Active Labour Market Policies and Welfare Reform

Also by Anne Daguerre

La protection de lenfance en France et en Angeleterre 1980-1989 [The evolution of Child Protection Policy in England and France, 1980-1989], 1999

WHEN CHILDREN BECOME PARENTS: Welfare State Responses to Teenage Pregnancy (with Corinne Native/) (eds), 2006

Active Labour Market Policies and Welfare Reform Europe and the US in Comparative Perspective

Anne Daguerre Senior Research Fellow, School of Health and Social Sciences, University of Middlesex, UK

* ©Anne Daguerre 2007 Softcover reprint of the hardcover 1st edition 2007 978-1-4039-8830-0

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ISBN 978-1-349-54206-2 DOI 10.1057/9780230582231

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Contents

List of Figures and Tables ix

Acknowledgements X

Abbreviations xi

Introduction: An Overview of Welfare Reform in Europe and the United States 1 The three worlds of activation 4 Key arguments, hypotheses and outline of the book 10

1 The Evolution of the US Workfare Model 25 Introduction 25 The stigmatisation of welfare policies 26 Issue networks and welfare reform: the ideological shift to the right 32

The role of right-wing policy communities in the reauthorisation reform agenda 47

Conclusion 54

2 Welfare Reform in the United Kingdom: Helping or Forcing People Back into Work? 58 Introduction 58 Main features of the social assistance system: the Conservative legacy 59

New Labour policies: the role of workfarist policy communities 65

The difficult reform of Incapacity Benefits 74 Conclusion 79

3 Active Labour Market Policies in Denmark: Towards a Discriminatory Workfare Regime? 82 Introduction 82 The Danish welfare state under pressure 84 The rediscovery of activation policies in the 1990s 87

vii

viii Contents

The second wave of activation: welfare chauvinism and workfarism

Conclusion

4 Testing Resistance to Change: The Erratic Imposition of

94 102

Workfare at the Margins of French Society 105 Introduction 105 The dualist system of French unemployment protection

Activation at the margins: the management of 'social exclusion'

From making work pay to workfare? Conclusion

5 Activation Policies at the EU Level:

107

112 117 126

A Workfarist Tum? 130 Introduction 130 The EES and the emergence of a social

liberal discourse 131 The dissolution of the social liberal

discourse coalition 138 The move towards workfare: a cosmetic change? 145 Conclusion 148

Conclusion: The Advent of the 'Active Welfare State' 151 Towards a workfarist shift? The hypotheses revisited 151 A change in social policy goals 164

Notes 168

Bibliography 172

Index 186

List of Figures and Tables

Figures

1.1 Maximium penalty for not complying with an individual responsibility plan

1.2 AFDC/TANF Families and Recipients Calendar Years 1960-02

Tables

A.1 Spending on active labour market policies as a

43

46

percentage of GDP (1985-1997) 17 A.2 Spending on active labour market policies per person

unemployed as a percentage on spending on employment policies (1985-97) 17

1.1 Insurance programmes (non means-tested) 26 1.2 Means-tested public assistance programmes 27 1.3 TANF administrative rules 41 3.1 Overview of policy changes, 1990-2000 91 3.2 Overview of legislative changes, 2002-2005 97 4.1 Unemployment Benefits (insurance), average benefit for

the first four months, in real terms (1986 = 100) 110 4.2 Revenu Minimum d'insertion, rates in real

terms (1989 = 100) and as a percentage of average net earnings for a single person

B.1 Changes in social assistance entitlements in the United States

B.2 Changes in social assistance entitlements in the United Kingdom

B.3 France and Denmark 1996-2005 B.4 Share of expenditure on active labour market

measures by category in 1998 and 2003

ix

111

152

152 153

155

Acknowledgements

I would like to express my gratitude to the British Academy for its financial support. The grant (Welfare Reform across the EU and the USA: A Comparative Study) permitted me to conduct interviews in the United States, France, Denmark, the United Kingdom and in Brussels. I would like to thank my home institution, Middlesex University, for allowing me to move to the European University Institute in Florence during the final stages of the completion of the manuscript. I would also like to express my gratitude to the European University Institute for welcoming me as a Visiting Fellow for six months, thus enabling me to complete the book. Over the course of 2004-06, I conducted a series of interviews with officials at ministries, unions and NGOs in Paris, London, Washington DC, Copenhagen and Brussels. Their time and efforts are much appreciated, as are their valuable insights into the policy-making process. Finally, I would like to thank both an anonymous reader and Georg Menz for their helpful comments and suggestions for improving the manuscript. I would also like to thank the US Department of Health and Human Services (DHHS) for allowing me to reproduce Figures 1.1 and 1.2.

