A Decade of Innovation in EU Social Governance

Jonathan ZeitlinUniversity of Wisconsin-Madison

March 2008

2

Outline of the talk

• I. The European Employment Strategy (EES) as an EU governance innovation

• II. From the EES to the Open Method of Coordination (OMC)

• III. The OMC in action• IV. The OMC and the Lisbon Strategy relaunch• V. Closing the implementation gap through

better governance?• VI. Reorienting the relaunch• VII. Post-mortem and future prospects

3

I. The European Employment Strategy as an EU governance innovation

• The EES originated from a combination of:– Widespread uncertainty among EU MS on how to

combat persistent high unemployment• 1993 Delors White Paper, 1994 Essen common action plan

– Political spillover from EMU• Demand for an employment chapter in EU Treaty to sustain

public support for European integration

– European advocacy coalition committed to a more active role for the EU in employment policy

• Commission, Parliament, MS gov’ts (esp. Sweden)• Consolidated by political changes in key MS (UK, France)

4

The EES as a political compromise

• Like employment chapter of Amsterdam Treaty, the EES or ‘Luxembourg Process’ launched in November 1997 was a political compromise

• Focused around four ‘pillars’: employability, adaptability, entrepreneurship, equal gender opportunities

• Not only built on common employment policy priorities (agreed at Essen in 1994), but also combined ideas from social democratic, liberal, and ‘Third Way’ approaches

5

The EES as a procedural solution

• Amsterdam Treaty authorized EU to coordinate MS policies towards achieving a ‘high level of employment’, but granted it no new legislative or spending powers

• EES sought to square this circle by developing a new iterative process of benchmarking national progress towards common European objectives, supported by organized mutual learning

6

The EES as a new governance architecture

• EES as a new governance architecture based on a recurring annual cycle– Establishment of common but non-binding guidelines,

targets, and indicators– National Action Plans, assessing relative progress

and proposing corrective action where needed– Peer review of NAPs by MS reps in Employment

Committee (EMCO), supported by contextualized exchange of good practices

– Joint Employment Report and country-specific recommendations

– Review and revision of guidelines, targets, indicators, and procedures in light of implementation experience

7

The EES as an innovative approach to EU governance

• Built and improved on methods for coordination of MS policies developed during the 1990s– ‘Essen procedure’ of annual reporting on national

progress towards common EU employment priorities, but with stronger and more systematic guidance, monitoring, and evaluation of MS policies

– Broad Economic Policy Guidelines & EMU convergence programs, but with greater emphasis on adaptation of common European approaches to diverse national circumstances and mutual learning

– Quickly recognized as an innovative approach to EU governance by Commission as well as academics

8

II. From the EES to the OMC

• The Open Method of Coordination introduced at the extraordinary European Council of March 2000 as a broadly applicable new governance instrument for the EU

• Designed to assist in achieving the ambitious goals of the ‘Lisbon Strategy’: ‘to make the EU the most dynamic and competitive knowledge-based economy in the world, capable of sustainable economic growth, with more and better jobs and greater social cohesion’

9

OMC as a new governance architecture

• OMC defined at Lisbon as a new governance architecture involving four key elements:– ‘Fixing guidelines for the Union combined with specific timetables for

achieving the goals which they set in the short, medium and long term; – establishing, where appropriate, quantitative and qualitative indicators

and benchmarks against the best in the world and tailored to the needs of different Member States and sectors as a means of comparing best practices;

– translating these European guidelines into national and regional policies by setting specific targets and adopting measures, taking into account national and regional differences;

– periodic monitoring, evaluation and peer review organized as mutual learning processes.’

