To what extent do you think there is a tension or confrontation between flexibility and social protection in the following areas of European employment law: the regulation of working time, of minimum wage, of temporary work, and of part-time work? Which of these do you see as the area in which such tension is the hardest to resolve? SUBTITELA. Flexibility: a general overview SUBSUBTITEL(i) Background The debate over labour market flexibility has an increasing influence over the direction of social policy and employment law within the European Union. Concerns over high levels of unemployment in the various Member States have led many to argue that “the European Social Model” based on social protection and collective employee representation has paid an obstructive role. As a consequence, from some corners, deregulation and flexibility have –unjustifiably- been defended. The past two decades, the workforce has also changed dramatically from ‘industrial mass production’ to a more ‘service oriented economy’. This has posed new challenges to the way labour law is perceived and the way in which it is able to answer to these tendencies and economic realities. The Commission has tried to respond to these changes by inviting social partners and the European Commission to take part in a discussion about a partnership which could make a significant contribution to achieving the objective of a productive, learning and participative organization of work, based on European values, which combine competition between firms and solidarity between citizens. Let’s put things in its perspective. I do think that the Commission is seeing the future of the organization of work and the realisation of a ‘third way’ between security for employees combined with flexibility for employers through rose-coloured glasses. I’ll put it bluntly. In our globalized economy, based on a high skilled, fast adaptable, totally committed workforce, there is no way that both parties can gain the same advantages from a flexible organisation of work. In any way, the employer is the victor, no matter how many efforts are made to provide the employee with the necessary security. Flexibility and security are two irreconcilable values. I will try to argue this standpoint by referring to working time, wages, temporary work and part time work. SUBSUBTITEL(ii) Flexibility can mean a lot of things to a lot of different people What does flexibility exactly mean. It can mean a lot of different things to different persons, so it is necessary to point out exactly what is meant by this ‘sacred cow of the Commission’. First of all, a clear distinction has to be made between demand side flexibility and supply-side flexibility. Demand side flexibility emphasis “the flexible firm”. It stresses the attempts of employers to vary labour inputs according to fluctuations in the state of external demand. In this type of flexibility four different categories can be distinguished. 1. ‘Numeral flexibility’, which allows the firm to modulate the numbers of workers according to its needs; 2. ‘Working time flexibility’, which permits the raise or lowering of hours through overtime or through variations to the normal hours; 3. ‘Financial flexibility’, which describes practices such as performance related pay which links remuneration directly to output; 4. ‘Functional flexibility’, which refers to the multi-skilling of workers that permits them to move around between different tasks. This model has had a considerable impact on government policies in the ‘80s first half of the ‘90s. ‘Supply side flexibility’, on the contrary, puts the emphasis on family-friendly policies. From this point of view, the growth of non-standard forms of employment may represent an increase of employment opportunities for groups previously discriminated against, for example women with child care obligations. Again, despite the good intentions, many of the non-standard jobs tend to be poorly paid and tend to offer few prospects for career development. Demand side and supply side conceptions of flexibility point in opposite directions. These conflicting pressures are evident in the 1997 Directive on Part Time Work. On the one hand, Member States and social partners have to observe the principle of equal treatment, while on the other hand, the Directive speaks of a deregulatory agenda when it calls on Member States and social partners to identify and review obstacles to part time work. SUBSUBTITEL(iii) Flexibility and deregulation A view which –unfortunately has been supported and taken into account by some European governments in their conception of Social Policy is that regulation causes rigidities in the market. Flexibility is then the consequence of the absence of regulation. In this view, economic efficiency can be restored through deregulation. Elements of rigidity in the European social model are said to include centralized collective bargaining, high unionisation rates, employment taxes and social security contributions (the so called tax wedge), job protection legislation and earning related unemployment benefits. According to some, the effect of such regulation is that flexibility is prevented by institutional conditions. This deregulatory approach to achieve flexibility does not take into account that the market is not perfect and that norms