Sympathy for the Devil? Exploring Flexicurity Win–Win Promises

Pablo de Pedraza; Marcos Álvarez-Díaz; Marcos Domínguez-Torreiro

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Sympathy for the Devil? Exploring Flexicurity Win–Win Promises

Pablo de Pedraza

Marcos Álvarez-Díaz

and

Marcos Domínguez-Torreiro

| Nov 16, 2019

IZA Journal of Labor Policy

Volume 9 (2019): Issue 1 (June 2019)

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DOI: https://doi.org/10.2478/izajolp-2019-0009

Keywords
flexicurity, European Pillar of Social Rights, unemployment, employment, poverty, inequality

© 2019 Pablo de Pedraza, Marcos Álvarez-Díaz, Marcos Domínguez-Torreiro, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Matrix categories of the Danish golden triangle.Note: Own elaboration, based on Madsen (1999).

EU-28 performance over 2005–2015 in the golden triangle drivers.

Golden Triangle underlying the linear regression models.Source: Own elaboration.

Explained variables included in the econometric analysis

Social outcomes (dependent variables)

Variable	Concept	Definition	Source
Y₁	Early leavers from edu- cation and training	Percentage of the population between 18 and 24-year-old with at most secondary education who were not in further education or training during the last 4 weeks preceding the survey in 2015	Social Scoreboard for the European Pillar of Social
Y₂	Gender gap	Difference between the employment rates of men and women of working age in 2015	Rights (https:// composite-
Y₃	Income inequality	The ratio of total income received by the 20% of the population with the highest income over the income received by the 20% of the population with the lowest levels of income in 2015	indicators.jrc. ec.europa.eu/ social-scoreboard/)
Y₄	At risk of poverty or social exclusion (AROPE)	Percentage of the population who is either at risk of poverty or social exclusion (severely deprived or living in a household with low work intensity in 2015
Y₅	Young people not in ed- ucation, employment, or training (NEET)	Percentage of young people aged between 15- and 24-year-old who are neither working nor studying or doing a training job in 2015
Y₆	Unemployment rate	Unemployed people as a percentage of the labor force in 2015

Results of the OLS regression over the period 2008–2015

						Social outcomes

Variables				Y_1,2015	Y_2,2015	Y_3,2015	Y_4,2015	Y_5,2015	Y_6,2015
Constant				11.479	−6.677	2.192	−22.675	7.589	18.015
Flexicurity	Flexibility	External numerical	F_1,2008	0.004	0.039	−0.006	−0.035*	−0.023	−0.061*
	Security	Employment security	S_5,2008	−0.048	−0.009	0.023*	0.067	0.001	0.0773
		Income security	S_6,2008	0.055**	−0.018	−0.013	−0.063*	−0.014	−0.046
	Control variables	L₂₀₀₈		0.553***	0.843***	1.159***	1.021***	1.056***	0.695***
		ln_GDP₂₀₀₈		−0.946	0.323	−0.279	2.435	−0.403	−1.035
		νGDP₀₈₋₁₅		6.200**	5.613	−0.348	−7.904	−4.549**	−15.781***

						Diagnostic checking

Adjusted R²				0.91	0.88	0.86	0.87	0.83	0.83
Heterocedasticity			B-P-G test	0.65 (0.74)	0.99 (0.47)	1.329 (0.29)	0.537 (0.84)	0.546 (0.79)	1.399 (0.26)
			White test	0.753 (0.66)	0.62 (0.75)	1.330 (0.29)	0.449 (0.90)	0.595 (0.75)	0.939 (0.52)

