Flexicurity: Beneficial for Companies and Workers

10/03/2012

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Flexicurity: The Best of Both Worlds

European countries such as Germany and Denmark have kept unemployment low by developing policies based on "flexicurity," which provides both job flexibility and security for workers and companies. IESE Prof. Núria Mas explains that by making it easier for companies to adjust their workforce while also providing important support for workers, flexicurity can facilitate transitions in the labor market and boost participation rates.

Unemployment has grown more than 12 percent in Spain and 6 percent in the United States following the onset of the economic crisis. Yet in Germany, Austria and Denmark, unemployment rates have risen less than 2 percent. What are the second group of countries doing differently? One of the main reasons that some European countries have kept unemployment low is that they have developed policies based on "flexicurity," which provides both job flexibility and security for workers and companies.

A key characteristic of flexicurity is that it allows companies to adjust their workforce, while providing important support for the worker through benefits and training. This approach facilitates transitions in the labor market and also helps boost participation rates - a critical factor in healthy economies, Prof. Núria Mas explains.