Flexibility and security: an asymmetrical relationship?
8.3. Economic viability of the flexicurity arrangements and
distribution of costs: who pays the bill?
One of the most difficult dilemmas facing policy makers, social actors and individuals alike, re-
garding the implementation of the flexicurity agenda, is related to the question: who shall bear the
substantial costs involved, especially in providing employment and income security? Is it only the
governments, or do the other social actors also have to contribute? How is the burden to be shared?
Budgetary constraints, including (in some countries) the Stability Pact, and the ongoing economic
recession make it increasingly difficult to finance active labour market policies and compensatory
social protection that are required in order to provide safe transitions to the workforce and enhance
the security dimension of the flexicurity nexus. The financing of the welfare system, in particular,
will be coming under increased pressure owing to demographic ageing. For their part, businesses
are also reluctant —even unable- to assume their share of costs, in a period of shrinking profits and
falling demand. The quest of a new “business ethic” does not seem a realistic expectation under the
prevailing circumstances.
The question of who pays the cost of the flexicurity strategies, especially of the security dimen-
sion, inevitably brings into surface the issue of public finances and of taxation. The example of
Denmark, points out that it is possible to develop effective employment policies without a reduc-
tion in social expenditure. But is this experience transferable elsewhere, especially in countries with
under-financed welfare systems, without recourse to increased taxation? European citizens seem to
be torn between two irreconcilable situations: (a) whilst everyone seems to be aware of the fact that
the financing of more efficient social protection systems may require higher taxation, yet (b) there
is reluctance to assume the cost of the extra burden involved. So, despite deep concern regarding
growing social inequalities amongst the majority of European citizens, and a wide consensus on the
need for society as a whole to assume more responsibility for the elderly and the sick, only 40% agree
to pay higher taxes to support people in need (European Commission, 2008, Flash Eurobarometer).
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