Danish labour market policy Danish labour market policy

- from a beautiful swan to an ugly - from a beautiful swan to an ugly duckling?

Henning Jørgensene g Jø ge seProfessor, Aalborg University, CARMA

h @d dkhenningj@dps.aau.dk

Conference ”Activation of social protection”Co e e ce ct at o o soc a p otect oMaison Heinrich Heine, Paris 28.09.2012

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

Activation part of a new intervention Activation part of a new intervention paradigm

employment as goal and central integration mechanismnew moralism build into contractual arrangements

i ti id titi ( i iti hi )reinventing identities (economic citizenship)activating the whole system of social protection (Barbier)

Activation regimes: diversitydifferent concepts of active labour market policyp p yLMP expenditures differ stronglyLMP priorities differ stronglyLMP procedures differ strongly

2

LMP procedures differ strongly

Expenditures on Labour market policy 2005

Belgium

Netherlands

Denmark

France

Finland

Germany

Belgium

Portugal

Spain

Sweden

Active

Norway

Switzerland

Austria Passive

UK

Canada

Italy

Ireland

USA

Japan

UK

3

0 1 2 3 4 5

Spending as percent of GDP

Construction of activation systemsybased on:

Egalitarian valuessocial logic outcome of strugglessocial logic, outcome of strugglesBeveridgean rationale

Paternalistic valuesf ti l l i t f t tifunctional logic, outcome of constructionBismarckian rationale

The Danish activation system of the 1990´es

4

ybased on egalitarian values (social activation)

The Danish labour market system

A voluntaristic bargaining system(collective agreements since 1899 strong IR-system)(collective agreements since 1899, strong IR system)

A political interventionist strategyA political interventionist strategy

negotiated regulation of labour market questionscorporalism at more levelsactive labour market policies (especially since 1994)generous unemployment benefit system (socializes costs of flexibility)

5

V b l d l diffVocabulary and real differences

EU ” i l t ”EU: ”social partners”

it hconsensus, community, harmonysymmetrical concepts and distributions

Nordic countries: ”labour market parties”

markets and conflicts, compromisesasymmetrical distributions of power

6

Citizenship

Nordic construction of an interest-oriented social citizenship (including universalism)

Not simply a right-oriented social citizenship

In the Nordic countries wages and working conditions areregulated on a collective level.

The political system garanties the institutional frames for the labour market system and the normalcy of paid workthe labour market system and the normalcy of paid work

The welfare state supports and regulates also for thosepp goutside the labour market

7

The Nordic Approach:

Macro-economic

lipolicy

Labour

Wage policy The welfare stateI it

Labour market parties

Collective agreements

Income security

Services and LMP

Denmark 1993/94:/A new policy mix of

Expansive fiscal policy

Public investments

Active labour market policies

Leave schemes (to be reduced again)

9

Danish LMP reform 1993/1994: t t f ti LMP (ALMP)start of active LMP (ALMP)

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

ff- activation offers - ”Learn-fare” (not ”work-fare”)

* Steering- regionalization- labour market parties in pivotal positions

10

Unemployment figures (%) 1994 2006Unemployment figures (%), 1994-2006

101112

789

3456

0123

01994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Denmark Germany EU (average)

11OECD, Employment outlook, 2007.

Denmark Germany EU (average)

Denmark: the Phillips curve flattened out!p

25

20

enta

ge) 1974

1975

15

reas

e (p

erce

1961

196

1966

19711973

6

10

Wag

ein

cr

1956

1959

1962

19631964

1965

196719681969

19701972

1976

1977 19781979 1980

1981

1982

1983

1987

1988

Labour market policy reform

5 19571958

196019841985

19861988

198919901991

1992 19931994

19951996199719981999

200020012002

0

0 2 4 6 8 10 12 14

12Source: ADAMs databankUnemployment (percentage)

2007

”Flexicurity” part of the EES

Denmark used as a ”role model” for the rest of Europe as to LMPp

But: Activation in LMP was already being But: Activation in LMP was already being changed in Denmark

13

”Flexicurity”

