The EU and the Domestic Politics of Welfare State Reforms: Europa, Europae (Work and Welfare in Europe)

The EU and the Domestic Politics of Welfare State Reforms

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RECWOWE SERIES LIST Work and Welfare in Europe Series Editors: Denis Bouget, University of Nantes, France, Jochen Clasen, University of Edinburgh, UK, Ana M. Guillén, University of Oviedo, Spain, Jane Lewis, London School of Economics and Political Science, UK and Bruno Palier, Sciences-Po Paris, France Titles include: Sigrid Betzelt and Silke Bothfeld ACTIVATION AND LABOUR MARKET REFORMS IN EUROPE Challenges to Social Citizenship Sonja Drobnič and Ana M. Guillén WORK-LIFE BALANCE IN EUROPE The Role of Job Quality Colette Fagan, María González Menéndez and Silvia Gómez Ansón WOMEN IN MANAGEMENT European Employment Policy Neil Fraser, Rodolfo Gutiérrez and Ramón Peña-Casas WORKING POVERTY IN EUROPE Paolo Graziano, Sophie Jacquot and Bruno Palier THE EU AND THE DOMESTIC POLITICS OF WELFARE STATE REFORMS Europa, Europae Karl Hinrichs and Matteo Jessoula LABOUR MARKET FLEXIBILITY AND PENSION REFORMS Flexible Today, Secure Tomorrow? Trudie Knijn WORK, FAMILY AND TRANSITIONS TO ADULTHOOD IN EUROPE Birgit Pfau-Effinger and Tine Rostgaard CARE, WORK AND WELFARE IN EUROPE Rik van Berkel, Willibrord de Graaf and Tomáš Sirovátka THE GOVERNANCE OF ACTIVE WELFARE STATES IN EUROPE

Work and Welfare in Europe Series Standing Order ISBN 978–0–230–28026–7 (outside North America only) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England

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The EU and the Domestic Politics of Welfare State Reforms Europa, Europae Edited by

Paolo R. Graziano, Universita Bocconi, Milan, Italy

Sophie Jacquot Sciences Po, Centre d’études européennes, Paris, France and

Bruno Palier Sciences Po, Centre d’études européennes, CNRS, Paris, France

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Selection and editorial matter © Paolo R. Graziano, Sophie Jacquot & Bruno Palier 2011 Individual chapters © contributors 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–29643–5 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data The EU and the domestic politics of welfare state reforms : Europa, Europae / edited by Paolo R. Graziano and Sophie Jacquot and Bruno Palier. p. cm. Includes index. ISBN-13: 978–0–230–29643–5 ISBN-10: 0–230–29643–2 1. Public welfare – European Union countries. 2. European Union countries – Social policy. I. Graziano, Paolo. II. Jacquot, Sophie. III. Palier, Bruno. HV240.5.E96 2011 361.698094—dc22

2011011824

10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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The members of the RECWOWE task on Europeanization and authors of this book on welfare state reforms have been personally involved during its conception in the fight against the demographical decline in Europe. This book is for Aurèle, Mia, Solveig, Svea, Joseph and Giacomo.

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Contents

List of Illustrations

ix

Notes on Contributors

xi

Preface and Acknowledgements

xv

RECWOWE Book Series: Work and Welfare in Europe Funding

xvi xviii

Introduction: The Usages of Europe in National Employment-friendly Welfare State Reforms Paolo R. Graziano, Sophie Jacquot and Bruno Palier

1

1 Social Europe in Action: The Evolution of EU Policies and Resources Hélène Caune, Sophie Jacquot and Bruno Palier

19

2 Boasting the National Model: The EU and Welfare State Reforms in France Hélène Caune, Sophie Jacquot and Bruno Palier

48

3 Learning or Teaching? Germany and Its Complex Historical Relationship with the EU Patrizia Aurich and Anne Schüttpelz

73

4 The Activation Turn in the Netherlands: ‘Home’-grown or Steered by Europe? Willibrord de Graaf and Rik van Berkel

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5 Usages of ‘Europe’ in Welfare Policies in Greece, 1981–2010 Dimitri A. Sotiropoulos

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6 ‘Eppur si muoveva ...’ The Italian Trajectory of Recent Welfare Reforms: From ‘Rescued by Europe’ to Euro-scepticism Paolo R. Graziano and Matteo Jessoula

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7 A Compass or a Spear? The Partisan Usage of Europe in Portuguese Employment-friendly Reforms Sotirios Zartaloudis

175

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8

9

Contents

EU and Czech Instrumentalism in Employment and Social Inclusion Strategy Tomáš Sirovátka Sweden: The Reluctant Rule Follower Åsa Casula Vifell

10 Europeanization and Welfare State Change in the UK: Another Case of ‘Fog over the Channel’? Jonathan Hopkin and Christa van Wijnbergen 11

Social Security Reform in Turkey: Different Usages of Europe in Shaping the National Welfare Reform Cem Utku Duyulmus

201 230

254

280

Conclusion: Europa, Europae: The Many Faces of Social Europe Paolo R. Graziano, Sophie Jacquot and Bruno Palier

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Index

325

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Illustrations

Tables 0.1 1.1 1.2 1.3 1.4 2.1 2.2 2.3 3.1 4.1 5.1 5.2

5.3 5.4 5.5 5.6 6.1 6.2 6.3 6.4 7.1 7.2

Characteristics of different types of usage European resources (1957–early 1980s) European resources (1980s–mid-1990s) European resources (since the late 1990s) European social policies: policy goals, policy domains and policy instruments A panorama of different reforms: dimensions of policy change and actors Role and usages of Europe Perception of the content of the reform and usages of Europe The sequencing of main German labour market reforms since 1990 Dutch political reforms Social protection in Greece from the comparative (EU) perspective (%) Social benefits in Greece by function group: percentage share of total social benefits from a comparative (EU) perspective (2005) The main employment policy reforms in Greece, 1981–2010 The main pension policy reforms in Greece, 1981–2010 The main social inclusion policy reforms in Greece, 1981–2010 Role and usages of Europe in Greek welfare policy reforms Italian passive and active employment policies expenditure, in percentage of GDP, 1993–2004 Beneficiaries of active and passive policies, Italy, 1996–2005 Main features of social policy reforms in Italy, 1992–2008 The role of Europe in Italian welfare reforms Portuguese employment rates – total (1997–2008) Portuguese unemployment rates by gender (1997–2008)

15 24 30 38 45 62 67 69 82 114 124

124 128 132 134 140 159 159 169 170 178 179

ix

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x

List of Illustrations

7.3 Sequencing of EU and national developments: employment policy 7.4 Sequencing of EU and national developments: social inclusion 7.5 Sequencing of EU and national developments: pensions 7.6 Europeanization of employment-friendly reforms: Portugal 7.7 Usages of Europe: Portugal 8.1 The role of Europe in policy reforms: employment during the pre-accession period 8.2 The role of Europe in policy reforms: employment in the accession and post-accession periods 8.3 The role of Europe in policy reforms: anti-poverty and social inclusion measures 10.1 Timeline for European employment strategy and labour market reforms in Britain 10.2 A panorama of different reforms: dimensions of policy change, actors and usages 11.1 Demographic, labour market, health expenditure and public expenditure statistics for Turkey 11.2 Age dependency ratio 11.3 Share of informal employment in total non-agricultural employment 11.4 Information on policy area, policy change and main actors regarding the social security reform in 2006 and 2008 11.5 Characterization of the usages by the union confederation and employer associations C.1 The main research findings

183 184 187 188 194 209 213 220 264 276 305 306 306 307 308 321

Figure 6.1 Percentage of Italians and EU citizens stating that the membership of their country to the EU is ‘a good thing’

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Contributors

Patrizia Aurich studied sociology at the University of Hamburg and the University of Wisconsin-Madison. She received a three-year PhD scholarship from the University of Hamburg in 2007 and is now a research fellow at the Centre for Globalization and Governance, where she works on comparative welfare state research. Rik van Berkel is Associate Professor at the School of Governance of Utrecht University, the Netherlands. His research interests are situated in the interface of social policy, public administration and public organization studies, and include active welfare state transformations, the introduction of new models for the provision of social services, and processes of change in public organizations responsible for the implementation of social policy and governance reforms. He has published several edited volumes and articles in journals such as Public Administration, Journal of Social Policy, European Journal of Social Policy, Social Policy and Society and European Journal of Social Work. Åsa Casula Vifell is a researcher in the Department of Political Science at the University of Stockholm, and at Södertöm University. Her research interest focuses on the changes in Swedish public administration in light of European integration, and democracy in global governance. She has published several articles in international journals such as Governance, European Political Science and European Integration Online Papers. Hélène Caune is a doctoral student in political science at Sciences Po, Paris (Centre d’études Européennes), where she studies European integration, public policy and welfare policy. She collaborates with the European Network of Excellence: RECWOWE (Reconciling Work and Welfare). She teaches at Sciences Po, Paris, Université Paris X-Nanterre and at Université Cergy-Pontoise. She is currently a visiting fellow at Harvard University and affiliated with the Center for European Studies and the Government Department. Cem Utku Duyulmus is a doctoral student and a research assistant at the University of Montreal, Department of Political Science, Research Chair in Citizenship and Governance. He is working on the ‘Uses of Europe by Domestic Actors in Social Policy Reforms: Labour Regulation xi

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xii Notes on Contributors

and Social Security Reforms in Turkey’. His research interests are comparative politics, international relations, European integration, social policy and the welfare state. Willibrord de Graaf is Associate Professor in the Department of Interdisciplinary Social Science at the Utrecht University. He has studied welfare state developments, especially in labour market and activation, and the transition of school to work of young migrants. He has been involved in several European research projects, including the European Network of Excellence: RECWOWE (Reconciling Work and Welfare). He has published articles in Ethnic and Racial Studies, Administration and Society, European Societies, Social Policy and Administration and Social Politics, and will co-edit a book in 2011 on the Governance of Active Welfare States in Europe, to be published by Palgrave Macmillan. Paolo R. Graziano is Associate Professor at Bocconi University and Visiting Fellow at the Centre d’études Européennes, Sciences Po, Paris. He teaches political science and public policy analysis. He has published two books in Italian and edited a volume on Europeanization: New Research Agendas (with M. V. Vink, Palgrave Macmillan, 2007). He is working on an authored volume on Italy and the European Union (Routledge, 2011). His contributions have appeared in the following international journals: European Journal for Political Research, European Political Science, Regional and Federal Studies, Social Policy and Administration, International Journal of Labour Law and Industrial Relations, Global Social Policy and Journal of Social Policy. Jonathan Hopkin is Senior Lecturer in Comparative Politics, Department of Government, London School of Economics and Associate Fellow of the Johns Hopkins University Bologna Center. He is the author of Party Formation and Democratic Transition in Spain (Palgrave Macmillan, 1999), and of articles in a range of journals, including the European Journal of Political Research, European Urban and Regional Studies, Governance, Party Politics, Review of International Political Economy and West European Politics. His current research focuses on the interaction between electoral politics and social and economic policies. Sophie Jacquot is Research Fellow and Scientific Coordinator of the Centre d’études Européennes at Sciences Po, Paris. She specializes in sociology of policy analysis and European integration studies. Her research focuses on the transformation of EU public action, especially in the social, gender equality and anti-discrimination fields. She has published articles in journals such as West European Politics, Comparative

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Notes on Contributors xiii

European Politics, Journal of European Public Policy, European Journal of Social Security and European Integration Online Papers. She has also coedited a reference dictionary of policy analysis in French (Dictionnaire des politiques publiques, Presses de Sciences Po, 2010). Matteo Jessoula is Assistant Professor in the Department of Social and Political Studies at the University of Milan. He is mainly interested in policy developments and political dynamics in the fields of pensions, labour market and social assistance. He has published several book chapters and articles; among his recent publications are the volume Pension Policy (in Italian), edited by Il Mulino and the article ‘ “Selective Flexicurity” ’ in Segmented Labour Markets: the Case of Italian “MidSiders” ’ (with P. Graziano and I. Madama) in Journal of Social Policy. With K. Hinrichs he is currently editing the volume Labour Market Flexibility and Pension Reforms: Flexible Today, Secure Tomorrow? (forthcoming by Palgrave Macmillan). Bruno Palier is CNRS Research Director at the Centre d’études Européennes, Sciences Po, Paris. He is studying welfare reforms in Europe. He is the scientific coordinator of the European Network of Excellence: RECWOWE (Reconciling Work and Welfare). He has published numerous articles on welfare reforms in France and in Europe in journals such as Politics and Society, Journal of European Social Policy, West European Politics, Governance, Socio-Economic Review, Global Social Policy, Social Politics and various books. In 2010, he edited A Long Good Bye to Bismarck? The Politics of Welfare Reforms in Continental Europe (Amsterdam University Press). Anne Schüttpelz is a political scientist at the Ministry of Labour, Social Affairs, Women and Family of the State of Brandenburg and has worked for more than ten years in the fields of labour market research and EU integration studies. She did her PhD in 2008 on the Europeanization of employment policy in EU accession states. Tomáš Sirovátka is Professor of Social Policy at the Faculty of Social Studies, Masaryk University in Brno. He has been involved in several European research projects and has contributed to comparative books on employment and social policies in post-communist countries – among others (with Mirka Rakoczyova) in A. Cerami and P. Vanhuysse (eds) Post-Communist Welfare Pathways (Palgrave Macmillan, 2009) – and in journals such as Journal of Comparative Policy Analysis, European Journal of Social Security, International Review of Sociology, International Journal of Sociology and Social Policy, Social Policy and Administration, Journal of

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xiv Notes on Contributors

Marriage and the Family, Czech Sociological Review, Prague Economic Papers. He will co-edit a book in 2011 on the governance of active welfare states in Europe (forthcoming by Palgrave Macmillan). Dimitri A. Sotiropoulos is Associate Professor in the Department of Political Science and Public Administration at the University of Athens and Research Associate of the Hellenic Foundation for European and Foreign Policy Studies (ELIAMEP, Athens). He has also taught at the University of Crete and at the Institute Juan March, Madrid, Spain. Between January 2003 and August 2003, Dr Sotiropoulos was Senior Research Fellow of the Hellenic Observatory at the London School of Economics and Political Science (LSE) and from 2009 to 2010 he was Visiting Fellow, Southeast European Studies (SEESOX), European Studies Centre, St Antony’s College, Oxford. His publications include Is Southern Europe Doomed to Instability?, co-edited with Thanos Veremis (Frank Cass, 2002) and The State and Democracy in the New Southern Europe, co-edited with Richard Gunther and P. Nikiforos Diamandouros (Oxford University Press, 2006). Christa van Wijnbergen is Research Fellow in the European Institute at the London School of Economics. She has written on labour market and welfare state reforms in Europe and is currently studying the political economy of compulsory educational reforms. Sotirios Zartaloudis is a PhD candidate at the European Institute of the London School of Economics (LSE). During his studies, he participated in numerous research projects and taught at LSE, College of Europe and SWUFE Chinese University. He has published on the EU impact on Greek and Portuguese employment policy, on the impact of the EMU on national labour market reforms and on USA–EU income inequalities.

