Mads Peter Klindt


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Mads Peter Klindt

  1. 1. Flexicurity: The Danish Experience <br />Mads Peter Klindt, Research Fellow<br />Centre for Labour Market Research (CARMA)<br />Aalborg University <br /><br />Presentation at the FORES labour market conference in STOCKHOLM<br />March 24, 2010<br />
  2. 2. Outline of the presentation<br />The Danish flexicurity-model<br />Nordic flexicurityprofiles<br />The dynamics of flexicurity: some empirical findings concerning labour market mobility<br />Time to turnaround? Some policy recommendations for the Swedish government<br />
  3. 3. The ‘Golden Triangle’ of Flexicurity<br />Traditional nexus between flexibility and security (since 1899/1907)<br />Flexible labour market<br />Qualification effect of ALMP (1994)<br />Active labour market policies<br />Generous<br />unemployment benefits<br />Motivational effect of ALMP(1994/2001)<br />Source: Madsen (2006)<br />
  4. 4. Flexicurity version 2.0<br />FlexibleLabourMarket<br />Educationand CVT<br />Job trai-ning<br />Unem-ployment Benefits<br />Service, monitoring and control<br />Source: Klindt (2010)<br />
  5. 5. Nordic flexicurity-profiles<br />Source: Nordic Council of Ministers (2010)<br />
  6. 6. Dynamics of flexicurity<br />Moderate to low EPL reduces labour market segmentation and improves employer’s ability to adjust to changes through hiring and firing (flexibility).<br />So, when hiring and firing is cheap, employers are less hesitant to hire; especially, this has an positive impact on youth employment rates.<br />Good UB provides economic security for unemployed persons (security) and reduces the political pressure for better job security<br />High and long lasting UB can create functional disincentives (such as reduced search intensity), however, it a has positive effect on workers’ willingness to take the risk of job-to-job mobility <br />Furthermore, the negative incentives stemming from UB can largely be offset by ALMP through balanced systems of rights and duties. <br />
  7. 7. Labour turnover<br />European Commission (2009)<br />
  8. 8. Labour market segmentation and EPL<br />Source: European Commission (2006)<br />
  9. 9. Youth unemployment<br />Source: European Commission (2009)<br />
  10. 10. Mobility from temporary employment to other statuses (from one year to the next)<br />Source: Nordic Council of Ministers (2010)<br />
  11. 11. Job mobility: Experiences and attitudes<br />Share of work force with a positive view on job mobility <br />R2 = 0,8401<br />R2 = 0,6195<br />Average number of job transitions per person <br />Source: Owncalculationsbasedon Eurobarometer 64.1 (2005)<br />
  12. 12. Policy-recommendations for the Swedish government <br />The Swedish government has reduced the generosity of the UB, halved the UB-duration, but maintained a high degree of EPL <br />These steps, together with increased self-financing in the UI-funds, may jeopardize Swedish workers’ willingness to take the risk of job-to-job mobility, and may result in a less dynamic labour market. <br />From a flexicurity-perspective, Sweden should rather have preserved its UB system (generous benefits and collective risk pooling) while at the same time it should have reduced EPL to lower the economic burden on private enterprises.<br />“Workers will be more inclined to take risks associated with job transfers if benefits are adequate during transition periods and if prospects for new and better jobs are real (…) if these conditions are met, dismissal procedures can be made considerably lighter, less costly and less time consuming” (European Commission, 2007) <br />
  13. 13. Unemployment insurance in Denmark and Sweden<br />Compensation rate<br />90 %<br />80 %<br />70 %<br />Duration<br />300 days<br />4 years<br />
  14. 14. Denmark also has problems…<br />Gap between registered and surveyed unemployment <br />Source: AE-raadet (2010)<br />
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