Job protectionJob protection

i hLow High

Socialprotection

LowUKUSA Italy

protection USA

High GermanySweden

Denmark

14

The Danish flexicurity system: not a y ymodel – only relationships

St t ti b t j b

FlexibleThe primary axe of the

• Strong rotation between jobs

• Low job security

Quick structural adaptationFlexiblelabourmarket

Flexicurity model • Quick structural adaptation

Socialsecurity

Activelabourmarket

li i

The labour market parties

I it E l

policies

15

• Income security

• High percieved job security

Employment security

Some basic figures for Danish flexicurity:”the security of the wings” (up to 2007)

13 percent of the

30 procent change jobs each year20 procent of the

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

Flexible labour market

pworkforce experience unemployment each year

CVT

Social security

ALMP

11 procent in ALMP each year

16

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

Individual and regulary contacts with the unemployed persons

Job plan (substituting individual action plan)

Use of ”other actors” (= privatization)

Offers: three onlyguidance and qualificationguidance and qualificationtrainee servicewage subsidies

17

g

Danish ”employment policy” 2003-20112003 2011

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

• Education no longer a central measure

PProcesses:* The labour market parties no longer in pivotal positions:

municipalities takes over decision-making responsibility

Polity:* schizophrenic mixture of control and competition

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

Integration policy and employment policy unitedemployment policy united

Introduction of ”start help”/”integration scheme” for immigrants 2002: reduced economic support (30 – 50 % below ordinary level)below ordinary level)

Ceiling of social assistance after 6 months of support 2004

2005: 300 hours of ordinary work required in order to 2005: 300 hours of ordinary work required in order to have right for public support; and it became a duty to participate in activation

2008: 450 hours of ordinary work required

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Integration policy reviewedIntegration policy reviewed

Strong believe in incentives and sanctions; but few people have become employed (86 % have had no change of status)status)

Strong poverty effects (the integration arrangements also called ”poverty schemes”)

Special treatment of immigrants means a break with Special treatment of immigrants means a break with universal welfare state principles

Integrations measures were supposed to pave the way for changes in employment policy

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Changes as to content of l t li 2007 2011employment policy 2007-2011

Enlargement of target groups: people on sicknessallowance, people on social assistance with social

bl t thproblems amongst others

Stronger requirements as to accepting a job offer and Stronger requirements as to accepting a job offer and to be ready to participate in activation measures

Control and sanctions strenghtened

But no change of support levelsBut no change of support levels

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New structural reform 2007 - 2009New structural reform 2007 - 2009

Towards one-tier system:Joint entrance for all kinds of unemployed people( f i i liti d bli l t i )(common for municipalities and public employment service)

91 jobcentres createdj

From 14 to 4 regions only:(now mostly monitoring agencies)(now mostly monitoring agencies)

From corporatism to political steering:(reduced role of the labour market parties)

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A new labour market steering A new labour market steering system from 1.8.2009

Municipalities have taken over all kind of responsibilities as to employment policyp p y p y

Economic incentives to steer activities

Strong monitoring and intervention from the Strong monitoring and intervention from the side of the state

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Activation and unemployment 1981-2011 (full time persons)(full time persons)

40000060000

300000

35000050000

250000

300000

40000unem

Act

150000

20000030000

mploy

ivate

100000

10000

20000 ed

ed

0

50000

0

10000

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

24

198

198

198

198

198

198

198

198

198

199

199

199

199

199

199

199

199

199

199

200

200

200

200

200

200

200

200

200

200

201

201

Work-oriented Education Full time unemployed

New changes in employment li 2010/2011policy 2010/2011

Changes in the unemployment support system and the security elements:

Period of unemployment benefits from 4 to 2 years

From 26 to 52 weeks of ordinary work within the last 3 years in order to (re)gain unemployment benefits

Special retirement scheme (”Efterløn”) strongly reduced

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N t O t b 2011New government October 2011

Continues macro-economic policies of the former right wing government

Signals changes in employment policy: calls for ”an active labour market policy” – but no big changes yet.