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Preface and Acknowledgements This book presents the results of a collective work which has been developed under the auspices of the Reconciling Work and Welfare (RECWOWE) network of excellence. A research group on the ‘Europeanization of “employment-friendly” national welfare state reforms’ was created in June 2007 in Warsaw during the first RECWOWE general conference. This research group gathered 29 researchers from 14 countries (members and non-members of the EU), whose common interest was to analyse the linkages between national ‘employmentfriendly’ welfare reforms and the EU’s possible inputs and influence. The project indeed finds its origins in a common claim, based on a reading of welfare state and Europeanization literatures: first, it is not possible to work on welfare reforms without studying Europe, but, second, the EU does not dictate policies and member states aren’t just transposing regulations. Since the first meeting in Warsaw, five intensive research seminars have been held in Oslo, Utrecht, Nantes, Paris and Stockholm. This long-term perspective and the regular discussions within the group and also with external researchers gave birth to the construction of a coherent common approach based on the analysis of EU resources and their usages by domestic actors, allowing for an innovative in-depth comparison of the various case studies. A specific project focused on the influence of the EU on the national policies aimed at reconciling paid work and private life in eight European countries has also been launched within this research group. The results have been published as a special issue of the European Journal of Social Security entitled ‘Letting Europe In: The Domestic Usages of Europe in Reconciliation Policies’ (vol. 13, no. 1, 2011). The editors of this book would like to warmly thank all the participants to the ‘Europeanization’ research group for their enduring commitment to this long process, which has been particularly enriching from a research and human point of view. We also would like to thank Silke Bothfeld, Laurie Boussaguet, Patrick Hassenteufel, Jakob Larsson, Nathalie Morel, Kimberly Morgan, Joakim Palme, Philippe Pochet, Martin Seeleib-Kaiser, Yves Surel and Cornelia Woll for their external insight, sharp look and helpful comments and Sara Casella Colombeau for her irreplaceable and joyful assistance. xv

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RECWOWE Book Series: Work and Welfare in Europe

Series Preface Since the late 1970s, both labour markets and welfare regimes have been under intense economic pressure and have been challenged by profound changes in social and demographic structures, as well as in social norms. The work/welfare relationship has always been key to the modern state, but has undergone substantial change over recent decades. On the one hand, approaches to social provision have become more explicit in recognizing the importance of the relationship to employment, such that it is possible to suggest that social policies have become ‘employment-led’. On the other hand, it is possible to argue that there is a profound ‘disconnect’ between labour markets and welfare systems, and that this partly explains the socio-economic problems that some countries are facing in terms of high unemployment and low activity rates in particular. Changes in labour markets, which have often tended to more flexibilization, often pose challenges to the protective goals of social policies; thus the financial and programmatic configurations of social policies are often held to have impeded job creation. These arguments over the nature and effects of the relationships between labour markets and welfare systems have been and are intense and need to be further analyzed. These relationships between labour markets and welfare systems constitute the backdrop for this series, which takes as its starting point the tensions that now characterize this centrally important relationship between ‘work and welfare’. Among these tensions, one can mention the tension between the firms’ demands for more labour market flexibility and citizens’ need for economic security; the tensions between the increased participation in paid work and the importance of family life, the greater fluidity in family relationships, and the greater flexibility in the labour markets; the friction between quantity and quality of the jobs to be created, between job creation and maintaining or improving the quality of employment; and finally the conflicts raised

xvi

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RECWOWE Book Series: Work and Welfare in Europe

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by the need to adapt (industrial) social protection systems to new labour market structures. This book series has been created within RECWOWE, a European Network of excellence created within the 6th Framework Programme of the European Commission (FP6). The full title for the network’s activities is ‘Reconciling Work and Welfare in Europe’. Such a reconciliation is an important political objective for most EU member states. In order to meet it we need to improve our understanding of the relationship between work and welfare in very diverse national settings across member states. The RECWOWE series publishes books that analyse work and welfare, and which pay special attention to the tensions that now characterize this relationship. Beyond the four main tensions mentioned above, the series is open to any other forms of analysis of the relationship between work and welfare. It is committed to publishing work that focuses on the gender dimension of this relationship, on the impact of the relationship on migrants, and, on its multilevel – European, national and local – institutional dimensions. Denis Bouget, University of Nantes Jochen Clasen, University of Edinburgh Ana Guillen, University of Oviedo Bruno Palier, Sciences Po Paris

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Funding This book has been published thanks to the European research project RECWOWE (Reconciling Work and Welfare in Europe), 2006–11, cofunded by the European Commission, under 6th Framework Programme for Research – Socio-economic Sciences and Humanities (contract nr 028339-2) in the Directorate-General for Research. The information and views set out in this book are those of the authors and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

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Introduction: The Usages of Europe in National Employment-friendly Welfare State Reforms Paolo R. Graziano, Sophie Jacquot and Bruno Palier

What is the use of EU policy? Does European integration influence national social policies? This book focuses on the relationship between European integration and its effects on national institutional and political settings. The most recent literature has shown that the EU is an important variable by which to understand recent welfare state changes, but it remains relatively unclear precisely how Europe matters. Our project is aimed explicitly at exploring and specifying what the political mechanisms are through which the EU plays a role in domestic social policy changes. How do these various EU initiatives matter at the national level? We contend here that the best way to understand how the EU can influence domestic politics is to look at the way national actors make use of EU resources and constraints. The main goal is to unveil the political games through which European resources and constraints become political opportunities for national actors.

1. National welfare reforms and the relevance of Europe In recent years, various books have been published on welfare state reforms, analysing the ‘retrenchment’, ‘transition’ or ‘survival’ of the welfare state in Europe (Esping-Andersen, 1996; Ferrera and Rhodes, 2000; Scharpf and Schmidt, 2000; Huber and Stephens, 2001; Leibfried, 2001; Pierson, 2001; Sykes et al., 2001; Taylor- Gooby, 2001; Daniel and Palier, 2001; Swank, 2002; Wilensky, 2002). Although this literature emphasizes the pressures of international constraints on the development of welfare systems, very few contributions analyse in detail the role played by the EU in the changes. 1

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2

Paolo R. Graziano, Sophie Jacquot and Bruno Palier

An ample literature has indeed been devoted since the mid-1990s to the assessment of the welfare state crisis in European countries (Jacquot 2008). The main causes that are highlighted can be listed as follows: ●

●

International factors are privileged by some authors as one of the main causes of the welfare state crisis, including: globalization (i.e. Mishra 1999), and/or the new international economic context (i.e. Scharpf, Schmidt 2000). Other authors study primarily domestic factors, including: changes in the labour market organization (such as the passage from an industrial to a service economy, the mass entry of women into the labour market), and/or demographic ageing, changes in the family structure (i.e. Pierson 1998).

In this framework, the possible role and influence of the process of European integration as such is scarcely taken into account as an autonomous factor of change. Then, when it comes to the analysis of the content of recent welfare state reforms in European countries, few references are made to the EU in the literature: the role of the European level tends to be considered as negligible or redundant in understanding welfare state changes at the national level. Analyses of the reforms have focused on institutional constraints and underlined the remarkable continuity and remaining diversity of the European welfare states (Daniel and Palier, 2001; EspingAndersen, 1996; Ferrera and Rhodes, 2000; Huber and Stephens, 2001; Leibfried, 2001; Palier and Martin, 2008; Pierson, 2001; Scharpf and Schmidt, 2000; Swank, 2002; Sykes et al., 2001; Taylor- Gooby, 2001). The literature on this subject agrees on the existence of, at least, three worlds of welfare reforms, each ‘world of welfare’ following its own path of reform: re- commodification in the liberal welfare states; rationalizing recalibration in the Nordic welfare states; updating recalibration in the continental welfare systems (Pierson, 2001). Current reforms are seen as reinforcing the logic of each model. There is little or no evidence of convergence in the solutions adopted by each welfare state (Ferrera and Rhodes 2000). To understand the recent welfare state responses to new challenges, it therefore seems to be more useful to refer to national institutional specificities. A most diffused thinking reads as follows: if Europe had any influence on national welfare reforms, one could witness some convergence of the welfare systems in the member states; however, as studies do not sustain the idea of convergence, European influence is

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Introduction 3

not really meaningful for understanding changes. This position is also supported by institutional elements, by the predominance of the principle of subsidiarity in social matters at the EU level and by the fact that the European Union has no direct competencies relating to the heart of social protection but merely “subsidiary competence provisions” under which intervention is possible only if considered functional for market integration. Against this understanding, an increasing number of authors have pleaded for an inclusion of the European Union in the picture (for a review, see Jacquot, 2008). According to them, in order to grasp all aspects of welfare state transformation, the relationships between the European integration and European and national policies have to be addressed. Traditional analysis tends to focus on the national level to understand the politics of welfare reforms and does not pay sufficient attention to the impact of European integration on the development of social policy at the national level. More precisely, some authors are starting to question the static description of some welfare states, notably the Bismarckian and South European ones (Palier, 2005, 2010; Ferrera, 1996), and call for more comparative empirical research. In fact, insufficient attention has been given to the mechanisms of impact of European policies on the development of social policy in European member states. Despite the fact that in the European context welfare states have become semi-sovereign (Leibfried, 2001; Pierson, 2001), very little research has focused on the interaction between the EU and national social policy developments. Four major contributions stand out as relevant with respect to the impact of Europe on national social policies: Falkner and others (2005); Zeitlin and Pochet (2005) and, more recently, Kvist and Saari (2007) and Heidenreich and Zeitlin (2009). The first study is a very accurate analysis of the implementation of a limited number of Directives in the 15 member states, and it primarily concentrates on examining the “translation” of EU policies (i.e. Directives) at the national level. This project elaborates a typology of “worlds of compliance” (“world of law observance”, “world of domestic politics”, “world of transposition neglect” – and added a fourth one when studying the Central and Eastern European countries, the world of “dead letters”). The second is a very useful comparative research effort aimed at providing information on the impact of the Open Method of Coordination (OMC) on national policies in the fields of employment and social exclusion. This volume, also, is devoted to the implementation of EU policies (OMC) in a large number of EU countries, but it

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Paolo R. Graziano, Sophie Jacquot and Bruno Palier

provides a limited account on the mechanisms of change that occur at the national level. The third contribution consists of an analysis of the developments of national social policies in the light of emerging EU social protection policies (economic and employment policies and the social policy agenda) in numerous European countries. The fourth contribution is particularly focused on the OMC, which is only one of the relevant EU initiatives in the field of social policy, and concludes by stating that the OMC processes, have [ ... ] contributed to bringing Member States closer together by eroding historical institutional differences between them, while at the same time stimulating the continuous emergence of new forms of practical diversity through the creative adaptation of common European principles and policy approaches by domestic actors to suit their distinct circumstances. (Zeitlin, 2009: 234) All these contributions are of great use and interest, but they consider Europeanization primarily as a top- down process and hence they limit their analysis to the impact of European Union policies on national ones, providing limited information on the mechanisms and different patterns of change that have occurred at the national level. The only volume which takes a different approach which is more in line with the one developed here (Heidenreich and Zeitlin, 2009) covers only a limited number of European countries and it is focused on the OMC and not on the other policy initiatives developed at EU level over time. A new wave of literature on the role of the European Union in welfare state transformation has shown that, despite continuity and path dependence, the integration process plays a part in the understanding of national measures of reform. But, most importantly, it has shown that this influence is not necessary direct nor is it strictly limited to legally binding regulations. In our understanding, to be captured, this role has to be put into perspective and the definition of Europeanization of the welfare state reforms needs to be broadened. In the past ten years, the national and the European levels have become increasingly “interwoven” in the field of social protection (Kvist and Saari, 2007). In this sense, the process of welfare state reforms can be considered as Europeanized. Consequently, the question that has to be tackled by the analyst certainly needs to be reformulated: Europe matters, but how does it matter? The aim of the “how question” is to investigate the diversity of the mechanisms of influence of Europe and to insist on variables such as actors and interests, which are sometimes

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Introduction 5

overshadowed, or rather considered as passive intermediary variables, in a literature mainly focused on institutions. Furthermore, in a period when the EU increasingly emphasizes the need to implement “employment-friendly” welfare reforms, when even the conservative corporatist welfare regimes have decided to give up on “labour shedding” and welfare without work strategy (Clegg, 2007; Palier, 2010), it seems particularly relevant to better analyse the linkages between national “employment-friendly” welfare reforms and the EU’s possible inputs and influence.

2. How does EU matter? The usages of Europe and the interactions between the domestic and EU levels In order not to reproduce past analyses of EU influence on social policy, which all started at the EU level and concluded that it was weak, we would rather start from the national level (regarding it as more relevant in understanding welfare reforms) to see whether, where, when and how the EU has been mobilized by national actors during the reform dynamic. We also want to consider cases when the EU itself has constituted a target for national actors’ political action, both in the policy formulation and policy implementation phases. In sum, we want to study the usages of Europe. This approach has several advantages. First, it does not take for granted that EU pressures all have the same effect in various national welfare states. Looking specifically at the national level allows us better to capture the specificity of each national case and to see if, when and how EU policies have entered into the national policy agenda. Secondly, it does not assume a priori that Europe has had an effect (whatever it may be) on national welfare states. Our research is designed in such a way that space for various options is left to empirical study, which may show that European resources and constraints should be counted alongside many other resources and constraints at work at the national level (or at the international level, as in the case of Turkey). Thirdly, the study considers various social policy fields (pensions, employment, social assistance) and, therefore, it provides more information and fewer idiosyncratic research answers than other single-policy-focused studies (such as the OMC) which have flourished over the past years. The usages of EU resources by national actors: a research strategy It cannot easily be contested that the evolution of welfare states and their reform can be understood and explained primarily looking at

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the national level: the origins, the timing, the actors, the political and social conflicts, the specific measures vary from one country to another, even from one sector to another, and have national traits and specificities that cannot be ignored. Hence, it is quite difficult to argue that any national reform in the main areas of welfare (unemployment insurance, employment policies, pension and health care polices, care policies, etc.) has been implemented in any given European country because it was imposed by European institutions. Any attempt to look at the link between Europeanization and domestic welfare reforms with this top- down perspective and asking this type of question (Is Europe the cause of national welfare reforms?) will have a hard time detecting any strong, direct EU influence. As it is well known, there has been no hard law, no Directives in the “traditional” fields of the welfare state (with the exception of vocational training and other employment subpolicy fields) and, in the literature, limited empirical evidence for direct EU influence on national welfare reforms can be found. However, this does not mean that the EU has not played a role in welfare reforms; it simply means that asking a mere ‘top- down’ research question is not particularly useful in the case of welfare reforms. The recent literature on Europeanization and social policy (Zeitlin and Pochet, 2005; Graziano, 2007; Heidenreich and Zeitlin, 2009) shows, however, that there may be some elements of the national reforms linked to European policy trajectories and that these effects vary with respect to different national welfare state traditions (or models or worlds). What emerges from this literature is that the national actors are crucial in implementing reforms supported by European institutions. This is not surprising per se; what is more surprising and interesting is that national actors, more or less suddenly, may support policy structures1 which have not previously been supported by them, and quite often these new policy structures have a clear European flavour. In order to assess the type of influence the EU may have exercised on national reforms, we suggest a different research question; that is, we do not ask whether the national reforms are or are not the ‘implementation of European guidelines or Directives’ (the EU being the independent variable and national reform the dependent one). We want to investigate if, where, when and how national actors have been using EU resources, references and policy developments as strategic devices for their own strategies within the dynamic of national reforms. The basic research strategy is to consider EU policy developments as a set of opportunities and/or constraints for national actors. These actors ‘shuttle’ between the European level and the level on which they act

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Introduction 7

(or wish to act) (i.e. typically the national one), creating a context of interaction and reciprocal influence (Jacquot and Woll, 2003; Woll and Jacquot, 2010). Therefore, the aim is to analyse changes at the national level that result from the process of European integration facilitated by many and diverse actors through many and diverse ways. Such a research strategy makes it possible to correctly place EU actors and strategies in a wider (and more appropriate) context, i.e. where welfare state reforms have always taken – and still take – place. Put differently, in order to better understand the role of the EU in national welfare reforms we want to ask the question raised elsewhere by Jacquot (2008: 21): ‘How do national actors use the tools and resources offered by the process of European integration (formal or informal, binding or non-binding, etc.) to help them in the national dynamics they are engaged in (bargain assets, legitimization, room for manoeuvre, power increase, etc.)?’ This means that what we are considering in the various chapters of this edited volume is not the EU per se, but national “employment-friendly” welfare reforms, following the general assumption that if we take the effect of Europe on the national into account, we can better understand welfare reforms, and especially their common trends beyond diversity. What we therefore propose is to analyse various national reforms and try to identify within national dynamics, national-specific timings and national actors that have used the EU as a tool for formulating, elaborating, defending and implementing welfare state reforms. The proposed approach allows us to look primarily at the mechanisms of recent welfare state reforms through the appropriate lens, since we are considering the political arena where policies are decided and implemented (the national one) and – in case of policy change – we look for an explanation which is not purely based on more traditional endogenous factors. In order to do so, we need to identify: European resources and policies; the role of European institutions; national case policy evolution; different usages of Europe. But first we need to present and discuss the key research hypotheses derived from the literature on Europeanization and welfare state transformation. Membership, relationship and misfit: research hypotheses The general question of this research project is whether and how the EU has contributed to changing national welfare states. The question can be investigated in two different ways. There are two different analytical paths: a) focuses on the transformation of the national welfare state

