumbling blocks’;

2) low intra-firm mobility: transitions are even more difficult for workers whose working skills are strictly confined to a particular job. Fostering mobility and learning within the enterprises can be an effective way to improve workers’ adaptability to changing working conditions and places;

3) skills and opportunity gaps in the workforce: where segmentation is to be found rather in skills than in contracts, the Commission advocates for enhanced measures to increase upward social mobility through lifelong learning possibilities;

4) strong dependence to welfare benefits: social security systems are the unique source of income for a high percentage of the population. The policy recommendation here is to accelerate the introduction of active schemes in order to help bringing back to employment those who still can and focus the expenditure on those really in need.

Main contending issues

The Communication on flexicurity was intended to provide a comprehensive account of the debate on the reform of the European labour markets and welfare regimes, as well as to set a policy strategy for the EU in the medium-long term. Therefore, it sort of catalysed all cleavage dimensions of previous EU policy initiatives (directives and the possible evolutions of OMC processes) with regard both to the role of the Community level in steering national policies and to the political direction of possible interventions. Given the scarcity of reports and official documents available on actual discussions within the Employment Committee, most assumptions are deduced from the Green Paper on the Modernisation of Work, whose function was precisely that of gathering opinion on the desirability and scope for further EU action on employment and social policies.

a) the role of the EU: flexicurity as an indicative policy strategy or detailed set of recommendations to the Member States?

There is very little evidence on official documents over the discussion about this point, although some interviews to practitioners all point out to the emergence of the traditional division between the Commission arguing for a more detailed set of recommendations addressed to particular Member States and most national delegations, which opposed detailed naming anchored the Communication on flexicurity to an indicative policy strategy with no further implications[3]. As it is also stated in the Impact Assessment on Flexicurity[4], the Commission never thought of an impossible one-size-fits-all directive on flexicurity. More realistically, the idea could have been that of calibrating the pathways on clusters of states explicitly named and specifically advised within the realm of a standard OMC process. This would have obviously had a much more profound impact on national policy-making, since flexicurity would have substituted the national action plans of EES policy process and engaged the Member States over a concrete set of policy interventions, rendering the Communication a sort of set of ‘softly-binding’ guidelines.

Therefore, the Employment Committee put a veto on explicit naming and focused more on the request by some Member States of concrete measures to be adopted by the Commission in order to show its political willingness in engaging more than just in words for flexicurity (see below).

b) labour market flexibilisation

As the debate sparked by the preparatory Green Paper on the Modernisation of Labour Law highlights, the issue of lowering the highest levels of employment protection legislation, foremost concerning workers covered by standard open-ended employment relationships, attracted the main fears, criticisms and advocacy coalitions. Arguably, by adopting the Danish and the Dutch models and a set of scientific works as a source of inspiration in the Communication[5], the Commission here appeared to suggest to Member States a central trade-off between the renegotiation of the most stringent provisions “overly” protecting European workers (i.e. insiders) to allow a ‘simultaneous’ redefinition of scope and means of social protection systems.

This point was strongly debated by the social partners at the Tripartite Social Summit of 2006, which was totally centred on the flexicurity agenda. The European employers emphasised that “flexible labour law” is one of the key ingredients of an effective flexicurity strategy, in that it “does not mean wild deregulation, but it means examining whether the rules are sufficiently smart in the Member States on protection against dismissals and a variety of employment contracts”[6]. the employers start from the assumptions that atypical forms of employment are sufficiently protected against discriminations by EU directives, thus they cannot be deemed precarious, and that security would be guaranteed more by the actual possibility of finding a job. Accordingly, flexicurity is to be led towards the “removal of unnecessary rigidities”, which “would also help to overcome segmented labour markets in which insiders enjoy a high degree of security while outsiders are trapped in unemployment or less secure forms of employment”[7].

