Flexicurity – A Concept Doomed to Failure

Flexicurity, an "integrated strategy to simultaneously strengthen flexibility and security in the labour market", is perceived both by the European Union and in economic policy discussion as a tool to overcome current weaknesses in the labour market. In actual practice, flexicurity was typically implemented in the form of deregulating temporary employment contracts without improving the social security situation of those affected by such contracts. The result was dual labour markets which chiefly substituted permanent employment contracts by temporary ones and had a rather negative effect on employment, productivity and training. Instead of offering a launch pad for entry into the labour market they act as a barrier for the young. Austria was rather lukewarm in following the trend towards flexicurity; here the differences in the regulations governing permanent and temporary contracts are fewer and the dualisation rate is lower than in other OECD countries.