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regimes and on the usages of Europe as an element to explain this process of change; b) focuses exclusively on the national usages of Europe through the analysis of welfare state reforms. Each option is legitimate and analytically sound but each also carries potential pitfalls. The major risk connected to option (a) is to overlook the EU and the usages of Europe and to only concentrate on domestic welfare state change. To counter this pitfall, it is important always to parallel national developments with EU developments, tracing the most relevant national changes and seeing if any link with the EU level can be found. For this purpose, we will focus on both EU and national trajectories in each country chapter. The major risk connected to option (b) is to take into account only the case studies where the EU has been influential and used by national actors, and to lose sight of the more general picture of the evolution of the national welfare state configuration. Focusing on the usages may also lead to favouring analysis of “positive” examples only. However, cases of failures or “counter- examples” need to be considered carefully since they may help us to better understand the general evolution of national welfare states. Relying on the literature on Europeanization and welfare state transformation, but also on our own research, we have elaborated three specific research hypotheses that will be tested in each national case study. a)

EU membership – RH1: the more “under scrutiny” by the EU the countries are (for example, because they are accessing countries – see Grabbe, 2001), the more probable it is for European Union policies and institutions to be considered seriously and therefore be a fundamental motivation of and/or point of reference for the political behaviour of national actors. In other terms, we would expect national actors to make constant and positive reference to Europe if they operate in accessing countries and few, limited or even no reference in ‘old’ EU members. The idea is to test a “joining the club” effect. EU pressure is stronger when a country is about to become a member of the club (EU, EMU, etc.) or to be seriously threatened with exclusion from it. The policy change consequence of this general hypothesis is that in countries that are the subject of greater “scrutiny” by the EU we expect to witness more domestic social policy changes connected to EU prescriptions. b) Relationship to Europe – RH2: the specific usages of the EU for national welfare reforms depend on the general relationship of each country with Europe. This relationship, and its evolution, includes

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Introduction 9

c)

two sets of elements: the national elite’s attitude towards Europe and national public opinion regarding Europe. Here, the underlying assumptions are the following: if elite and public opinion are in favour of Europe, then usages will be both positive and explicit and we would expect major changes in the examined social policy field; if both elite and public opinion are Euro-sceptic, then there is either no usage or a denial of the usage. The policy change implication is that, in this case, we would expect limited or no “EU- driven” change in the examined social policy fields. There is, of course, a continuum of mixed combinations in between these two ends. Policy fit/misfit – RH3: according to the degree of “policy structure” misfit between the EU and the national welfare regime, the nature of the usages of Europe made by national political actors in national reform processes will range from positive to negative, from using Europe as a legitimating reference to blaming and rejecting it or denying its influence. If there is a total fit, then there is no pressure from Europe, so no usage or claim that the EU has inspired the national orientation of reforms (but there may be a claim of “uploading”, that the national case served as a model at the EU level and for other countries – see the Dutch case in this volume). If there is a small misfit, then there is a probable (limited) EU influence and (possible) usage. If misfit is significant, then we can expect full usage of the EU in those cases where the social cost of reform is high (the so- called “blame avoidance” phenomenon; Weaver, 1986), or we may also see neglect. This final hypothesis needs clearly to be connected to RH1: if there is no or limited public support (elite and/ or public opinion) with respect to the EU, then in case of significant misfit we may witness no usage of Europe which could also be labelled as ´rejection´ or ´resistance´; under the same conditions, if the public support (elite and/or public opinion) is high, then we will expect full usage of Europe.

Elements of interaction: EU resources and EU roles In order to study the usages developed by national actors, it is necessary to articulate their political work with the resources provided by the EU, along with the role played by EU institutions in providing new opportunities and/or constraints to the national actors. Most of the time in the literature, Europe is perceived as a specific constraint which leads to negative integration, limiting national governments room for manoeuvre or sovereignty (Scharpf, 1999; Leibfrid and Pierson, 1995). But the EU has not only provided national actors and

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10 Paolo R. Graziano, Sophie Jacquot and Bruno Palier

welfare systems with new constraints, it has also created new opportunities: ECJ cases, Directives, EC Communications, EES or OMC are full of new resources that national actors might have taken up, translated or shaped in order to follow their own national strategy. Five main types of EU resources can be listed: 1) legal resources (primary legislation, secondary legislation, case law, etc.); 2) financial resources (budgetary constraints but also European funding); 3) cognitive and normative resources (Communications, ideas, etc.); 4) political resources (argumentation, blame avoidance mechanisms, multilevel games, etc.); 5) institutional resources (committees, agencies, etc.). This large range of resources highlights the fact that studying the usages of resources is not synonymous simply with discourse analysis. Ideas – and also actors –circulate between EU and national arenas. But European opportunities and constraints provided by the EU have to be transformed into specific national resources by actors (even the transposition of Directives cannot be reduced to a cut-and-paste process), which implies political work and hence involves power, transaction, framing, conflict, etc. Not all these resources will be relevant in each investigated policy field. Nevertheless, a checklist is very useful for our research strategy; we hope to see, from the national cases, if and how the above-mentioned resources have been used by national actors in order to promote or contrast welfare state reform efforts. In the next chapter, by Caune, Jacquot and Palier, the development of various EU resources are presented and analysed. What has emerged from the literature is that some welfare states – quite distant if considered from a ‘welfare state model’ perspective – have recently used similar resources and arguments (such as the Maastricht criteria, or the necessity to increase employment rate in the EU) in order to reform very different welfare states (Immergut et al., 2006). Therefore, focus on resources and domestic policy change mechanisms may tell us more about recent similarities in political dynamics which can be found in very different welfare state settings. With respect to the negative integration process, looking at these pressures from our perspective should allow us to identify whether, when, where and how reference to EU policies and institutions has been used

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Introduction 11

to justify and frame national welfare reforms. Finally, such a research strategy may help to identify the triggers of emerging European social policies which have a peculiarly ‘national’ story. One of the aims of our research is to better qualify the type of influence the EU has had on employment-friendly welfare reforms by analysing the various effects that EU resources can have. Whether perceived as constraints or opportunities, EU resources will be analysed through their usage by various domestic actors. We also need to understand the role played by Europe in providing specific new opportunities and/or constraints to the national actors. In general, European institutions may play eight different roles (see Sotiropoulos, Chapter 5, this volume): 1) No role for EU in employment-friendly reforms (a possibility to be taken into account); 2) EU as a scapegoat for reform defence (a source of legitimizing arguments for domestic policy changes); 3) EU as a reform- enforcement agent (in the framework of the OMC); 4) EU as a reform coordinator, or reform coach (a rather neutral role linked to the supervision of the implementation of the procedures of coordination instruments like the OMC); 5) EU as a reform catalyst, reform supporter (with respect to pension or inclusion policies; for instance, European institutions have played a more subtle role in providing guidelines which were in line with some of the reforms already implemented in some EU countries); 6) EU as a reform broker (key role in coordination towards agreement on common vision of the problems and solutions); 7) EU as a reform innovator/initiator, agenda setter (with respect to regional funds and employment policy, the case of Italy shows that the reforms which took place in the second half of the 1990s were carried out after EU initiatives were displayed [cohesion policy] or in the context of a greater reform process which was occurring in Europe [EES and employment policy]); 8) EU as a reform taker (with respect to the Growth and Stability Pact, EU institutions had to partially change the “rules” since both France and Germany, between 2004 and 2005, were not able to fully respect the Pact and therefore managed to produce a new, less binding Pact which would provide fewer constraints then the previous one). In some of the case studies presented in this volume, we will investigate what kinds of roles the European institutions have played with respect

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to national policy debates and/or decision-making systems in order to better understand how Europe has mattered. The domestic policy evolution In order to organize the comparative case studies, all the authors have been asked to identify relevant reforms. Authors focus on “employmentfriendly” welfare reforms. By “employment-friendly” welfare reforms, we mean those reforms aimed at increasing activation of social policies, especially employment policies (Bonoli, 2010), and at increasing employment rates – of women (conciliation policies), older workers (active ageing and pension reforms aimed at postponing the retirement age) – and anti- discrimination policies aimed at favouring employment for all.2 Since rendering welfare systems more “employment-friendly” has been the motto of European institutions since the early 1990s (see Chapter 1), we assume that there may have been some usage of Europe in the national reform process. In the various chapters of this volume, analysis of national reforms is structured by the following two series of questions: 1. What are the key features of recent major reforms (from 1990)? Did any specific policy change occur? What policy structure dimensions were involved? In order to be able to assess the quality and depth of change, we consider crucial to disentangle the various dimensions of change in general terms: objectives, principles, financial instruments, procedures. The objectives are the general aims of the policy, the principles are the policy normative assumptions, the procedures regard the policy operational mechanisms (for example, entitlements, governance structure, eligibility) and the financial instruments regard the funding sources. Focusing on these dimensions has allowed us to better understand the degree of change (radical change or transformation if three or four dimensions are involved; limited change or absorption in the case of EU pressures for change if only one or two dimensions are involved; continuity, possibly driven by domestic resistance, in the case of EU pressures for change if no dimension is involved). The need to analyse clearly these dimensions of changes (and the relevant policy dimensions) is not originated by the focus on welfare state change per se, but by the need to be accurate in a) the description of policy change in order to better grasp b) the role played by domestic actors. In other words, the nature of the change may be strongly connected to the national actors’ selective ‘usage of Europe’.

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Introduction 13

2. What is the dynamics of national reform? What are the main explanations provided for national reforms? What are the reforms which can be associated with the UE integration/policies processes? What are the EU policy-based mechanisms in place? The chapters in this volume include information on the dynamics of national reform – that is, information on who the relevant actors have been in the reform processes, what the role of Europe has been and what the nature of the policy conflict was – if there was one – in undertaking reform. Analysing the usages of Europe in national employment-friendly welfare state reforms Finally, by articulating EU resources mobilized at the national level and the specific role played by European institutions in reforms, one aim of this volume is to elaborate a complete list of possible usages of the EU at national level. To understand and analyse the meaning of a reform, an essential element is the political work of actors within a normative system imposing its constraints. Domestic actors are, at the same time, ‘filters and users of European norms and rules’ (Pasquier and Radaelli, 2006), and they are creative in their relation to European norms, opportunities, constraints, rules and discourse: they use them as resources, even in the absence of integration pressures; they re-appropriate and re- define them to advance their own agenda. Some authors have underlined the importance of this “leverage effect” (Erhel et al., 2005; Zeitlin and Pochet, 2005): national actors can use the European opportunities as a toolbox to advance their own interests or agenda, to legitimize their position, etc. Other authors have conceptualized this ability of actors as a specific form of “two-level game”, concerning not only grand intergovernmental bargaining but also the more day-to- day policymaking process (Börzel, 2003; Büchs, 2008). Domestic actors and bureaucracies (especially in the social policy field; see Kröger, 2007) may be creative in their relation to European ideas, norms, opportunities, constraints, rules: they can use them as a resource even in the absence of integration pressures, they re-appropriate and redefine them to advance their own agenda, to legitimize their political preferences, etc. (Jacquot and Woll, 2003). Furthermore, the influence of the European Union may become even stronger if national actors are willing to further support European initiatives. In other words, in order to fully detect the role of Europe it is primarily important to analyse the national political games and preferences and the ways through which

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European ideas, norms, opportunities, constraints and rules have been used by national actors for their own power- enhancement purposes (Jacquot, 2008). Also, actors not only act strategically, they are also transformed by their relation to Europe. In this light, the notion of “usages of Europe” can also be helpful (Jacquot and Woll, 2003; Woll and Jacquot, 2010). It allows to re- equilibrate the strong concentration of the literature on institutional dynamics, leading to an underestimation of the discretion and role of political actors in the adaptation processes. The objective of this perspective is to insist on the role of actors in the concrete translation of European integration effects and the motives for action that can be identified. Paying attention to the role of actors implies study of the mechanisms of appropriation, re-appropriation, engagement and disengagement of domestic actors in the process of European integration. More precisely, the term “usage” covers practices and political interactions, which re- define themselves by seizing the European Union as a set of opportunities – whether they are institutional, ideological, political or organizational. These practices and political interactions happen as actors go back and forth between the European level and the level on which they act (or wish to act), creating a context of interaction and reciprocal influence. The aim is to analyse the changes at the national level, which result from the use of the process of European integration by many and diverse actors (Jacquot and Woll, 2003; Woll and Jacquot, 2010). Usages are categorized according to their functionality and three main types can be distinguished. Cognitive usage refers to the understanding and interpretation of a political subject and is most common in when issues are being defined or need to be discussed; ideas serve as persuasion mechanisms, helping to aggregate interests and to build coalitions of heterogeneous actors. Strategic usages refer to the pursuit of clearly defined goals by trying to influence policy decisions or one’s room for manoeuvre, be it by increasing one’s access to the policy process or the number of political tools available. It is the most common of all types and occurs typically in the middle of the political process, once all stakes are clearly defined. Legitimating usage mixes cognitive and strategic elements and occurs when political decisions need to be communicated and justified. Actors rely on the image of ‘Europe’ to communicate implicit content or employ related discursive figures such as the “European interest”, “European constraint”, or the “application of the Maastricht criteria” to legitimate political choices (Jacquot

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Introduction 15 Table 0.1

Characteristics of different types of usage Resources used

Cognitive usage

Strategic usage Legitimating usage

Cognitive (ideas, data, expertise).

Type of actors

- Political entrepreneurs. - Advocacy coalitions. - Public policy networks. Legal, financial - Institutional and institutional. actors. Political. - Politicians.

Political work - Argumentation. - Framing of political action.

- Resource mobilization. - Justification. - Deliberation.

Source: Adapted from Jacquot and Woll, 2003.

and Woll, 2003). Cognitive usages are generally mobilized during the framing phase of a reform (problem definition, elaboration of policy alternatives); strategic usages are more concerned with the policy- and decision-making phases; legitimating usages are linked with the general public and the justification of the reform. Table 0.1 summarizes the main features of our usages approach. Choice of cases and common outline Ten EU and non-EU countries are compared in this volume: France, Germany, the Netherlands, Greece, Italy, Portugal, the Czech Republic, Sweden, the United Kingdom and Turkey. These countries have been selected in order to be able to test the relevance of our three research hypotheses. They consequently offer a broad representativeness in terms of moment of accession to the EU (old, new or candidate countries), in terms of their general relationship with the EU (elite and public opinion attitudes towards Europe) and in terms of welfare regime (the countries represent the various worlds of welfare regimes present in the EU). All chapters have a common outline divided into three parts. First, a country characterization, in which authors provide background information on the country EU membership (old member, not so old, just accessed, preparing accession); its relationship to Europe and its evolution in time (euro- enthusiasm or scepticism, world of compliance); the national welfare state regime. Secondly, the chapters analyse the national trajectories of employment-friendly welfare reforms in the light of EU initiatives, so that concordance and discordance between the two are made visible. This part tackles the “what” and “when” questions. The

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third part of the chapters focuses on the processes of reforms. This part analyses how national actors have used European resources in order to promote/block welfare state change at the national level. It tackles the “how” and “who” questions. Finally, the conclusion focus on discussion of the research hypotheses and their relevance for the national case in question. At the end of this volume is a final chapter presenting our main common conclusions relating to the research hypotheses, as well as to the usages of Europe in the case of “employment-friendly” welfare reforms.

Notes 1. On the notion of ´policy structure´, see p. 12. 2. There is not a standard list of policies that each chapter should be looking at, but each author has chosen the relevant set of policies that corresponds to the main development in the country under study as well as to our broad definition of “employment-friendly” welfare reforms.

