European Worlds of Activation: Patterns and Challenges

Incomplete draft version

Martin Heidenreich (University of Oldenburg)

Contribution to a workshop on “Integrated employment and activation policies in a multilevel welfare system” (Milano, August 30-31, 2012)

Table of Contents:

1. Introduction: Activation policies in the economic crisis2. Varieties of activation policies3. The organizational underpinnings of activation policies4. Conclusion: Activation as a multi-level game

Abstract: Due also to the European employment strategy, activation has become a new paradigm for welfare and work. Labour market policies have shifted towards the aim to activate broader parts of society by facilitating the access for unemployed and inactive to the labour market. However, even if the activation paradigm has been established as a dominant concept in “modern” employment and social policies, empirically the heterogeneity of these policies at least concerning the mix of active and passive components, the role of social services, family policies and upskilling and the incentive reinforcement of labour market policies are very huge. In the EU, at least four types of activation regimes can be distinguished: Comprehensive activation in the Nordic countries, a mix of compensatory and activation labour market policies mostly in the continental European states, emerging activation regimes and residual labour market policies in the Southern and Eastern European countries.

Relatively independently from these national patterns, activation policies imply important challenges for the governance of employment policies which increasing have to link classical labour market policies (benefits, training, placement) with other policy fields. Organizational arrangements can make a great difference to the success of activation policies which aim to integrate long-term unemployed and other groups into the labour market. This often requires new forms of systemic coordination inter-agency co-operation, public-private partnerships, the decentralisation of public employment services, and new forms of an individualised support and monitoring of clients. Such organizational restructuring can create problems of fragmentation and overlapping of competencies and resources, due to difficulties in coordination between job placement and welfare policies or conflicts between the national and the local level, for example. This raises the question how organizations cope with the challenges of integrated employment policies. This question is discussed on the basis of recent reorganizations of employment policies in five countries which reflect basic features of the previously described types: Sweden, Germany, Italy, Poland, and the United Kingdom. It can be shown that the governance structures in these countries are much more similar than the different expenditure types at the macrolevel might have been expected.

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1. Introduction: Activation policies in the economic crisis

After a short period of common prosperity and as a consequence of the financial, banking and currency crises since 2008, the member states of the European Union (EU) face again major challenges in guaranteeing full employment. Rising unemployment rates and falling employment rates especially in Southern Europe are a major consequence of the economic downturn, the financial crisis and the austerity policies that European states are implementing as the consequence of the private banking crisis that has been transformed in a public indebtedness crisis (Streeck, 2011). In the last years the unemployment rates in Europe have significantly increased from 6.9 % (1/2008) to currently 10.4 % (6/2012). In Spain and Greece nearly one quarter of the population is unemployed, while the unemployment rates in Germany, the Netherlands or Austria are below 6 % (for the social and psychological consequences of the resulting precarious living conditions especially for the youth cf. the contribution of Hendrickson, Maestripieri and Sabatinelli to this conference). Since 2009, the variation of the regional unemployment rates is strongly increasing in the EU-27. All EU member states are navigating through the same storm, but they are not in the same boat.

As a consequence of the rising unemployment rate, since 2008 the expenditures for labour market policy are strongly increasing, while the expenditures for active labour market policies (ALMP) are at least relatively declining.1 This raises the question which role activation policies will play in the current financial and indebtedness crisis.2 In order to answer this question, it is necessary to differentiate between different challenges and forms levels of activation policies. They may play an important role for dealing both with labour shortages in some countries and professions and high unemployment rates in others. On the one hand, activation policies may contribute to a higher economic dynamism especially in countries with temporarily high unemployment rates and segmented labour markets by maintaining and updating the employability, the motivation and the qualification of the unemployed, while in other countries with situations of nearly full employment the mobilization of additional employees by activation policies may play an essential role in increasing the labour supply.

Activation policies thus have many different functions and facets as a broad debate has shown (cf. Barbier, 2005; Eichhorst et al., 2008; Serrano Pascual, 2007; Aurich, 2011; Graziano, 2012). Activation comprises so different measures as public job creation schemes, incentive reinforcement, employment assistance and upskilling (Bonoli, 2010). It is therefore necessary to differentiate between different functions and also national patterns of activation. My first thesis therefore focuses on the continuing national divergence of national patterns of activation policies: While (mostly) Northern European countries with a better employment situation focus mainly on the mobilization of disadvantaged groups as for example lone parents, older people, long-term unemployed or handicapped persons, (mostly) continental European countries still rely strongly on compensatory labour market policies. To the extent,

1 The expenditures for labour market policies in the EU-27 are growing in the crisis from 1.61 % of the GDP (2007) to 2.17 % in the EU-27 (2009). Even if also the expenditures for active labour market policies (ALMP) have increased from 0.47 % of GDP to currently 0.54 %, its relative share in the total expenditure for labour market policies have decreased from 33 % to 28 % (source: Eurostat).

2 Activation policies can be defined as the “broad range of policies and measures targeted at people receiving public income support or in danger of becoming permanently excluded from the labour market” (Drøpping et al., 1999: 134).

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these countries develop active labour market policies (ALMP), the demanding, incentive-reinforcing facets of activation policies are as important as the enabling ones – for example by the provision of social services and family policies. Berthet and Bourgeois (this conference) even expect that in the current crisis the constraining elements which stress the citizens duties and not their rights are becoming more important. Southern European countries with a more challenging labour market situation and traditionally strongly segmented labour markets rely if anything on passive unemployment benefits. Another pattern can be observed in the Central and Eastern European countries with a relatively stable and often improving labour market situation where for the first time after the mass unemployment of the postsocialist transformation processes the need for more activating and enabling employment policies are felt – however, often without yet the organizational infrastructure for these policies. In the third and fourth case, especially the European Employment Strategy and the corresponding financial support play an important role in the development of activation policies (section 1).