and regulations are not rigidities, but can also be opportunities and advantages in order to find an equilibrum between efficiency and equity. Rigidities which may have short running destabilizing effects may also be the source of longer-term dynamic efficiencies, through stimulation of technical and organizational innovation based on trust. In short, labour standards are an indispensable element of a productive economy. This view is reflected in the 1997 Commission Green Paper on a Partnership for a New Organisation of Work. In this Paper the Commission stresses that a new organization of work would have potential benefits for everyone. “The key issue is that the social partners and the policy makers have to find a balance between flexibility and security. The reorganization of work often causes uncertainty. Workers need above all to be reassured that after the changes are made, they will still have a job and that this job is for a reasonable time. At the same time, once the changes are made, the new organization of work can offer workers increased security though greater involvement in their work, more job satisfaction and the possibility of developing skills and long-term employability. This security for workers can also provide employers with increased security in the form of a more stable, versatile and contended labour force.” The Commission, again, is very optimistic, too optimistic, I believe. SUBTITELB. The regulation of working time Working time is –as the Commission says- at the centre of the public debate on the organization of work. Two separate questions emerge. One is about working time flexibility: the adjustment of working time arrangements to the needs of firms or to the needs of individual workers. The other question is about working time and employment. Can a shortening of working time create more jobs? In Its Green Paper ‘Partnership for a New Organization of Wok’ the Commission acknowledges that many innovative working time arrangements are being introduced in firms throughout the European Union, both on the initiative of the firm concerned or as the result of pressures or incentives from the Member States. Such arrangements can take a number of forms, including: · Changes in the length of the working week According to the Commission, some research has shown that firms may employ more workers as a result of reducing working time, provided that certain conditions are met. I am very sceptical towards this kind of initiatives. · Annualisation of work There has also been a trend in recent years towards coping with fluctuations in demand by calculating working time on an annual basis rather than on a weekly basis. The Commission is of the opinion that this would enable workers to organize their time between work and leisure better. For employers it would allow greater flexibility in the organisation of production and avoid expensive overtime premia. Perhaps I missed something in the Commission’s argument, but I do not see any advantages for the workers by this kind of proposals. I am strongly convinced that a strict regulation of the working time is a necessity to protect workers against an over demanding globalized economy where night-time and daytime are not more than relative concepts. How could one expect for example female workers –but not only them- to organise their family if they work one week 30 hours and the other week 55 hours. · Part time work The Commission acknowledges that this form of work represents both opportunities and risks. From the employer’s point of view, it provides the flexibility which is necessary to meet changing consumer demands. From the worker’s point of view it also provides a flexibility that makes it easier to combine work with other responsibilities. The Commission acknowledges that conditions of employment for part time workers are often limited when compared with those for full time work. This crystallises the need for a new balance between the interests of employers and workers, which could have positive effects for both sides and could lead to an integration of part time workers into the labour market. I will expand upon this topic under the section on part time work. · Career breaks The Directive on Parental Leave provides a good example of the progress being booked. The Working Time Directive (Directive 93/104 concerning certain aspects of the organization of working time) was adopted under Article 137 EC and formed one of the key pillars of the EC’s 1989 Social Charter Action Programme. Action on the duration and organization of working time was in this document advocated in order to guarantee that the completion of the internal market would lead to an improvement of the living and working conditions of workers in the EC. The Commission thus used this change in emphasis to conceive a Directive on Working Time, not as a job creation measure, but as a health and safety measure, enabling it to select article 137 EC as the appropriate legal basis. The Directive was criticized by many businesses as a significant constraint on their ability to introduce flexible working arrangements. I do not agree. As I said earlier, a clear determination of the working time –preferably on a daily and a weekly basis- is essential to able employees to combine working and family life. For reasons I will set out