From learning to steering in Danish labour market policy

- or from a beautiful swan to an ugly duckling?

Henning Jørgensen

Professor, Aalborg Universitet, CARMA [email protected]

, Welfare States in Transition, Chicago 15th May 2009

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

 Activation part of a new intervention paradigm    employment as goal and central 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 2

Denmark Net herlands Belgium Germany Finland France Sweden Spain Port ugal Austria Swit zerland Norway Ireland It aly Canada UK Japan USA 0

Expenditures on Labour market policy 2005

1 2 3 Spending as percent of GDP 4 5 Active Passive 3

Construction of activation systems based 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

4

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) 5

The Nordic Approach: Macro-economic policy Wage policy

Collective agreements

The social partners The welfare state

Income security Services and LMP

”Flexicurity” Social protection Low High Job protection Low High

UK USA Italy Denmark Germany Sweden 7

The Danish flexicurity system: not a model – only relationships

The primary axe of the Flexicurity model

Flexible labour market

• Strong rotation between jobs • Low job security • Quick structural adaptation

Social security The social partners

• Income security • High percieved job security

Active labour market and educational policies

Employment security 8

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

30 procent change jobs each year 13 percent of the workforce complete a CVT-courses each year 20 procent of the workforce experience unemployment each year

Flexible labour market CVT Social security

11 procent in ALMP each year

ALMP

9

Danish LMP reform 1993/1994

* Content: - from rules to needs - individual action plans - activation offers (mostly education)

* Steering

- regionalization - the social partners in pivotal positions 10

Unemployment figures (%), 1994-2006

12 11 10 9 8 3 2 1 0 7 6 5 4 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Denmark OECD, Employment outlook, 2007.

Germany EU (average) 11

Denmark: the Phillips curve flattened out!

25 20 1974 1975 15 10 5 0 0 Source: ADAMs databank 1973 1971 1969 1967 1968 1964 1963 1959 1960 1956 1976 1998 1987 1981 1982 1986 1997 1983 1988 1984 1996 1990 1995

Labour market policy reform

1992 2 4 6 8 10 Unemployment (percentage) 12 14 12

New LMP reform of the new government: ”More people to work” 2002/2003

 Individual and flexible contacts with the unemployed persons  Job plan  Use of ”other actors”  Offers   guidance and qualification trainee service  wage subsidies 13

New structural reform 2007 - 2009



Towards one-tier system:

Joint entrance for all kinds of unemployed people into jobcentres (common for municipalities and public employment service) 

From 14 to only 4 regions:

(now mostly monitoring agencies) 

From corporatist steering to state-municipality steering:

(reduced role of the social partners) 14

Danish ”employment policy” 2007 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 (but still rights and dialogues)

Processes:

* The social partners no longer in pivotal positions: municipalities takes over decision-making responsibility * coordination weakened, contractualisation in use

Polity:

* schizophrenic mixture of control and competition (decentralized operations – centralized steering) 15

The Labour Market Steering System in Denmark 2007 - 2009

State financing unemployment benefits and efforts

Minister of Employment Regional service Region of employment

Monitoring of effects and results

Jobcentres (91) B (77) S M C (14) M

Municipal financing of assistance and efforts BER

RBR LBR

KB 16

A new labour market steering system from 1.8.2009

 Municipalities take over all responsibilities  Economic incentives to steer activities  Strong monitoring and intervention from the side of the state 17

Policy changes - assessment

Continuity

Content

Break

Gradual change Process

Incremental change

Reproductive adaptation

Abrupt/ Brusque change

Regime survival System transformation

18

Institutional recalibration of the system

 Contractualization introduced at all levels  Performance management system and ”steering” as to results  New measurement system from 2007  Central standards and manuals 19

Evidence-based measurement system

 Is

partial

: includes only some aspects of LMP (employment records)  Measures only on the supply side: is

one-sided

 Register last years performance: too

static



The role of dialogues has been reduced

20

Consequences internally

 The frontline people have a new role definition: agents for a ”behavioral” policy  Employees will experience de professionalization  The PES is becoming a traditional bureaucracy (run by the municipalities) 21

Implementation depends on organizing principles

The labour market calls for shifting and dynamic interventions: But the jobcentres are transformed into traditional bureaucracies!

Tasks Uniform Variable Technologies Standardized Non-standardized Bureaucracy Management Professional organisation Learning organisation 22

Internal behavioral consequenses:

 ”Wicked” problems redefined as ”tame” ones  Steet-level bureaucrats have less discretion  No further training and education in the system  Controlling the unemployed people: they need to learn how to handle their own situation and to reshape their attitudes (a moral theraupeutic problem) 23

Danish policy change now more ”European” as to institutional reform

 Policy design separated from policy implementation  MBO is subsituting law making and political regulation  Measurement og monitoring to help performance management (central steering)  Individualization and moral-therapeutic practices ( case management )  Contractualization  Quasi-markets and outsourcing of tasks from PES  Standardization of procedures and ways of operating 24

But:

cooperative adaptation

is still the key to good governance

 Institutionalizing social dialogues  Placing responsibilities on actors  Developing common norms  Coupling mechanisms  Trust and learning 25

cooperation

trust learning coupling mechanisms norms resources motivation

actors coordination cognition

institutional set-up incentives goals

political system

Danish LMP: from beautiful swan to an ugly duckling?

 LMP no longer ”owned” by the social partners  In LMP: Threats and sanctions to become dominant (paternalistic values introduced)  From qualification measures (learn-fare) to ”shortest possible way to a job” (work-first)  Organizational change from a learning system to central steering of a fully bureaucratized system  Leaving Danish flexicurity behind? 27