Secondly, in all countries the organizational dimension of activation policies is crucial for their quality and efficiency. Many European countries try to increase the efficiency of active labour market policies – however by very different means: Nordic and Continental-European countries shift the emphasis from more expensive to more cost-effective activation measures (e.g. by a shift from comprehensive forms of further education to job placement and short training courses and by external service providers; cf. the papers of Bengtsson for Sweden and Denmark and Jantz and Klenk for Germany), while Central and Southern European countries try to limit – from a much lower level – the increasing expenditure for labour market policies. A crucial focus of this reorganization and rationalisation attempts is the local and regional level. Besides the stronger cost and efficiency orientation and the managerialist reorganization of employment services, a third aspect of the new governance forms especially at the local level is the attempt to offer comprehensive services for the most disadvantaged groups The question therefore is how employment agencies deal with the challenges of a closer interorganizational co-operation across the boundaries of formerly separated societal and organizational fields in a context characterized by a stronger cost orientation of labour market policies and a managerialist reorganization (section 2).

A final dimension of activation policies is the creation of a new relationship to the clients of employment services which cannot any longer be treated only as the passive recipients of administrative strategies, but who increasingly are actively involved in the ‘co-production’ of these services (Pestoff, 2009). Serrano Pascual (2007) and Van Berkel and Valkenburg (2007) therefore observe an individualization of employment services. The question is how this reorganization of the relationship between employment agencies and their newly created clients takes place (section 3).

2. Varieties of activation policies

Activation policies are policies which aim at “the removal of options for labour market exit and unconditional benefit receipt” (Eichhorst et al., 2008: 5). In principle, they are based on the combination of sticks (coercion in case of non-compliance) and carrots (incentives and social services for supporting the access to the labour market). These demanding and enabling aspects of labour market policies are at the core of a new form of welfare assistance, which Morel et al. (2012: 2) describe as a social investment welfare state that “both invest in human

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capital development (…) and that help to make efficient use of human capital.” They couple labour regulations and employment, educational and social services much closer as before, where labour market policies were mainly based on placement and training services and income maintenance for persons which were contemporaneously unemployed but who are supposed to find easily a new job. Activation policies aim at a new way of dealing with labour market exclusion based on an individualisation of interventions, an emphasis on employment and a contractualisation of the relationships between citizens and the state (Serrano Pascual, 2007: 14). This new form of coupling labour markets and employment and social policies reacts to the “increasing heterogeneity of the labour market and the stronger consideration of personal circumstances of job-seekers” (Eichhorst et al. 2008: 5).

The concepts on flexicurity and activation have been developed in the context of the European Employment Strategy (Graziano, 2012; Heidenreich and Zeitlin, 2009) which initially focused only on the concept of employability, i.e. the ability to move into and within labour markets and to manage the required and desired employment transitions. While the activation concept was initially inspired by the liberal labour markets of the Anglo-Saxon countries, it has been recognized that a stronger inclusion of the population in the labour force cannot be based exclusively on the deregulation of the labour markets, a weaker employment protection legislation and more incentives to work (“make work pay”) – especially if the quality of work and the social cohesion of the European societies are taken into account. Thus, the distinction between ‘work first’ and ‘human capital development’ strategies (Lindsay et al. 2007) emerged which reflected first of all the distinction between Anglo-Saxon and Scandinavian countries. Barbier (2005) opposes these types of activation policies as liberal and universalistic:

“The liberal chiefly enhances the individuals’ relationships to the labour market, which, aggregated, are assumed to yield social equity and efficiency. ALMPs as well as social policies thus take on a limited role, restricted to inciting individuals to seek work, providing quick information and simple matching services, as well as investing in short term vocational training. Individuals in and out of the labour market are also the target of the wide-ranging implementation of ‘tax credits’ and all sorts of ‘in-work’ benefits. Similarly, activation manifests itself in the trend towards adopting measures inciting people to be as active as possible (accepting any job on the market as it is) across their life and implementing pension reforms dispensing with any fixed age for retirement (…)On the other hand, the universalistic type not only cares for the provision of complex and extended services to all citizens, but simultaneously guarantees relatively high standards of living for the assisted, and, for the lower paid sections of the labour force, benefit levels amounting to a significant proportion of minimum wages. Hence the role of the market is not unilaterally prominent (…). Activation applies to all citizens in a relatively equalitarian manner and the ‘negotiating’ between the individual’s and society’s demands appears as much more balanced. A fully active society seems to be able to yield employment opportunities tailored to a variety of needs and capacities. Activation applies to an already highly active population employed in a context of relatively good quality jobs.” (Barbier, 2005)

The first type reflects the experiences of the Anglo-Saxon countries (cf. however Lindsay et al., 2007 who have observed “universalistic” activation policies also in the UK). The Scandinavian countries are the role model for the universalistic type of activation policies:

“The offensive Danish workfare strategy puts emphasis on: (1) activation rather than benefit and wage reductions; (2) improving the skills and work experience of the unemployed rather than merely increasing their mobility and job-searching efficiency; (3) training and education rather than work-for-the-benefit (quid pro quo); (4) empowerment rather than control and punishment; (5) more inclusive workfare programmes rather than programmes which only target the unemployed.” (Torfing 1999: 17)

The current use of the concept “activation policies” combines these two meanings: “(T)hrough the conceptual and practical combination of demanding and enabling elements, activating labour market policies aim at overcoming individual barriers to employment such

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as lack of employability due to long-term unemployment, poor skills and personal problems.” (Eichhorst et al. 2008: 5).

