The FPB said it welcomed the direction of the report, entitled ‘How to make labour law fit for the 21st century'. The report responded to two papers from the European Commission, one entitled ‘Modernising labour law to meet the challenges of the 21st century' and a second called ‘Pathways to flexicurity'. 

"‘Flexicurity', explained the FPB's European Affairs spokesman, Martin Smith, "Is an amalgam of ‘flexibility' and ‘security', and is an expression derived from a description of the Danish labour market, where this combination has worked well. The only unemployment in Denmark is frictional, a result of the time lag between workers moving out of one job and into another as demand patterns in the economy change."  

The flexibility in the system is provided by the ease with which employers can respond to changing market conditions; hiring workers in good times, and downsizing and restructuring when necessary, are all relatively hassle-free. Such flexibility is necessary for economic dynamism, for firms and industries to respond quickly to changing conditions.  

"The security," explained Mr Smith, "Is not an artificial notion of security where rigidity keeps workers in the same job even if that it is not where they would be best be used – that kind of security only creates unemployment for the ‘outsiders'. Instead, security means state support for transitions between jobs, through welfare payments high enough to maintain a decent standard of living in unemployment without creating disincentives for work. It also means ‘active' labour market policies such as worker retraining, subsidies for skills provision and lifelong learning initiatives that mean workers can more easily adapt when labour demand changes. 

"Flexicurity is by no means perfect," said Mr Smith. "Denmark, for example, has very high welfare costs of nearly 5% of GDP, and I think our members would see skills, rather than welfare, as a sustainable investment on the security side," recalling that FPB's members had complained in recent surveys of poor workforce skills and a challenging tax burden. "However, it marks a distinct improvement in the EU's thinking, away from the idea of a highly regulated labour market to which they have traditionally been wedded, and which has created nothing but unemployment and poor growth." 

Mr Smith also invited trade unions to overcome their scepticism of flexicurity. "At the end of the day what they want is as near to full employment as possible with workers happy and productive in well-paid jobs," he said. "With flexicurity we have economic dynamism and with that we have high employment. Skilled and productive workers are also happy and well-paid, and secure in the knowledge that if they lose their current job, they can easily get another one. Because of this I think flexicurity provides a framework for a new consensus on employment policy that meets everyone's goals."