Autocorrelation			LM test	0.008 (0.93)	0.41 (0.53)	0.007 (0.94)	0.013 (0.91)	0.653 (0.43)	0.005 (0.94)
			L-B test	0.012 (0.91)	0.51 (0.48)	0.008 (0.93)	0.018 (0.89)	0.630 (0.43)	0.008 (0.93)
Normality (Jarque–Bera			test)	0.581 (0.75)	0.43 (0.81)	0.830 (0.66)	4.437 (0.11)	0.802 (0.67)	1.680 (0.43)
Model specification (Ramsey			Reset	0.113 (0.91)	0.42 (0.68)	0.914 (0.37)	0.217 (0.83)	1.110 (0.28)	1.940* (0.07)
Test)

Indicators by security category and driver

Category and driver	Indicators	Direction
Job security

S.1. EPL and tenure	EPL regular contracts (FRCA_01_r)	+
	EPL temporary contracts (FRCA_01_t)	+
	Job tenure in years—Job duration (FRCA_20)	+

S.2. Transitions and	Transition from temporary to permanent—3-year average (FRCA_04)	+
self-employment	Transitions by contract—Pay level (FRCA_06)	+
	Diversity and reason for contractual and working arrangements— self-employed (FRCA_14)	−

S.3 Involuntary part-time and temporary jobs	Diversity and reason for contractual and working arrangements—Involuntary part-time (FRCA_12)	−
	Diversity and reason for contractual and working arrangements—Involuntary temporary (FRCA_11)	−

Employment security

S.4. Human capital—lower education	Early leavers from education and training (TSDSC410)	−
	Percentage of the population having completed at least secondary education (TPS00065)	+
	At least upper secondary educational attainment, age group 20–24 by sex (TPS00186)	+

S.5. Human capital—	LLL (age 25–64) (CLLL_01)
higher education, LLL,	Public spending on human resources (CLLL_02)	+
and ALMP (S´5)	Educational attainment—% aged 30–34 with tertiary educational attainment (CLLL_07)	+
	Expenditure on ALMP as % GDP (ALMP_05)	+
	Activation—LMP participants per 100 persons wanting to work (ALMP_06)	+
	Expenditure on ALMP per person in labor service (ALMP_04)	+
	LTU ¹ (% active population) (ALMP_01)	−

Income security

S.6. Social security	PLMP expenditure on support per person in labor reserve (MSS_02)	+
support	Expenditure on PLMP as % GDP (MSS_03)	+
	PLMP participants % of U (MSS_04)	+
	Net replacement rate after 6 months (MSS_07)	+
	Net replacement rate after 5 years (MSS_08)	+

S.7. In-work poverty	At risk of poverty rate max secondary education (TSDSC420)	−
	In work at risk of poverty (TSDSC320)	−
	At risk of poverty without dependent children no low-work intensity (TESSI122)	−
	At risk of poverty with dependent children no low-work intensity (ILC_PEES02)	−
	Inactivity trap (WLB_03)	+

Work–life balance/combination security

S.8. Childcare,	Childcare (WLB_02)	+
parenthood, and	Employment impact of parenthood (WLB_04)	−
inactivity	Lack of care for children and other dependents—the main reason for inactivity (WLB_07)	−

S.9. Part-time and low wage	Lack of care for children and other dependents—the main reason for part-time (WLB_06)	−
	Low wage trap (MSS_06)	−

EMCO variables grouped by flexibility drivers—pairwise correlations.

EMCO variables grouped by security drivers—pairwise correlations.

Flexibility and security matrix: categories and drivers

Flexicurity components	Categories	Drivers
Flexibility	External numerical flexibility	Employment protection legislation (EPL) and tenure
		Job seekers
		Public expenditure
		Traps
		Family and labor supply
		Low-wage supply
		Transitions
	Internal numerical flexibility	Working time
	Functional flexibility	Human capital—lower education
		Human capital—higher education, LLL, and ALMP
	Wage flexibility	Competitive pay and labor cost

Security	Job security	EPL and tenure
		Transitions and self-employment
		Involuntary part-time and temporary jobs
	Employment security	Human capital—lower education
		Human capital—higher education, LLL, and ALMP Social security support
	Income security	Social security support
		In-work poverty
	Work–life balance	Childcare, parenthood, and inactivity
		Part-time and low wage