In addition to these two forms of activation, Aurich (2011: 300-1) proposes “coercive welfare” as a third hybrid type, which is characterized by a strict benefit regime and high level of active provision. It “assumes that the unemployed are unable to help themselves. At the same time, they are seen as morally weak and in need of additional incentives in order to realise their potential” (cf. also her contribution to this conference) Also Serrano Pascual (2007: 301) takes the different concepts of the individual into account in order to develop a typology which takes into account the variety of activation policies also in the Continental, Central and Southern European countries: Besides the economic springboard and the autonomous citizens regime which corresponds to the liberal and universalistic types, she describes the civic contractualism regime (Netherlands), the minimalist disciplinary regime (Portugal, Czech Republic) and the fragmented provision regime (Spain). This typology is based on the difference between a moral-therapeutic conception of the individual which interprets unemployment as the result of a rational financial calculation, lack of motivation or laziness of the unemployed and thus is based on disciplinary measures, incentives and supervision, and a matching conception of public policies which focus on the obligation of the welfare state “to provide the conditions for producing individuals who match the new requirements of industry” (p. 298) – for example personal training, subsidies for the employment of disadvantages groups, mobility support etc.

Given these extremely different types and aspects of activation, Bonoli (2010) stresses the ambiguity and vagueness of this concept and proposes a classification of the different facets of active labour market polices and their main instruments in two dimensions: Promarket employment orientation and investment in human capital. The first one is strong for incentive reinforcement, employment assistance and upskilling and weak in the case of job creation schemes, the last one in the case of upskilling and basic education.

In the following, I will propose another typology which – in contrast to the previous ones – based on statistical evidence. On the basis of the previous discussion, three different policy dimensions will be distinguished in order to classify the national activation policies in the EU (see appendix table):1. Intensity of active and passive labour market policies: In general, the following

expenditures are classified as ALMP: Training, job rotation and job sharing, employment incentives, supported employment and rehabilitation, direct job creation and start-up incentives. The following are classified as passive or compensatory measures: Out-of-work income maintenance and support and early retirement. In order to classify the national schemes, I include the expenditures for active and passive measures both with the GDP and the national unemployment level. Therefore, I will use the following indicators: Expenditures for active labour market policies (categories 2-7, in % of GDP; 2009) Spending on ALMPs as a percent of GDP per percentage point of unemployment,

2009 Expenditures for passive labour market policies (categories 8-9, in % of GDP; 2009) Spending on passive labour market policies (in % of GDP) per percentage point of

unemployment, 2009

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Figure 1: Expenditures for active and passive labour market policies (2010)

Irelan

dSp

ain

Belgium

Denmark

Finlan

d

Netherl

andsFra

nce

Austria

Portugal

German

yIta

ly

Swed

en

Hungary

Latvia

Luxembourg

Slove

nia

Estonia

Norway

PolandGree

ce

Cyprus

Slova

kia

Lithuan

ia

Czech Rep

ublic

Romania

Bulgaria

Malta

United Kingd

om0.0 %

0.5 %

1.0 %

1.5 %

2.0 %

2.5 %

3.0 %

3.5 %

4.0 %

0.8 0.7 1.3 1.4 0.9 0.8 0.8 0.7 0.6 0.6 0.4 0.8 0.5 0.5 0.4 0.3 0.1 0.5 0.6 0.2 0.3 0.2

3.0 3.12.3

1.6

1.81.7

1.51.4 1.4 1.3 1.5

0.50.7 0.7 0.8

0.7 0.9 0.5 0.3 0.7 0.6 0.60.5

0.4 0.6 0.50.4 0.3

Active labour market policies

Income maintenance; early re-tirement

Source: Eurostat (2012).

2. Investment in capabilities: Education and training does not only take place in the context of ALMP. A broader indicator for investments in human capital therefore is public expenditure on education. In addition, activation policies especially at the local and regional level rely on complementary services and benefits especially for families and social services (Nikolai, 2012; Kazepov, 2010). Therefore, I will use the following indicators for the classification of national activation policies:

Education (public expenditure on education in % of GDP, 2009) Social services (benefits in kind; without sickness/health care function, in % of

GDP, 2009) Family and Children benefits (in % of GDP; 2009)

3. Incentive intensity: Bonoli (2010) rightly stresses the role of incentive reinforcement as an essential part of ALMPs. An indicator for this is the level of net replacement rates in the case of unemployment (here for married couples with 1 earner, 2 children, average wage, initial phase of unemployment, 2009)

On the basis of these eight indicators, I performed a hierarchical cluster analysis for the 27 EU countries based on the standardised scores using the method of Ward with squared Euclidean distance. The outcomes are four types (cf. Table 1) which correspond only partially to the well-known worlds of welfare capitalism:

Comprehensive activation: In spite of the reduction of expenditures for upskilling and in general ALMP especially in Sweden described by Bengtsson (this conference), Denmark and Sweden are still the front-runner with the highest level of ALMP expenditures, the highest expenditures for public education and benefits in kind, the highest replacement rates (even if the Swedish level has sharply declined) and the highest employment rates and the lowest long-term unemployment rates.

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Table 1: Four worlds of activation. Results of a cluster analysis (2009)

Unweighted means Comprehen-sive activation

Compensatory welfare states on the

move

Emerging activation regimes

Residual labour market policies

Countries Denmark, Sweden

Belgium, Ireland, Netherlands, Fin-land, Germany, France, Austria

Spain, Portugal, Italy, Estonia, Latvia, Lux-embourg, Hungary, Slovenia, Lithuania,

Cyprus

Poland, Slovakia, Greece, Czech Re-

public, United Kingdom, Bulgaria,

Malta, Romania

Total

Expenditures for total LMP (% of GDP)

2.5 2.9 1.6 0.7 1.7

Expenditures for active LMP (% of GDP)

0.92 0.77 0.34 0.17 0.44

Spending on ALMPs as a percent of GDP per percentage point of unemployment

0.14 0.12 0.04 0.02 0.06

Expenditures for compensatory LMP (% of GDP)

1.23 1.86 1.16 0.45 1.13

Spending on passive LMPs as a percent of GDP per percentage point of unemployment

