From a beautiful swan to an ugly duckling

From a beautiful swan to an ugly duckling? – Danish activation policy since 2003 n Henning Jørgensen n Professor, Aalborg Universitet, CARMA n henningj@socsci. aau. dk, n ASPEN/ETUI conference, Brno, March 2009 1

Activation as part of the ”modernization” of the welfare systems ³ Activation part of a new intervention paradigm employment as goal and the integration mechanism new moralism build into contractual arrangements reinventing identities (economic citizenship) ³ Activation regimes: diversity different concepts of active labour market policy LMP expenditures differ strongly LMP priorities differ strongly LMP procedures differ strongly 2

Expenditures on Labour market policy 2005 3

Construction of activation systems based on: q. Egalitarian values social logic, outcome of struggles Beveridgean rationale q. Paternalistic values functional logic, outcome of construction Bismarckian rationale The Danish activation system of the 1990´es based on egalitarian values 4

Activation systems – look at more levels: v Activities: common discourses – different qualities/systems/models v Steering arrangements: corporatism vs. contractualization v Financing: public-private mobilization of resources/incentives based arrangements 5

Contextualization of activation systems Labour market situations and IR systems Welfare state traditions Macro-economic regimes Learning capability of people and organizations V Power relationships V EU influence in national system V V Collective mechanisms and collective memories decisive as to successfully (re)integrating individuals and reforming public policies 6

The Danish labour market system [ A voluntaristic bargaining system (collective agreements since 1899) [ A political interventionist strategy 4 4 densely organised labour market negotiated regulation of labour market questions active labour market policies (especially since 1994) generous unemployment benefit system (socializes costs of flexibility) 7

Denmark: Socio-economic and political context v Economic problems and high unemployment during the 80 es and beginning of the 90 es v New Social Democratic lead governments 1993 -2001 v New Policy-Mix of offensive macro-economic policy and active LMP v Readjustments of policy in 1995, 1996 and 1999 in accordance with recovery v New Liberal-Conservative government in 2001 – and a new LMP introduced 8

The Nordic Approach: Macro-economic policy The social partners Wage policy The welfare state Collective agreements Income security Services and LMP

”Flexicurity” Job protection Low Social protection Low UK USA High Denmark High Italy Germany Sweden 10

The Danish flexicurity system • Strong rotation between jobs • Low job security The primary axe of the Flexicurity model Social security Flexible labour market • Quick structural adaptation The social partners • Income security • High percieved job security Active labour market and educational policies Employment security 11

Work motivation high in Scandinavia Question: ”I would be glad to work even if I did not have a need for the money” Country Sweden Denmark Norway Switzerland Japan Germany USA Hungary Portugal UK France Netherlands Cyprus Ireland Spain Czech Rep. Slovenia Bulgaria Agree (totally or partly) % 75 78 74 70 69 71 60 57 63 55 53 52 47 52 52 47 43 36 1) Difference between ”agree” and ”disagree” Source: International Social Survey Programme (ISSP), 1997. Percentage Difference Index % 1) 64 62 61 52 51 50 36 35 34 27 21 21 19 18 15 15 0 -7 12

Structure of tax and contribution receipts 13

Danish LMP reform 1993/1994 * Content: - from rules to needs - individual action plans * Steering - regionalization - the social partners in pivotal positions 14

Activation in Denmark Before 1994 Measures Work After 1994 Measures Arbejde Work 15

Unemployment figures (%), 1994 -2006 OECD, Employment outlook, 2007. 16

LMP regimes – employment rates 2002 17

Denmark: the Phillips curve flattened out! Wage increase (percentage) 25 1974 20 1973 15 1975 1971 1966 19651970 19691968 1972 1967 1962 10 1976 1979 1977 1980 1978 1982 1987 1981 1959 1964 1963 1956 1960 5 1986 1957 1958 2001 20021999 2000 1998 1983 1988 1997 Labour market policy reform 1984 1985 1991 19961989 1990 1995 1992 1994 1993 0 0 Source: ADAMs databank 2 4 6 8 10 12 14 Unemployment (percentage) 18

Some basic figures for Danish flexicurity: ”the security of the wings” (up to 2004) 20 procent of the workforce experience unemployment each year 13 percent of the workforce complete a 30 procent change jobs CVT-courses each year Flexible labour market CVT ALMP Social security 11 procent in ALMP each year 19

Public finances in Denmark, % of GDP 1995 2004 General government expenditure Denmark Total OECD 60. 3 42. 4 56. 3 40. 8 Tax and non-tax receipts Denmark Total OECD 58. 0 38. 4 58. 6 37. 5 Budget balances Denmark Total OECD - 2. 3 - 4. 0 2. 3 -3. 3 Government debt Denmark Total OECD 78. 4 73. 7 49. 4 76. 4 20

New LMP reform of the new government: ”More people to work” 2002/2003 » Individual and flexible contacts with the unemployed persons » Job plan » Offers guidance and qualification trainee service wage subsidies 21

Those outside - Who are they? 22

New structural reform 2007 - 2009 ª Towards one-tier system: Joint entrance for all kinds of unemployed people in jobcentres (common for municipalities and public employment service) ª From 14 to only 4 regions: From steering bodies to mostly monitoring agencies ª From corporatist steering to state-municipality steering: Reduced role of the social partners è Strong, big municipalities in pivotal positions è More rule-based efforts è More standardized measures è Erosion of regionalized labour market policy è The social partners without much power and motivation 23

