In the early 2000s ‘flexicurity’ grabbed the attention of policymakers. Popularised in Denmark, it aimed to combine labour market flexibility and security through making it relatively easy to hire and fire, but providing a secure safety net and investment in training to help workers adjust to change.
It was those last two bits of the jigsaw that proved tricky to implement in the U.K. There was little political appetite to raise out-of-work benefit levels and while spending on training rose the national culture toward it didn’t change. Then came the financial crash and the focus was back on flexibility in order to maintain employment levels. Combined with sharp spending cuts since 2010 this means one million fewer adults improving their skills each year.
Perhaps now is the time to revive our interest in flexicurity.
Employment rates are at record levels. But real wages are falling, new forms of work (such as the gig economy) have grown and an increasing number of people feel insecure. Our challenge is to combine the flexibility that has delivered the high employment that benefits many - self employment, the gig economy and even zero hours contracts are forms of work that benefit many people - with ensuring people have security of income and work.
Long-term trends changing the labour market are unlikely to go away. Whether you believe the rise of the robots will sweep away large swathes of the world of work or not (spoiler: I’m at the more cautious end of the spectrum), technology will clearly continue to have a significant impact. Other trends such as Global economic change, Brexit and demographic changes will also require greater flexibility.
So can we have the best of both worlds - and avoid flexibility being a one-way street for employers?
It’s a big and complex question and not one the Taylor Review and the government’s response could be expected to answer alone. For example, the government agrees the tax system needs to change but won’t change it, due to the political flack that forced it to backtrack on National Insurance rises for the self employed even before it lost its majority in the General Election.
But the Taylor review and the response do make strides forward. These include the recommendation, adopted by the Government, that the quality of work should be a national objective along with the quantity of work. If this starts to permeate government policy it could make a real difference. Extra action on enforcement of rights, including a greater role for HMRC, are welcome too.
However, we need a step change in thinking in other areas. One that stands out is training – one of the pillars of flexicurity in Denmark. Changing patterns of work, and the impact of economic change on the skills needed to work and progress, make this an area crying out for fresh thinking and investment. But the government response simply trots out standard lines about Apprenticeships, which, given they require the apprentice to be employed, are not much use to the self-employed, along with pilots to test new ways to engage adults (welcome but pretty small beer).
If we were serious about flexicurity we’d do far more to help the nine million adults with low literacy or numeracy. These are core skills like understanding the dosage instructions on an aspirin packet which are vital to work and life, but the number of adults taking classes to improve such basic skills has fallen 25% in the last five years. At Learning and Work Institute we’ve called for an extra £200m per year for adult education so that all adults have the chance to brush us their basic skills by 2030.
We’ve also argued for a more flexible learning system, with greater investment for adults. This includes a new system of ‘Personal Learning Accounts’ bringing together people’s achievements and individuals’ investment being matched by government, alongside an entitlement to support for those on the lowest incomes. We were pleased the Taylor Review recommended this approach. In addition, systems of online micro-credentials, highlighted by the Taylor Review, could play a role too.
We also want a review of the system of Advanced Learning Loans, which are university-style loans for intermediate skills. Learning at these levels has fallen by one third since their introduction. But set up properly they could be a good vehicle for people to invest in their own skills development. However, they need a rethink, including the flexibility to invest in modules of learning rather than just full qualifications as at present.
All told, it feels like we’re now asking the right questions. The quality of work and security are on the agenda. What we don’t have yet are all the answers. A serious investment in learning must be part of the answer. Perhaps, like fashions from previous decades, it’s time for a revival of flexicurity.