0.19 0.27 0.12 0.06 0.14

Public expenditure on education (% of GDP)

8.0 6.1 5.5 4.7 5.6

Benefits in kind (without sickness/health, in % of GDP)

7.3 2.7 1.4 1.4 2.2

Family and children benefits (in % of GDP)

3.7 2.8 2.3 1.6 2.3

Net replacement rate 78.5 74.7 76.2 59.3 71.0Employment rate (% of pop. aged 15-64)

74.0 67.9 62.6 61.5 64.5

Unemployment rate (%) 7.2 7.6 10.6 8.1 8.8Youth unemployment rate (from 15 to 24 years)

18.1 17.0 24.5 20.1 20.8

Long-term unemployment rate (in % of total unemployment)

11.2 31.3 29.5 37.3 30.9

(1) Married couple, 1 earner, 2 children, average income, incl. assistance, initial phase of unemployment; LMP: Labour market policies; ALMP: Active LMP; GDP: Gross domestic product.Source: Own calculations on the basis of Eurostat and OECD figures.

Compensatory welfare states on the move to more active employment policies: Mostly Continental European countries (Belgium, Netherlands, Germany, France, and Austria), but also Ireland and Finland rely on above-average levels of activation, service provision, family and children benefits: They are spending between 0.67 (Austria) and 1.19 % (Belgium) of their GDP for ALMP. Even if their investment in education, families and social services are below the Swedish and Danish level, they are considerably higher than in most of the Central

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and Southern European countries. In addition, their employment and unemployment rates are better than the European average. However, in comparison to Sweden and Denmark they spend a high share for compensatory labour market policies – even if the unemployment level is taken into account.

Emerging activation regimes: The next group is composed of mostly Southern and Central European countries with average levels of expenditures both for active and passive labour market policies (Spain, Portugal, Italy, Estonia, Latvia, Hungary, Slovenia, Lithuania, Cyprus, but also Luxembourg). They are spending between 0.17 (Cyprus) and 0.65 % (Spain) of their GDP for ALMP. While their initial replacement rates are relatively high, investments in social services are below average. This indicates that these mostly rudimentary welfare states are investing only to a limited extent in social services, education and activation policies. Their employment rates are low and their unemployment and youth unemployment rates are high – indicators for strongly segmented labour markets.

Residual labour market policies: In other Central and Southern European countries (Poland, Slovakia, Greece, Czech Republic, Bulgaria, Malta, Romania), but also in the United Kingdom the expenditures for active as well as for passive labour market policies are clearly below the European average. Social protection for the unemployed is low and incentives for taking up a new job are high, as the low initial replacement rates show. The investments in social services, education and family benefits are in general low. However, the public expenditures in education in the UK are above average indicating that in this case a low protection, strong pressures on benefit claimants, lack of affordable childcare, but high investments in human capital are combined in the British workfare approach (Bengtsson, this conference; Morel et al., 2012: 358; Lindsay et al., 2007).

Also Poland is a very interesting case in this respect, because due to the sharp decline in unemployment and unemployment benefits in the last years the country is able to invest relatively high sums in ALMP (0.53 % of the GDP). Karolina Sztandar-Sztanderska explains this as follows:

“1) Since 2004 there was a significant decrease in spending on preretirement benefits and allowances due to restriction of access to it. 2) The rest of the expenses on obligatory preretirement measures was no longer financed from the Labour Fund but from the other state fund, which meant that more funds were available for the ALMPs (…). 3) Compared to the beginning of 2000s unemployment rate dropped along with the spending on passive measures like unemployment benefits, so more money in Labour Fund remained for ALMPs; 4) Since 2004/2005 European Funds for ALMPs for unemployed has become available, some of them in the frame of obligatory programmes to be implemented by poviat labour offices; 5) there was a significant funding for the disabled from European Funds in the of other state funds dedicated to this target group and they are counted as ALMPs counted by Eurostat. 6) At the same time … an important amount of money for ALMPs goes for benefits (called for instance scholarships) paid for ALMPs participants, which means that they to a certain extent replace low and very restricted unemployment benefits. So we observe a phenomena (but nobody know how widespread it is) similar to the one in Italy that, on the one hand, apprenticeships and training are used to replace income for unemployed and, on the other hand, apprenticeships are used by employers to lower their employment costs (since they don't have to pay their trainees).” (Communication to the author)

In sum: Activation policies are a bundle of demanding and enabling labour market and employment policies whose relative weight differ from country to country: At least incentive reinforcement, employment assistance, upskilling and job creation schemes have to be distinguished. Starting with the distinctions of offensive and defensive respective universalistic and liberal patters, various typologies have been proposed in order to come to grips with the heterogeneity of activation regimes. A deficit of existing typologies is the neglect of social services other than ALMP which are essential especially for the activation of

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disadvantaged groups. Therefore, I proposed to differentiate national patterns of activation policies according to the relative weight of active and passive components, the role of social services, family policies and upskilling and the incentive reinforcement of labour market policies. On the basis of a cluster analysis of eight indicators for these three dimensions, four types of activation regimes can be distinguished: Comprehensive activation in the Nordic countries, a mix of compensatory and activation labour market policies mostly in the continental European states, emerging activation regimes and residual labour market policies in the Southern and Eastern European countries. This typology is only a first and rough attempt to provide a quantitative basis for the discussion on the varieties of activation regimes. Another contribution is the inclusion of social services also beyond the scope of employment services – which in general have a much bigger quantitative impact and which play also an important role for activation policies, even if for example family, housing or disability services are not focused on this aim (cf. however Stevens, this conference, for the activation of people with learning disabilities). It has at least three deficits: At first, it focuses mostly on the level of macro-indicators for public expenditures for labour market policies, thus probably neglecting the role of workfare policies as in the case of the United Kingdom. Secondly, it draws only a static picture of activation regimes on the basis of data for one year. Thirdly, it neglects the organizational challenges at the local and regional meso-level, where activation really takes place (van Berkel et al., 2012). The question is how a comprehensive and individualised support especially for long-term unemployed, which are an essential target group for activation policies, really takes place. In the following, I will discuss these organizational dimensions of activation policies taking the example of …. in order to contribute to a conceptual framework for an analysis of the organizational dimensions of integrated employment policies.