• Modeled directly on the EES

10

Diffusion and dilution

• Lisbon European Council authorized application of the OMC to a wide range of policy areas– R&D/innovation, information society/eEurope,

enterprise promotion, structural economic reform, social inclusion, education/training

• Subsequently extended to various other fields, including pensions, health/long-term care, youth policy, better regulation, industrial relations

• But many of these ‘OMCs’ included only fragmentary elements of the four-stage governance architecture defined at Lisbon

11

Theoretical promise of a new mode of governance

• OMC widely hailed by policy makers and academics as a ‘third way’ for EU governance, between harmonization/centralization and regulatory competition/fragmentation

• A mechanism for reconciling pursuit of European objectives with respect for national diversity through iterative benchmarking of performance against common indicators

• An instrument for promoting experimental learning and deliberative problem solving through systematic comparison of different national approaches to similar problems

12

OMC as an EU policy template

• During the years immediately following the Lisbon Summit, the OMC rapidly became the governance instrument of choice for EU policy making in complex, domestically sensitive areas– where the Treaty base for Community action is weak– where inaction is politically unacceptable– where diversity among Member States precludes

harmonization– where widespread strategic uncertainty recommends

mutual learning at the national as well as European level

13

III. The OMC in action

• National influence and effectiveness of OMC processes is notoriously hard to evaluate

• Methodological problems of assessing the causal impact of an iterative policy-making process based on collaboration between EU institutions and MS governments without legally binding sanctions

• But now a large body of empirical research, based on both official and independent sources– Zeitlin & Pochet 2005; Heidenreich & Zeitlin forthcoming

• Focused on employment and social inclusion: oldest, most developed, best institutionalized OMC processes

14

OMC in employment and social inclusion: a qualified success

• Contributions to substantive policy change– Cognitive shifts: incorporating EU concepts into

domestic debates, exposing policy makers to new approaches, challenging entrenched assumptions

– Political shifts: putting new issues on the domestic agenda and/or raising their relative salience

– Policy shifts: changes in specific laws/programs• A two-way interaction rather than a one-way

causal impact– Active role of MS in shaping the development of OMC

processes (‘uploading’) and selectively interpreting their message (‘downloading’)

15

OMC in employment/inclusion:a qualified success (2)

• Procedural shifts in governance/policymaking– Better horizontal integration across policy areas– Improved statistical and steering capacity– Enhanced vertical coordination between levels of

governance– Increased involvement of non-state actors

• Particularly strong in social inclusion• Uneven but growing participation in employment

– Development of horizontal/diagonal networks for participation of non-state/subnational actors in EU policy making

16

OMC in employment and inclusion: a qualified success (3)

• Mutual learning– Identification of common challenges and promising

policy approaches– Enhanced awareness of policies, practices, and

problems in other MS– Statistical harmonization and capacity building at both

national and EU levels– MS stimulated to rethink own approaches/practices,

as a result of comparisons with other countries and ongoing obligations to re-evaluate national performance against European objectives

17

OMC in employment and social inclusion: limitations

• Lack of openness and transparency– Dominant role of bureaucratic actors in OMC

processes at both EU and national level

• Weak integration into national policy making– NAPs as reports to EU rather than operational plans– Low public awareness and media coverage

• Little bottom-up/horizontal policy learning– Few examples of upwards knowledge transfer and

cross-national diffusion from innovative local practice

18

A reflexive reform strategy

• Overcome limitations of existing OMC processes by applying method to its own procedures – Benchmarking, peer review, monitoring, evaluation,

iterative redesign

• Ongoing reforms as evidence of practical viability– Strengthening of peer review/mutual learning

programs– Efforts by EU institutions to promote greater

openness, stakeholder participation, and ‘mainstreaming’ of OMCs into domestic policy making

19

Advancing the European knowledge economy through OMC: a failure?

