• Peter Auer

09 November 2009Is Australia the new economic and social model for the world, asks Peter Auer in the Australian Review of Public Affairs

SOME EUROPEAN countries, led by Denmark, are successful, both economically and socially, and Australia could learn from their policy approaches. But is all the learning to be had uni-directional, now that Australia seems to be weathering the recession so much better than even the best European performers?

Previously it seemed that Denmark (and some other smaller European countries, such as the Netherlands and, with some reservations, Austria, Finland and Sweden) had found the right balance between economic efficiency and social equity. Indeed, along with other European scholars, I have claimed that the Danish model had the dynamism of the United States, without its social problems. In recent decades, Denmark has developed labour market regulation combining loose employment protection, which allow for high labour market mobility, with generous income and employability protection. The Danish model also enables effective integration of working and family life through generous maternity, parental and training leave.

Taken together, these measures thus constitute insurance against the different labour market risks that individuals may face over their life course, such as unemployment, transitions between jobs, between parenthood and jobs, and between jobs and retirement. This system has been called “protected mobility”, “transitional labour markets” or simply “labour market security”. However, the different elements of which it is composed—loose employment protection, generous passive and active labour market policies, ample training and family-related leaves, and the social dialogue and collective bargaining for arriving at such a package deal—have become the model for labour market reforms in the European Union under the name of “flexicurity”.

The global financial crisis seems to have changed everything. In a recent column, the Sydney Morning Herald’s Peter Hartcher wrote that “Australia is the country that seems to have achieved a sweet spot, combining the vigour of American capitalism with the humanity of European welfare, yet suffering the drawbacks of neither”...

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Photo: Andrew Jeffrey