Finnegan's Take

More workers are being hired on ‘no benefits’ contracts as employers look to cut costs

At a meeting of European industrialists in Brussels yesterday, the President & CEO of Philips Electronics highlighted a new trend: in the Netherlands, he said, there is a marked increase in the number of independent workers.

These, he said, are people who have chosen to take control of their own careers; they reject the old model of relying on others for pension and health benefits. And good for them, he added, for they are entrepreneurs.

His fellow industrialists nodded in approval. This was indeed good news for companies who have had a habit of offering gold-plated pension plans for senior executives.

Likewise, the handful of politicians and bureaucrats in the room – who enjoy some of the best employment conditions in Europe – were also pleased by this new-found lust for entrepreneurship in the workforce.

It might be a mistake to view the widespread move from employee to independence as a choice.

A recent Business Week article on the ‘Disposable Worker’ highlights that hidden behind the rising unemployment numbers of job losses is a tectonic shift in how people are employed.

For some, there are surely benefits in the form of flexibility and freedom to work with whomever they chose. For others, it brings insecurity.

From the point of view of industrialists and policymakers, it is important to consider how this new arrangment affects behaviour.

For example, we know that people often delay having children until they feel they are in a sound financial position. Given the demographic challenge Europe faces – and the productivity, pensions and healthcare crises it will bring – it would be worrying if the birth rate does not take an upward turn.

Likewise, consumer confidence is affected: would you buy a new car or a house if you know a serious illness would decimate your earning power?

Companies and governments might be happy to hand responsibility for health and pensions to individual workers – but if this phenomenon is more than a temporary result of the jobs crisis, its implications warrant more attention.

The big question is how this fits with the much-vaunted flexicurity policy. It has the ‘flex’ but what of the ‘-curity’?!

[To read EurActiv’s report on the industrialists’ vision for Europe, click here]

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