• Weak performance of innovation/information society initiatives within Lisbon Strategy– Lack of progress towards 3% R&D target– Limited impact/visibility of eEurope policies

• ‘Lite’ OMC recipes and fragmentary architectures– European Action Plans, objectives, targets, indicators,

benchmarking/scoreboards– But no agreed National Action Plans, systematic

monitoring/reporting, peer review, or country-specific recommendations; weak mutual learning mechanisms

– External evaluation (Tavistock Institute et al. 2005): OMC in these areas ‘cannot yet be said to be a success or failure’: ‘simply has not been fully implemented’

20

IV. The OMC and the Lisbon Strategy relaunch

• 2004-5 mid-term review sharply criticized both the overarching design of Lisbon Strategy and the role of OMC within it

• Kok Report (2004)– Slow progress towards Lisbon goals– Too many objectives, targets, indicators, processes– Weakness of OMC in mobilizing MS commitment and

providing incentives for policy delivery– Called for refocusing Lisbon Strategy on growth and

jobs, supported by intensified peer pressure on MS (naming/shaming/faming, league tables)

21

Commission Lisbon New Start (2005)

• Endorsed Kok critique of OMC & Lisbon I• Rejected naming/shaming/faming in favor of new

reform partnerships between Commission and MS, and between national governments and domestic stakeholders

• Proposed shift from sectoral, multilateral policy coordination (OMC) to integrated, bilateral dialogue on national reform programs

22

The mid-term review as an evidence-based process?

• Kok High Level Group– Lacked expertise on social and employment

policies– Did not review available evidence on OMC

performance in these areas

• Commission Lisbon New Start– Ignored both internal & external evidence on

successes/failures of different OMC processes

23

Integrating the economic and employment guidelines

• Architectural core of relaunched Lisbon Strategy: fusion of EGs and BEPGs into 24 Integrated Guidelines, in 3 chapters (macroeconomic, microeconomic, employment)

• Main thrust of EES preserved, including links to overarching objectives (full employment, quality & productivity at work, social cohesion), but at cost of increased complexity and overlap

• NAPs/empl and Joint Employment Report replaced by sections within MS Lisbon National Reform Programs (NRPs) and Commission Annual Progress Report

24

Saving and streamlining the social OMCs

• Social cohesion/inclusion reinstated within Lisbon II by European Council (2005-7)– Following a successful campaign by social NGOs

• Social Protection OMCs reaffirmed– Inclusion, pensions, health/long-term care– 3 strands streamlined into a single process

(OMC/SPSI) w/ both common and specific objectives

• OMC and Lisbon: a mutually reinforcing dynamic– Social OMCs to ‘feed into’ growth/jobs at nat’l & EU

levels; IGs/NRPs to ‘feed out’ to social cohesion goals

25

V. Closing the implementation gap through better governance?

• Results of Lisbon II not encouraging

• Erosion of employment policy coordination– Reduced visibility at both EU & national levels– Increased unevenness in national reporting

and loss of EU-level monitoring capacity– Uneven/variable format of NRPs hampers

feedback of mutual learning into MS policy making

26

‘Feeding-in/out’ in practice

• Limited effectiveness of mutually reinforcing dynamic, with wide variations across MS

• Few NRPs include social cohesion/inclusion objectives among national priorities

• Little reference to OMC/SPSI in NRPs• Little evidence of ‘feeding-out’

– e.g. through systematic impact assessment of effects of economic/employment policies on social outcomes

27

Enhancing national ownership and civil society participation?

• A key objective of Lisbon II• Most independent assessments agree that 2005 NRP

process did not realize these goals• A backward step for civil society participation compared

to NAPs/empl, and esp. NAPs/incl• Big push from Commission for increased national

ownership in 2006-2007 NRP implementation process– Leads to creation of new consultative/coordination bodies,

upgrading of Lisbon coordinators, wider involvement of national parliaments, social partners, local/regional authorities

• But still little involvement of civil society actors (e.g. social NGOs) and low public visibility in most MS

28

Simplification or specificity?