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18 Paolo R. Graziano, Sophie Jacquot and Bruno Palier Pasquier, R., and C. M. Radaelli (2006), ‘Conceptual issues’, in P. Graziano and M. Vink (eds), Europeanization: New Research Agendas (Basingstoke and New York: Palgrave Macmillan). Pierson, P. (1998), ‘Irresistible Forces, Immovable Objects: Post-industrial Welfare States Confront Permanent Austerity’, Journal of European Public Policy, vol. 5 (4), pp. 539–60. Pierson, P. (ed.) (2001), The New Politics of the Welfare State (Oxford: Oxford University Press). Scharpf, F. W. (1999), Governing Europe: Effective and Democratic (Oxford: Oxford University Press). Scharpf, F. W., and V. Schmidt (eds) (2000), Welfare and Work in the Open Economy (Oxford: Oxford University Press). Sotiropoulos, D. (2008), ‘The Role of the European Union in the European Employment Strategy and the Open Method of Coordination’, RECWOWE deliverable paper. Swank, D. (2002), Global Capital, Political Institutions, and Policy Change in Developed Welfare States (Cambridge: Cambridge University Press). Sykes, R., B. Palier and P. Prior (eds) (2001), Globalisation and European Welfare States: Challenges and Changes (London: Palgrave Macmillan). Taylor- Gooby, P. (ed.) (2001), Welfare States Under Pressure (London: Sage). Weaver, R. K. (1986), ‘The Politics of Blame Avoidance’, Journal of Public Policy, no. 6, pp. 371–98. Wilensky, H. (2002), Rich Democracies: Political Economy, Public Policy, and Performance (Berkeley: University of California Press). Woll, C., and S. Jacquot (2010), ‘Using Europe: Strategic Action in Multi-Level Politics’, Comparative European Politics, vol. 8 (1), pp. 110–42. Zeitlin, J. (2009), “The Open Method of Coordination and reform of national social and employment policies: influences, mechanisms, effects”. In M. Heidenreich and M. Zeitlin (eds), Changing European Employment and Welfare Regimes: The Influence of the Open Method of Coordination on National Reforms (London: Routledge), pp. 214–45. Zeitlin, J., and P. Pochet (eds) (2005), The Open Method of Coordination in Action: The European Employment Strategy and Social Inclusion Strategy (Brussels: PIEPeter Lang).

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1 Social Europe in Action: The Evolution of EU Policies and Resources Hélène Caune, Sophie Jacquot and Bruno Palier

Introduction The question common to the various chapters of this book is whether and how the European Union (EU) has contributed to employmentfriendly welfare reforms. In order to investigate the mechanisms which cause the various EU initiatives to matter at the national level, we have chosen to concentrate on the national ‘usages of Europe’ (see Graziano, Jacquot and Palier, introduction to this volume; and for a general presentation of this analytical approach see Woll and Jacquot, 2010). From this perspective, analysing the way EU resources are used at the national level first requires analysing what kind of resources the EU can provide national actors with. The aim of this chapter is to provide a panoramic view of the resources provided by the EU to national actors in the field of employment and social policies. We distinguish five different types of EU resources: legal (treaties, Directives, case law from the Court of Justice); financial (European Funds); institutional (European foundations, observatories, committees, agencies); political (especially European Councils); and cognitive (guidelines, statements, White Papers). In order to describe them as exhaustively as possible, and to analyse their changing nature, we will trace their emergence and development over time. The structure of the chapter is based on the sequenced construction of European social policies and the identification of their instruments. Three main sequences in the EU approach to social and employment policies can be differentiated.1 A first sequence runs from the early construction of the European Economic Community (EEC) to the mid 19

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1980s. During this period, member states were participating in the construction of the Common Market but, at the same time, wanted to keep their national sovereignty over social policies. The European level of policymaking was concerned with implementing the principle of the free movement of goods and workers. Governments wanted to make sure that European institutions would not interfere with their social policies, but also that the construction of the European market would not lead, in social terms, to a race to the bottom. Hence, the Treaty aimed at supporting the free circulation of workers through the coordination of social security regimes, at establishing common norms to allow “fair” competition (Articles 117 and 118 but also Articles about equality of treatment), and the Structural Funds were designed to help the poorest regions to catch up, instead of pulling others down. In a second sequence, that covers the end of the 1980s and most of the 1990s, European policies deepened the creation of the market, multiplying the decisions that could indirectly affect welfare policies. With the implementation of the Single Market and, moreover, with the introduction of the Maastricht criteria, the European Community adopted a new monetarist approach to economic policies that pushed for national welfare retrenchment. National levels of policymaking had to face the growing contradiction between national social policies and European economic policies. National social policies, which remained demand driven, were increasingly at odds with European supply side economic policies. The third sequence can be understood as a reaction to the previous strong economic focus of European integration during the second phase. An increasing social preoccupation led national and EU actors to incorporate more reference to employment (Title VI of the Amsterdam Treaty) and favour an EU coordination of national employment policies. In fact, European social policies developed towards non-binding mechanisms. The development of non-binding policies at the European level has maintained national autonomy in the social field but they have nevertheless been increasingly constraining politically. This chapter shows that European institutions have progressively engaged in a broader range of different social policy fields (freemovement of workers, health and safety at work, equal treatment, employment and employability, social inclusion, pensions and health). Meanwhile, European resources provided by the European level of decision-making have varied over time, and national governments have had to adapt to this evolution. In the following sections, we analyse the main traits of each of the three identified sequences. For each sequence,

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a table identifies the specific resources (legal, financial, institutional, political and cognitive) linked with the social domains developed in at the European level (Tables 1.1, 1.2 and 1.3). The final table (Table 1.4) sums up the link between policy goals and policy domains and instruments and clarifies the rationale of the European policy.

1. 1957–early 1980s: European market, national welfare policies a. The construction of the common market and the remaining social sovereignty From the Treaty of Rome (1957) to the economic crisis of the early 1980s, EU activities and competences were restricted to the implementation of the Common Market. The distinction between European and national policymaking was relatively clear- cut. In the post-war context of the beginning of European integration, the construction of the Common Market was seen as a tool to sustain economic growth as well as to foster social progress. In 1957, the founding members were already engaged in the construction of their welfare systems and aimed at keeping their social sovereignty (Ferrera, 2005). The first six countries of the European Community shared a preference for the safeguarding of national autonomy in the social field. Article 118 of the Treaty of Rome states that the social field – that is, areas such as employment, labour law and working conditions, basic and advanced vocational training, social security, prevention of occupational accidents and diseases, occupational hygiene, the right of association, and collective bargaining between employers and workers – is based on close and unanimous cooperation between the member states. All in all, national legislation that might have an impact on the free movement of workers was the only field to be directly affected by the construction of the Common Market, so that this principle in the treaty could be implemented. In this first sequence, Regulations on the coordination of social security regimes were adopted, as well as several Directives aimed at harmonising social security conditions and ensuring that free movement would indeed be possible for workers and their families. b. The Common Market as a tool to foster social progress The preamble to the Treaty of Rome explicitly mentions that the member states of the EEC are devoted to ‘the constant improvement of the

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living and working conditions of their people’. Article 117 of the treaty refers to the promotion of improved living conditions and to the ‘harmonisation of social systems’. The common welfare specificities shared by the six founding members may have made this objective possible. Indeed, the continental European countries belonged to the same type of welfare regime, the “conservative- corporatist” one (Esping-Andersen, 1990; Palier, 2010). In all these countries, social insurance is traditionally funded by workers’ contributions and benefits are “contributory”. Harmonising social protection could have been done through a similar rate of social contribution and similar replacement rates for the various benefits. This has however been postponed until each country has itself harmonised its own welfare system. In the meantime, the discrepancies between the levels of welfare provided in the six countries were a concern to those with the most developed levels of social protection, especially France. Certain founding members feared that open markets would entail competition over labour costs and would finally lead to a “race to the bottom” between the welfare systems of the EEC (Moravcsick, 1998, p. 114, 121). To ensure that the establishment of the Common Market would not damage social security systems at the national level, several measures were put in place: coordination of social security systems; Articles 117 and 118; equality of treatment; the European Social Fund. Such policy instruments were implemented so that strengthening the market would enable countries “lagging behind” to catch up, instead of creating a “race to the bottom” between national welfare systems. In 1973, the first enlargement of the EEC (United Kingdom, Ireland, Denmark) raised new fears about “social tourism” opportunities. While both the UK and Ireland have a liberal welfare regime, the Danish system is social democratic (Esping-Andersen, 1990). In the liberal or social democratic systems, social benefits are mainly funded by taxes and are not tied to previous contributions or to socio-professional category. The newcomers (especially Denmark) feared a “social tourism” in which citizens from other member states could come and take advantage of their welfare state. Residency in a new member state was hence limited and required minimum financial resources. Thus, the European principle of free movement has been restricted to workers (or individuals with sufficient resources) instead of being applied to every citizen. Meanwhile, the idea of harmonising social protection became less envisioned because of the diversity of welfare models now present within the EEC. The will to harmonize mainly involved working conditions. To implement the principle of the free movement of workers,

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some of the national regulations on working conditions needed to be harmonized. In the mid-1970s, several Directives were adopted to make national working condition legislation more compatible. The idea was to adjust the regulations (without undermining them) to allow for a greater circulation of workers while ensuring that competition leading to less social provision would not occur. Health and safety at work was thus targeted. Several Directives were implemented to prevent workers being exposed to dangerous products. In 1974, the EEC started to go beyond regulation alone to propose action programmes. The first Social Action Programme had three policy objectives: the improvement of living and working conditions; full and better employment; and the increased involvement of employer and employee representatives in the economic and social decisions of the Community. Following this political commitment, the European Centre for the Development of Vocational Training (Cedefop) and the European Foundation for the Improvement of Living and Working Conditions (Eurofound) were set up in 1975. In 1981 and 1986, the EEC was enlarged to include three Mediterranean welfare states. Although they shared some characteristics with the conservative- corporatist model, Greece, Spain and Portugal had their own specificities: pensions constituted the main public expense but family and unemployment policies were hardly developed (Ferrera, 1996). To allow these new member states to catch up, the EEC created or expanded a series of instruments to harmonize economic and living conditions: not only the European Social Fund but also regional policy, which relies on structural and cohesion funds. As economic growth was also stimulated by European funds, no “social dumping” occurred in the new member states. The southern enlargement of the EEC fostered economic growth in the new member states (Guillén, Palier, 2004). The Single Act (1986) extended the use of qualified majority voting and thus gave a new momentum to European social policy. Social dialogue was developed and the role of trade unions in European policymaking was recognized. During this first sequence, the development of a Common Market was seen as a complement to national policymaking. The EEC was expected to stimulate economic growth which would preserve the highest possible level of welfare in each of the member states. The European Common Market and national welfare policies thus developed simultaneously but independently, even if economic and social policies reinforced each other. Member states maintained their social sovereignty. However, in the early 1980s, the economic crisis and rising

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24 Hélène Caune, Sophie Jacquot and Bruno Palier Table 1.1

European resources (1957–early 1980s)

Policy domains

Policy instruments (type of resources) European resources Rationale

- Regulations on the - Abolition of restrictions on application of social movement and residence for security schemes to workers and their families. employed persons - Social security for migrant workers. and their families moving within the - Non- discrimination over access to vocational training. Community (e.g. 1408/71/EEC). - Directives (e.g. 64/221/EEC). - Regulations (e.g., 1612/68/EEC) on the coordination of special measures concerning movement and residence. - Case law (e.g. Royer 48/75; Gravier 293/83) Health and Legal - Directive on risks - Harmonisation of the law to strengthen the functioning of safety at work linked to exposure the Common Market. to chemical, - Improvement of laws to physical, and biological agents at protect workers (prevent work exposure). (e.g. 80/1107/EEC). Institutional - European - Introduction and planning Foundation for of better living and working the Improvement conditions. of Living and - Evaluation and analysis of Working Conditions working conditions. (Eurofound) (1975). - Advice to policymakers and stakeholders. Equal pay and Legal - Directives on equal - To promote equal pay for equal treatment pay and equal equal work. between men treatment (e.g. - To combat discrimination and women 75/117/EEC; 76/207/ over access to employment, EEC). promotion, vocational - Case law (Defrenne training and working 43/75; Hofmann, conditions, or social security. 184/83; Jenkins, - to promote maternity leave 96/80). and equal pay. Financial - European Social - to support the entrance Fund. of women into the labour market, training and reconversion. Free movement of workers

Legal

Continued

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Continued

Policy domains

Policy instruments (type of resources) European resources Rationale

Institutional - Advisory - to promote equal Committee on equal opportunities for women and opportunities for men. women and men - to encourage the exchange of (1981). relevant experience, policies and practices between the member states and the various actors involved. Employment and Financial - European Social - to improve job opportunities employability Fund. in the Community by - European Regional promoting employment and Development Fund increasing the geographical and occupational mobility of (1975). workers. - To “compensate” for job losses and help workers in restructuring sectors. Cognitive - Social Action - Promotion of full and better Programme (1974) employment. - Improvement of living and working conditions. - Increased involvement of management and labour in the economic and social decisions of the Community. Skills Legal - Decision on - Implementation of a common vocational training vocational training policy. (63/266/EEC). - Non- discrimination over - Case law (Gravier, access to vocational training. 293/83). Institutional - European Centre - Promotion and development for the of vocational education and Development of training. Vocational - Provision of scientific and Training (Cedefop) technical know-how and to (1975). promote exchanges of ideas between partners. Mobility Legal - Directives - Measures to alleviate the on collective consequences of redundancy redundancies for workers. and employers - To safeguard employees’ insolvency (75/129/ rights in the event of transfers EEC; 80/987/EEC). of undertakings. - Protection in case of employers’ insolvency.

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26 Hélène Caune, Sophie Jacquot and Bruno Palier

unemployment rates constituted further steps toward a new phase in the relationship between domestic welfare states and the EEC. In the following sequence, tensions developed because the economic sphere started to have the upper hand over the social field.

2. 1980s–mid-1990s: the negative integration In the 1980s and the most part of the 1990s, the EEC developed European labour negotiations and some Directives on labour laws. It published Directives on health and safety at work, as well as on equality of treatment. The Treaty of Maastricht introduced a protocol on social policy, whose aim was to promote employment, improved living and working conditions, social protection, dialogue between management and labour, and the development of human resources. But the new thrust of European economic policies, prompted by the economic difficulties of the 1980s and 1990s, and changes in many European national governments, came to be increasingly at odds with national welfare policies. The establishment of the Common Market and the impact of the single currency indirectly affected the domestic levels of decision-making in the social policy domain. During this sequence, the knock- on effects of negative integration2 on national welfare systems opened and provoked tensions. From a national perspective, such constraints led to cost- contained welfare policies and welfare retrenchment measures. For national policymakers, the EEC became the main scapegoat for various difficult welfare reforms. a. The Maastricht criteria as a new economic policy regime During the 1990s, European economic integration changed the general economic context in which social policies were implemented. The single market altered the economic environment of welfare states. In many countries, welfare transfers and services started to be portrayed as a burden on companies and states that tried to compete in the new integrated Single Market. Passive and costly welfare programmes were increasingly denounced as impeding the competitiveness of firms and countries in this new context. Recognition and response to these issues is said to require a radical adaptation of welfare states. This adaptation implies not only policies of retrenchment in social policy but also a general change to render it more market- and employment-friendly. This shift has sometimes been theorised as a global shift from the typical Keynesian welfare state, where social policy is seen as favouring consumption and growth, to a

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‘Schumpeterarian workfare state’, aimed at strengthening the competitiveness of national economies and at subordinating welfare policy to the demands of flexibility (Jessop, 1994). In the same vein, the Maastricht treaty should not be seen as imposing only technical criteria for the single currency. It also meant that all the European countries accepted a profound shift in the economic policy paradigm. The basic policy goals have become a sound public budget, limited debt, and a low inflation rate (which means both wage moderation and stabilisation of the level of social contributions). Deregulation, increased competition, the limitation of budgetary and state deficits, low inflation: these elements associated with the Single Market and the single currency correspond to a coherent (neo-classical) economic vision, based on supply side economic policies, which promote free competition and budgetary restriction. With the Single Market and currency, the main goal of macro- economic policy definitively changed from fighting unemployment (through reflation policy) to fighting inflation (though monetarism and strict budgetary policy). As shown by Scharpf, ‘The Maastricht criteria for joining the Monetary Union have practically eliminated deficit spending as a policy tool; and the realization of the Monetary Union has completely removed monetary policy and exchange rate policy from the control of its member states’ (2002: 88). All in all, the development of economic agreements at the European level constrained the room for manoeuvre in the social field at the national level. Pierson and Leibfried (1995) have shown that, in this context, national welfare states became “semi-sovereign”, meaning that European integration processes have tightened national sovereignty, especially member states’ ability to control the social field. Scharpf speaks about “negative integration” (1999) and explains how the construction of the Common Market has finally changed member states’ ability to control their public policies and has led national governments to implement retrenchment policies and more market-friendly welfare reforms. Major welfare reforms in the member states were implemented during the 1990s. Such reforms challenge strong national – and electoral – constituencies and are hence politically difficult (Pierson, 2001). All over Europe, the difficult domestic welfare reforms of the 1990s were often presented as a counterpart to the Maastricht criteria (Palier, 2010). They contributed to deepening the gap between European citizens and the European political project. The ‘permissive consensus’ (Key 1961:32–35; Inglehart, 1970), which might be understood as a relative lack of public

