Download On the Enlightenment from Danish Flexibility Labor Market

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On the Enlightenment from Danish Flexibility Labor Market
LIU Yanli, LI Huai
Hebei University of Engineering, Handan, Hebei, P.R. China, 056038
[email protected]
Abstract: Denmark takes the “golden triangle” flexicurity as the labor market model, which enhances
the country’s competitiveness and work efficiency, meanwhile strengthens the social cohesiveness. The
model creates employment miracle and makes Denmark become one of the world’s most competitive
countries. Based on the foreign studies, this paper had analyzed Danish flexicurity labor market and
proposed the choices and a series of policies and measures for our labor market, adapting to our national
condition.
Keywords: Denmark, Flexicurity, Labor Market, Enlightenment
1 Introduction
Since the 1980s, faced with serious recession, sustained increase in unemployment and a large number
of long-term unemployed, Western countries have introduced the reform of labor market flexibility. The
flexibility of the employment relations is recognized as an important way to increase the country’s
economic performance, social sustainability in globalization era. Employers prefer to share competitive
pressures with employees. The massive dismissals, the part time work, the temporary operating post
emerges suddenly and unceasingly. Traditional typical working style, long-term permanent employment,
stability of jobs has gone away; traditional employment security has disintegrated as well as the social
security. On the one hand, the labor market, employment and work organization request further
flexibility; on the other hand, the employees, particularly vulnerable groups and marginal groups, more
urgently need the security of labor market, employment and work organization. The pursuit of
flexicurity became an important employment policy for Western countries, especially European
countries. Flexicurity strategy of labor market can promote the flexibility of labor market, work
organization and labor relations, and strengthen employment security and social security for vulnerable
and marginal groups in the labor market (Wilthagen, Tros, 2004, 170). Therefore, this strategy becomes
one choice of new employment policy for European Union and various member nations.
2 Characteristics of Danish Flexicurity Labor Market Model
The Danish labor market flexicurity model is acknowledged as the success of flexicurity strategy, there
are three aspects: high external numerical flexibility; the security of generous social welfare system;
active labor market policies. The combination of three aspects forms Danish three pillars of the
economic society, supports Danish economic transformation, and this model is also called “golden
triangle” .(show below)
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The Danish flexicurity model
：
source Thomas Bredgaard, Flemming Larsen, Per Kongshøj Madsen 2005.
2.1Guarantee of flexibility--- free and flexible labor market
The Danish labor market flexibility lies in the number of external flexibility, primarily in two areas: (a)
Deregulate labor market regulation, reduce the stringency of the employment protection legislation.
Unlike most other industrialized countries and the Nordic countries, Denmark has low stringency of
employment protection, if employee without efficient production capacity or enterprises subject to
external shocks, the employer can fire the employee freely without the approval of Government and
trade unions. According to the 2004 OECD employment protection measurement standards, Denmark
was ranked the lowest level of employment protection for employees. (b) High degree of jobs mobility.
There is a common work culture that is frequent job transition. The high fluidity of operating post
reduces employee’s average employment duration in one enterprise. Compares with Britain, in 2001
Danish employee’s average employment duration was only 8.3 years, the enterprise ability to adapt
market shift is stronger.
2.2 Guarantee of income security --- generous and perfect social welfare system
Security is a necessary prerequisite for the flexibility of the Danish labor market, the main emphasis is
income security, and generous social welfare is an important guarantee for income security. Denmark
has a comprehensive unemployment insurance legislation, under the net of unemployment security; the
problems of the unemployed can be resolved timely and properly. The unemployed persons excluded by
the labor market can receive compensation through a variety of unemployment benefits. Danish
unemployment insurance is from three parts, the government, enterprises and individuals, the largest
part are shared by the government. Although the company may freely fire employees, the generous
social security system can ease the Danish unemployed to find work without fear for their lives. Danish
unemployment benefit may account for 90% of working income one month before the unemployed; the
maximum is 1,800 Euro per month.