Activation system to be renewed

Has abandoned ”poverty schemes” from 2012

Has postphoned changes in the system of unemployment benefits for ½ year

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Unemployment change 2007-2011Unemployment change 2007 2011

Latvia

I l dGreeceSpain

LithuaniaEstoniaLatvia

PortugalDenmark

United StatesSlovakiaIreland

SwedenUnited KingdomCzech Republic

SloveniaHungary

FinlandFrance

ItalyEU-27Poland

Sweden

NorwayNetherlands

AustriaBelgiumFinland

Bottom to top, 2007Q1 til 2011Q3. Eurostat

0 2 4 6 8 10 12 14 16

Germany

Increase in unemployment rate (percentage points)

Newest unemployment figuresp y g

Eurostat

Long-time unemployment 2008-2010Long time unemployment 2008 2010

To pay the bills?p y

Source: Eurobarometer: Monitoring the social impacts of the crisis, Wave 4, June 2010 (data collection: May 2010)

LMP expenditures in % of GDP (Eurostat)

4,50

3,50

4,00

2 00

2,50

3,00

2006 1

1,00

1,50

2,002010 :

0,00

0,50

,

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Danish LMP: from a beautiful swan Danish LMP: from a beautiful swan to an ugly duckling?

In LMP: threats and sanctions have become more dominant (paternalistic values also introduced)

From qualification measures (learn-fare) to ”shortestpossible way to a job” for everyone (work-first)

Organizational change from a learning system to central steering of a fully bureaucratized system

LMP no longer ”owned” by the labour market parties.

Municipalities look to own economic benefits

32Leaving Danish flexicurity behind? Security threatened?

Policy changes - assessmentPolicy changes assessment

Content

Continuity Break

Incremental Reproductive Gradual

Process

c e echange

ep oduc veadaptation

G duchange

Abrupt/ Brusque

Regime survival System transformation

33

qchange

Institutional recalibration of the system

Contractualization introduced at all levels

Performance management system and ”steering” as to results

New measurement system from 2007y

Central standards and manuals

34

Consequences internallyConsequences internally

The frontline people (”street-level bureaucrats”) have a new role definition: agents for a ”b h i l” li ( l j t ” i l ”behavioral” policy (no longer just ”social workers”)

Employees experience de-professionalization

The former PES is becoming a traditional bureaucracy (run by the municipalities, but

h t t d b th t t )orchestrated by the state)

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Implementation depends on organizing principles

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

Tasks Uniform VariableTasks Uniform Variable

TechnologiesStandardized Bureaucracy Professional y

organisation

Non-standardized Management Learning organisation

36

g

I t l b h i l Internal behavioral consequenses:

”Wi k d” bl d fi d ”t ” ”Wicked” problems redefined as ”tame” ones

St t l l b t h l di ti Steet-level bureaucrats have less discretion

fNo further common training and education in the system

Controlling the unemployed people: they need to learn how to handle their own situation and to learn how to handle their own situation and to reshape their attitudes (e.g.: unemployment a moral-theraupeutic problem)

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moral theraupeutic problem)

Danish policy now more ”European” t ti l fas to operational reform

P li d i d f li i l iPolicy design more separated from policy implementation

Measurement og monitoring to help performance g g p pmanagement (central steering)

Individualization and moral-therapeutic practices Individualization and moral-therapeutic practices

Contractualization

Quasi-markets and outsourcing of tasks from PES/jobcentres/j

Standardization of procedures and ways of operating

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But: cooperative adaptation is p pstill the key to good governance

Institutionalizing social dialogues

Placing responsibilities on actors (including the labour market parties)p )

Developing common normsDeveloping common norms

Coupling mechanismsCoupling mechanisms

Trust and learning

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Trust and learning

icooperation

trust coupling mechanismstrustlearning

coupling mechanismsnorms

coordination

resourcesmotivation

institutional set-upincentivesgoalsgoals

cognition

actors political system

ConclusionConclusion

D i h LMP h i d ki d f t Danish LMP has experienced a kind of system transformation: substantive and operational reforms at the same time in 2003-2011reforms at the same time in 2003 2011

Danish LMP is no longer a role model in Danish LMP is no longer a role model in Europe. But still rights and social protection.

Danish LMP is now weakening the Danish ”flexicurity” system as to security elementsy y y

The present Minister of Employment wants to The present Minister of Employment wants to restore and renew the policy in 2013-2014

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”If you marry time, you will soon be left a widow”

(Søren Kierkegaard)(Søren Kierkegaard)

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