Figure 2: Services in kind by different functions (2009, in % of GDP)

EU27

EU15 SE DK FI UK NL EL DE AT FR HU ES LU CY IE MT BE LT PT SI SK LV BG IT RO CZ EE PL

0 %

1 %

2 %

3 %

4 %

5 %

6 %

7 %

8 %

Old age and otherHousingDisabilityFamily, childrenUnemployment

Source: Eurostat. 3. The governance of activation policies3

3 The following section is partly based on the proposal and preliminary results of the project “Local Worlds of Social Cohesion. The Local Dimension of Integrated Social and Employment Policy”

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The social inclusion of low skilled, women, younger and older people, immigrants or long-term unemployed cannot be achieved only by means of classical labour market policy. The traditional instruments of active labour market policy, e.g. job-placement, training and occupational redeployment are increasingly insufficient for including groups with complex social problems (e.g. low qualifications, indebtedness, health, alcoholism, addiction, housing, transport, family care, child care, and care for the elderly) in the labour market. Activation of these groups often requires multiple social services tailored to individual needs of these groups (cf. Table 2 for an overview over the programs and services provided in selected countries). This requires the integration of formerly separated policies and a closer cooperation of formerly detached administrative agencies, social partners, welfare organizations, NGOs and even beneficiaries (Künzel, 2012).

The starting point for dealing with these challenges is the recognition that activation problems cannot be solved by a single agency within its established domain, but that new problems can be dealt with only by overlapping policies and shared responsibilities. The corresponding organizational strategies can be summarized in five points: 4 (van Berkel et al., 2012: 263): 1. Systemic coordination – for example by reorganizing employment agencies and

strengthening their ability to coordinate. 2. Collaboration: The establishment of new forms of networking and inter-agency

cooperation3. Marketisation: The establishment of new forms of public-private partnerships 4. Decentralisation: The creation of new links between the central and the local level5. Individualisation: Individualised forms of support and control.The general challenge is a closer co-operation between formerly separated political and organizational fields is necessary, for example between placement and training services, income substitution, counselling, family and health policies (Niklasson, 2007). The question is how the problems of fragmentation and the challenge of overlapping competencies and resources are dealt with.

(LOCALISE) financed by the EU. 4 The first three dimensions refer to the well-known typology of Stoker which Green and Orton (2012)

summarise as follows: “(P)rincipal-agent relations (including purchaser–provider relationships) favoured under the contracting-out of public services; inter-organizational negotiation (the coordination of resources and capabilities, for example through multiagency delivery partnerships); and systemic coordination (embedded multi-agency governance based on a shared vision and institutionalized joint working to the extent that self-governing networks emerge).

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Table 2: Social services provided to disadvantaged groups in five different countries (not yet finished)

Social services Sweden Germany Italy Poland United Kingdom

Activation regime Comprehensive activation

Compensatory welfare states on the move

Emerging activation regime

Residual labour market policies

Workfare variant

Insurance or assis-tance benefits (“conditionality”)

unemployment in-surance , activity and sickness compensa-tion (2003), reha-bilitation chain (2008)

Unemployment and social assistance bene-fits are oriented towards getting back to work; sanction regime for long-term unemployed (2005)

Job-search, place-ment

JOB (coaching, placement, supported employment), job guarantee for young people (2007),

MIS conditional on job search requirements (2005), case manage-ment and integration contracts for long-term (2005)

Job-related training schemes

Strong decline (from 34 to 8 % of partici-pants in ALMP), government, shift to a ‘work first ap-proach’

Training grants, expen-ditures reduced in the last years, shorter train-ing courses, no longer vocational training

Coaching instead of training

Subsidised employ-ment

JOB (2007), activa-tion guarantee (2000), new start jobs (2007)

Drastically reduced in the last years

In-work benefits and other financial in-centives

job tax deduction (2007-10)

Insertion grants; in-work benefits by MIS system

Additional social services (counsel-ling, childcare, housing …)

Individual action plans, housing, pa-rental benefit and child allowance

Local childcare, health services, and housing benefits for employabil-ity of long-term unem-ployed in the MIS-re-gime

MIS: Minimum income system. Source: National case studies of the LOCALISE project.

First of all, this can be done by the creation of agencies which are charged with the task of a stronger co-operation or link between the different domains and which integrate also resources and competences across former organizational boundaries (“bridging institutions”). These agencies can serve as a one-stop-shop – for example in the case of the German job centres which integrate the tasks of job placement and benefit payment and provide access to other services (childcare, training and education, job creation schemes in the public sector). However, other types of one stop shops may provide a much broader range of enabling services, as Minas (this conference) has observed in a six-country-comparison: “Two types of

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one stop-shops have been identified, the main distinction between the being a stricter focus on employability in the type that is labeled as narrow one stop- shop. The key objective is to get unemployed as quick as possible into work, concentrating offered services mainly within one policy area instead of bridging several ones. In contrast the other type, labeled as the wide one stop-shop gathers various services in the new service models.” (p. 19)

Secondly, the challenge of integrating different policy fields may also be resolved by a closer inter-agency co-operation at the municipal level (Green and Orton, 2012): Public and private actors at the local level for example are responsible for the provision of better childcare facilities, which are an important prerequisite for the activation of women. Also the improvement of employment services has to take place at the regional and local levels.

