The Contested Meaning of Labour Market Flexibility: Economic Theory and the Discourse of European Integration

This paper argues that in order to facilitate informed debate and to develop a coherent social and employment policy in Europe, it is necessary to clarify the different meanings of the term 'labour market flexibility'. It questions whether the deregulation of the labour market is an inherent component of increased flexibility. The paper then examines the EU's employment strategy and argues that it must be understood in terms of its linkages to social policy on the one hand, and the process of economic and monetary union (EMU) on the other. It suggests that a coherent alternative to neoliberal policies, of the kind apparently promised by a 'Third Way' agenda for the labour market, has yet to emerge at European level. There is a danger, instead, that the institutional arrangements for the conduct of social and economic policy (broadly conceived) within the Community are making it impossible to forge the linkages between labour standards, active labour market policy and the macroeconomic framework of the kind which are needed to renew the 'European social model'. It therefore questions whether, under present institutional conditions, the goals of Third Way advocates can be met.