The European Social Model and Transitional Labour Markets

Law and Policy

Ralf Rogowski

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781317033189
• Edition: 1
• Topic: Law
• Subtopic: International Trade Law
• Index: Law

Bringing together theoretical, empirical and comparative perspectives on the European Social Model (ESM) and transitional labour market policy, this volume contains theoretical accounts of the ESM and a discussion of policy implications for European social and employment policies that derive from research on transitional labour markets. It provides an economic as well as legal assessment of the European Employment Strategy and contains evaluations of new forms of governance both in European and member state policies, including discussions of the potential and limits of soft law instruments. Country studies of labour market reforms in Denmark, the Netherlands, Belgium and France assess their contribution to an emerging ESM, while comparative accounts of the ESM examine mobility and security patterns in Europe and beyond and evaluate recent 'flexicurity' policies from a global perspective.

Part I Transitional Labour Markets and the European Social Model

Chapter 1 The European Social Model and the Law and Policy of Transitional Labour Markets in the European Union

Ralf Rogowski

DOI: 10.4324/9781315616384-2

Introduction

The concept of transitional labour markets (TLM) has been prominent and provided core ideas not only for recent labour market reforms in a number of advanced Member States of the EU but also in employment policy discussions in the EU. Yet the fact that it played an important role in the design of the European Employment Strategy (EES) in the mid-1990s, influenced the evaluation of the EES by the Kok Commissions, and helped to revise the EES as part of the Lisbon agenda and to streamline employment and economic policies is rarely acknowledged in public and academic discussions and deserves to be assessed adequately.

In the following it will be argued that the underlying assumptions of the TLM concept lie at the heart of the EES as well as the European social model (ESM). In particular, if the EES and the ESM are assessed in functional terms, it becomes clear that ideas such as balancing organizational and individual interests, life-course policies, and a special focus on transitional phases in employment careers are core concerns of the TLM approach as well as of the debates over the EES and an ESM.

The ESM has been a concept that has risen to prominence in documents issued by the European Commission as well as in academic discussions of the distinct character of both provision of welfare and economic policy-making in the EU. It is possible to distinguish two leading concepts: (1) a narrow view that defines the ESM as a policy concept at the supranational level by indicating the constitutive elements of the role of the EU in introducing uniform regulations and in setting standards for the harmonization of laws in the area of social protection; and (2) a broader understanding that describes the common core in providing the welfare that underlies the diverse understandings of the role of the welfare state, both at the EU level and in its Member States. These two notions are linked in the following way. The more its Member States share a common understanding of what kind of basic protection and social security should be provided by the national welfare state, the less regulation is needed at the supranational level. However, with the erosion of this common understanding, as a result of deregulation and privatization policies favoured in many transition countries and in some older Member States, the traditional European Social Model is challenged. A major consequence of this challenge is the need for the EU to define at the supranational level what minimum protection has to be provided for its citizens, and thus to make explicit the previously tacit common understanding of the basic elements of social protection. Furthermore, in doing so, the EU defines the limits for deregulation and privatization of social protection pursued by its Member States.

This chapter focuses on the first notion. It discusses the ESM as it emerges from policies pursued at the level of the EU, in particular the European Employment Strategy and coordination of social policies. It asks in particular how and to what extent European policies resemble TLM policies. The TLM concept is thereby used as a heuristic device in assessing European policies, and special attention is paid to reflexive legal instruments that aim at increasing flexibility in transitions within the labour market.

The Transitional Labour Market (TLM) Approach

The TLM concept originated in research undertaken by Günther Schmid and his collaborators at the Research Unit on Labour Market Policy of the Wissenschaftszentrum Berlin (WZB). It was the main theoretical concept of the large-scale European project TRANSLAM (Social Integration through Transitional Labour Markets) which was funded under the European Commission’s Fourth Framework Programme of Targeted Socio-Economic Research (TSER).¹ TRANSLAM developed the concept of transitional labour markets into a regulatory idea for building institutional bridges to support individual transitions between various employment statuses (unpaid involuntary civil work, part-time and full-time work, continuous adjudication and training, dependent employment and self-employment). A basic premise of it was that ‘making transition pay’ enhances the employment intensity of growth and avoids the dilemma of a growing segmentation of the labour market into insiders and outsiders. This research came to the conclusion that labour market policy that focuses on transitions transcends the narrow focus on European employment policies and is beneficial for the European economy as a whole.

The idea of transitional labour markets was further advanced in debates and research carried out in the thematic network ‘Managing Social Risks through Transitional Labour Markets’ (TLM.NET),² funded under the European Commission’s Fifth Framework Programme ‘Improving the Socio-Economic Knowledge Base’. In these discussions the TLM approach was combined with the idea of social risk management and transitions over the life-course of individuals. It led to a wide range of policy conclusions for both national and supranational employment policies.³The contributions in this volume bear further witness to advances in the TLM approach, theoretically as well as in comparative terms, in analysing policy concepts, including legal instruments.

The closeness to policy is indeed one of the defining features of the TLM approach (see in particular Schmid 2002). Its success can be measured in terms of its influence on various national and supranational policy debates. In France, for example, it has been supported for a number of years by Bernard Gazier, who actively promoted it in discussions organized for the Commissariat général du plan (before its demise in 2005) (Gazier 2003). But it probably had its strongest influence in Germany, due in large part to Günther Schmid’s membership of the Hartz Commission on labour market reform. TLM has been a key concept in the Hartz Commission’s fundamental overhaul of German labour market policies since 2002. Furthermore, the TLM concept has been most influential in designing and evaluating the European Employment Strategy (EES), as will be shown later.

The original concept of the transitional labour market operates with five core transitions within the labour market as well as into and out of it. Figure 1.1 shows how the original TLM approach and the idea of management of social risks can be linked.