Thirdly, the provision of social services for the activation of unemployed can also be provided by private partners. Public tendering of service providers on quasi-markets by means of contracts and economic incentives may be a way for getting access to ‘better and cheaper’ services (Lindsay et al. 2008: 716). Jantz and Klenk (this conference) for example show that the German Hartz IV reforms in 2005 did not only introduce integrated agencies, the so-called job-centres which have been inspired by the already abolished Jobcentre Plus (2002-2011) in the United Kingdom. But they strengthened also market-based forms of employment policies by organizing the contracting out not only of training and education services (which is a traditional feature of employment policies in Germany), but also of job placement. The authors underline that the newly created quasi-markets are closely intertwined with hierarchical forms of coordination. The integration of private service providers competing for PES resources creates additional possibilities, but also tensions, for example the tension between competition and coordination (Green and Orton, 2012; Lindsay and McQuaid, 2008) (see the paper of Berthet and Bourgeois on this conference, who diagnose “very weak attempts to implement real marketisation” (p. 10) – with the exception of the UK. See the paper of Fuertes and McQuaid on this conference).

The fourth dimension refers to the gap between centrally organized labour market and often locally organised social policies. The municipal level in Europe traditionally fulfilled tasks of social welfare provision. Social welfare offices and youth welfare offices at the local level offer various forms of social assistance. In addition, the local level is often responsible for issues of housing policy. Social services are traditionally related to social work or income provision, but rather weakly connected to labour market inclusion (Saraceno 2002; Finn, 2000). On the other hand, labour market policy is often based on the uniform, centralised and bureaucratised provision of placement services and unemployment benefits shaped by central actors and decisions. Thus, in the past the tasks in local employment offices remain strongly confined to narrow functions in the implementation process of central programs.5 Local skills in the field of social welfare on the one hand and the field of labour market policies on the other hand therefore have frequently been two isolated fields. In consequence, local social problems are often rather weakly connected to issues of labour market policy. Activation policies challenge this division of labour. Lindsay et al. (2007: 717-8) for example mention seven advantages of a closer integration of centralised co-ordination and localised execution of activation policies: Flexible and responsive policy solutions, facilitating innovation,

5 Lindsay (et al. 2008: 721) for example observes: “The UK system’s ‘centralized localism’ (…) means that the PES still largely controls the design and content of programmes, with local ‘partners’ tendering to provide agreed services within a set contracting structure.

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sharing knowledge and expertise, pooling of resources and ‘bending the spend’, building capacity in organizations and communities, tapping local knowledge, legitimizing policy and mobilizing support. Even if local actors’ activities usually remain severely restricted within the framework of national regulation (Lindsay et al., 2008), the implementation of activation policies is in general assigned to the local level in order to exploit the proximity to urban problems and its efficiency in implementing specific solutions. Thus, due to the specific skills and challenges of the local level the local level will play a crucial role in the implementation of integrated employment strategies. The importance of the local level in the field of employment policy therefore is increasing (Green and Orton, 2012), because the organizational and institutional separation between social welfare and employment policy can only overcome if local and central actors cooperation in the provision of social and employment services. However, this requires the reinvention of the local arena in a mostly national context, which Bannink, Bosselaar and Trommel (this conference) describe as “crafting local welfare landscapes”: “Nationally defined policy space does allow the emergence of localized policymaking processes, but it may block the emergence of local welfare policy landscapes.” (p. 2) Taking the example of the Swiss social assistance, Bonoli and Champion (this conference) even show, that a strong role of municipalities in the context of a Federal system even may block any reforms – an observation which evocates the joint decision trap Fritz Scharpf observed in the cases of Germany and the European Union and which makes the outcome of the Hartz IV-reforms in Germany even more unlikely (cf. the contribution of Künzel to this conference).

Fifthly, activation policy implies the shift to individualised forms of support and control (Gubrium and Lødemel, contribution to this conference). The jobseeker is increasingly defined as a client with whom insertion contracts have to be closed and who has to fulfil specific obligations. He or she is no longer treated as the passive object of bureaucratic interventions, but as an individual with clear responsibilities. Techniques of profiling can facilitate tailor-made placement and individual strategies of counselling (see the paper of Berthet and Bourgeois on this conference, who gives an overview on the extent of profiling in six countries, p. 9). Social services are increasingly targeted to the specific needs and handicaps of the unemployed. The PES therefore has to take into account the individual living conditions, qualifications, resources and limitations offering individualised services. This may lead to a different work organization: One case manager may be responsible for all aspects of the “unemployment relationship”: Job placement, benefit payment, and the provision of various services. And the efficiency of these case managers and agencies is regularly monitored and compared in a standardised way.

These new governance modes of activation policies are often inspired by the principles of new public management (Pollitt and Bouckaert, 2011): Performance measurement, contractualism, competition benchmarking, auditing, vouchers, one-stop-shops, case management, decentralisation, contracting out play an important role. Serrano Pascual (2007: 12) interprets this contractualisation of the relationship between agency and client as a “policy of producing individuals and identities that conform more readily to industry’s new rules”. This increased individualisation of interventions transforms the relationship between the unemployed and the public employment services (PES): “The State as the guarantor of social right (the ‘entitlement State’) is being replaced by the State as the regulator individuals’ behaviour (the ‘enabling State’)” (Serrano Pascual 2007: 17).

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In these five dimensions, I will now describe selected organizational strategies in four countries which belong to the previously described four national types of activation policies. These descriptions will be based on the presentations of this conference, but also some preliminary results of the LOCALISE project previously mentioned (see also the presentation of Berthet and Bourgeois during this conference).

