From a beautiful swan to an ugly duckling?

– Danish activation policy since 2003

Henning JørgensenProfessor, Aalborg Universitet, CARMA

henningj@socsci.aau.dk,

ASPEN/ETUI conference, Brno, March 2009

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Activation as part of the ”modernization” of the welfare systems

Activation part of a new intervention paradigm

employment as goal and the integration mechanism new moralism build into contractual arrangements reinventing identities (economic citizenship)

Activation regimes: diversity

different concepts of active labour market policy LMP expenditures differ strongly LMP priorities differ strongly LMP procedures differ strongly

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Expenditures on Labour market policy 2005

0 1 2 3 4 5

USA

J apan

UK

Canada

Italy

Ireland

Norway

Switzerland

Austria

Portugal

Spain

Sweden

France

Finland

Germany

Belgium

Netherlands

Denmark

Spending as percent of GDP

Active

Passive

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Construction of activation systemsbased on:

Egalitarian values social logic, outcome of struggles Beveridgean rationale

Paternalistic values functional logic, outcome of construction Bismarckian rationale

The Danish activation system of the 1990´es based on egalitarian values

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Activation systems – look at more levels:

Activities: common discourses – different qualities/systems/models

Steering arrangements: corporatism vs. contractualization

Financing: public-private mobilization of resources/incentives based arrangements

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Contextualization of activation systems

Labour market situations and IR systems Welfare state traditions Macro-economic regimes Learning capability of people and

organizations Power relationships EU influence in national system

Collective mechanisms and collective memories decisive as to successfully(re)integrating individuals and reformingpublic policies

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The Danish labour market system

A voluntaristic bargaining system(collective agreements since 1899)

A political interventionist strategy

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)

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Denmark: Socio-economic and political context Economic problems and high unemployment

during the 80es and beginning of the 90es

New Social Democratic lead governments 1993-2001

New Policy-Mix of offensive macro-economic policy and active LMP

Readjustments of policy in 1995, 1996 and 1999 in accordance with recovery

New Liberal-Conservative government in 2001 – and a new LMP introduced

Macro-economic

policy

Wage policy

Collective agreements

The welfare state

Income security

Services and LMP

The social partners

The Nordic Approach:

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”Flexicurity”

Job protection

Socialprotection

Low High

Low

High

UKUSA Italy

GermanySweden

Denmark

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The Danish flexicurity system

Flexiblelabourmarket

Socialsecurity

The primary axe of the Flexicurity model

 

• Strong rotation between jobs

• Low job security

• Quick structural adaptation

• Income security

• High percieved job security

Employment security

Activelabourmarket andeducationalpolicies

The social partners

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Work motivation high in Scandinavia

Question: ”I would be glad to work even if I did not have a need for the money”Country Agree

(totally or partly) %

Percentage Difference Index % 1)

646261525150363534272121191815150-7

SwedenDenmarkNorwaySwitzerlandJapanGermanyUSAHungaryPortugalUKFranceNetherlandsCyprusIrelandSpainCzech Rep.SloveniaBulgaria

757874706971605763555352475252474336

1) Difference between ”agree” and ”disagree”Source: International Social Survey Programme (ISSP), 1997.

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Structure of tax and contribution receipts

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Danish LMP reform 1993/1994

* Content: - from rules to needs - individual action plans

* Steering - regionalization - the social partners in pivotal positions

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Activation in Denmark

Before 1994

Measures

Arbejde

After 1994

Measures

Work

Work

16OECD, Employment outlook, 2007.

Unemployment figures (%), 1994-2006

0

1

2

3

4

5

6

7

8

9

10

11

12

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Denmark Germany EU (average)

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LMP regimes – employment rates 2002

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Denmark: the Phillips curve flattened out!

Source: ADAMs databank

0

5

10

15

20

25

Wag

e in

crease

(p

erc

en

tag

e)

0 2 4 6 8 10 12 14

Unemployment (percentage)

1956

19571958

1959

1960

1961

1962

19631964

1965

1966

196719681969

1970

1971

1972

1973

19741975

1976

1977 19781979 1980

1981

1982

1983

198419851986

1987

1988

198919901991

1992 19931994

19951996199719981999

200020012002

Labour market policy reform

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Some basic figures for Danish flexicurity:”the security of the wings” (up to 2004)

Flexible labour market

Social security

ALMP

 

30 procent change jobs each year20 procent of the

workforce experience unemployment each year

11 procent in ALMP each year

CVT

13 percent of the workforce complete a CVT-courses each year

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Public finances in Denmark, % of GDP

General government expenditureDenmark 60.3 56.3Total OECD 42.4 40.8

Tax and non-tax receiptsDenmark 58.0 58.6Total OECD 38.4 37.5

Budget balancesDenmark - 2.3 2.3Total OECD - 4.0 -3.3

Government debtDenmark 78.4 49.4Total OECD 73.7 76.4

Source: OECD

1995 2004

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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

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Those outside - Who are they?