• Growth & jobs closely linked to other policy areas with separate coordination processes – social protection/inclusion, education/training,

environment/sustainable development• Loss of specificity & detailed reporting against

common indicators needed to monitor, evaluate, and coordinate complex policy areas – e.g. employment

• Incorporating key objectives & indicators from other sectoral processes is not like adding ornaments to a Christmas tree, but rather using full range of instruments to avoid flying blind

29

VI. Reorienting the relaunch

• New cycle of IGs (2008-2011)– An opportunity to correct deficiencies of

relaunched Lisbon governance architecture revealed by experience of past three years

• 2 key areas of proposed reform– Strengthening Lisbon’s social dimension – Reviving the European Employment Strategy

30

Strengthening Lisbon’s social dimension

– European Council has repeatedly affirmed that greater social cohesion & fight against poverty/social exclusion remain core Lisbon objectives

– But this political commitment has not been reflected in guidelines to MS for preparation of NRPs, nor in their assessment

– 2007 Spring Council resolved that ‘common social objectives of MS should be better taken account within the Lisbon Agenda’

31

Improving policy coherence and discovering synergies

• European systems of social protection need ongoing reform to ensure their adequacy, sustainability, and adaptation to new risks

• OMC/SPSI designed to pursue these multiple, indispensable goals in a balanced, coherent way, incorporating both social & economic views

• But Lisbon II has returned to one-sided coordination of MS social policies in pursuit of economic & employment goals, which OMC/SPSI was created to overcome

32

Policy options for a stronger social dimension

1. Incorporate both EU’s common social objectives and OMC/SPSI into IGs and NRPs

2. Incorporate EU social objectives more explicitly into the IGs, while retaining the OMC/SPSI as a distinct policy coordination/reporting process

3. Leave existing structure of IGs and OMC/SPSI unchanged, while improving arrangements for ‘feeding-in/out’ at both national and EU levels, through enhanced participation, reporting, and impact assessment requirements

33

Option 1: full incorporation of social objectives & OMC/SPSI into IGs/NRPs

• Advantages– The cleanest and most coherent solution– Would place EU’s social objectives on equal footing

with pursuit of growth & jobs– Would create an integrated institutional framework for

reconciling conflicts/discovering synergies between objectives at both national and EU levels

• Disadvantages– Risk of weakening EU social policy coordination by

reducing its autonomy & visibility

34

Option 3: advantages & disadvantages

• Advantages– The simplest and least risky solution– Reinforced social participation, reporting, & impact

assessment requirements are both desirable per se, and necessary for effective working of Options 1 & 2

• Disadvantages– Experience under Lisbon II suggests that proposed

improvements in ‘feeding-in/out’ will remain ineffective without changes in the structure of IGs

– Most MS have ignored exhortations from the EC to highlight ‘feeding-in/out’ in their NRPs, as has the Commission in its own Annual Progress Report

35

Option 2: incorporating social objectives but not OMC/SPSI into the IGs

• Advantages– The most promising approach to strengthening the

social dimension of the Lisbon Strategy while preserving the visibility and autonomy of EU social policy coordination

• Disadvantages– Still some risk of reducing autonomy of OMC/SPSI– But retaining procedural autonomy while sacrificing

political influence is the greater risk, since MS are already subject to one-sided coordination of social protection reforms under the IGs for Growth & Jobs

36

Restructuring Lisbon governance

• Incorporation of social objectives into the IGs should be accompanied by broader organizational changes to Lisbon Strategy governance, aimed at safeguarding the integrity of OMC/SPSI as a distinct sectoral process

• IGs & NRPs should be reconceived as twin apexes of an overarching policy coordination process built up from sectoral OMCs– Sites where conflicting priorities can be reconciled,

not centralized replacements for sectoral coordination processes themselves

37

Reviving the EES

• Such organizational changes would be beneficial for the Lisbon Strategy as a whole, and should be extended to the EES to correct the problems experienced under Lisbon II– Loss of visibility, monitoring capacity, participatory

impetus

• As with the OMC/SPSI, would be desirable to revive the EES and NAPs/empl as distinct policy coordination processes and planning documents preceding and flowing into NRPs