Comprehensive activation in Sweden: Besides Denmark and the Netherlands, Sweden is considered to be one of the front runners in active labour market policies, which has been at the heart of the Swedish ‘Rehn-Meidner model’ already since the 1950s. Bonoli (2010: 437) interprets the combination of generous unemployment benefits and education, training, mobility and placement supports as the result of a compromise between unions and employer organizations: “(P)owerful labor movements imposed ALMPs upon reluctant employers. They claim that the Nordic—and in particular the Swedish—version of ALMP was part of a major cross-class compromise that allowed the social democrats to pursue their political objectives without endangering the profitability of capital.” Since 2001. “demands on activation were strengthened. An unemployed shall actively collaborate with the case worker in creating an individual action plan. The definition of ‘appropriate job’ changed, the unemployed should during the first 100 days search for jobs in their area of occupation and close to their residence, but after that at the whole labour market. Also, participation in active measures did no longer qualify for a new benefit period. Furthermore, the entitlement to a somewhat longer duration among older workers was abolished.” (Bengtsson, this conference). Bengtsson describes this as a profound shift of the Swedish activation policies “from employability to standby-ability (…) including stricter work incentives, contractualization of citizenships rights, less generous unemployment benefits and less costly forms of activation.” (p. 14-15)

(not yet finished)

Activating a compensatory welfare state – the Hartz IV reforms in Germany: The industry-centred German employment regime was based on the segmentation between the full-time employed male breadwinner population, female part-time work and an inactive or peripherally employed labour force sustained by their families or by social policy. Germany was the classical example of an insider-outsider-market characterised by the exclusion of women, older people, foreigners and handicapped. As a result, large differences evolved between core workers and groups, which remained outside or at the ‘periphery’ of the labour market. Even if ALMP in the sense of job placement, training and retraining measures and subsidised employment existed at least since the Employment Promotion Act of 1969, the activation of unskilled, younger and older employees and women was beyond the scope of the former employment model.

Therefore, the Job-AQTIV Act in 2001 and the four subsequent Hartz laws 2003-2005 led to a radical change of the previous employment regime by combining the centrally administrated scheme of unemployment assistance with the locally administered social assistance schemes (Kemmerling and Bruttel, 2006). The unemployment assistance thus was transformed from status-based income preservation to a basic income support for currently more than 6.1 million persons, among them 4.4 million employable persons, 2 million unemployed and 0.9 million long-term unemployed (July 2012). The integration of social

15

assistance and unemployment assistance schemes reduced on the one hand the benefits for long-term unemployed from the previous level (53 % respective 57 % of the previous net income) to the minimum income (currently 374 Euro plus housing costs). On the other hand, the labour force among the recipients of MIS participated now fully in the placement and training activities of the Federal Employment Agency. In addition, a stricter monitoring of job searches, a profiling of jobless people, case management and reintegration contracts have been developed.

Complementary to the more inclusive labour market policy at the margins of the labour market, also the governance structure for the Public Employment Services (PES) was fundamentally reorganised. Until 2005, the operational responsibility for the German labour market policy was centralised at the German Employment Agency. Together with the unions and the employer associations this agency was responsible for training and placement activities. Since 2005, currently 416 jobcentres have been created as one-stop agencies for unemployment assistance, job placement and the coordination of social services. These job centres are jointly run, controlled, manned and financed by the Employment Agency and the municipalities. 108 job centres (mostly in rural regions) are even run only by the municipalities. The municipalities therefore have become an essential actor in labour market and activation policy. This facilitated the provision of social services to the most vulnerable groups by combining the competences, networks and also employees from the Employment Agency with local employees from the social affairs departments. Even if the organisational and even legal challenges of creating such a common organisation were very high and the administrative cultures of the employees from the German Employment Agency and the municipal employees are still very different, the job centres can be considered a success because they facilitated the access to employment and social services for millions of employable persons. This, however, does not overcome the segmentation of the German labour market, because the persons who are entitled to unemployment benefits (in general short-term employed) have a likelihood of getting a regular job within one month is four times as high as for the recipients of unemployment assistance (14.5 % in 2011 in comparison to 3.7 %9.6

(not yet finished)

Emerging activation regimes –Italian experiences:

Residual labour market policies: The Polish experiences:

Market-based forms of activation in the case of the UK: The UK is an example of a country where activation is mostly based on contracting out. Stevens (this conference) describes the new Work Programme as follows: “(T)he contracts for the Work Programme do not stipulate the kinds of support offered by Work Choice or Work Programme providers, but simply indicate a general target of getting people into jobs, that are sustained for set periods. With only a small amount of initial funding, providers are primarily paid by results, after people get and keep jobs for a set length of time.” (p. 5)

6 Bundesagentur für Arbeit, Arbeitsmarktberichterstattung: Der Arbeitsmarkt in Deutschland, Strukturen der Arbeitslosigkeit, Nürnberg Mai 2012.

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Table 3: The organizational dimension of activation policies: Four examples in five dimen-sions

Comprehensive activation (S)

Compensatory welfare states on the move (D)

Emerging activation regimes (I)

Residual labour market policies (Pl)

The workfare variant of residual LMPs (UK)

Systemic coordination 308 (out of 416) local jobcentres integrate municipal and PES employees responsible for placement, social services and unem-ployment benefit and unemployment assis-tance payment, (one-stop-agency)

Collaboration/networking Cooperation of the PES, SSIA and the mu-nicipality

Coordination of other social services by pri-vate actors and NGOs (placement, training, housing, childcare, counselling …)

Marketisation Recently also private provi-sion of services (coordinated by the regional level)

Marketisation of placement and training

Definition of general targets providers have to meet

Decentralisation Since 1998, social assis-tance claimants have to partici-pate in munici-pally organised activities

Centrally coordinated decentralisation of competences for placement services

No prescription of in-struments (training, services …)

Individualisation of inter-ventions

Case management, insertion contracts, profiling of the unem-ployed

Paid by results (getting people in jobs for a certain time)

(Empirical evidence on the basis of LOCALISE)

It can be retained: Activation policies are confronted with fragmented institutions and policy fields (Borghi and van Berkel, 2007). Diverse organizational solutions for the interaction across different policy fields are tested. These solutions can be discussed in the following five

17

dimensions: Systemic coordination; collaboration/networking; marketisation; decentralisation and benchmarking.