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interest in European integration, was replaced by a ‘constraining dissensus’ (Hooghe and Marks, 2009). This change led national leaders, as well as European institutions, to develop new ways of cooperation and interaction. However, in the early- and mid-1990s, cooperation in the social field still remained a rather marginal element in EU policies. Suitable policy tools acceptable to both the member states and the Commission were lacking. Whilst the former systematically called for the application of the subsidiarity and proportionality principles, the latter underlined the need to modernise social protection systems (Falkner, 1996). From the mid 1990s onwards, new procedures and tools have been invented that allow the EU to intervene more in employment and social issues. b. The political need for a more social Europe: the call for employment-friendly welfare systems During national debates on the adoption of the Maastricht treaty, many European governments discovered that European integration was not always perceived as a good thing by their citizens, who saw only economic constraints rather than social advantages in European integration. In these circumstances, some European actors tried to promote a more social Europe, which aimed at favouring full employment in a period of economic recession (1992–1993) in order to increase its legitimacy. Jacques Delors’ White Paper, Growth, Competitiveness and Employment, published in 1993, tried to link European macro- economic policy with welfare reforms aimed at rising employment levels. In September 1993, the European Employment Initiative was launched by the European Socialists. Influenced by its Nordic members, it attempted to rework the Delors White Paper and to connect issues of welfare and employment better (Wincott, 2003). In similar circumstances, the Directorate- General for Employment and Social Affairs (named DGV before the Commission reform) had two recommendations on social protection adopted by the European Council in 1992. The first concerned sufficient resources and social assistance in social protection systems. The second proposed a convergence of social protection objectives and policies, aimed at ‘improving and modernising national social protection systems’.3 This second recommendation began promoting the reduction of ‘social burdens’ (i.e. social contributions) on firms in order to make social protection more employment-friendly and to move from a passive to an active social policy framework. As for employment policies, the idea of using the classic European method of integration was given up in favour of a

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softer approach, elaborating common objectives for different national policies. Following these orientations, heads of states and governments met in Essen (Essen European Council on Employment) in 1994 and defined five main lines of convergence for national employment policies: the improvement of employment opportunities; increasing the employment intensity of growth; the development of active labour market policies; targeting of measures to re-activate the long-term unemployed; and a reduction in non-wage labour costs to encourage employers to hire lowskilled workers (de la Porte and Pochet, 2002). The European Council in Essen stressed the need to promote investment in vocational training, to make growth more employment-intensive by reducing indirect labour costs and increasing the effectiveness of labour market policy. It was also committed to reinforcing the fight against risks of exclusion from the labour market. These new directions fitted in with previous and current reforms in liberal or social democratic countries, but were in opposition to conservative- corporatist welfare reforms, which were engaged in “labour shedding strategies” (Esping-Andersen, 1996; Palier, 2010). However, until 1997, no real effort was made at the European level to follow through on these new strategies.

3. Late-1990s and onwards: coordination and competition of national welfare policies Since the late 1990s, the EU has increasingly been developing its activities in the social field. In 1997, the Commission proposed important communications to modernise social protection. The Treaty of Amsterdam (1997) introduced a new Title on employment and stressed the full employment objective of the EU. The new Title articulated the links between European economic and social policy and required that employment policies developed at the national level fit with the Broad Economic Policy Guidelines defined in Article 99.2. Article 3 of the treaty included a coordinated strategy to support employment. Article 2 inscribed equal opportunity as a mainstream policy. Article 13 addressed anti- discrimination measures, including gender issues. In the context of the coordinated strategy for employment, specific mechanisms such as the European employment guidelines, annual country reports and Council Recommendations were instituted (Article 128). National competencies in the field of employment policies remained but the Amsterdam treaty offered some room to develop a coordinative employment strategy. Article 127 and 129 defined information

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30 Hélène Caune, Sophie Jacquot and Bruno Palier Table 1.2 European resources (1980s–mid-1990s)

Policy domains

Policy instrument (type of European resources) resources

Free movement Legal of workers

- Regulations and Decisions amending Regulation 1408/71/ EEC on the application of social security schemes to employed persons and their families moving within the Community. - Case law (Kempf, 139/85; Meints, 57/96; Sala, 85/96). Cognitive - Charter on the fundamental social rights of workers (1989). Health and Legal - Directives on security at work the risks linked to exposure to chemical, physical, and biological agents at work (83/477/EEC; 91/322/EEC). Directives (88/599/ EEC), Regulations (3820/85/EEC) and Decisions on the harmonisation of road transport. - Directives on health and safety in the workplace (89/391/ EEC; 89/654/EEC) and for the use of work equipments (89/655/EEC). Institutional - European Agency for Safety and Health at Work (1994).

Rationale - To promote the free movement of workers. - To provide social security for migrant workers. - To provide family and unemployed benefits for migrant workers.

- To ensure social rights regulate the Common Market.

- Harmonisation of the law to strengthen the functioning of the common market. - Improving the laws to protect workers (prevent exposure to dangerous products and strengthen the safety of work equipment).

- To improve working life conditions. - To promote a risk prevention culture. Continued

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Table 1.2 Continued

Policy domains Equal treatment and equal pay

Policy instrument (type of European resources) resources Legal

Financial Political Employment and employability

Financial

- Directives on equal treatment for men and women in occupational social security schemes (86/378/EEC). - Directive (96/34/ EEC) on parental leave and Decision (95/419/EEC) on maternity leave. - Case law (Kaufhaus, 170/84; Dekker, 177/88, Barber, 262/88; Kalanke, 450/93). - European Social Fund. - European Council in Essen (1994). - Maastricht criteria.

Political

- European Council in Essen (1994).

Cognitive

- White paper on Growth, Competitivity and Employment (1993).

Rationale - To promote equal pay for equal work. - Promotion of gender equality. - Protection regarding sickness and maternity insurance. - To promote equal treatment in occupational pension schemes.

- To support training and conversion for women.

- To promote competitiveness for growth and employment. - To improve employment opportunities. - To increase the employmentintensiveness of growth. - To make work organization more flexible. - To define wage policies which encourage job- creating investments. - To promote initiatives at the regional and local level. - Growth, competitiveness and employment to be seen as mutually reinforcing. - To promote labour-market efficiency. - To encourage investment in human resources. - To make taxation and social protection systems more employment-friendly. Continued

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32 Hélène Caune, Sophie Jacquot and Bruno Palier Table 1.2 Continued

Policy domains

Policy instrument (type of European resources) resources

Skills

Financial

Mobility

Rationale

- European Social Fund.

- To invest in training and human resources. - To support the inclusion of specific groups in labour markets (young and old workers, women). Institutional - European - To develop education and Employment training systems. Observatory (1989). - To promote the development of individual skills. Legal - Directive on - To promote the right to European Works information and consultation Council (94/45/EEC). on company decisions. - Directive on the - Provision of information to organization of employees in the employment working time relationship. (93/104/EEC). - Directive on information and consultation of workers (91/533/ EEC).

exchange processes to encourage cooperation between member states. A Committee on employment issues was planned under Article 130, whose role was to assist the Council in the coordination of national social policies. The Treaty of Amsterdam also constituted a further step in the strengthening of social dialogue: Article 132.2 distinguished two types of agreement: on the one hand, agreements implemented by a Directive; on the other hand, “autonomous” agreements implemented at the national level. Article 141 (ex-article 119) was recast and merged the contents of social policies agreements. A specific judicial framework was created (Article 141.3) in the field of equal opportunities and equal treatment at work. In addition, the social protocol annexed to the Treaty of Maastricht (with opt- out clauses for the UK) was integrated into the Treaty of

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Amsterdam. All measures containing a special UK opt-out have been revised to bring this country into line with its European partners. All in all, the Treaty of Amsterdam allowed European social policy to have more unity and consistency. In the following paragraphs, we will first analyse the political conditions under which social policies came explicitly onto the EU agenda, before analysing the “soft procedures” that resulted in 1997 and 2000, and concluding with the most recent development: the Open Method of Coordination (OMC). a. A ‘race to the social’ It is the deepening of the competition over welfare issues between “economically- oriented” actors and “socially- oriented” European actors that has increased the involvement of European institutions in social policies. While most of the literature on the spill- over of European economic integration into social policies foresaw a ‘race to the bottom’, very few predicted a competition over competence in social fields between different European organisations, leading to innovation in European social policy orientation and practices. In the field of employment policy, as well as in the broader field of social protection, “economicallyoriented” actors tried to pre-empt the definition of policy orientation so that welfare reforms would conform to their own economic nostrums. “Socially- oriented” actors reacted in alarm, lobbying national governments and promoting an alternative social policy orientation.4 By the end of the 1990s, national governments were more favourably oriented to social policy and reacted positively by launching new European social strategies but with an intergovernmental form. b. Towards an European employment strategy After the Essen summit, the Directorate- General for Economic and Financial Affairs, (previously called DGII), seized on the European Council’s new interest in employment policy to promote its own (neoliberal) views on these policies. Often, DGII added a paragraph on employment to the Broad Economic Policy Guidelines they proposed. In this document, they asked for more flexibility, denounced the disincentive effects of social benefits, the rigidities of labour legislation, etc. Meanwhile, in some reports, the Economic Policy Committee (EPC) was asking for more flexible labour markets and more liberal employment policies. The risk was that Europe would promote neoliberal employment policies in line with the development of the Single Market.

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In reaction, DGV (the current DG Empl) tried to counteract these trends by juxtaposing the term ‘security’ with ‘flexibility’ in Commission texts. Meanwhile, it lobbied national governments to make employment an explicit, positive goal of the Union. DGV claimed that, otherwise, national Ministers of Employment would be stripped of their role by the Council of Economic and Finance Ministers (Mandin, 2001). Such proposals met a favourable political juncture: newcomers to the EU (Austria, Finland and Sweden joined in 1995) had pro-social policy traditions. Meanwhile, left/social democratic governments were increasingly numerous across Europe. In this context, a new chapter on employment was included in the Amsterdam treaty, so that Europe explicitly recognised the goal of full employment. In June 1997, the recently elected French socialist Prime Minister, Lionel Jospin, pressed European countries to take action in this field, even before the treaty was adopted. An exceptional summit on employment was organised in Luxembourg in November 1997 to launch the European Employment strategy (EES). Since the Amsterdam treaty was not yet adopted, all the processes it launched were purely voluntary. c. Competing for the definition of welfare reforms The same kind of process occurred in social protection. With the adoption of the Maastricht criteria, and afterwards the Growth and Stability Pact, European “economically- oriented” actors (especially DGII and the EPC) believed that they were responsible for guaranteeing that member states balanced their budgets. The Pact asserted that a stable single currency needed sound public finance. Economic actors promoted an extensive version of the Pact, imposing the view that public expenditure had to be controlled or even reduced for the sake of a stable Euro. Multiple reports and studies from the ECP committee and DGII showed that, for many European countries, public spending increased most for health and that increased ageing would soon cause a sharp rise in public pension expenditure. They started to suggest “structural reforms” of health and pension systems (especially for continental European countries, whose social protection expenditure was among the highest and the least controlled). These reforms often meant a partial privatisation of health and pension systems.5 In reaction, members of DGV argued that, left to themselves, these European dynamics would lead to the dismantling of national welfare systems and the demise of the European social model (Mandin, 2001). In July 1999, just before it resigned, the Santer Commission adopted a communication proposing, ‘a concerted strategy for modernising

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social protection’ aimed at combining economic efficiency with social justice.6 In this context, Portugal prepared its presidency of the Union (for the first half of 2000) and convinced European governments that national welfare reforms should be coordinated through a balanced compromise between economic requirements and social objectives. In March 2000, during the Lisbon summit, the principle of the Open Method of Coordination was adopted, with implementation planned in several fields, including social protection (pensions, social exclusion/ inclusion, making work pay, health care). Since the late 1990s, employment policies (1997) and social protection (2000) have thus been formally included in European competences. d. The Lisbon strategy and its reform: a global strategy for economic and social issues towards employment-friendly welfare states The compromise between economic constraints and social objectives was reached at the Lisbon Council in 2000, and shared by the member states. The Council set a strategic objective to make the EU ‘the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment by 2010’.7 This agreement illustrated the compromise between economic and social objectives and resulted in the Open Method of Coordination (OMC), a collection of soft law mechanisms that sustain the coordination of national welfare policies. From a policymaking perspective, the OMC is an attempt to elaborate a European orientation, while respecting national sovereignty. Its goal is to articulate the European and national levels of policymaking through a new multi-level governance arrangement and to achieve a cognitive harmonization: the europeanization of a social policy paradigm (Radaelli, 2003). The OMC works by choosing common goals and objectives, setting guidelines and timetables to achieve them, establishing quantitative and qualitative indicators to help in their diffusion and in making comparisons between national policy results. These guidelines are then supposed to be translated into national or regional policies, which are, in turn, evaluated in order to promote organizational learning and cross-national policy transfer. Although they do not rely on traditional binding mechanisms, social policies have hence been introduced into the European agenda. While doing so, the content of the policy proposals has clearly been oriented towards increases in employment rates, activation and rendering welfare states more employment-friendly.

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36 Hélène Caune, Sophie Jacquot and Bruno Palier

The Lisbon strategy has quickly been criticised, especially because the targets were too ambitious. However, it is still striking that such agreements have been reached despite the wide spectrum of national employment policies and the diversity of welfare regimes across the EU. In 2004, a high-level group, presided over by Wim Kok, was given the task of evaluating the strategy at its mid point. The evaluation of the average economic progress stated critically: ‘there is no room for complacency. Too many targets will be missed. Europe has lost ground to both the US and Asia and its societies are under strain.’8 The Kok report (as well as other economic assessments during the same period) acknowledged that ambition was needed more than ever but argued that the approach relied on strategic goals which were too broad: ‘Lisbon is about everything and thus about nothing. Everybody is responsible and thus no one.’9 The goals still commanded a wide consensus but the “non- constraining” method was criticised. In Spring 2005, judging the results as “mixed”, heads of state and government chose to refocus priorities on growth and employment and decided to streamline the Lisbon process. The reform of the Lisbon strategy (Lisbon II) thus mainly relied on a focus on growth and jobs, instead of extending the EU’s strong concerns about sustainable development or social issues, such as poverty and inclusion. The relative failure of the Lisbon strategy was also due to excessive complexity and an inadequate process with respect to the policy instruments used at the European level. The lack of political commitment on the part of member states was regarded as a major shortcoming.10 Accordingly, the revised Lisbon strategy stressed the importance of national ownership and adopted a more tailor-made, bottom-up approach (such as the National Action Plans evaluated by the Commission on a yearly basis). The Kok report recommended that the Commission name the countries with the most difficulties, recommendations, or delays but this solution was not officially adopted. President Barroso said that the aim of the Commission was to be a partner of the member states rather than a schoolmaster. However, naming and shaming strategies were finally reversed: instead of naming the countries which encountered most difficulties with their structural reforms, the Commission preferred to name the countries that did well according to European criteria. The Commission services and Council groups (for instance, the Lisbon Methodology Working Group - LIME) have evaluated member states on a yearly basis. These evaluations constitute the basis of their recommendations to member states. They address the progress of structural reforms, according to the Broad Economic Policy Guidelines and

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integrated guidelines, as well as being in line with national programmes and contexts. Thus, even indirectly, the Commission has organized what can be defined as a cognitive and normative competition between European welfare systems. In 2005, the reform of the Lisbon strategy launched the last cycle of the Lisbon strategy until 2010. The yearly evaluation cycle was normalized but the strategy, which was supposed to end in 2010, had to be renewed. In March 2010, the Commission therefore proposed a renamed strategy – Europe 2020 – which is labelled ‘a strategy for smart, sustainable and inclusive growth’.11 This new strategy puts forward three mutually reinforcing priorities: smart growth (an economy based on knowledge and innovation); sustainable growth (the promotion of a more resource efficient, greener and more competitive economy); and inclusive growth (a high- employment economy delivering social and territorial cohesion). All in all, the 2000 European economic and social strategy (Lisbon Strategy) was limited on growth and jobs in 2005 (Lisbon II). It has been expanded, however, for 2010 and includes more themes such as social inclusion and poverty, research and development, and sustainable development. Nevertheless, the policy instruments have not been reinvented but redefined once again. Europe 2020 relies on two pillars. First, the thematic approach, which combines priorities, headline targets and country reporting and is designed to help member states to develop their strategies for a return to sustainable growth and public finances. Secondly, country-specific recommendations are addressed to member states to sustain their reform processes (Article 148). Policy warnings (Article 121.4) can be issued in cases of inadequate response. The economic and financial crisis that began in 2008 is an important element in the Communication of the Commission on Europe 2020. Getting out of the crisis is considered to be the immediate challenge but the biggest one is avoiding a return to the pre- crisis situation. In other words, it seems that the Commission is using the crisis as an argument to legitimize the reforms at the national level. The 2020 strategy also proposes an EU employment and skills “flagship initiative” called, ‘An Agenda for New Skills and Jobs’. This consists of the modernization of labour markets by facilitating labour mobility and the development of skills throughout the lifecycle with a view to increasing labour participation and better matching labour supply and demand. Since the late 1990s, the relationship between European integration and national welfare policies has developed towards “co- opetition” of European welfare protection systems (that is, the articulation of

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Table 1.3 European resources (since the late 1990s)

Policy domains

Policy instrument (type of resources) European resources

Free movement Legal of workers

Health and safety at work

Legal

Coordination Legal of social security systems

Rationale

- Decisions (e.g. 99/370/ - Provision for access EEC) amending to health care during Regulation 1408/71 a temporary stay in a on the social security member state. schemes of workers. - Harmonisation of - Directive on safeguarding the recognition of the supplementary qualifications and pension rights of migrant competences. workers (98/49/EEC). - Decision introducing a European health insurance card (2003/751/ EEC). - Directive (2005/36/ EEC) and Decision on a framework for the transparency of qualifications and competences (2241/2004/ EEC). - Case law (Graf, 190/98). - Directives on the risks - Protection of the safety linked to exposure to and health of workers. chemical, physical, and - Social protection of biological agents at work workers and provision (e.g. 98/24/EEC). of services. - Case law (Simap, 303/98; Jaeger, 151/02; Rüffert, 346/06) - Regulation on the - To improve the free coordination of social movement of people. security systems - To improve standards (883/2004/EEC). of living and conditions of employment. - To provide equal treatment for workers under different national laws. - Workers retain the rights and the advantages acquired and in the course of being acquired. Continued

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Table 1.3 Continued

Policy domains

Policy instrument (type of resources) European resources

Rationale

Institutional - Social Protection Committee. - Committee in the area of supplementary pensions.