below, I do not support initiatives for part time and fixed term work. A clear determination of the daily and weekly working time would already be a great help in the attempt to combine a professional career and a family, without minimising the loss of career opportunities and possibilities for vocational training. The Directive leaves enough space for flexibility. Some sectors –such as the armed forces and the police- are excluded. Derogations are made for unmeasured working time, other special cases and shift work. Collective agreements can be concluded between the two sides of industry. An important role is envisaged for the social partners, not only in implementing the Directive, but as well in setting out substantive standards. I am of the opinion that the Directive on Working Time provides a good example of what security for employees and flexibility for employers should mean. SUBTITELC. Minimum wages Firstly, I’d like to stress that the EU has no competence on wage systems. Article 137, 6 EC expressly excludes from the Community’s competence pay, the right of association, the right to strike or the right to impose lock-outs. I strongly support minimum wage competences at EU level. Minimum wages are an absolute necessity to protect workers against exploitation. One must definitely realise that workers and employers are not on an equal footing when they are negotiating. Legislative initiatives are required to compensate this initial inequality especially if one takes into account that Article 2 EC speaks of a high level of employment and social protection, the raising of the standard of living and quality of life. Article 5 of the Social Charter Action Programme provides that all employment shall be fairly remunerated. To this effect, workers shall be assured of an equitable wage, a wage sufficient to enable them to have a decent standard of living. The term ‘equitable wage’ is carefully selected. No reference is made to a ‘minimum wage’. Let’s open the point of discussion to wages in general. It is said that European labour markets are inflexible because of the relatively limited degree of wage dispersion (wage inequality) in Europe compared to the US. Wage equality is perceived to be a sign of inefficiency since it implies that wages are only imperfectly matched to the different qualities of individuals. Another factor is said to be the greater length of time it takes for wages in most EU systems to adjust to changes in the level of unemployment. According to Simon Deakin and Hannah Reed the solution lies in measures which allow for more competition over terms and conditions by for example allowing employers to escape from multi employee collective agreements permitting ‘two tier’ bargaining structures with different terms and conditions for newly hired workers and the core workforce. Again, I do not agree, not with the general critics, nor with the proposals of Deakin and Reed. Comparisons with the US are inadequate for improving our social system at European level. The European employment legislation and social policy reflects a view on society that differs in a manifest way from that supported in the US. Excessive wage inequalities introduced to motivate individual workers are in my opinion contra productive and could lead to –I put it strongly- a disintegration of the society. A balance should be struck between the need for flexibility in wages -in order to motivate and attract human capital- and the basic premises of our West-European society: a proper standard of living for a mere part of the population. The setting of a minimum wage is absolutely not contradictory to this aim and would –in my opinion- be a step in the right direction, to an even more ‘fair society’ with possibilities for all its citizens. SUBTITELD. Temporary work Following the evolution in the Netherlands concerning flexibility in temporary work, the European Social Partners announced their intention of starting negotiations on fixed term work. They concluded a Framework Agreement which the Council put into effect by Directive 99/70. The Directive has a double purpose. It wants to improve the quality of fixed-term work by ensuring the application of non-discrimination and it has the intention to establish a framework to prevent abuse arising from the use of successive fixed term employment contracts. The Directive applies to fixed term workers who have an employment contract/relationship as defined in each Member State. The Preamble even though makes clear that the Agreement does not apply to those fixed term workers placed by a temporary works agency at the disposition of a user enterprise. The Directive marks a shift away from the earlier Commission position that temporary work was essentially a low quality form of employment and should be limited to certain strictly specified circumstances. Unlike the Part-Time Work Directive (which requires Member States to identify and review…and where appropriate eliminate legal or administrative obstacles to part time work) the Fixed Term Work Directive stops short of explicitly promoting fixed-term work. In the Preamble of the Framework Agreement, there is an express reference to the fact that the agreement represented a further contribution towards the achievement of a better balance between flexibility in working time and security