Indicators by flexibility category and driver

Category and driver	Indicators	Direction
External numerical flexibility

F.1. EPL and tenure (F´1)	EPL regular contracts (FRCA_01_r)	−
	EPL temporary contracts (FRCA_01_t)	−
	Job tenure in years—Job duration (FRCA_20)	−

F.2. Job seekers	Unemployment rate (ALMP_02)	+
	Involuntary working on a temporary job (FRCA_11)	+
	Involuntary working part-time (FRCA_12)	+
	Diversity and reason for contractual and working arrangements—	+
	self-employed (FRCA_14)

F.3. Public expenditure	Net replacement rate after 6 months (MSS_07)	−
	PLMP expenditure on support per person in labor reserve (MSS_02)	−
	Expenditure on PLMP as % GDP (MSS_03)	−
	PLMP participants % of U (MSS_04)	−

F.4. Traps	Unemployment trap (MSS_05)	−
	Low wage trap (MSS_06)	−
	Inactivity trap (WLB_03)¹	−

F.5. Family and labor	Employment impact of parenthood (WLB_04)	−
supply	Lack of care for children and other dependents—Main reason for inactivity	−
	(WLB_07)

F.6. Low-wage supply	In-work at-risk-of-poverty (TSDSC320)	+
	At-risk-of-poverty without dependent children no low-work intensity	+
	(TESSI122)
	A t-risk-of-poverty with dependent children no low-work intensity (ILC_PEES02)	+
	Net replacement rate after 5 years (MSS_08)	−

F.7 Transitions	Transition from temporary to permanent—3-year average (FRCA_04)	−
	Transition in labor status and pay levels—Same or higher qualification level	+
	(CLLL_06)²

Internal numerical flexibility
Working time	<No EMCO indicator>

Functional flexibility

F.8. Human capital—	Percentage of the population having completed at least secondary	−
lower education	education (TPS00065)
	At least upper secondary educational attainment, age group 20–24 by sex	+
	(TPS00186)

F.9. Human capital—	LLL (age 25–64) (CLLL_01)	+
higher education, LLL, and ALMP	Public spending on human resources (CLLL_02) Educational attainment—% aged 30–34 with tertiary educational attain-	+ +
	ment (CLLL_07)
	Expenditure on ALMP per person in labor service (ALMP_04)	+
	Expenditure on ALMP as % GDP (ALMP_05)	+
	Activation—LMP participants per 100 persons wanting to work (ALMP_06)	+

Wage flexibility

F.10. Competitive pay	Transitions by contract—Pay level (FRCA_06)	−
and labor cost

Independent variables included in the econometric analysis

Flexicurity measures and controls (explanatory variables)

Matrix		Variable		Concept	Definition	Source
Flexicurity	X	Flexibility	F1	External nu- merical flexibil-	The aggregated value of the driver “EPL and tenure” in 2008	Own elaboration
				ity in the labor
				market
			S5	Employment	The aggregated value of the driver
		Security		security	“Human Capital—higher education, LLL, and ALMP” in 2008
			S6	Income security	The aggregated value of the driver
					“Social security support” in 2008

Control	C	L		Lagged depen- dent variable	Value of the dependent variable in 2008	Social Scoreboard for the European Pillar of Social
						Rights
		ln(GDP)		GDP per capita	Natural logarithm of GDP per capita in	Eurostat
					2008
		νGDP		Economic	The annual average growth rate of GDP
				growth	per capita over the period 2008–2015

Outliers		D		Country dummies	Dummy for each country detected as outlier according to the DFFIT¹ analysis	Own elaboration

