Flexicurity experiences from Central and Eastern Europe

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Flexicurity experiences from Central and Eastern
Europe

• Sandrine Cazes
• ILO
• Turin, 2 July 2008

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Todays topics

• Flexicurity concept and policy
• Labour Markets in CEE- Assessing flexibility
• Labour Markets institutions and policies
• ILO flexicurity project
• Challenges for moving forward

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Some thoughts on flexibility and security

• Flexibility is...the degree to which employment
  (or working time) or wages adjust to economic
  changes
• Security relates here to labour market security
•  Flexicurity  is the combination of both, i.e.
  a socially acceptable balance between the needs
  of adaptable firms and need of security, notably
  for weaker groups in and out the labour market
• The mix of strategies has to be flexible

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LM in CEE- increasing flexibilization of
employment relations

• Since 2000, trend towards more flexible form of
  employment, in particular temporary employment.
• By contrast, part-time employment remains
  limited below 10 - due to its unpopularity
  among employers and workers.
• Major differences across countries in the of
  self employment
• However, main evidence of LM flexibilization has
  been an increase in informal employment during
  the transition period.
• Incidence of flexible forms of employment
  particularly high among   vulnerable  groups.
  It points to a deepening of LM segmentation.

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LM in CEE- strong perception of insecurity

• Labour turnover has declined since 2000,
  indicating a certain stabilization of LM after
  the period of extensive enterprise restructuring
  in the 1990s.
• Tenure data also confirmed this stabilization, as
  well as deepening LM segmentation.
• Even in periods of economic growth many workers
  are hesitant to quit their jobs voluntarily,
  because of their heightened perception of job
  insecurity.
• Inefficient labour reallocation may have a
  negative effect on labour productivity

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Labour Market institutions policies

• Liberalization of EPL in CEE countries in hope of
  boosting employment and new recruitments
• EPL in new EU countries now more liberal than the
  average for EU-15, but its enforcement needs
  improvement. Moreover, since coverage of workers
  by Collective Agreements is low, workers enjoy
  low protection at workplace.

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Labour Market institutions policies

• Unemployment insurance became less generous over
  the 90s (level of benefit duration, tightening of
  eligibility conditions)
• ALMPs a drop in the ocean (expenditures below 1
  of GDP in most countries)
• In general spending on UB and ALMP significantly
  lower than in EU-15 countries
• Despite recent improvement still high labour
  taxation, E and income security outside workplace
  through LMP is still much below the level of
  EU-15

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Social Dialogue

• Membership in TUs has declined
• 1995 2001
• Czech Rep. 43 30
• Estonia 36 15
  
• Hungary 60 20
• Poland 34 15
  
• Slovakia 62 40
  
• Slovenia 60 41
  
• Collective Bargaining coverage is higher than
  union density, but declined as well
• Weak bargaining power due to low level of
  coordination

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Empirical Feedback do institutions and policies
matter?

• Finding from econometric analysis (2003)
• EPL strictness has no significant impact on
  unemployment rates (aggregate, long-term and
  youth)
• Labour Market institutions that matter ALMPs and
  labour payroll taxes
• But long payment of UB increases youth and
  long-term unemployment (and reduces LFP and
  employment rates).

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Wrap up

• Liberalization of EPL without any visible
  effects on LM performances
• Weak Labour Market institutions (in particular
  Social Dialogue)
• Need to capture the complexity of the
  institutional settings and their interactions
• Flexicurity as a relevant framework for the
  sub-region

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ILO project in CEE Baltic States

• Combination of research, TC activities and
  advocacy
• Raising awareness
• Capacity building
• Facilitating general agreements
• Country studies / national tripartite seminars

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Challenges for moving forward

• Further efforts on conceptualization
• Link-up with the macro-economic level
• Operationalization at the country level
• Establish the process
• Need for empirical feedbacks
• Who bears the costs?
• Who is responsible?