Danish employment policy 2009 Content: * Shift of priority from fighting unemployment towards increasing the supply of labour * Activation to become threatening to unemployed people in order they will find a job themselves Processes: * The social partners no longer in pivotal positions: municipalities takes over decision-making responsibility * coordination weakened in the system Polity: * schizophrenic mixture of control and competition (decentralized operations – centralized steering) 24

The Labour Market Steering System in Denmark 2006 Parliament National Employment Board Minister of Employment Central ”Arbejdsmarkedsstyrelsen” Labour Market Administration Regional ”Arbejdsformidlingen” (AF) Regional Labour Market Board Employment Service County Municipalities Goals Resources Evaluations Educational Institutions Unemployment Offices Firms 25

The Labour Market Steering System in Denmark 2007 - 2009 State financing unemployment benefits and efforts Minister of Employment Regional service Region of employment BER RBR Monitoring of effects and results Jobcentres B S C K LBR K KB Municipal financing of assistance and efforts 26

The new labour market steering system from 1. 8. 2009 ¡ ¡ Municipalities take over responsibilities Economic responsibility for unemployment transferred as well Economic incentives to steer activities Strong monitoring and intervention from the side of the state 27

Danish LMP: from beautiful swan to an ugly duckling? ý LMP no longer ”owned” by the social partners ý In LMP: Threats and sanctions for those who do not have the ”right” attitudes and motivation ý From qualification measures to ”shortest possible way to a job” ý Towards a unified benefit system? ý Leaving Danish flexicurity behind? 28

Policy changes - assessment Continuity Process Incremental change Reproductive adaptation Abrupt/ Regime survival Brusque change Break Gradual change System transformation 29

Ways of creating policy change ”Crowding out” ”Breed of new elements” ”Reshaping” ”Exhaustion” Alternative solutions to the present institutions New elements to be connected to present institutions Re-use of old institutions for new purposes Gradual erosion of institutions over time Mechanisms Shortcomings Differentiated growth New interpretation Use up Execution Openings for new behavior Quicker growth of new elements Gap between rules and practice Change of normal practice Invasion of foreign ideas New advantages Unintended connected to the conflicts to be growth solved Principal features Falling returns 30

Content ”Crowding out ”Breed of new elements” ”Reshaping” ”Exhaustion” from ”learn-fare” to ”quickest possible way to a job” The state run public employment service system abolished firm contacts with the unemployed persons Gender equality ”mainstreamed” and forgotten Regional LMP eroded Network activities having a new local basis Motivation of private actors to participate lowered discourses on individualisation of risks introduction of ”other actors” Outsourcing of activities Dutch examples to be copied From motivation to control From individual action plans to narrow job plans Regional LMP substituted by local discussions Focus on effects only – downplaying regional strategic discussions 14 job centres with municipal leadership only Activation changed and downsized Ceiling of social assistance Cross-profesional unemployment insurance funds Low start help for immigrants New actor system Local labour market boards instead of regional ones The role of the social partners changed from policy makers to monitoring agents Process Municipality based actions Local job center activities to be monitored New evalutation practices Uncoordinated control systems 31

Implementation depends on organizing principles The labour market calls for shifting and dynamic interventions: But the jobcentres are transformed into traditional bureaucracies! Tasks Uniform Variable Technologies Standardized Bureaucracy Professional organisation Non-standardized Management Learning organisation 32

Internal behavioral consequenses: ¡ ”Wicked” problems redefined as ”tame” ones ¡ Steet-level bureaucrats have less discretion ¡ No further training and education in the system (e. g. : you just need to know how to act according to an order!) ¡ Controlling the unemployed people: they need to learn how to handle their own situation and to reshape their attitudes 33

External actors institutionalizing cooperation competition ”Cartel”-like competition ”Market”competition individual reasons collective reasons Partnership Network cooperation 34

cooperation trust learning coupling mechanisms norms coordination institutional set-up incentives goals resources motivation cognition actors political system

Why do ideas travel? The new institutionalists speak of ”isomorphic mechanisms” • Coercive (rarely) • Normative (perhaps: but norms only direct imitation) • Mimetic (yes!) 36

Imitation and invention go hand in hand a) Imitation a first cognitive step b) Imitation weakens the original attraction of the invention c) Imitiation has to be adapted to national institutional settings and traditions multiple and intertwined processes 37

Looking for national solutions: - Translation is a vehicle - Imitation its motor - Fashion sits at the wheel or you can use present Danish activation system as an non-inspiring example: it is an ugly duckling! 38

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Forms of activation systems Approach Principal system of social integration Active mechanisms Role of passive support I. Liberal Labour market and family Competition/ wages/incentives family responsibilities Negative work incentives, and help for the poor only II. Paternalistic Labour market participation Paternalistic help and strong sanctions Measures in cash depending on complying with rules and advices III. Welfare security Income security through public support (Un)conditioned basic income Diagnostic assessment of basic needs IV. Activation of social protection Active participation in activation and educational systems Activation measures and supportive policies Positive incentives and public supply of offers 40