2.3 Guarantee of employment security --- active labor market policies
Active labor market policy is a key factor to achieve labor market flexibility and security unified. The
Danish Government introduced active labor market policy on January 1 1994, concrete measures are as
follows: (a) The implementation of active policies to reduce the period for drawing unemployment
insurance: after 1994, the period for unemployed people receiving the unemployment pay reduced from
4 years to 2 years, latter the period is 1 year. One year later after receiving unemployment pay, the
unemployed people must participate in the professional training, the vocational education, the enterprise
practice and job rotation and so on, to enhance employed ability. (b) The implementation of regional
labor market policy. The labor market policy differs from the central government to fourteen local
counties. Under the social partner’s participation, according to the local labor market’s development
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condition, regional policy is designed in order to enhance the pertinence and effectiveness.
3 Effects of Danish Flexicurity Labor Market Model
According to most surveys results, Danish employment rate ranks the top in the EU. In 2007, the Danish
national employment accounts for 77.4 per cent of the population between 15 and 64 years, by contrast,
the employment rate of 27 EU countries only 65.7%, and compared to continuing high unemployment in
1980s and 1990s, Denmark is close to full employment, the unemployment rate is about 3.1%(European
Communities, 2008). Currently, while maintaining the highest employment rate in the EU, Danish
utilization for the potential and the existing workforce is the highest, youth and women’s employment
maintain high level.
With the intension of international competition, advancement of new technology and high demand for
flexibility in international market, Denmark explores development model coexisting stable economic
increase with social welfare system. And its result arouses international society’s widespread interest. Its
distinctiveness is “flexicurity”, that is, it can adapt the international environment change, and as well
maintain the social welfare system to unite a country. This model meets the demand for free market
economy and labor market flexibility, and maintains the relatively high security of traditional Nordic
welfare system. The model keeps a very good balance between labor market flexibility and security.
Since the mid-1990s, labor market flexicurity has became the hot research in the field of labor and
employment in Western countries, an increasing number of Governments and scholars have started to
study and learn Danish labor market flexicurity model. The flexicurity strategy both conforms to the
strategic objective of EU Lisbon-knowledge economy as the foundation, European Union is to become
in the world most competitive and vigorous with continuous economic growth, great operating posts and
formidable social cohesive force, and consolidates traditional European social model. The EU and its
Member States have kept flexicurity strategy as part of their new employment strategy. The thirteen
terms of European Employment Guideline(2001) states that “by all levels of social partners’
consultations and negotiations, work organization realize modernization including flexible working
arrangements, thereby to increase the potential productivity and competitiveness, balance flexicurity,
and improve the quality of their work”. In 2003, the EU commission further pointed out that keeping the
balance between flexibility and security is helpful for the enhancement of enterprise’s competitiveness,
improvement of the quality of the work and productivity, and enterprise’s adaptability to market shift. In
2007 the European Commission has issued Common Principles on Flexicurity, its main elements are:
flexicurity aims to create more and better jobs, social cohesion, and fight poverty and social exclusion.
The foundation for flexicurity is democratic agreement; and flexicurity is both employer flexibility and
employee flexibility. It is a social integration with the base of equal opportunities and gender equality.
Flexicurity ensures the employed enjoy full rights, which relies on the support of the active policy.
Flexicurity should make income security adequately, which requires sustained investment in education,
advocating lifelong learning concept.
4 Implications of Danish Flexicurity Labor Market Model
4.1 Constructing our model of flexicurity labor market
With globalization, China has joined the global production chain. In the late 1990s, as a result of
economic restructuring, non-regular employment has become China’s largest form for employment.
Temporary workers, short-term contract workers, dispatched service labors and so on not only appear in
the cities’ emerging departments, the non-regular department, moreover also in the regular departments.
Following labor market flexibility reform, the labor market security is protruding day and day. The
workers’ rights and interests cannot obtain the proper safeguard, the lack of income and employment
security not only causes the work relations worsen, but also becomes the main reason to widen income
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inequality. Currently constructing labor market flexicurity is of great significance. To obtain a greater
degree of flexibility enterprises must ensure employee security, particularly the protection of employees’
income security and employment security. Due to huge employment pressure, numerical flexibility does
not suit the development of our harmonious society, function flexibility is advantageous in training loyal
employees, strengthening employee’s adaptability and employment ability and it is prerequisite for the
smooth development of our social economy too.
