Moving from flexicurity to ‘mobication’

The significant impact of structural changes on European labour markets has led to a stronger focus on labour supply and the employability of the workforce. The European Commission has promoted flexicurity as a key concept embracing important dynamics of labour market regulation. A new report argues that most recent policy development suggests a strong focus on workforce mobility as well as a need to enhance education in the broadest sense. They coin this ‘mobication’.

Introduction

Production, services and employment conditions are changing. Much attention has focused on the economic crisis triggered by the financial crisis, and there are of course good reasons to address the economic problems and loss of jobs caused by the crisis. However, in the long run the biggest challenge will probably not be cyclical crises but structural changes. Four major structural changes can be identified:

• a new international division of labour (due to the strong economic growth outside the United States and Europe);

• a continuous introduction of new technologies and subsequently new organisation of work;

• demographic changes;

• a climate change agenda that creates new and different perspectives for growth and employment.

These mega-trends will have an influence on future job opportunities in Europe.

Although the financial crisis and the subsequent employment crisis have created new challenges in the short term, politicians and researchers should be prioritising the long-term consequences of these structural changes. The changes mainly create new challenges for education and employment policies.

Trends in recent years suggest that high labour mobility and a flexible education system, directly supported by European as well as national policies, may be crucial for the competitiveness and future prosperity of Europe. In the past decade, flexicurity emerged as a central concept in the debate on how regulation of work and welfare could ensure consistency between the supply and demand of labour. The flexicurity debate can be seen as a response to structural challenges, which have already influenced policy development. This means that not all the structural challenges mentioned above are new, but they have at varying speeds moved to the top of decision-makers’ agenda over recent decades.

This is the outline of a new report, The competitiveness of the Nordic countries – from flexicurity to mobication (English abstract), commissioned by the Nordic Council that takes a critical view of the effectiveness of ‘flexicurity’ during a period of economic crisis. The report’s authors argue that high labour mobility and a flexible education system directly supported by government policies may be crucial for the competitiveness and future prosperity of the Nordic countries.

Limitations of flexicurity

Despite the fact that flexicurity can be seen as a response to structural developments, there are limitations to the insights it offers. Flexicurity analysis has emphasised new understanding of the positive dynamics of regulation, such as the possibilities of simultaneously enhancing both labour flexibility and security. However, the limitations of this approach persist. A key problem has been the somewhat vague character of the flexicurity concept, making it difficult to determine the ‘what’ and ‘how’ in order to identify and measure flexicurity. The report argues that, in addition (even in some of the prominent flexicurity cases such as the Danish one), the flexicurity approach can only explain to some extent why there has been a positive development in employment levels over a longer period.

Other dynamics that ensure high levels of employment seem to be at work. A study of the development of policy formulation (especially at the European level) seems to suggest that tomorrow’s competitive advantage depends on the ability to ensure high labour mobility through comprehensive and flexible educational systems. It is this relationship between mobility and education that the report terms ‘mobication’.

The term implies that skills are used systematically to promote mobility within and between labour markets. Mobication assumes that tomorrow’s job openings will be even more changeable and unpredictable than today. This emphasises the challenge of combining a flexible labour market with a high level of security for employees. Flexibility must ensure that employees are moving to where the job openings are.

In the flexicurity debate, the security aspect has focused on the possibility of obtaining various forms of benefits if one is made redundant. Mobication suggests that security primarily comes from continuous education and training, meaning that individual employees will have access to further training and/or reskilling in all stages of their working life. The overall aim is to have fewer and shorter periods of unemployment for each employee despite major economic upheavals such as restructuring, the introduction of new technologies or plant closures. In this sense, mobication is an attempt to further develop the Danish flexicurity model, a model where flexible dismissal rules have been combined with relatively high unemployment benefit and active labour market policies.

Policy change in regulating labour markets

Looking back over the past two decades, European policy formulation has emphasised the need to reform labour market regulation. Policy initiatives in this period have increasingly focused on increasing the labour supply (raising the employment rate) rather than, as before, using public resources to combat unemployment and to compensate individual workers made redundant. Away from the Nordic countries, the traditional ‘compensating’ labour market policies were gradually toned down and a new understanding of what occupational policy might consist of was introduced. In common parlance, there has been a move from ‘labour market policy’ to ‘employment policy’ indicating that many policy areas (such as labour, social, educational, fiscal) should be connected with the aim of increasing the supply of labour.

However, the difference between traditional labour market policy and the new employment policy goes further than that. Three main differences should be highlighted.

First, in traditional labour market policy, unemployment is fundamentally seen as a systemic fault and the unemployed person should accordingly be compensated. In employment policy, however, it is to a much larger degree the employee’s own responsibility to stay employable. There is therefore less weight on compensating for the occurrence of unemployment and more emphasis on preventing unemployment by creating incentives for further education and training, and for workers to seek employment where it exists. Tax policy is coordinated with activity-based unemployment benefits; activation combined with control.

Secondly, in traditional labour market policy attention was directed backwards at what had happened (unemployment had occurred) and to what would happen in the next few months (how to get back to work). In employment policy, attention is directed forwards towards what should be happening over the next five or 10 years, and towards what measures are needed to support the ability of wage earners to adapt to the dynamic development of the labour market. Labour-related policies are based on what is termed ‘investment in the future’.

Thirdly, in traditional labour market policy, the dominant policy tools to avoid unemployment were linked to wage and income trends, and seen as a way to create demand and thus to avoid unemployment. In employment policy, the focus is on labour skills and the need for a flexible development of skills to adapt to changing labour demands. Developing competences through education and training begins to be seen as the key tool to promote labour supply.

Phases leading to mobication

These basic changes in labour market regulation policies can be identified in European policy formulation. This has happened step-by-step, in three distinct but interlinked phases.

The first phase was characterised by reforms intended to enhance the flexibility of labour markets, while labour market reforms were simultaneously linked to broader welfare reforms. The ‘Delors’ 1993 White Paper on growth, competitiveness and employment (14.1Mb PDF) marks the beginning of this phase with the first steps from the concept of ‘labour market policy’ towards the much broader concept of ‘employment policies’.

The second phase saw the dawning of the flexicurity debate. In 1997 the European Commission set the scene for the employment strategy and in 2000 it emphasised the need to combine ‘flexibility with security’, highlighting what the Commission itself described as a political compromise between a neo-liberal understanding of the markets and a more traditional understanding of welfare state regulation.

The third phase began around 2007, as the European Commission focused its attention on the need to optimise the skills of individuals throughout their working life. Through the concept of the active welfare state, employment policies began to focus on transitions – first and foremost, transitions in both directions between employment and education. Linking a high level of mobility within the labour market with flexible access to education and training captures the dynamic relationship that the report’s authors identify as ‘mobication’.

Summing up, mobication deals with the fact that tomorrow’s employment policies must create conditions to facilitate labour mobility through the lifelong learning of the individual. Mobication stresses that coordination between labour market and education policies is crucial for business competitiveness.

Reference

Andersen, S.K., Lubanski, N. and Pedersen, O.K. (2011), De nordiske landes konkurrencedygtighed. Fra flexicurity til mobication [The competitiveness of the Nordic countries – from flexicurity to mobication], Nordic Council, Copenhagen.

Søren Kaj Andersen, FAOS, Nikolaj Lubanski, Metropol University College, and Ove K. Petersen, CBS