Equal treatment and equal pay

- To adapt to the changing world of work, new family structures and the dramatic demographic changes of the forthcoming decades. - To find solutions to the problems and obstacles associated with cross-border mobility of workers in the area of supplementary pensions. Legal - Directive on the burden - Provision of equal of proof in cases of treatment and equal discrimination based on pay. sex (97/80/EEC). - Measures of protection - Directive on equal for women. opportunities and equal treatment in matters of employment and occupation (2006/54EEC). - Case law (Badeck, 158/97). Financial - European Social Fund - To encourage equal treatment and equal opportunities in the labour market. Institutional - European Institute for - To promote gender Gender Equality (2006). equality. Political - European Council in - To promote equal pay Stockholm (2001). for equal work. - To encourage gender equality. - To promote equal opportunity in labour markets. - To improve female employment rates. Continued

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40 Hélène Caune, Sophie Jacquot and Bruno Palier Table 1.3 Continued

Policy domains

Policy instrument (type of resources) European resources Cognitive

AntiLegal discrimination

Financial

Cognitive

- European Employment Strategy (1997). - Open Method of Coordination (Joint Report on Employment, Joint Report on Social Inclusion) (2000). - Community framework strategy on gender equality (2001). - Community action programme to promote organizations active at the European level in the field of equality between men and women (2004). - Directive on equal treatment of persons irrespective of racial or ethnic origins (2000/43/ EEC). - Directive on equal treatment in employment and occupation (2000/78/ EEC).

Rationale - To promote equal opportunity in labour markets. - To improve female employment rates.

- To encourage concrete measures to combat ethnic and racial discrimination in the field of employment and social protection. - To shift the burden of proof. - To enable independent institutions to fight discrimination at the national level. - European Social Fund - To promote equal treatment and equal opportunities in the labour market (EQUAL, 2000). - European Year for people - To combat with disabilities (2003). discrimination. - European Year of Equal - To encourage concrete Opportunities for All measures to combat (2007). discrimination (based - Community action on race, religion, programme to combat disability, age, sexual discrimination (2000). orientation, etc.). Continued

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Table 1.3 Continued

Policy domains

Employment and employability Skills

Policy instrument (type of resources) European resources

Rationale

- To improve knowledge and appraisal of discrimination through the evaluation of the effectiveness of policies and practice. - To promote the exchange of information and good practices and the creation of European networks. - To promote and disseminate the values and practices underlying the fight against discrimination. Financial - European Social Fund. - To change the focus - European Globalization from unemployment to Adjustment Fund (2006). work and activation. - PROGRESS (2007). - To promote training, skills, and job creation. - To promote the inclusion of specific groups in the labour market (young and old workers). - To reintegrate redundant workers in the labour market. - to promote retraining and entrepreneurship. - To finance active social protection measures. Institutional - Employment Committee (1998). - The Employment Committee (EMCO) and the Social Protection Committee (SPC) (2000). Continued

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Table 1.3 Continued

Policy domains

Policy instrument (type of resources) European resources Political

Cognitive

Rationale

- To promote growth, competitivity and employment as mutually reinforcing. - To encourage labourmarket efficiency. - To encourage investment in human resources. - To make taxation and social protection systems more employment-friendly. - To encourage a lifecycle approach to work. - To promote active labour market policies. - To improve training possibilities and enhance vocational training. - To improve female and older workers’ employment rates. - To improve labour- Dublin Declaration on market efficiency. Employment (1996). - European Employment - To encourage investment in human Strategy and guidelines for employment policies resources. - To promote social (1997). protection and - European Employment employment friendly Pact (1999). systems. - The Lisbon Strategy - To encourage a life(2000). cycle approach to work. - Open Method of - To promote active Coordination (Joint labour market policies. Report on Employment, - To improve training Joint Report on Social possibilities and Inclusion) (2000). enhance vocational - Social Agenda (2000– training. 2005; 2005–2010). - Copenhagen Declaration - To improve female and older workers’ (2002). - Maastricht Communiqué employment rates. (2004). - Europe 2020 (2010). - Extraordinary Council on Employment in Luxembourg (1997). - European Council in Cologne (1999). - European Council in Lisbon (2000). - European Council in Stockholm (2001). - European Council in Barcelona (2002). - Tripartite social summit for growth and employment (2003).

Continued

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Table 1.3 Continued

Policy domains

Policy instrument (type of resources) European resources

Mobility

Legal

Social inclusion

Financial Cognitive

Rationale

- Directive on collective - To cover the right of redundancies (98/59/ establishment. EEC). - To promote - Directive on fixed-term harmonisation of work work (99/70/EEC). conditions. - Directive (2001/86/ - To address terms EEC) and Regulation and conditions of (2157/2001/EEC) on the employment. statute for a European company. - Directives on working time (2003/88/EEC) and temporary agency work (2008/104/EEC). - Case law (Viking, 438/05; Laval 341/05) - European Social Fund. - To combat social - PROGRESS. exclusion. - Lisbon Strategy (2000).

- To reduce the risks of social exclusion.

- Open Method of Coordination (Joint - To reduce child Report on Social poverty. Inclusion) (2000). - To reintegrate people - National Action Plans on into labour markets. social inclusion. - Programme of Community Action to encourage cooperation between member states to combat social exclusion (2002–2006). - Community strategic guidelines on cohesion (2006).

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cooperation and competition between the member states in the field of social protection) (Mann et al, 2007, quoted by Bruno, Jacquot, Mandin, 2006). This phenomenon has been reinforced by the 2005 reform of European governance in the social field. In other words, European social policies are now organised around a locus that articulates the cooperation of different spheres of policy-making. At the same time, this locus promotes competition between national welfare reforms whilst they are put under the scrutiny of European institutions.

Conclusion To sum up, the sequencing of the history of the relationship between the EU and welfare policies may help in understanding national sequencing of welfare reforms and, most of all, the usages of Europe. The tables presented here stress the kind and type of resources that have been provided at the European level. They are available to national actors in order to support or block national welfare reforms. Indeed, political opportunities can be envisaged as resources or constraints provided by the EU. Whatever might be the nature of a specific resource (political, legal, financial, etc.) actors need to seize them in order to transform the available resources into political practices. Usages imply an intention at work and can therefore not be defined by opportunities alone (Woll and Jacquot, 2010). The whole process of transforming resources or constraints into political practices in order for an actor to engage in a national reform process constitutes a usage. Opportunities are necessary but not sufficient conditions of usage. They are the contextual element on which a political usage is based but the chapters in this book show that European resources or constraints need to be “activated” by actors. The main driving forces for the sequenced evolution of social Europe have been presented in this chapter and the tables identify and classify European social rationales for the resources made available. From a national perspective, European requirements in the social field can be understood as policy resources or as policy constraints. To provide a model of the possible uses of policy instruments for different policy groups and policy domains, tables 1.1, 1.2 and 1.3 provide a classification of the various European social instruments. Finally, table 1.4 identifies the social principles and orientations behind European requirements.

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Table 1.4 European social policies: policy goals, policy domains and policy instruments Policy goals

Policy domains

1957–early 1980s Maintaining social sovereignty; Preventing a race to the bottom.

Free movement of Legal instruments (treaties, persons (+ social rights Directives and case law). portability) Equal pay and equal Legal instruments (treaties, treatment between Directives). men and women Financial instruments. Institutional instruments. Employment and Legal instruments (Decisions, employability. Directives). Financial instruments. Institutional instruments. Political instruments. Cognitive instruments. Free movement of Legal instruments (Directives and persons case law). Cognitive instruments. Health and safety at Legal instruments (Directives). work Institutional instruments. Equal pay and equal Legal instruments (directives). treatment between Financial instruments. men and women Political instruments. Employment and Legal instrument (treaties, employability. Directives). Financial instruments. Institutional instruments. Political instruments. Cognitive instruments. Free movement of Legal instruments (Directives and persons case law). Health and safety at Legal instruments work (Directives). Coordination of reforms Legal instruments (treaties, Directives). Institutional instruments. Cognitive instruments. Equal pay and equal Legal instruments (treaties, treatment between Directives). men and women Financial instruments. Cognitive instruments. Anti- discrimination Legal instruments (treaty). Financial instruments. Cognitive instruments. Employment and Legal instruments (treaties, employability. Directives). Financial instruments. Institutional instruments. Political instruments. Cognitive instruments. Social inclusion Financial instruments. Cognitive instruments.

1980s–1990s Maintaining social sovereignty; ensuring the implementation of an economic common orientation at the national level.

1990s–2000s Development of cognitive and normative harmonization; Increasing cognitive and normative competition.

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Notes 1. This sequencing is rather classic. See for a similar sequencing but with some different interpretation of the meaning of the sequences, Daly, 2008. 2. Negative integration refers to the removal of obstacles to free and undistorted competition. On the distinction between positive and negative integration, see (Scharpf, 1999). 3. Council Recommendation of 27 July 1992 (92/442/CEE), OJ L245 of 26 August 1992. 4. ‘Economically- oriented’ actors correspond to the ex-DGII (economic and finance affairs), different lobbies of insurers, bankers, employers and the Economic Policy Committee. ‘Socially- oriented’ actors correspond to the ex-DGV (employment and social affairs), and later the Employment Committee, and the Social Protection Committee. The two terms correspond to the vocabulary used by the actors themselves (at least in interviews) and have been used within different research (see Mandin, 2001; Delaporte and Pochet, 2002). 5. If the message in texts published by DGII remain implicit, interviews with European civil servants from DGII are unambiguous on this point. DGII has been created to build Europe on a market base: actors there do not see why social protection and employment policies should be exempted from that frame. 6. COM(1997)102 final; COM(1999)347 final. 7. Lisbon Council, 2000, Conclusions of the Presidency. 8. Facing the Challenge - The Lisbon Strategy for Growth and Employment. Report from the High Level Group Chaired by Wim Kok, November 2004, p.11. 9. Facing the Challenge - The Lisbon Strategy for Growth and Employment. Report from the High Level Group Chaired by Wim Kok, November 2004, p.16. 10. Facing the Challenge - The Lisbon Strategy for Growth and Employment. Report from the High Level Group Chaired by Wim Kok, November 2004, p.40–42. 11. COM(2010) 2020.

References Bruno, I., Jacquot, S., Mandin, L. (2006), ‘Europeanization through its Instrumentation : Benchmarking, Mainstreaming and the Open Method of Coordination ... Toolbox or Pandora Box ?’, Journal of European Public Policy, Vol. 13 (4), pp. 519–536. Daly, M. (2008), ‘Whither EU Social Policy? An Account and Assessment of Developments in the Lisbon Social Inclusion Process’. Journal of Social Policy, vol. 37: 1, 1–19. Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism, (Cambridge: Polity Press). Esping-Andersen, G. (ed.) (1996), Welfare States in Transition. Social Security in the New Global Economy (London: Sage). Falkner, G. (1996), ‘European Works Councils and the Maastricht Social Agreement: Toward a New Policy Style?’ Journal of European Public Policy, Vol. 3 (2), pp. 192–208.

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Favarel-Dapas, B., Quintin, O. (2007), L’Europe Sociale, (2ème edition), (Paris: La Documentation Française). Ferrera, M. (1996), ‘The Southern Model of Welfare in Social Europe’, Journal of European Social Policy, Vol. 6 (1), pp.17–37. Ferrera, M. (2005), The Boundaries of Welfare: European Integration and the New Spatial Politics of Social Protection, (Oxford: Oxford University Press). Graziano, P. R., Jacquot, S., Palier, B. (2011), ‘The Usages of Europe in National Employment-friendly Welfare State Reforms’, in Graziano, P. R., Jacquot, S., Palier, B. (eds.), The EU and the Domestic Politics of Welfare State Reforms. Europa, Europae, (Basingstoke and New York: Palgrave Macmillan). Guillen, A., Palier, B. (eds.) (2004), ‘EU Enlargement, Europeanization and Social Policy’, Journal of European Social Policy, Vol. 14 (3). Hall, P. (1986), Governing the Economy: the Politics of State Intervention in Britain and France, (New York: Oxford University Press). Hooghe, L., Marks, G. (2009), ‘A Post-functionalist Theory of European Integration: From Permissive Consensus To Constraining Dissensus’, British Journal of Political Science, Vol. 39 (1), pp.1–23. Inglehart, R. (1970), ‘Cognitive Mobilization and European Integration’, Comparative Politics, Vol. 3 (1), p. 45–70. Key, V. O. (1961), Public Opinion and American Democracy (New York: Alfred A. Knopf). Leibfried, S., Pierson, P. (eds.) (1995), European Social Policy: Between Fragmentation and Integration, (Washington, DC: Brookings Institution). Mandin, C. (2001), L’Union Européenne et la Réforme des Systèmes de Retraite: de la Nécessité d’une Adaptation aux Nouvelles Normes Socio- économiques à l’Elaboration d’un Compromis Politique, Master thesis (Paris: Institut d’Etudes Politiques). Moravcsik, A. (1998), The Choice for Europe (Ithaca, NY: Cornell University Press). Palier, B. (2010), ‘L’Europe et le Social’, in Dehousse, R. (ed.), Politiques Européennes (Paris: Presses de Sciences Po). Pierson, P. (ed.) (2001), The New Politics of the Welfare State (Oxford: Oxford University Press). Radaelli, C. (2003), ‘The Europeanization of Public Policies’, in Featherstone, K., Radaelli, C. (eds.), The Politics of Europeanization (Oxford: Oxford University Press), pp. 27–56. Scharpf, F. (1999), Governing in Europe: Effective and Democratic? (Oxford: Oxford University Press). Scharpf, F. (2002), ‘Globalization and the Welfare State. Constraints, Challenges, and Vulnerabilities’, in Sigg, R., Behrendt, C., Social Security in the Global Village (New Brunswick: Transaction Publisher), pp. 85–116. Woll, C., Jacquot, S. (2010), ‘Using Europe: Strategic Action in Multi-Level Politics’, Comparative European Politics, Vol. 8 (1), pp. 110–142.