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New structural reform 2007 - 2009

Towards one-tier system:Joint entrance for all kinds of unemployed people in

jobcentres(common for municipalities and public employment service)

From 14 to only 4 regions:From steering bodies to mostly monitoring agencies

From corporatist steering to state-municipality steering:

Reduced role of the social partners Strong, big municipalities in pivotal positions More rule-based efforts More standardized measures Erosion of regionalized labour market policy The social partners without much power and motivation

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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)

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The Labour Market Steering System in Denmark 2006

Parliament

Minister of Employment

Central

Regional

”Arbejdsmarkedsstyrelsen”

Labour Market Administration

”Arbejdsformidlingen” (AF)

Employment Service

County Municipalities Educational Institutions

UnemploymentOffices

Firms

Regional Labour Market Board

National Employment Board

Evaluations GoalsResources

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The Labour Market Steering System in Denmark 2007 - 2009

Minister of Employment

Regional service Region of employment

BER

RBR

Jobcentres

B

KS K

C LBR

State financing unemployment benefits and efforts

Monitoring of effects and results

KBMunicipal financing of assistance and efforts

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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

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LMP no longer ”owned” by the social partners

In LMP: Threats and sanctions for those who do not have the ”right” attitudes and motivation

From qualification measures to ”shortest possible way to a job”

Towards a unified benefit system?

Leaving Danish flexicurity behind?

Danish LMP: from beautiful swan to an ugly duckling?

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Policy changes - assessment

Content

Continuity Break

Process

Incremental change

Reproductive adaptation

Gradual change

Abrupt/ Brusque change

Regime survival System transformation

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Ways of creating policy change

”Crowding out”

”Breed of new elements”

”Reshaping” ”Exhaustion”

Principal features

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 connected to the growth

Unintended conflicts to be solved

Falling returns

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”Crowding out ”Breed of new elements”

”Reshaping” ”Exhaustion”

Content discourses on individualisation of risks

Dutch examples to be copied

From motivation to control

From individual action plans to narrow job plans

introduction of ”other actors”

Outsourcing of activities

Municipality based actions

14 job centres with municipal leadership only

Cross-profesional unemployment insurance funds

from ”learn-fare” to ”quickest possible way to a job”

firm contacts with the unemployed persons

Activation changed and downsized

Ceiling of social assistance

Low start help for immigrants

The state run public employment service system abolished

Gender equality ”mainstreamed” and forgotten

Regional LMP eroded

Process Regional LMP

substituted by local discussions

Focus on effects only – downplaying regional strategic discussions

New actor system

Local labour market boards instead of regional ones

Local job center activities to be monitored

The role of the social partners changed from policy makers to monitoring agents

New evalutation practices

Uncoordinated control systems

Network activities having a new local basis

Motivation of

private actors to participate lowered

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Implementation depends on organizing principles

The labour market calls for shifting and dynamic interventions:

But the jobcentres are transformed into traditional bureaucracies!

Tasks

Technologies

Uniform Variable

Standardized Bureaucracy Professional organisation

Non-standardized Management Learning organisation

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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

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External actors institutionalizing cooperation

competition

collectivereasons

individualreasons

cooperation

”Cartel”-likecompetition

”Market”-competition

Partnership Network

cooperation

trust

learning

resources

motivation

coupling mechanisms

norms

institutional set-upincentivesgoals

actors political system

coordination

cognition

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Why do ideas travel?

The new institutionalists speak of ”isomorphic mechanisms”

• Coercive

• Normative

• Mimetic

(rarely)

(perhaps: but norms only direct imitation)

(yes!)

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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

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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!

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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/incentivesfamily 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)conditionedbasic income

Diagnostic assessment of basic needs

IV. Activation of social protection

Active participa-tion in activation and educational systems

Activation measures and supportive policies

Positive incentives and public supply of offers