Security drivers—PCA and Cronbach’s α results

Group 1# FRCA_01_r FRCA_01_t FRCA_20
	PC1	PC2	PC3
SS loadings	1.673	0.757	0.570
Proportion Var	0.558	0.252	0.190
Cumulative Var	0.558	0.810	1.000
Proportion explained	0.558	0.252	0.190
Cumulative proportion	0.558	0.810	1.000
Cronbach’s α: 0.61
Group 2# FRCA_04 FRCA_06 FRCA_14
	PC1	PC2	PC3

SS loadings	1.641	0.746	0.613
Proportion Var	0.547	0.249	0.204
Cumulative Var	0.547	0.796	1.000
Proportion explained	0.547	0.249	0.204
Cumulative proportion	0.547	0.796	1.000
Cronbach’s α: 0.58
Group 4# JQ_10 JQ_11 JQ_12
	PC1	PC2	PC3

SS loadings	2.595	0.285	0.120
Proportion Var	0.865	0.095	0.040
Cumulative Var	0.865	0.960	1.000
Proportion explained	0.865	0.095	0.040
Cumulative proportion	0.865	0.960	1.000
Cronbach’s α: 0.92
Group 5# CLLL_01 CLLL_02 CLLL_07 ALMP_05 ALMP_06 ALMP_04 ALMP_01
	PC1	PC2	PC3	PC4	PC5	PC6	PC7

SS loadings	3.575	^1.206	0.918	0.590	0.378	0.191	0.141
Proportion Var	0.511	0.172	0.131	0.084	0.054	0.027	0.020
Cumulative Var	0.511	0.683	0.814	0.899	0.953	0.980	1.000
Proportion explained	0.511	0.172	0.131	0.084	0.054	0.027	0.020
Cumulative proportion	0.511	0.683	0.814	0.899	0.953	0.980	1.000
Cronbach’s α: 0.83
Group 6# MSS_02 MSS_03 MSS_04 MSS_07 MSS_08
	PC1	PC2	PC3	PC4	PC5

SS loadings	3.366	0.780	0.480	0.291	0.084
Proportion Var	0.673	0.156	0.096	0.058	0.017
Cumulative Var	0.673	0.829	0.925	0.983	1.000
Proportion explained	0.673	0.156	0.096	0.058	0.017
Cumulative proportion	0.673	0.829	0.925	0.983	1.000
Cronbach’s α: 0.87
Group 7# JQ_6 JQ_1 JQ_3 JQ_5 WLB_03
	PC1	PC2	PC3	PC4	PC5

SS loadings	3.214	0.746	0.575	0.326	0.139
Proportion Var	0.643	0.149	0.115	0.065	0.028
Cumulative Var	0.643	0.792	0.907	0.972	1.000
Proportion explained	0.643	0.149	0.115	0.065	0.028
Cumulative proportion	0.643	0.792	0.907	0.972	1.000
Cronbach’s α: 0.85
Group 8# WLB_02 WLB_04 WLB_07
	PC1	PC2	PC3

SS loadings	2.064	0.666	0.270
Proportion Var	0.688	0.222	0.090
Cumulative Var	0.688	0.910	1.000
Proportion explained	0.688	0.222	0.090
Cumulative proportion	0.688	0.910	1.000
Cronbach’s α: 0.76

Flexibility drivers—PCA and Cronbach’s α results

Group 1# FRCA_01_r FRCA_01_t FRCA_20
	PC1	PC2	PC3
SS loadings	1.673	0.757	0.570
Proportion Var	0.558	0.252	0.190
Cumulative Var	0.558	0.810	1.000
Proportion explained	0.558	0.252	0.190
Cumulative proportion	0.558	0.810	1.000
Cronbach’s α: 0.61
Group 2# ALMP_02 FRCA_11 FRCA_12 FRCA_14
	PC1	PC2	PC3	PC4

SS loadings	2.479	0.693	0.497	0.331
Proportion Var	0.620	0.173	0.124	0.083
Cumulative Var	0.620	0.793	0.917	1.000
Proportion explained	0.620	0.173	0.124	0.083
Cumulative proportion	0.620	0.793	0.917	1.000
Cronbach’s α: 0.80
Group 3# MSS_07 MSS_02 MSS_03 MSS_04
	PC1	PC2	PC3	PC4