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2 Boasting the National Model: The EU and Welfare State Reforms in France Hélène Caune, Sophie Jacquot and Bruno Palier

Introduction French elites have an ambiguous and contradictory relationship to Europe, especially in the social domain: on the one hand, they claim to inspire European integration developments, but, on the other hand, they tend to deny the influence of such developments on the national reform processes. This chapter aims to analyse this intriguing situation and its consequences in the context of the process of Europeanization of French social policies. On this issue, the classical explanation that can be found in the Europeanization literature, linked to the fit/misfit mechanism, would here mean that the degree of Europeanization would depend on the degree of fit/misfit between European orientations for welfare reforms and the national welfare regime (Caporaso et al., 2001). However, we consider that this hypothesis is too static because it does not really pay attention to the present impact of past relations of the considered member state with the European Union (EU), and it neglects the role of actors in the process, except as intermediary variables. Domestic actors are reflexive and strategic when using the EU as a resource or a constraint (Jacquot and Woll, 2003; Woll and Jacquot, 2010). Our chapter confirms that the changes implied by European requirements differ according to the various types of European resources and the way such resources are used by decision-makers and other relevant stakeholders. In fact, what we observe is that in France the mechanism of change is more horizontal (i.e. time and the consequences of past actions matter, strategic interaction between different national groups of actors matter) 48

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than vertical (a divergence between European requirements or guidelines and national situation). French elites have long pictured the country as capable of shaping European outcomes. Since this ability has been undermined (due to the Economic and Monetary Union [EMU], the increasing interest of the EU in social policies “unfit” for the French system and the enlargement process), the French relationship to Europe has became doubleedged. What we illustrate in this chapter is that the usage of Europe will depend on the general relationship of France with Europe, on the type of resources used and also on the specific politics in the field of welfare reforms. French decision-makers have denied European influence in the traditional welfare fields (employment and pensions), but have referred to it in social policy fields where innovations were to be implemented, such as anti- discrimination and disability policies. Partly because European requirements were not of the same nature (cognitive resources in the first case, more legal resources in the second case), the actors have not used these resources in the same manner. However, these differences also should be linked to the specific national politics in each field. In the area of social protection, decision-makers and politicians hardly referred to European pressures. In welfare, for example, where traditional actors still prevail, the only references to Europe were made in order to underline the intrinsic quality of the French model, what we call a “boasting strategy”. In other fields (anti- discrimination and disability), when decision-makers referred to European requirements, they did not present them as a pressure on the French welfare system; but European resources have been actively mobilized by new actors that were about to impose innovative ways of doing within these fields. These actors have used European demands as legitimizing and problem-solving resources and have hence entered the decision-making processes. Part 1 of this chapter addresses the conceptualized fit/misfit hypothesis. Background information on the French welfare regime is provided so that the country’s welfare characteristics constitute a starting point from which to evaluate the potential political cost of European-induced reforms. We then analyse the country’s long-term relationship with Europe. As one of the founding members of European integration, French elites have long pictured their country as a model for the development of European policies. However, at the European level, the development of social policy frameworks has not always been theoretically compatible with the French schemes. This discrepancy has explained the decreasing support of French elites and citizens towards the EU.

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Part 2 will focus on the key features of recent major welfare reforms: (a) the traditional conservative-corporatist fields based on a male-breadwinner logic (employment and pensions), which evolved from demand side policies to supply side policies (employment) and multi-pillarization (pensions), and (b) diversity policies based on the non-universalist group logic of the French Republican model which shifted to the recognition of specific groups and types of discrimination (anti-discrimination and disability). While traditional cases (employment and pensions reforms) are linked to European cognitive and normative resources, new fields (antidiscrimination and disability) relate to both legal and political/cognitive resources. Nevertheless, in all cases, policy structures have been dramatically reformed. In the traditional fields, all dimensions have changed (objectives, principles, procedures and financial instruments). In the new fields, objectives remain the same (integration), but all others dimensions have changed (principles, procedures and financial instruments). After having looked at the content of reforms in part 2, part 3 identifies how decision-makers and the relevant stakeholders have used European resources to change the objectives and principles of French welfare policies. All recent French welfare reforms are in line with Europeandefined orientations. However, the possible influence of Europe on the reforms is rarely spelled out or advocated as such. We claim that the diversity of French usages of Europe can only be explained by taking into account the political dimension of past usages of Europe, the substantive dimension of the changes induced by European requirements and the specific politics of the field. In this chapter, we draw on interviews with political actors and parliamentary debates to analyse if and how different actors used specific European resources to promote policy changes, as well as how they consider European constraints. We tell a synthetic story of French employment-friendly welfare reforms in the light of EU initiatives and we confront both specific European requirements and the types of resources involved with the changes actually introduced at the national level. We also analyse how French decision-makers use such resources and discuss the features of related policy changes. These elements help us to understand how the EU has had an impact on the French welfare state.

France and Europe: a difficult relationship, between leadership and denial The French welfare model is categorized as a conservative- corporatist welfare regime (Esping-Andersen, 1990; Palier, 2010a). It typically relies

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on social contribution earned through work and employment protection. Since the 1990s, the misfit between the French welfare system and European social policy orientations has increased. Decisions-makers, as well as political leaders, are, hence, increasingly vigilant ‘against anything perceived as threatening protected employment and social protection’ (Palier and Petrescu, 2007: 62). In this book, we test the hypothesis that the older the EU member country, the lower the level of scrutiny they experience and, hence, the more likely it is that they do not seriously consider European requirements. In France, early membership is reinforced by the country’s perception of its leading role in the European integration process. As far as the country’s level of both legal transposition and practical compliance with European schemes is concerned, France is known to belong to the neglecting world of compliance (Falkner et al., 2005). Considering these three French characteristics – (i) a conservativecorporatist welfare system unfit with European requirements; (ii) being a founding father of European integration which pictured itself as a locomotive of the EU and (iii) constituting a world of traditional neglect towards European requirements – we do not expect France to be keen to transpose European demands by any means. Rather, we can predict that the usages of Europe will be poor or denied. The rationale of this section is to identify the evolution of the French–EU relationship. The sequencing presented stresses a major turning point in the early 1990s, with the backlash of the 1992 Maastricht referendum ( ‘yes’ received only 51.05 per cent of the vote) as an early indicator. Since the preparation of the Treaty of Maastricht and the 1990s difficult national welfare reforms, French citizens are increasingly in doubt as to whether the EU is likely to sustain their welfare model. From leadership to denial The long-term relationship between France and the EU shows that the country is keen to comply with Europe as long as the EU is built following its image and it reflects its model. The relationship between France and the EU can be divided into four phases, characterizing France from a position of European leader to one led to deny that Europe is influencing its own national policies. 1957–late 1970s: the Gaullist print on the vision of Europe as a large France During the first phase (1957–late 1970s), France acted as a driver of European integration and tried to frame Europe so that it would both

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mirror the French model and strengthen national interests. De Gaulle demonstrated his capacity to freeze European integration if it did not fit with his vision. His successors, Pompidou (1969–74) and Giscard d’Estaing (1974–81) were less obsessed with French grandeur and the French European policy dramatically changed.1 In the early 1970s, French citizens felt that the coordination of social policies at Community level was “important” or “very important” (74 per cent).2 Among the French population, 61 per cent felt that belonging to the Common Market was a good thing. During this first phase, both European policies and administrative organizations were largely inspired by French models and conveyed a French approach to public problems (Parsons, 2003). French elites pictured the European project as a “large France”, meaning that European integration would strengthen national interests (Evans, 2007; Schmidt, 2007). 1982–92: quiet functionalism and permissive consensus The second phase (1982–92) initiated the French decoupling with Europe. European policies challenged the French model in the fields of economic planning, stock market regulation and industrial and employment policies. During this decade, French elites used Europe as a driver of change and implemented reforms in the name of the Single Market. The pro- Single Market coalition between Mitterrand, Kohl and Delors maintained a rather positive relationship between the European project and French citizens, who remained passive towards the European project. This acceptance of European influence by citizens has been termed “permissive consensus” (Key, 1961: 32–5; Inglehart, 1970). This second phase sowed the seeds of the French decoupling from Europe. In France, debates on monetary policy did not divide along traditional political left–right lines but crystallized internal divisions within political parties (Lequesne, 2008). In the early 1980s, Mitterrand committed to stabilizing public finance, which constituted an important step in anchoring French politics to the European sphere. It also seriously weakened the French supporters of national economic and monetary sovereignty. At that time, 60 per cent of French citizens favoured a European government.3 They did not feel that Community and national identity were contradictory, but rather complementary. In France, this period was characterized as an ‘elite- dominated process with very little electoral salience’ (Grossman, 2007: 986). The framing of Europe by French elites explained the general public permissive consensus and the acceptance of a quiet functionalism; however, the Single

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Market and EMU de facto represented the last episodes of this European construction, as imagined by the founding members (Lequesne, 2008). The 1990s break-up of French leadership: increasing divergence between French policies and European guidelines The Maastricht treaty marked a turnaround and increased public defiance towards the European project. Future European enlargement heralded the end of French leadership in Europe. In 1992, governmental political parties consensually favoured the Maastricht treaty referendum for ratification (achieving marginal success with 51.05 per cent of the population voting in favour). This treaty inspired a new approach to public policy and increased the divergence between French policies and European guidelines. French elites used Maastricht as a scapegoat to dilute political responsibility with regard to difficult welfare reforms, which resulted in ‘Europe being charged with all the real or supposed negative consequences of economic adjustment, welfare state reform and globalization’ (Grossman, 2007: 987–8). The backlash of the Maastricht referendum illustrates the changing relationship between France and Europe. Blame avoidance strategies (Weaver, 1986) implemented by political leaders resulted in a changing conception of European references; whereas mentioning European demands had been useful in the past, it became rather harmful in the second half of the1990s. This new phase was animated by distributive concerns and evaluations of absolute economic performance (Eichenberg and Dalton, 2007: 128) and signalled the end of the passive delegation of citizens’ trust in European elites. The 2000s: the defence of the French social protection model The failure (54.67 per cent of the votes against) of the referendum on the ratification of the treaty establishing a Constitution for Europe (2005) is emblematic of this fourth sequence. The referendum strongly mobilized French citizens (69.37 per cent of the voters did participate in the election) and raised intense debates on economic and social issues. Among voters, 31 per cent feared the potential negative effects of the Constitutional Treaty on the French employment situation.4 Governmental parties consequently choose to seemingly, in their discourse, defend the French social model but their support failed to reconcile French citizens with the European project (Caune et al., 2007). In 2006, France was the only founding member of the EU to have a majority of negative responses on the positive effect of enlargement.5 Citizens’ support towards European integration decreased, but the general positive tendency was not reversed (Belot and Cautrès, 2006).

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In 2008, with the French Presidency of the European Council, political leaders revealed strong activism regarding the ratification of the Lisbon treaty and the financial crisis. Assuredly they wanted to reinvest in the European project after the crisis due to the rejection of the treaty establishing a constitution in 2005 (Dehousse and Menon, 2009). We see that the vertical gap (misfit dimension) between French policies and European normative pressures has tended to increase, pushing for change and reforms. However, the French elites’ attitude is also a function of the horizontal historical gap and the answers to these pressures have also evolved. Indeed, in the 1980s and 90s, the changing perceptions of citizens regarding the EU meant that, from that time on, any public political claim made in the name of European demands would de-legitimize any potential reform instead of reinforcing it.

Recent welfare reforms in France: going in the EU-defined direction When looking at recent welfare reforms, we are at the heart of the French paradoxical relationship towards Europe. The analysis demonstrates a number of concordances between the content of French reforms and European guidelines. At the same time, it also stresses an important hiatus between practice and discourse, since reforms of the traditional social policies are barely linked to EU development. In this section, we underline the concordance between EU guidelines and French social policy orientation. In recent years, specific policy measures have induced a shift in traditional and new social policies. This reorientation of social policies is in line with the main ideas promoted at EU level. Employment: lowering the cost of labour, developing activation measures French labour market policy has experienced many reforms since the mid-1990s. One of the main themes around which social policy reorientations were organized in the 1990s was employment and the negative effects of social protection. Two elements were put forward: a) labour costs were supposedly too high for companies and prevented them from hiring; b) welfare payments were too passive and thus acted as a disincentive for the unemployed to return to active employment. Two new typically supply sided sets of policies have been developed to deal with this: those to lower the cost of labour and those concerned with welfare benefit activation. These reforms crucially mark

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a rupture with the French conservative- corporatist model of welfare protection. Lowering social charges Lowering “social charges” became a primary objective of employment policies in France during the 1990s. This objective has clearly been associated with the “imperatives” of the Single Market, since French employers have claimed throughout the 1980s and early 1990s that labour costs were too high in France to enable French firms to compete with their European counterparts. Policies to lower “social charges” were first very specifically targeted and later came to apply to all lower wages. Without referring to it, this change echoed the White Paper on Growth, Competitivity and Employment published in 1993 by the Commission, which promoted the ‘reduction of employers social security contributions and increased revenue through other means so as to neutralize the effects on the social protection of workers’, as well as the criteria set in Maastricht. To make up for the drop in receipts induced by these policies, new tax sources were devised and/or raised (particularly taxes on tobacco and alcohol). In 1990, a major innovation was introduced with the creation of the general social contribution (Contribution Sociale Généralisée [CSG]), a tax (deducted at the source) on all income, including indirect income and income on capital, earmarked for social expenditure. It was originally set at a low rate (1.1 per cent of income) but was later raised considerably higher (7.5 per cent of income as of 1998). Between 1993 (large-scale lowering of “social charges” was undertaken in the context of the five-year law on employment) and 1995 (a plan was launched to expand the CSG), a threshold seems to have been crossed leading to a deep-seated transformation in the funding of certain areas of social protection. Gradually, taxes were to play an increasing role in social protection financing: whereas social contributions represented 80 per cent of the funding of welfare benefits in the early 1980s, they had dropped to two-thirds by early 2000. Activation policies Since the 1980s, employment policies have also been affected by a change of paradigm. From a vision in which unemployment was primarily perceived as linked to collective causes and therefore involuntary, there has been a shift to an analysis of unemployment as resulting from individual causes, thus viewed as voluntary. In the wake of these new conceptions, new policies have gradually been developed based on the will to activate social policies (Palier, 2006).

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The initial measures taken in the late 1980s aimed at fostering activity among the unemployed first applied to young people and the long-term unemployed. They were later expanded, with a minimum benefit payment, the Revenu Minimum d’Insertion (RMI), in 1988. Policy measures started to affect unemployment insurance in 1992. The allocation unique degressive (AUD) reduced both the level of unemployment benefit and its duration. Activation was finally implemented across the board with the 2001 reform of unemployment insurance schemes. The allowance paid was changed from an unemployment benefit to a job-seeking allowance (allocation pour la recherche d’emploi [ARE]), which was necessarily accompanied with a return-to- employment action plan signed by the beneficiary (plan d’action pour le retour à l’emploi [PARE]) (Palier, 2006). In addition, a new measure aiming to foster employment was introduced in 2001, the “employment bonus” (prime pour l’emploi) which aimed to “make work pay”. Following this trend, a new benefit was created in 2008, the RSA (revenu de solidarité active), which is supposed to progressively replace RMI in the long run. This benefit is aimed at providing anybody taking a (low-paid) job with a state-financed complement, which guarantees to workers a better income than the people on RMI (Palier, 2010a). Here again, the national actors who have implemented these policies (mainly the social partners for unemployment insurance, and the government for minimum income schemes) have not referred to EU discourses, nor to European employment strategy, despite the fact that it openly called for activation. Pension reform: returning to work, remaining on the labour market With respect to pension schemes, the situation in France in the early part of the twenty-first century does not look promising. According to the projection made in a French national report in September 2002, public expenses are set to increase rapidly, from 12.6 per cent of GDP in 2000 to 16.3 per cent in 2040 (Palier, 2010b). According to a European projection, the pension system would evolve from having a surplus of 0.6 per cent of GDP in 2005 to a deficit of 1.8 per cent of GDP in 2020 and 3.8 per cent in 2040. This would lead to an increase in the contribution rate of 10 per cent.6 In France, the activity rate of workers older than 55 is one of the lowest in Europe (31.9 per cent in 2001; 38 per cent in 2008), and the average age of effective retirement is just under 60. Due to this early retirement and the baby boom, the cost of pensions has increased tremendously since the late 1990s. The financial weight of this has increased pressure on the pension system (Mandin and Palier, 2004).