4. Conclusion: Activation as a multi-level game (not yet finished)

Due also to the European employment strategy, activation has become a new paradigm for welfare and work. Labour market policies have shifted towards the aim to activate broader parts of society by facilitating the access for unemployed and inactive to the labour market. However, even if the activation paradigm has been established as a dominant concept in “modern” employment and social policies, empirically the heterogeneity of these policies at least concerning the mix of active and passive components, the role of social services, family policies and upskilling and the incentive reinforcement of labour market policies are very huge. In the EU, at least four types of activation regimes can be distinguished: Comprehen-sive activation in the Nordic countries, a mix of compensatory and activation labour market policies mostly in the continental European states, emerging activation regimes and residual labour market policies in the Southern and Eastern European countries.

Relatively independently from these national patterns, activation policies imply important challenges for the governance of employment policies which increasing have to link classical labour market policies (benefits, training, placement) with other policy fields. Organizational arrangements can make a great difference to the success of activation policies which aim to integrate long-term unemployed and other groups into the labour market. This often requires new forms of systemic coordination inter-agency co-operation, public-private partnerships, the decentralisation of public employment services, and new forms of an individualised support and monitoring of clients. Such organizational restructuring can create problems of fragmentation and overlapping of competencies and resources, due to difficulties in coordination between job placement and welfare policies or conflicts between the national and the local level, for example. This raises the question how organizations cope with the challenges of integrated employment policies. This question is discussed on the basis of recent reorganizations of employment policies in five countries which reflect basic features of the previously described types: Sweden, Germany, Italy, Poland, and the United Kingdom. It can be shown that the governance structures in these countries are much more similar than the different expenditure types at the macrolevel might have been expected.

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Appendix: Indicators for the activation typology

2009 Typology Total LMP

Active LMP

ALMPs/ unemp

Pas-sive LMP

Pas-sive LMP/ unemp

Edu-cation

Ser-vices

Fam-ily

Re-place-ment

Em-ploy-ment

Unem-ploy-ment

Youth unem-ploy

Long-term unemp

Den-mark

Comprehen-sive activa-tion

3.22 1.17 0.19 1.73 0.29 8.7 7.3 4.2 93 75.7 6 11.2 9.1

Sweden 1.8 0.67 0.08 0.72 0.09 7.3 7.4 3.2 64 72.2 8.4 25 13.3

Bel-gium

Compen-satory welfare states on the move

3.79 1.19 0.15 2.38 0.3 6.6 1.5 2.2 61 61.6 7.9 21.9 44.2

Ireland 3.47 0.65 0.06 2.62 0.22 6.5 1.7 3.7 87 61.8 11.7 24.2 29

Nether-lands

2.88 0.8 0.24 1.69 0.5 5.9 3 1.3 86 77 3.4 6.6 24.8

Finland 2.77 0.75 0.09 1.89 0.23 6.8 5 3.3 75 68.7 8.2 21.5 16.8

Ger-many

2.5 0.61 0.08 1.52 0.2 5.1 2.6 3.2 75 70.9 7.7 11.2 45.5

France 2.4 0.72 0.08 1.42 0.15 5.9 2.4 2.6 70 63.7 9.5 23.3 37.4

Austria 2.35 0.67 0.14 1.5 0.31 6 2.5 3.1 69 71.6 4.8 10 21.3

Spain Emerging activation regimes

3.76 0.65 0.04 2.98 0.17 5 2.2 1.5 75 59.8 18 37.8 23.7

Por-tugal

2.06 0.63 0.07 1.31 0.14 5.8 1.2 1.5 78 66.3 9.5 20 44.2

Italy 1.78 0.36 0.05 1.39 0.18 4.7 0.9 1.4 71 57.5 7.8 25.4 44.4

Estonia 1.62 0.15 0.01 1.38 0.1 6.1 0.7 2.3 59 63.5 13.8 27.5 27.4

Latvia 1.34 0.27 0.02 1.03 0.06 5.6 1 1.7 75 60.9 17.1 33.6 26.7

Luxem-bourg

1.29 0.37 0.07 0.87 0.17 3.2 2 4 93 65.2 5.1 17.2 23.1

Hun-gary

1.13 0.36 0.04 0.68 0.07 5.1 2.3 3 67 55.4 10 26.5 41.6

Slove-nia

0.96 0.23 0.04 0.63 0.11 5.7 1.1 2.1 83 67.5 5.9 13.6 30.1

Lithua-nia

0.91 0.2 0.01 0.61 0.04 5.6 1.3 2.8 87 60.1 13.7 29.2 23.2

Cyprus 0.88 0.17 0.03 0.67 0.13 8 1.7 2.2 74 69.9 5.3 13.8 10.4

Poland Residual labour market policies

0.96 0.53 0.06 0.34 0.04 5.1 0.3 0.8 49 59.3 8.2 20.6 30.3

Slova-kia

0.92 0.15 0.01 0.67 0.06 4.1 1.1 1.7 57 60.2 12 27.3 54

Greece 0.91 0.21 0.02 0.69 0.07 4.1 2.6 1.8 60 61.2 9.5 25.8 40.8

Czech Repub-lic

0.74 0.17 0.03 0.44 0.07 4.4 0.8 1.4 67 65.4 6.7 16.6 30

United King-dom

0.71 0.04 0.01 0.33 0.04 5.7 3.3 1.8 71 69.9 7.6 19.1 24.6

Bulga-ria

0.65 0.22 0.03 0.38 0.06 4.6 1 2 60 62.6 6.8 16.2 43.3

Malta 0.51 0.03 0 0.37 0.05 5.5 1.6 1.3 58 54.9 7 14.4 44

Roma-nia

0.46 0.04 0.01 0.38 0.06 4.2 0.8 1.7 52 58.6 6.9 20.8 31.6