Unions today primarily insist on job retention, wages, Christmas bonuses, and minimum wage. Such a policy merely postpones business-motivated needs for adjustment.
Worker security today depends on their knowledge and skills, so the union struggle should focus on ensuring conditions for lifelong learning and adequate social protection during periods of unemployment.
Written by: mr. sci. Sanja Crnković-Pozaić,
director of CEPOR, the Center for the Development Policy of Small and Medium Enterprises and Entrepreneurship*
Many economists, especially those of neoliberal origin, will wave their hands dismissively when they hear the word ‘flexicurity’. They will say it is a new mantra of Euro-bureaucrats trying to combine the incompatible. The term ‘flexibility’ evokes associations of job loss, fixed-term work, or part-time work, and for most people, it stirs negative associations. This package also includes low wages, short notice periods, small severance payments, and the ease of dismissal, as well as new hiring. It is believed that flexibility benefits only employers, at the expense of workers. On the other hand, job security is considered an exclusive interest of workers and is most often the subject of union work in their favor. How accurate are these perceptions?
Let us recall the recent past. Croatia lost more than 800,000 jobs during the transition period. Some were prematurely retired, while others filled the unemployment register or sank into the gray economy. At that time, flexibility was an unknown word. It was called transition. These structural changes occurred alongside a very rigid Labor Law and a socialist Employment Law, which proved to be a very weak protection for workers and the unemployed. The social welfare system, as the last safety net, brought unemployed workers even closer to poverty. During that period, there was much flexibility and little security.
Today, however, we have a somewhat more flexible labor law (Croatia is among the countries with a medium level of worker protection), and the definitions of employment and unemployment have been partially aligned with the much stricter criteria of the International Labour Organization. At the same time, employment is increasing, unemployment is falling, and the gray economy is decreasing. However, there are worrying trends of marginalization of certain groups of workers who enter a vicious circle of short-term employment, periods of unemployment, and inactivity, which negatively affects their potential for development. This can only be achieved through more permanent employment engagement and investment in one’s own education and training.
In the employment guidelines, the European Commission provided the following instruction: ‘It is necessary to promote three key objectives: achieve full employment and reduce unemployment and inactivity, improve the quality and productivity of work, and strengthen social and territorial cohesion. These objectives are achieved with the help of three political priorities: 1. employment of individuals and their retention in employment; 2. increasing the adaptability of workers and enterprises; 3. increasing investment in human capital through better education and necessary skills.’ The need to promote flexibility is emphasized, but also the simultaneous encouragement of worker security and the reduction of labor market segmentation within the cooperation of social partners. At the spring meeting of the European Council in 2006, a call was made to the European Commission to define common European principles of flexicurity.
The main motives for introducing greater flexibility are globalization, the aging of the European population, which requires a higher level of economic activity, and faster structural changes driven by technological development, new products, and services. The development of human capital has become slower than the demand for new skills and competencies, so it is necessary to increase labor mobility. The flexicurity policy is a matter of consensus among the main interest groups in the labor market for each country, where the main actors are social partners. From this perspective, flexicurity is also a result of social dialogue, and therefore it can be expected to have different characteristics. The flexicurity policy unites the areas of labor legislation, active employment policies, social security systems, and lifelong learning. These four areas of action should define the flexicurity system to change job security into ’employability’ security. What does this mean?
Unions in negotiations primarily insist on retaining individual jobs, wages, Christmas bonuses, and recently on the minimum wage. This shows that the goal is to protect the worker by retaining their existing job and ensuring the greatest possible rights within that framework. Such a policy does not provide long-term security for the worker. It is short-lived as it merely postpones business-motivated needs for adjustment. The fight for security should be conducted on another level; worker security today depends on their knowledge and skills, so the union struggle should focus on ensuring conditions for lifelong learning and adequate social protection in today’s increasingly frequent periods of unemployment and job searching. Unions that first move in this direction are in real danger of losing part of their membership, which requires thoughtful, brave, and innovative policy. However, there is no real alternative.
Labor market analyses show that part of the employed population is above average exposed to atypical forms of work, with 85 percent of newly employed individuals hired on fixed-term contracts, wages are irregular and partially paid under the table, which causes a low level of old-age insurance. Young people are particularly exposed to high fluctuation, losing the opportunity for higher quality forms of learning both at work and in formal education. However, most employees, on average, have been employed by the same employer for more than 10 years, while in the EU, that threshold is six to seven years. However, those working on fixed-term contracts often work for shorter periods.
The Croatian labor market is very segmented and similar to other countries in the region. Some workers are protected to such an extent that dismissal is almost an unknown occurrence, for example, in the state and public sector. There, wages are not high, but they are regular, and there is a very high level of security. On the other hand, informal work or contracts for services, as well as self-employed individuals in agriculture or in the gray zone, have above-average levels of insecurity. Unions most often protect the acquired privileges of relatively protected workers. The state, which represents the interests of all citizens, has the greatest responsibility to reduce working conditions in various segments. What next?
At the forefront of flexicurity policy in countries like Croatia, the policy of reducing the differences between protected and unprotected employment is emphasized. It is proposed that all non-standard forms of work be covered by the Labor Law so that these workers have the same rights as those with employment contracts. It is also necessary to improve the social protection of the unemployed by increasing benefits, enhancing the activation of the unemployed and their efforts to find work (the duty of public employment services), and increasing allocations for lifelong learning to enhance ’employability’ (i.e., the competitiveness of individuals in the labor market concerning the necessary knowledge, skills, and required abilities), especially for the long-term unemployed and groups that find it harder to get employed. However, excessive security in some segments of the labor market is unjustified. Informal work requires a complex policy aimed at legalizing such activities, especially for those who are self-employed but work illegally. For this purpose, it is necessary to simplify the registration process, reduce taxes and mandatory contributions, and make access to legal instruments cheaper and faster. It is also essential to strengthen inspection oversight and increase their authority.
Flexicurity as the last bastion of worker security is a thesis that speaks to the importance of putting these issues on the agenda. Today, the question of flexibility on one side and security on the other is a key developmental issue. On one hand, it is necessary to enable companies to restructure as quickly and efficiently as possible; on the other hand, Europe, with its model of social sensitivity, may be at an advantage over other countries of liberal capitalism because, in a knowledge society, the individual is the source of all values. This individual needs security to be creative, innovative, and a key to the competitive advantage of the company they work for. If the opportunity to achieve consensus on flexicurity is missed, the question is whether this topic will ever come back to the agenda. In this sense, the dialogue on flexicurity is the last bastion of defense for worker security – but security that comes from ’employability’, not the false security that assumes the retention of the existing job.