4.2 Strengthening tripartite cooperation mechanism
In the era of globalization, the trilateral cooperation mechanism is precisely the important way to let
employer and employee carry on dialog and keep each part’s interests. On August 3, 2001, our country
officially established national tripartite coordination mechanism for labor relations by Ministry of Labor
and Social Security, all China Federation of Trade Unions, China Association of Enterprises, and
Chinese Entrepreneur Association. In 2006, our country proposed “perfecting tripartite coordination
mechanism for labor relations” in the eleventh five-year plan sketch. The government plays a crucial
role in the establishment of employer-employee dialogue mechanisms and the further perfection of
tripartite cooperation mechanism. Through government’s macroscopic guidance, negotiation and talk
can go on between strong enterprise organization and weak workers on the issues of wage standard,
working conditions and so on.
4.3 Promoting life-long learning and improving employability
The idea of life-long study is advocated by the countries of EU. In accordance with the requests of EU,
Denmark continuously readjusts present policies to support life-long study strategy. Denmark
practitioners are completely aware of the importance of constant self-improvement, and actively
participate in various trainings. Under the flexicurity labor market, Danes are no longer afraid of
unemployment, but improve their intelligence and skills with the help of positive labor market policy.
High quality labor force advances Denmark economy .Compared to Denmark, the overall quality of our
workforce is low and their educational level is much lower than the world average. So the government
should take the improvement of employees’ employability as our country’s long-term employment
policy. Through the education system, vocational education and training, and more active labor market
policies and measures, the atmosphere of our lifelong learning is created to help individuals
continuously improve their employability.
4.4 Constantly perfecting active labor market policies
Firstly is to increase our investment in active employment policies. Practice has shown that increased
spending on active employment policies, can not only enhance human and material inputs of service
field, but also improve primary care systems and infrastructure construction and the quality of
employment and training. It is essential for those weak domains and emerging service fields with high
employment needs to get government’s financial support in their initial period. Therefore, faced with a
tough job market, the government must enlarge the expense on active employment policy in GDP
proportion.
Secondly is to implement the active regional and specific employment policy. The government may
decentralize rights to various regions, earmark budget to local, mobilize the enthusiasm of all social
partners’ participation, emphases on corporate social responsibility, so that all aspects concerned are
involved in caring their regional employment rate, offering advice to regulate labor market policy which
conforms to local economic development and maximizes employment. Local governments are
encouraged to adjust policy priorities, deal well with job assignment and job creation with the focus of
upgrading the employability of the employed and unemployed. The Central government may regard the
results of regional labor market policy as the criteria for assessing local authority achievements and
supervise local authority to achieve the goal of more people employed as far as possible.
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5 Conclusion
Labor market flexicurity is a new policy strategy for labor employment in globalization era. The
implementation of it is an effective way not only to balance labor market flexibility and security,
improve competitiveness and working quality and efficiency, but also to improve social cohesiveness
and prevent social disruption. In flexible era, this strategy will facilitate the development of a
harmonious society in China.
Acknowledgements:
Supported by 2010 Social Science Fund Project of Hebei Province (HB10VJY096)
References
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[1]. Ton Wilthagenand F. Tros The Concept of “flexicurity”: A new approach to regulating
employment and labour markets pp. 11. TRANSFER – European Review of Labour and Research
Vol. 10 No. 2. 2004
[2]. Social platform Ten principles of Social NGOs for the Heads of State and Government pp. 2.
2006 http://www.socialplatform.org
[3]. Thomas Bredgaard Flemming Larsen Per Kongshøj Madsen The flexible Danish labour market-a
review. Aalborg: CARMA research papers 2005:01.
[4]. Andranik Tangian Monitoring flexicurity policies in Europe from three different viewpoints pp.
7-8. WSI Discussion paper 137 2006
http://www.boeckler.de/pdf/p_wsi_diskp_137.pdf
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