On the contrary, the trade unions fiercely held the assumption that flexicurity was mainly understood as giving up job protection in return for employment security, and emphasised the core request of the ETUC as the necessity of highlighting the linkage between weak job protection and high inequality, thus promoting “the safeguard of employment protection laws and their complement with policies promoting upward mobility”[8]. It is quite difficult to extract a Union’s definition for positive flexibility, and it seems like there is indeed none.

c) rethinking of social security systems

The discussion on reform of the European Social Model has involved mentions to ageing populations and social inclusion as the most urgent problems to tackle through flexicurity since beginning[9]. In practice, though, the debate on the contents of flexicurity disregarded the many branches of what might constitute a social security system and focussed more regularly on unemployment benefits.

The employers called for “employment-friendly social protection system and in particular an unemployment insurance which links rights and obligations for the unemployed as opposed to giving unconditional passive income support”, by mentioning the weakness of real active labour market policies in many Member States as a fundamental tool on the basis of which social security systems could be redesigned[10]. No further argument is publicly brought forward on this topic.

The ETUC, on its side, put into question a number of important arguments. In the Unions’ opinion, social security systems can counterbalance the detrimental effect of family problems or illness as some of the main causes of job loss among European workers by providing an “universal welfare policy, effective active labour market policies, and by promoting strong trade unions”[11], in order to protect foremost the most vulnerable groups of society. In addition, the Unions repeatedly emphasise the need for suitable “macroeconomic policies supporting growth and the creation of new and additional jobs”[12] to complement flexicurity. Although the concept is reiteratively no further articulated, there is mention of wage policies and presumably of public intervention to stimulate demand of work, as well as consistent fiscal policies.

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d) policy implications of flexicurity

A final issue at stake was the possible impact of the communication on flexicurity with regard to the development and conduct of the existing OMC’s. As repeatedly stressed in interviews and official documents, the ‘integrated approach’ between flexibility and security also implied further integration of cross-cutting interventions in the realm of labour and social policy. Accordingly, a more creeping debate emerged in favour of a better articulation of the Broad Policy Guidelines for growth and jobs and the Social Protection and Social Inclusion policy process, possibly by means of a revision of the guidelines in accordance to the common principles.

Interviews reveal a failed attempt by the Commission and some Member States to add a 25th guideline explicitly directed to include a (not further specified) ‘social objective’ to be taken into account among the triennial set of policy recommendation on Employment Policy. In the opinion of many experts[13], this would help a more formal inclusion of social commitments in the policy of Member States, thus lending more political consistence to the Community discourse and action. On the other hand, many delegations – and part of the Commission itself – were convinced that ownership of reforms was the best way to deliver, and therefore opposed substantial renegotiations of the guidelines according to the flexicurity scheme[14].

Possible room for agreement

Arguably, all above-indicated points of contentions gave birth to a final spurious policy outcome, which balances between an assertive policy strategy on the normative level and a flexible framework open to a variety of national interpretations and concrete interventions.

• The clash between theory and practice: the Wilthagen report and the Flexicurity Communication

The diplomatic jargon is to be carefully deciphered and not be taken for granted, since its vagueness could be misleading by itself. In the absence of further evidence from discussions within the Employment Committee and the Council on the sequence of drafts submitted to them, we can highlight the differences between the Wilthagen’s Report and the actual outcome of the Communication.

In great part, the Report has been transposed word by word. Still some visible differences remain. On the essence of flexicurity, Wilthagen is surely more assertive in identifying “the flexibility of labour markets, work organisation and labour relations” as one pillar of the model, which is to combine with employment and social security”[15]. The Commission, by contrast expands and smoothes such definition, and prefers to highlight workers’ “transitions” as the core of a model advancing “upward mobility” with a substantial coverage of unemployment benefits and skills’ equipment, whereas enterprises seems to gain only more flexible work organisation and a limited mention to ‘recruit and dismissal’ faculties. In other words, the final text appears more aimed to dampen all fears of deregulation, in order to send a reassuring political message to the Trade Unions and socially-oriented actors[16].