Forum 2006

Competitive Europe - Social Europe: partners or rivals?
Dublin, 1-3 November 2006

Flexicurity is the path to better European competitiveness

Abstract by Isabel Da Costa (antagonist view)

What is the meaning of 'better European competitiveness'?

How is competitiveness to be measured or assessed? In terms of a better trade balance or increased exports? In terms of lower costs for equivalent products? Who are the competitors? Enterprises, countries or regions? USA, Japan, China or NAFTA, Mercosur, Asean or each European member state?
Since most European exchanges take place within Europe, is “better competitiveness” that of each European country against the global world or against each other? If the latter was the meaning of better competitiveness, then the path of flexicurity would:

• either have no effect, the conditions of competition being simply equalised if every single country was to successfully adopt the same policy or if it was a European level policy applying to all member states;

• or contain a serious risk of a downward spiral that could lower social standards throughout Europe, if each country tried to use its own particular form of flexicurity to get a competitive advantage against its neighbour.

Europe would be taking a low road and not the high road the Lisbon strategies suggest

If 'better competitiveness' is to be understood in relationship to the USA, Japan, or China then flexicurity, dealing mainly with labour costs, is not the best path. European workers cannot possibly compete with Chinese wages and conditions even if they were to accept decreased standards that would endanger social cohesion. Furthermore, the gains obtained in the labour market could easily be offset by the exchange rate of the Euro against the Yuen. Flexicurity alone would not work. It would have to be accompanied at least by a monetary policy not to mention an European wide industrial policy equivalent to those which prevail in different forms in the USA, Japan, or China.

'Flexicurity' is not the best European path

Flexicurity might benefit private enterprises in a visible manner but its costs are externalised and its benefits to society in general are more difficult to assess, particularly when it entails major reforms of the systems of social protection. In some European countries the risk is increased precariousness and social unrest. Furthermore, the uniformisation of strategic choices or public policies might not be the universal panacea. Industrial relations systems have maintained their diversity despite the common pressures of globalisation and they certainly have an impact on economic competition. To find a balanced mix of practices, including a strong role for the social partners, could conceivably be more efficient at each European national level than to adopt a single practice, such as flexicurity, which might work very well in one context but might become counter-productive in another because one can never keep all other things equal. Therefore instead of looking at the 'one best way', such as flexicurity, to implement everywhere, we should accept the idea that there are a variety of ways to achieve competitiveness. Other more efficient paths exist such as: high quality products, market niches, the development of new technologies, or even the evolution of the exchange rate of the Euro. European level input into the development of new technologies through a strong support for R&D and education at all ages, for instance, would be a much better path to competitiveness. A path that could be taken at the European instead of at the national member states level, would benefit the whole of society, and represents a high road towards European sustainable development.