38

Maximizing opportunities for mutual learning

• To maximize opportunities for mutual learning, MS should be obliged to report consistently on progress towards each objective/guideline, using common European indicators as far as possible– Common indicators should be outcome-oriented,

responsive to policy interventions, subject to clear/ accepted normative interpretation, timely, & revisable

– Indicators should also be sufficiently comparable & disaggregable to serve as diagnostic tools for improvement & self-correction by national/local actors, rather than as soft sanctions/shaming devices to ensure MS compliance with European targets

39

VII. Post-mortem and future prospects

• Following a year of public debate, the March 2008 European Council endorsed a 4th option for the new cycle of the Lisbon Strategy– Leaving the current set of Integrated Guidelines

unchanged, in order to focus on national implementation of commitments to structural reforms

– Strengthening the social dimension of the Lisbon Strategy by revising the explanatory text accompanying the Guidelines

40

The social dimension of the new Integrated Guidelines

• IGs designed to contribute to social cohesion objectives as well as sustainable growth and employment

• Need for strengthened interaction with the OMC/SPSI• MS should ensure that developments in economics,

labor, and social affairs are mutually reinforcing through broad stakeholder partnerships and systematic follow-up

• Modernization of social protection systems should support their access and adequacy goals as well as financial sustainability

• Active inclusion of all through promotion of labor force participation and fight against poverty & exclusion

• MS encouraged to monitor social impact of reforms

41

A flawed solution

• 2008-10 Lisbon Guidelines have attracted wide criticism from EP, ETUC, social NGOs, & others

• Disconnect between old guidelines and new explanatory text does nothing to improve the intelligibility of EU policies to MS citizens or enhance ownership by national actors

• Remains to be seen how commitment to promote greater synergy between IGs and OMC/SPSI will be followed up and monitored– E.g. through guidance to MS on preparation of NRPs

and development of ‘feeding in/feeding out’ indicators

42

Towards a post-Lisbon agenda

• Structural reforms of the governance architecture of the Lisbon Strategy will now have to await the next cycle of IGs, beginning in 2011

• But preparations for the ‘post-Lisbon’ era are already underway, in the form of planning for the EU’s next five-year Social Agenda – Charged with strengthening the social dimension of

the Lisbon Strategy– Reviewing governance instruments and policy tools in

response to new social risks and realities

43

Promoting active inclusion

• Modernizing social protection for greater social justice and economic cohesion through active inclusion for those furthest from the labor market

• A holistic strategy combining minimum income support with job opportunities/vocational training and better access to enabling social services of high quality

• Common EU principles to be adopted, as with flexicurity• Commission to update 1992 recommendation on

minimum income schemes for MS• Follow-up and monitoring through reinforced OMC,

with participation & integration of all relevant actors, and establishment of a network of local observatories

44

Enhancing mutual learning through OMC

• Ongoing proposals for enhancing mutual learning through OMC (EMCO, SPC) – Focus of peer review/mutual surveillance of national

strategy reports on key policy themes• E.g. flexicurity, active inclusion, child poverty

– More context and process-oriented approach to peer review of good and bad practices

– Stronger analytical framework for understanding relationship between policies and outcomes

– Better linkages between EU and national debates through improved dissemination, wider stakeholder participation, and development of ‘learning networks’

45

An alternative pathway to realizing Lisbon’s original promise?

• Comprehensive reforms to the governance architecture of EU social, economic, and employment policy coordination remain out of reach, at least for the moment

• But new integrative strategies such as active inclusion and flexicurity, coupled with reflexive reform of OMC processes, may meanwhile offer an alternative lower-profile pathway to realizing Lisbon’s original promise

• Helping to create a mutually reinforcing relationship between the EU’s core social, economic, & employment policy objectives: greater social cohesion, faster sustainable growth, and more and better jobs