for workers. However, the Framework Agreement is latently permissive of temporary work. Crucially, the Agreement is silent on the regulation of the circumstances in which recourse can be made to temporary work –in my eyes crucial-. It fails to set limits on the duration of the initial temporary contract, or on the total duration of successive contracts. It does not determine the grounds upon which temporary contracts can be extended. It does not adopt the powerful legal mechanisms proposed by the Commission in its earlier attempts to regulate this form of employment, the reversion of temporary contracts to permanent status in the event of employer breach of the precisely de-limited bases upon which temporary work could be used. The ETUC has continued to stress that it has never considered fixed-term contracts to be a means of promoting or creating jobs and has always emphasized that permanent contracts should be the usual form of an employment relationship. This view is reflected in the preamble to the Directive, but this does not undo the regulatory effect of the Agreement which is to normalise this form of atypical work. There are good grounds for questioning the linkage between the spread of temporary work and the creation of ‘more and better’ employment. The role of temporary work in job creation is not the same as that of part time work. “A high rate of temporary employment seems to mitigate the rate of unemployment, whereas a high rate of temporary employment is merely an additional manifestation of the weaker labour market position in times of high unemployment.” Temporary work also undermines the quality of employment and is contrary to the high standards, high productivity labour market the Community I sometimes seen as supporting. The protection afforded for workers is simply inadequate. The Directive’s protective regime is based on the principle of non-discrimination. This is not enough, since this form of employment is by nature discontinuous and insecure. Research shows that recourse to temporary work is often an expression of unilateral employer action, rather than a reflection of employee choice. The protection which temporary workers need is therefore a fully-fledged scheme of portability of entitlements, which recognises all relevant working experience for the whole range of conditions of employment and employment rights governing the work in question. SUBTITELE. Part time work After 20 years of unsuccessful attempts to regulate atypical wok, the Commission consulted the social partners and they concluded a formal Agreement upon part time work. This Agreement was then adopted as a Directive. The purpose of the Directive is to provide for the removal of discrimination against part-time workers and to facilitate the development of part time work on a voluntary basis and to contribute to the flexible organisation of working time in a manner which takes into account the needs of employers and of workers. There are substantial grounds for doubt that the Directive is strong enough or clear enough to achieve its aim of removal of discrimination against part time workers. The Part Time Directive is unlikely to have a great impact in most countries. The Directive is for example less precise and more narrow in scope than the ILO Convention N° 175 and its accompanying Recommendation. It is likely that this Directive wanted to overcome the objections of the Member States. It was, even though, subscribed as the minimum of the minimum. One can ask why the Agreement leading to the Directive was concluded in any way. One might assume that it was more important to show that “Social Dialogue” can be successful, than it was to reach an Agreement which was satisfactorily in substance. I support part-time work more than fixed term work. A satisfactorily balance between the interests of the employer and of the worker is more likely to be achieved. Even though, I would like to stress that in reality merely women perform part time work. This definitely leads to a lack of career possibilities. Even though women are nowadays quite integrated in the labour market, the percentage of women in executive high responsibilities jobs is below every expectation. The promotion of part time work is not going to improve this. Most executive jobs just don’t allow part time performances. I stay therefore very sceptical. Emancipation is more than integration in the labour market. Women will in the long term be the victims of this normalisation of part time work. SUBTITELF. Conclusion I am very sceptical towards the plans to reconcile security for workers with the flexibility which firms need. It is very hard to convince me that all kinds of flexible organisations of work –fixed term, part time, flexible working hours, no minimum wage- can be at the advantage for workers in general. This is an illusion. Some categories of workers will be able to profit from these flexible schemes, but the general balance is negative. The tension between flexibility and social protection is the strongest concerning temporary work, it is less for part time work and the least for working time. I situate the discussion about minimum wages at a different level. A minimum wage is a necessity, but is according to me a bit outside the discussion about flexibility and security.

Elisabeth Matthys