Figure 1.1 The transitional labour market and social risk management

Source: Schmid and Schömann 2004, 21, Figure 6.

It depicts the modern labour market as consisting of an active workforce of wage earners and the self-employed. The main idea here is to view the labour market as being embedded within and linked to four groups and areas of non-wage earners. The concept of transitional labour markets analyses five major transitions into and within the labour market: (1) transitions from education and work, (2) family and work, (3) work and retirement or disability, (4) employment and unemployment, and (5) transitions within the labour market, including change from employment to self-employment and change of type of employment (part-time and other atypical employment). The links between these areas and the labour market are fluid. The idea is that in modern times it is necessary to make the transitions into and out of the labour market more flexible and to concentrate regulatory efforts on these transitions. The model suggests devising policies that support flexible transitions in the labour market and innovative institutional set-ups, including new forms of legal regulation.

Figure 1.1 also shows how the TLM concept can be linked with a concept of social risk management. Different types of transition are related with different types and aspects of income. Günther Schmid has proposed that the core idea of TLM (that is, increasing the flexibility of the boundaries between gainful and non-gainful employment, combined with social risk management as outlined above) can lead to a meaningful redefinition of full employment (Schmid 2002). Key here is a new understanding of the role of the welfare state as a coordinator of economic policies. Furthermore, a focus on transitions requires that active labour market policy becomes ‘activating’ labour market policy. Such reorientation of labour market polices opens new paths into employment for the unemployed and inactive sections of the employment force, and carries a large potential for reducing overall unemployment in Europe.

1. First, developing, maintaining and enhancing the income capacity (known also as ‘employability’) for successful transitions between education and employment and during transitions between (continuous) training and employment.
2. Second, guaranteeing income security during critical transitions between various employment relationships, especially between part-time and full-time work, between dependent employment and self-employment, and – increasingly important – between high and low wage jobs.
3. Third, providing income support during phases in the life course in which the income capacity is reduced due to social obligations such as the care for children or other dependent persons.
4. Fourth, securing income maintenance during transitions between employment and unemployment.
5. Fifth, providing income replacement in case of disability or retirement, which means in phases of the life-course in which employability is severely reduced or lacking completely (Schmid and Schömann 2004, 21).

TLM and EU Employment Policies

There is much evidence that the TLM approach and its underlying ideas have influenced policies pursued by the EU. TLM ideas were taken up when European employment and social policies were given a new direction in the wake of the introduction of the European Economic and Monetary Union (EMU) during the 1990s. Already the White Papers on growth, competitiveness and employment (issued in 1993) and on European social policy (issued in 1994) showed rudimentary concern with transitions (‘transition from education or school to work’; ‘transition to part-time work’ – European Commission 1993, 118, 120; European Commission 1994, 7, 114, 330–334). The main concern of these papers was the combating of unemployment through increasing flexibility in the existing laws and policies, as well as support for businesses in their hiring efforts.

A radical shake-up of employment policies at the European Council summit in Essen in December 1994 led to a greater role for the Commission and the Council in monitoring labour market and social policies at national level. The Commission and the Council from then on had to report back annually to the European Council on progress in each of the Member States and the EU as a whole. In terms of labour market policies this has become known as the ‘Essen Process’. A similar change of direction in social policy was proposed by the Commission in its 1995 and 1997 Communications concerning The Future of Social Protection, a Framework for a European Debate (European Commission 1995) and Modernising and Improving Social Protection (European Commission 1997). The Commission proposed to introduce a new strategy to improve the social protection systems of the Member States by concentrating on five areas: employment, poverty, social exclusion, pensions and health.

At the 1997 Intergovernmental Conference in Amsterdam a ‘multilateral surveillance process’ (Trubek and Mosher 2003, 38) was launched under the aegis of the European Employment Strategy (EES), which enabled the Commission to monitor labour market policies of the Member States on an annual basis. The EES constitutes an ongoing process of negotiation and adjustment between the Member States and the European institutions. In a certain sense it depoliticizes the unemployment issue and turns it into a matter for labour market experts (Goetschy 2003, 73). Furthermore, the EES constitutes a radical shift from the idea of a European social policy focusing on the establi...

Table of contents

• Cover Page
• Table Of Contents
• The European Social Model and Transitional Labour Markets
• List of Figures
• List of Tables
• List of Contributors
• List of Abbreviations
• Introduction
• Part I Transitional Labour Markets and the European Social Model
• 1 The European Social Model and the Law and Policy of Transitional Labour Markets in the European Union
• 2 Sharing Risks: On Social Risk Management and the Governance of Labour Market Transitions
• Part II The European Employment Strategy and Transitional Labour Markets
• 3 Research in Transitional Labour Markets: Implications for the European Employment Strategy
• 4 The European Employment Strategy, Macroeconomic Policies, Institutional Regimes and Transitional Labour Markets
• 5 Temporary Agency Working and the European Employment Strategy
• 6 Employability Through Covenants: Taking External Effects Seriously
• 7 Social Europe and the Limits of Soft Law: the Example of Flexicurity
• Part III National Transitional Labour Market Policies in Europe
• 8 Transitional Labour Market and Flexicurity Arrangements in Denmark: What Can Europe Learn?
• 9 Making Work Pay and Social Security Reform in The Netherlands
• 10 Making Work Pay, Making Transitions Flexible: the Case of Belgium in a Comparative Perspective
• 11 The French Basic Income (RMI) and Transitional Markets: One National Policy, Many Local Realities
• Part IV Transitional Labour Market Policies in Comparative and International Perspectives
• 12 Balancing Labour Market Mobility and Employment Security Across European Welfare Regimes
• 13 Labour Market Institutions and the European Social Model in a Globalizing World
• Index