Towards a set of composite indicators on flexicurity : the indicator on flexible and reliable contractual arrangement

As a fourth and last step in the process of construction of a set of composite indicators on flexicurity within a joint DG EMPL-JRC project, this paper presents a composite indicator on Flexible and Reliable Contractual Arrangements (FCA), i.e. one of the four dimensions of flexicurity identified by the Commission (see COM(2007) 359). The indicator is based on 19 basic indicators and three sub-dimensions, i.e. i) Regulations on dismissals and use of flexible contractual forms - external flexibility; ii) Flexibility of working time - internal flexibility; iii) Flexibility of work organisation to help combine work and family responsibilities ¿ work-life balance combination flexibility. The indicator covers a four years period (2005 to 2008). The large set of indicators included, going well beyond the strictness of employment protection legislation whereby labour market flexibility is often measured, makes this exercise broader and more comprehensive than any previous attempt to characterise the flexibility dimension within a holistic attempt to measure flexicurity. All indicators used are based on institutional EU-level data sources. Results point to considerable heterogeneity in FCA across the EU, although Member States are not always grouped across well defined geographical clusters often mentioned in relevant literature (e.g. Southern, Anglo-Saxon etc.). The indicator's country ranking is quite stable over time, in particular in the years 2006-2008, while significant differences can be observed between 2005, on the one hand, and 2006-2008, on the other hand. Uncertainty and sensitivity analyses have been performed in order to test the robustness of the Composite Indicator. Those were based on 12000 different simulated scenarios, generated by considering different options with respect to standardization methods, weighting scheme, aggregation rules and the inclusion/exclusion of basic indicators. Results show that the composite indicator's scores and rankings are overall robust, albeit with some variability mainly due to imputation of missing data and low correlation among basic indicators. On average, ranking variability is higher than in the Life Long Learning and Modern Social Security composite indicators, but lower than in the Active Labour Market Policies one, reflecting the varying presence of missing data.