Flexicurity Business Term Paper (Term Paper Sample)

FLEXICURITY
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Flexicurity  PAGEREF _Toc385572443 \h
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Flexibility  PAGEREF _Toc385572444 \h
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Job security  PAGEREF _Toc385572445 \h
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Flexicurity as an Economic Concept  PAGEREF _Toc385572446 \h
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Danish Flexicurity  PAGEREF _Toc385572447 \h
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The golden triangle  PAGEREF _Toc385572448 \h
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Version 2: Centralized Decentralization  PAGEREF _Toc385572449 \h
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Reform proposals for a consistent implementation of flexicurity  PAGEREF _Toc385572450 \h
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Contradictions between EU policies  PAGEREF _Toc385572451 \h
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Flexinsurance  PAGEREF _Toc385572452 \h
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Basic minimum income  PAGEREF _Toc385572453 \h
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Workplace tax  PAGEREF _Toc385572454 \h
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Constraining financial markets  PAGEREF _Toc385572455 \h
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Conclusion  PAGEREF _Toc385572456 \h
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Bibliography  PAGEREF _Toc385572457 \h
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Flexicurity
Flexicurity is a portmanteau combining two words labour flexibility and job security. It 1implies a blend of social security and high flexibility in the labour market. Flexicurity can be explained using two views of the labour market. That is, employees’ view of labour market and the view of employers about the labour market. Employees need an assurance of job security, employment security and income security. On the other hand, employers require some level of flexibility that gives them room for functional and wage adjustment. This is important since employers need to respond to changing conditions from time to time to maintain competitiveness and efficiency.
The aim of flexicurity is to combine job security of the employee with labour market relations thereby generating economic adjustment opportunities for employers. These two aspects are balanced in a way, establishing a mutually beneficial structure leading to a situation where the employee is provided with adequate security and the employer is afforded opportunities for economic adjustment. One underlying feature of flexicurity is that both elements have to develop hand in hand in a synchronized manner, taking note of concerns of various internal and external stakeholders during negotiations.
Both workers and organisations can benefit from flexibility and security. For instance it would lead to better work organization, greater upward mobility due to greater skills acquired from enhanced training, firms would benefit from return on training due increased productivity while helping employees adapt to changing working requirements.
There are four policy requirements for flexicurity to function. First, there must be flexible and reliable contracts. Employers, employees, insiders, and outsiders must have complete trust that contracts will be honoured. These contacts can be reinforced through modern laws and trade unions. Another requirement is presence of comprehensive lifelong learning schemes in place to ensure constant adaptability of employees, more so the most susceptible. Also, there should be effective active labour market policies which would assist people to deal with unexpected changes, reduce durations of unemployment and facilitate quick transition into new jobs. Finally, there should be a modern and efficient social welfare system.
This system should guarantee sufficient income support, encourage people to look for and stay in jobs, and expedite mobility in the labour market. This includes provision of social protection that facilitates combination of work with social responsibilities. There are two dimensions of flexicurity; flexibility and job security.
Flexibility
Organizations need flexibility to respond to the continuously shifting market conditions.  Flexibility is the degree to which an organisation is able to alter the effort of people and things to the continuously shifting demands of work environment and processes. According to researchers, there are two forms of flexibility, that is, internal and external flexibility. Internal flexibility denotes changes occurring within a company such as variations in working hours. External flexibility refers to changes in the number of personnel to reflect the organization’s needs.
Job security
In reference to flexicurity, job security refers to the employability of an individual. The assurance that citizens will get a job and advance in the labour market is a key aspect of flexicurity. It entails offering people the training they require to keep their job-skills up-to-date and to grow their talents as well as giving them sufficient unemployment benefits if they were to become unemployed for some time. We can approach job security from several fronts. The first perspective is job security, which implies an assurance that an employee will stay with within a particular job working for particular employer. Employment security implies an assurance that an employee will stay employed regardless of whether it is for their current employer or a new one. Income security is the assurance that the employee will continue receiving an income. Finally, we have combination security, which denotes an assurance that the employee will be able to combine paid work with social responsibilities. Combination security is important since it helps us determine whether an employer is taking advantage of flexibility to exploit employees by not considering their personal lives and responsibilities.
Common policies applied to cushion workers from labour markets risks include employment protection legislation (EPL) and unemployment insurance benefits (UIB) economists generally agree on the effect of EPL on labour market performance. More employment protection leads to lesser firing and hiring. The effect on unemployment rate is however ambiguous. Essentially, EPL reduces the penetrability barrier of the wall between unemployment and work.
On the other hand, generous UIB programmes have lesser effect on general labour markets dynamics. Usually UIBs are compatible with greater need for flexible labour markets. The impact of EPL and UIB on the macro economy is therefore familiar ground for almost all economists. However, it is important we establish the effect of EPL and UIB on workers’ assessment of their job security. Balancing between the need for flexibility and the need for security is a vital issue in the overall performance of the economy.
The European Union has weighed in on this matter. It recommends to members that they should oversee the adaptability of both employees and firms to change, while bearing in mind the need to give workers security and afford firms with flexibility. Member states are further advised to conduct a review of restrictive labour market laws that have an adverse impact on the flow of the labour market. This review will help member states to identify rigidities and where possible they will initiate reforms aimed at eliminating those rigidities. While social insecurity has been a problem in EU countries for some time it is not until now that institutional effort in tackling this problem is being directed towards establishing flexible labour market dynamics. The institutional response therefore prefers using EPL rather than UIB to solve these problems.
Member countries have initiated these reforms in varying degrees. For instance, the Dutch established the Flexibility and Security Act in 1999 while Denmark has been at the forefront of implementing the flexicurity agenda since the 1990s. These two countries operate labour markets that are generally in line with the recommended view of EU. However, some countries in the European Union are still hesitant to adopt this approach.
Actually, researchers have observed that there is a negative correlation between standard indicators of EPL stringency and UIB generosity in many European countries. The genesis of this ostensible trade-off is still an area of active theoretical research. Some researchers have used political economy models of the choice of labour market structures where UIB and EPL are different components. From such research, it has been observed that EPL is greatly preferred by insiders, that is, people who already have jobs. This preference is obvious since rationally workers want their jobs protected. On the other hand, the unemployed show preference for generous UIB schemes and favour less employment protection. Obviously, because better UIB would assure greater income security while less strict employment protection would increase their chance of acquiring employment.
Research conducted about worker perceptions on job security arrived at five key findings.. First, workers were most secure in permanent public jobs and least secure in temporary jobs. This is rationally intuitive, but it demonstrates that subjective views about job security help establish objective views about job security. That would imply that when it comes to assessing job security workers know best. The second finding was that job security in temporary and permanent private employment is correlated positively with UIB generosity across states. The research also found that workers in countries with stringent EPL in fact felt less secure than workers in countries with more relaxed EPL. This finding seems to imply that indeed EPL may not be the optimal solution to this problem....