SS loadings	3.010	0.531	0.341	0.118
Proportion Var	0.752	0.133	0.085	0.030
Cumulative Var	0.752	0.885	0.970	1.000
Proportion explained	0.752	0.133	0.085	0.030
Cumulative proportion	0.752	0.885	0.970	1.000
Cronbach’s α: 0.89
Group 4# MSS_05 MSS_06 WLB_03
	PC1	PC2	PC3

SS loadings	1.989	0.577	0.434
Proportion Var	0.663	0.192	0.145
Cumulative Var	0.663	0.855	1.000
Proportion explained	0.663	0.192	0.145
Cumulative proportion	0.663	0.855	1.000
Cronbach’s α: 0.70
Group 6# JQ_1 JQ_3 JQ_5 MSS_08
	PC1	PC2	PC3	PC4

SS loadings	2.713	0.755	0.373	0.160
Proportion Var	0.678	0.189	0.093	0.040
Cumulative Var	0.678	0.867	0.960	1.000
Proportion explained	0.678	0.189	0.093	0.040
Cumulative proportion	0.678	0.867	0.960	1.000
Cronbach’s α: 0.83
Group 9# CLLL_01 CLLL_02 CLLL_07 ALMP_04 ALMP_05 ALMP_06
	PC1	PC2	PC3	PC4	PC5	PC6

SS loadings	3.359	1.200	0.674	0.383	0.240	0.144
Proportion Var	0.560	0.200	0.112	0.064	0.040	0.024
Cumulative Var	0.560	0.760	0.872	0.936	0.976	1.000
Proportion explained	0.560	0.200	0.112	0.064	0.040	0.024
Cumulative proportion	0.560	0.760	0.872	0.936	0.976	1.000
Cronbach’s α: 0.83

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Sympathy for the Devil? Exploring Flexicurity Win–Win Promises

Published Online: Nov 16, 2019

Page range: -

DOI: https://doi.org/10.2478/izajolp-2019-0009

Keywords
flexicurity, European Pillar of Social Rights, unemployment, employment, poverty, inequality

© 2019 Pablo de Pedraza, Marcos Álvarez-Díaz, Marcos Domínguez-Torreiro, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Figure 1

Figure 2

Figure 3

Explained variables included in the econometric analysis

Results of the OLS regression over the period 2008–2015

Indicators by security category and driver

EMCO variables grouped by flexibility drivers—pairwise correlations.

EMCO variables grouped by security drivers—pairwise correlations.

Flexibility and security matrix: categories and drivers

Indicators by flexibility category and driver

Independent variables included in the econometric analysis

Security drivers—PCA and Cronbach’s α results

Flexibility drivers—PCA and Cronbach’s α results

Sympathy for the Devil? Exploring Flexicurity Win–Win Promises

Published Online: Nov 16, 2019

Page range: -

DOI: https://doi.org/10.2478/izajolp-2019-0009

Keywordsflexicurity, European Pillar of Social Rights, unemployment, employment, poverty, inequality

© 2019 Pablo de Pedraza, Marcos Álvarez-Díaz, Marcos Domínguez-Torreiro, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Figure 1

Figure 2

Figure 3

Explained variables included in the econometric analysis

Results of the OLS regression over the period 2008–2015

Indicators by security category and driver

EMCO variables grouped by flexibility drivers—pairwise correlations.

EMCO variables grouped by security drivers—pairwise correlations.

Flexibility and security matrix: categories and drivers

Indicators by flexibility category and driver

Independent variables included in the econometric analysis

Security drivers—PCA and Cronbach’s α results

Flexibility drivers—PCA and Cronbach’s α results

Keywords
flexicurity, European Pillar of Social Rights, unemployment, employment, poverty, inequality