X

Abbreviations

AAH ADC ADF AEI AFDC AFDC-UP

AI ALMPS ANPE API APWA

ASS ASSEDIC

BEPGs CAF CAP CBI CBPP CDF CEA CEC CEC CERC CES CFDT CGT CIE CI-RMA CLASP CLI CNAF DA DfES DFP DG Ecfin

Allocation d' Adulte Handicape Aid to Dependent Children Assemblee des Departements de France American Enterprise Institute Aid to Families with Dependent Children Aid to Families with Dependent Children- Unemployed Partners

Allocation d'Insertion Active Labour Market Policies Agence nationale pour l'emploi Allocation de parent isole American Public Welfare Association, now American Public Human Services

Allocation de Solidarite Specifique Association pour l'Emploi dans l'Industrie et le Commerce. Association

Broad Economic Policy Guidelines Caisses d' Allocations familiales Community Action Programmes Confederation of the British Industry (CBI) Center on Budget and Policy Priorities Children Defense Fund Council of Economic Advisers Contrat Emploi Consolide Council of the European Communities Conseil de l'Emploi, des Revenus et de la Cohesion Sociale Contrats Emploi-Solidarite Confederation fran~aise democratique du travail Confederation generale du travail Contrats Initiative Emploi Contrat d'insertion- Revenu Minimum d' Activite Center for Law and Social Policy (CLASP) Commission Locale d'Insertion Caisse nationale des allocations familiales Danish Employer's Confederation Department for Education and Skills Danish People's Party Directorate General for Economic and Financial Affairs

xi

xii Abbreviations

DGV

DGAS DGEFP

DHHS DLC DRA DREAM DREES DRC DSS DWP EAPN EC EC EES EGLs EITC EMU ENA ETUC EU FC FIS FSA GA GAO GDP IB ILO IN SEE

IPBAs IRP ]ER JOBS ]SA LO LSE MEDEF MOE MSC MUD NAO

Directorate General for Employment, Social Affairs and Equal Opportunities

Direction Generale de 1' Action Sociale Delegation generale a l'emploi eta la formation professionnelle

Department of Health and Human Services Democratic Leadership Council Deficit Reduction Act Danish Rational Economic Agents Model Research Division of the Ministry of Social Affairs Disability Rights Commission Department of Social Security Department for Work and Pensions European Anti-Poverty Network European Council European Council European Employment Strategy Employment Guidelines Earned Income Tax Credit European and Monetary Union Ecole Nationale d' Administration European Trade Union Council European Union Family Credit Family Income Supplement Family Support Act General Assistance Government Accountability Office Gross Domestic Product Incapacity Benefits International Labour Organisation Institut national de la Statistique et des Etudes Economiques

Incapacity Benefits Personal Advisers Individual Responsibility Plan joint Employment Report job Opportunities and Basic Skills JobSeekers' Allowance Confederation of Danish Trade Unions London School of Economics Mouvement des Entreprises de France Maintenance of Efforts Manpower Services Commission Moral Underclass Discourse National Audit Office

NAP NDYP NGA NGOs NI NMW NSEJ OAI ODAS OECD OFA OMC PARE PCA PES PNAE PPE PPI PRIDE

PRWORA

PW RMA RMI SDA SMIC SSI TANF TC TECs TLM TRACE TUC TUC UI UMP UNEDIC

UNIOPPS

WEP WIN YTS

National Action Plan New Deal for Young People National Governors Association Non-Governmental Organizations National Insurance National Minimum Wage Nouveaux Services Emplois Jeunes Old Age Insurance

Abbreviations xiii

Observatoire national De l' Action Sociale decentralisee Organisation for Economic and Cooperation Development Office of Family Assistance Open Method of Coordination Plan d'aide et de Retour a L'emploi Personal Capability Assessment Public Employment Services Plan National pour l'Emploi Prime pour l'Emploi Progressive Policy Institute Personal Responsibility and Individual Development for Everyone

Personal Responsibility and Work Opportunity Reconciliation Act

Project Work Revenu minimum d'activite Revenu minimum d'insertion Severe Disablement Allowance Salaire minimum interprofessionnel de croissance Supplementary Security Income Temporary Assistance to Needy Families Training Commission Training and Enterprise Councils Transitional Labour Markets Trajets d'acces a l'emploi Trade Union Congress (UK) Travaux d'Utilite Collective (France) Unemployment Insurance Union pour la Majorite Presidentielle (Gaullist) Union Nationale pour l'Emploi dans l'Industrie et le Commerce

Union nationale interfederale des oeuvres et organismes prives sanitaires et sociaux

Work Experience Programme Work Incentive Programme Youth Training Schemes

On Moral Hazard 'I painted my face, and to make myself as pitiable as possible I made a good scar and fixed one side of my lip in a twist by the aid of a small slip of flesh­coloured plaster. Then with a red head of hair, and the appropriate dress, I took my station in the busiest part of the City, ostensibly as a match-seller, but really as a beggar. For seven hours I plied my trade, and when I returned home in the evening I found, to my surprise, that I received no less than twenty-six shillings and fourpence ... Well, you can imagine how hard it was to settle down to arduous work at two pounds a week, when I knew that I could earn as much in a day by smearing my face with a little paint, laying my cap on the ground, and sitting still ... As I grew richer I grew more ambitious, took a house in the coun­try, and eventually married. My dear wife knew that I had a business in the City. She little knew what.'

'But have you never been prosecuted for begging?' 'Many times; but what was a fine to me?'

Arthur Conan Doyle, 'The Man with the Twisted Lip'

xiv