Flexibility and Competitiveness: Labour Market Flexibility, Innovation and Organisational Performance.
Are Europe's national economies sclerotic and their labour markets over-regulated? Certainly, this was a popular perception during much of the 1990s until 2001. The American economy grew and grew creating new jobs, while most of Europe's economies barely grew at all, creating more unemployed people than new jobs. Yet there were a few, mostly small and more open European countries that bucked this trend and appeared immune to this 'Euro-disease'. Among these more successful smaller European economies are Ireland, The Netherlands and Finland (since the mid 1990s). Most of these smaller European countries were also able to maintain social cohesion, in terms of income equality and social inclusion, while creating economic and employment growth and introducing labour market flexibility. Arguably, Ireland is not one of these societies.
Flex.Com is an EU funded Fifth Framework research project that examines the relationship between labour market flexibility, national competitiveness, innovation and social cohesion in Ireland, Finland and The Netherlands, a less successful smaller country in Greece and a longer term success story in Switzerland. The project runs for two years from September 2001 to August 2003. It involves six European research teams and is coordinated by researchers at the National and Kapodistrian University of Athens. The main objective of the research is to identify to what extent labour market flexibilities contribute to long-term competitiveness and to socio-economically sustainable development. Previous research suggests that the pursuit of numerical flexibility by firms may undermine possibilities for functional flexibility. Although cost-cutting in the short term, flexibility may prove innovation-curtailing and socially divisive in the long run. These side-effects may damage in particular small open economies.
The research is being conducted in three stages. The first involves national reports on labour market flexibility and competitiveness in the five countries. The second focuses on case studies of selected companies, identifying the different reactions of firms in terms of their performance when flexibility increases. The third involves thematic reports on issues that link flexibility to competitiveness in knowledge based economies. These include national systems and policies in comparative perspectives; successes and failures in functional flexibility; and the compatibility or incompatibility of flexibility with the knowledge society; and the consequences of flexibility for innovativeness.
The comparative results should provide a better empirical understanding for academics, firms and policy-makers of the more and less successful uses of flexibility for firm and national competitiveness in smaller European countries. Perhaps there are lessons to be learned for the less successful EU and newer accession countries?
Further information is available on the
Flexcom project website.