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The reforms in the 1990s have been few and remained relatively limited. The Balladur reform, adopted on 1993, only concerned private sector employees. The main measure was to lengthen the period of contribution necessary to be entitled to a full pension (50 per cent of the reference wage) from 37.5 years to 40 years. The 1995 Juppé plan proposed to align the new conditions to civil servants but it was abandoned in the face of social pressure (Palier, 2000). The lack of decision with regard to reform created some differences in the replacement rate between private and public sector employees. After the re- election of Jacques Chirac in 2002, the Prime Minister, Jean-Pierre Raffarin, set pension reform on its agenda. The principal stake rapidly became the alignment of public sector employees with private sector employees’ regimes. Measures were enacted in an attempt to significantly curb the rise in early retirement, once viewed as the preferred instrument to complement economic reorganization. Consequently, a U-turn was performed, away from the preferred policy orientations of the 1980s (Erhel et al., 2005; Palier, 2006). Even through there was a big social movement, as well as some important strikes in May 2003, the Government obtained the agreement of the employers’ organizations and of two trade unions – the CFDT (Confédération Française Démocratique du Travail) and CGC (Confédération Générale des Cadres) – to adopt the reform. The bill obtained the support of a strong government majority in Parliament and was adopted in July 2003. A facultative regime of pensions financed through capitalization for private sector employees (PERP [Plan d’épargne retraite populaire]) was also accepted by Parliament (Palier, 2010b) and the different pathways for early exit from work have progressively been closed. Consequently, the 2003 Fillon reform followed the main orientations of the EU: to ensure the financial sustainability of the pension system, by introducing some parametric measures (lengthening the period of contribution) and by developing some supplementary private pensions plans in order to compensate the diminution of the public pension. It also follows the orientation of the EU concerning the active ageing policy: to encourage people to work longer, through a system of bonus and sanction; to develop lifelong learning in order to preserve their ability to work; and to close the early exit schemes. Finally, the European orientation related to the principle of equity and alignment between public and private sector pension regimes is also taken into account (Mandin and Palier, 2004). The same could, of course, be said with respect to the pension reforms implemented in 2010, which further prolonged the working career necessary to access a full pension (form

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40 to 41.5 years) and shifted the legal age of retirement from 60 to 62 (Palier, 2010b). Here again, despite being in line with EU requirement, no French government dared to refer to the EU orientation (as readable, for instance, in the Open Method of Coordination pension guidelines). Furthermore, the French government convinced the Commission to postpone the publication of its 2010 Green Paper on pensions from spring to July 2010 so that its publication would not interfere with the French 2010 pension debate and be interpreted as the EU imposing this unpopular pension reform.

The new “universalization of discrimination” In contrast with the traditional fields of employment and pensions, anti- discrimination policy not only refers to cognitive and normative resources but also to legal resources in the form of specific Directives. In this case, France had to implement a Directive that could have been perceived as highly contradictory with regard to its own national tradition of integration, which denies the relevance of taking into account any community- or ethnic-based differences among citizens. The Council Directive 2000/43/EC of 29 June 2000 ‘implementing the principle of equal treatment between persons irrespective of racial or ethnic origin’, is known in France as the ‘Race Directive’. The Council Directive 2000/78/EC of 27 November 2000 ‘establishing a general framework for equal treatment in employment and occupation’ extends the scope of the groups protected by European law. Both Directives lay on the new Article 13 of the Treaty of Amsterdam which enables the Council to take appropriate action to combat discrimination based on sex, racial or ethic origin, religion or belief, disability, age or sexual orientation. The Race Directive is concerned with all forms of racial discrimination in the areas of employment, education, social security, health care and access to goods and services and must be implemented at the domestic level within three years. It critically challenges the French Republican model based on the nation as a whole (‘La République une et indivisible’), which does not recognize the existence of specific groups based on racial or ethnic origins. During the phase of negotiation of this Directive, France has tried – and, to a certain extent, succeeded – to soften the contradictions with its model by opposing affirmative action (Calves, 2002). France has, however, also changed its own approach to discrimination – first, with a law in 2001 and, secondly, by the creation of a new anti- discrimination body, the HALDE (Haute autorité de lutte contre les discriminations et pour l’égalité) in 2004.

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Whereas French national legislation previously only recognized direct discriminations, the law of 16 November 2001 introduced the recognition of indirect discriminations in the employment field. This law marked a crucial turning point in French anti- discriminatory policy because it allowed for new resources for action in many different fields: sexual harassment, labour law, penal justice, administrative regulations and housing (Simon and Stavo-Debauge, 2004). Going a step further, the law 2004-1486 of 30 December 2004 created the HALDE in the form of an Administrative Independent Authority aimed at fighting discrimination and, thus, implementing one of the requirements of the Race Directive. The implementation of Directive 2000/43 and the creation of the HALDE show that France managed to deal with a European demand that previously constituted a challenge to its model. The creation of an independent body to fight discrimination first appeared on the national agenda in 1997 but was dismissed in 1999. At that date, a political window of opportunity opened (soon to be closed again) and a consultative body was created (Chappe, 2008: 52–60). The implementation of the Race Directive introduced an important debate on the French Republican model of integration and was, above all, an interesting case of agenda widening. Here, the EU served as a way to legitimize major symbolic institution-building. What was interesting in this case was that, although the Directive was first seen as challenging the national model, it was nevertheless framed as an instrument to reinforce the French model of integration. In 2002, Chirac Presidential discourse in Troyes included the creation of an independent body. It was presented as a way to strengthen the French integration model, which had been put endangered by recent electoral successes of the extreme right-wing party Front National, whose leader Jean-Marie Le Pen achieved victory over the then leader of the left, Lionel Jospin, in the first round of the 2002 presidential election, going on to be Jacques Chirac’s opponent in the second round.7 With the law of 2004, political decision-makers managed to a) answer European requirements and b) politically safeguard the Republican model. Not only did they create the institution to fight direct or indirect racial discrimination required by the Directive, they also extended concerns to other discriminations “prohibited by law”, but also engaged in a process of universalization with the introduction of discrimination based on sexism, homophobia and religious intolerance. Thus, France enlarged the scope of the institution required by the Directive.

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During the parliamentary phase, the creation of such an institution was rather consensual. The opposition between right and left focused on the level of power of the institution, and hence its efficiency. Debates arose on the composition of the HALDE (whether the participation of NGOs would be obligatory or only possible) and on the guarantee of equal representation between men and women. Non-political actors were finally empowered, as required by the Directive. Bones of contention mainly crystallized on the introduction of sexual orientation and disability issues. Indeed, there was no French framework to deal with such situations, although a law on homophobia was to be discussed by Parliament. The amendments voted on by the Sénat during its first lecture reinforced the recognition of several discriminated groups and, hence, largely undermined the debates during the second lecture at the Assemblée Nationale. To justify this position, French MPs eventually referred to other Directives on equal treatment between men and women. The recognition of all forms of discrimination can be seen as a process of “universalization of discrimination”. For French actors, the recognition of a large set of discriminations (including sexual orientations and disability) was a way to avoid focus on racial and ethnic groups that would contradict the French Republican model.

Disability: from a medical to a social approach Since the 1970s, the French approach to disability has been characterized by a mixed-system that combines ordinary schooling and measures for special schooling (Cardou and Poizat, 2007). Since 1987, the law has required that firms of more than 20 employees employ 6 per cent of disabled persons. However, the employment rate of disabled workers has never exceeded 4 per cent. In the early 2000s, recognition of weak French employment rates highlighted comparisons to rates elsewhere in Europe and fuelled debates on the disabled worker issue. At the European level, financial resources are available, although they are marginal (programme Equal). Several Directives had been voted on the basis of Article 13 of the Amsterdam treaty. Council Directive 2000/78/EC created a general framework and Directive 2001/85/EC provided a definition of the persons considered as disabled or with reduced mobility. Directive 2004/18/EC reaffirmed the principles of non- discrimination and equal treatment and recognized protected employment for disabled workers as a social insertion modality. Finally,

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the European approach also relied on European soft law, such as the European Charter on fundamental rights, which provides cognitive and normative frames and promotes a general and social approach to discrimination. Hassenteufel and Mohanu (2010) showed that French NGOs in the field of disability have been increasingly dissatisfied with French schemes and have directed political attention towards other European models, especially the Swedish one, in an effort to change the content of policies in France. The French law of February 2005 confirms the right to compensation of disabled people on the basis of their disability, which was introduced in the law on social modernization of January 2002. However, the principle is strengthened and redefined towards the personal project (life project). The law introduces a crucial innovation, which constitutes a change of the policy objectives. Indeed, it affirms the principle according to which every disabled child or teenager should be accommodated in the regular school of his or her neighbourhood. The law, hence, also reaffirms the creation of appropriate buildings that allow disabled students to pursue their schooling. Employers are also supposed to take appropriate measures to allow disabled workers to continue in their job and to benefit from professional training

The usages of Europe in France: a contrasted landscape In order to picture the nature of the usages of Europe that are made during the processes of French welfare reforms in the social field, one has to acknowledge a contrasting landscape. There is a selective – rather than a clear- cut – denial of the influence of Europe in these reform processes. Whereas the European influence is largely denied in traditional fields, the actors involved in new fields often use European resources to legitimize policy changes and to put the issues they advocate on the public and political agenda. Table 2.1 summarizes the dimension of policy changes involved in each field. In the traditional fields, all dimensions have changed (objectives, principles, procedures and financial instruments). In the new fields, principles, procedures and financial instruments have changed, but the objectives have remained the same (integration). Table 2.1 also identifies the promoters of the reforms and the actors that formed a pro- or anti-reform coalition. For each field, table 2.2 identifies the European resources at stake. It summarizes the role of Europe in the reforms, as well as the usages of Europe that actors have made.

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62 Hélène Caune, Sophie Jacquot and Bruno Palier Table 2.1 actors

A panorama of different reforms: dimensions of policy change and

Dimension/ degree of change

Reform promoter

Pro-reform coalition

Trade unions. Employers, government parties, economists. Trade unions, Employers, left-wing right-wing parties, parties, public economists. opinion. Government Traditionalist right. parties (left and right), NGOs, associations.

Key features

Years

Employment

1998– 2003

All dimensions (supply side policies).

Government (left and right).

Pensions

1990– 2000

All dimensions (multipillarisation).

Government (right).

Government Anti2000–4 Principles, (right). discrimination procedures and financial instruments (integration/ antidiscrimination).

Disability

2005

Principles, Government Associations procedures (right), coalition and financial associations. through instruments: the Conseil social National approach and consultative accessibility. des personnes handicapées (CNCPH). Users.

Anti-reform coalition

Some associations involved in physical disability (e.g. UNAPEI).

Boasting and denial in well-entrenched policy fields In the employment and pensions domains, French policymakers often deny the European influence. Rather, they maintain that reforms are only national. ‘In France, there is a will to not show the importance of Europe: Brussels that regulates everything, this appears as a ghost’ (interview from a French official in Erhel et al., 2005). While blameavoidance strategies were used in the 1980s, French decisions-makers have realized since that such strategies harm French citizens’ support for European integration. Above all, such strategies also backfire on decision-makers. Indeed, in return, citizens may blame national policymakers for not having been able to secure national interests and

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preferences when European policies were being defined in Brussels or in the implementation of national reforms. As national political leaders have long underlined their ability to shape European policies, citizens are not easily convinced when difficult welfare reforms (i.e. lowering unemployment and pension benefits) are presented in the name of the EU. Hence, it is sometimes more prudent for French decision-makers to deny external pressures (Caune, 2010). This feature characterizes the way French policymakers deal with Europe when employment policy is concerned. When French civil servants involved in the Open Method of Coordination processes discuss the influence of the European strategy, they generally put forward French voluntarism, rather than external pressures (OECD) or the role of the Commission. In short, French decision-makers are keener to emphasize the uploading processes of European integration (the introduction of employment as a European concern thanks to the mobilization of French politicians and civil servants) rather than the downloading processes (the Europeanization of national schemes) (Barbier and Sylla, 2001). For instance, they stress that the European pluri-annual annual logic of the OMC is directly drawn from the French quinquennial law (loi quinquennale). In 1996–97, French representatives at the Committee of Permanent Representatives to the European Council of Ministers (COREPER) were attributed a specific task – to develop the employment chapter of the Amsterdam treaty. These elements show that French policymakers are more likely to boast about French influence than they are to recognize that of European demands on national policymaking. In other words, the French habit of stressing their own ability to shape Europe according French principles is still alive and well. By contrast, recognizing the influence of the EU on national reforms is more difficult. In the pension field, policymakers do not boast about their influence on European orientations; however, they still deny European influence. The argument they stress is that European incentives in the pension field occurred too late to be taken into account in the national reforms process: The report of national strategy was a stylish exercise. The French report respects the questions prepared by the Commission. We respected the number of pages (25–30 pages). However difficult, the last important reform occurred 10 years ago. We were preparing the Fillon reform. During the elaboration of the Fillon reform, as for the elaboration of the national strategy report, we have juggled with the OMC. In

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September, the main objective was that we did not give the feeling that the reform was actually made, although it had to be discussed with the social partners. It was very important, not to give the impression that Brussels imposed the reform. It has been very present in the strategies of the successive governments. (Quoted in Erhel et al., 2005) In interviews, even though policymakers deny any direct European influence, they recognize that the OMC was not a totally distant phenomenon. Looking at French policymaking processes, it is then difficult to argue that the EU has imposed any of the recent trends observed in the first section. However, it does not mean that there is no link between EU requirements and national reforms.

Boasting and problem-solving in new fields In this section, we show that in new welfare fields (anti- discrimination and disability), new, marginalized or previously delegitimized actors have used the EU as a resource. The EU can help them to overcome institutional and traditional constraints, especially linked to Republicanism and its unitarian imperative. In two recent debates concerning the creation of the HALDE and the reform of law on disability – both linked to European Directives – previously non-legitimate actors have been the only ones to make explicit reference to Europe. In the case of anti- discrimination, external pressures (the Race Directive, but also international engagements, or foreign experiences in the UK, Belgium, or Canada) were presented as potential examples to reinforce the French integration model without changing it dramatically. French supporters of the reform did not use Europe as a stick (‘we have to do it anyway’), but rather presented it as an opportunity to provide a serious solution to strengthen the French universalist model, politically weakened by the 2002 Presidential election. The creation of the HALDE was only possible because it was included in a broader scenario, or, a storyline, that legitimized its inclusion in a larger policy framework (Chappe, 2008). Before 2000, the creation of an institution to fight discrimination, especially racial discrimination, was totally blocked by the Republican Pact and its veil of ignorance concerning citizens’ origins and differences. In 2002, the presence of the French leader of the extremist right in the second round of the Presidential election was interpreted as a sign of the weakening of the Republican model. The 2002 Presidential election created a window of opportunity. NGO members in favour of an extensive transposition of

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the 2000 Directive used this instrument to push for a penalization of discriminatory acts. However, they did not succeed because the fight against discrimination has been “re-universalized”, that is, presented as safeguarding equality between the citizens of the Republic (Chappe, 2008). In the course of the debates in Parliament, representatives from all the political parties have referred to the EU in order to underline its role as a progressive arena. The argument according to which the EU is not only a community based on law and market but also a moral community was especially directed towards the political left. Actors on the right of the political scale stressed the social character of the Directive to undermine possible left criticisms. Europe has been a legitimizing stimulus, giving added value to the project when it could be demonstrated that it was not only imposing market- driven retrenchment on social policies but also could contribute to improve social conditions for minority groups. The downloading of the European approach to discrimination (based on both the recognition of discriminated groups and the political necessity to guarantee their rights) in the French domestic context was, then, considered as a positive reference to strengthen the national model. Also, in 2004, the political context was set by the adoption of a law prohibiting religious signs in schools, which raised intense political debate on the French integration model. The main attack targeted the restrictive or prohibitive aspect of the law and crystallized traditional left–right political cleavages, as well as intra-party cleavages. As the political opposition saw it as a defensive initiative, the government consequently presented the HALDE as a supportive counterpart. To reassert both rights and duties, political actors linked the reassertion of French secularism with the fight against discrimination (Chappe, 2008). According to the Minister of Parity and Professional Equality, Nicole Ameline (UMP), the French transposition process of the Directive placed the country in an advanced position in Europe.8 Boasting about French principles of “liberty, equality, fraternity” was prevalent in political debates and the foundations of the 1789 French revolution were often cited. Such a solution allowed for the implementation of European requirements while avoiding criticism on the very principles of the Republican model. Hence, supporters of the reform used the EU as a resource, not only to gain legitimacy and overcome domestic constraints linked to the Republican model, but also to legitimize the model itself. The political process leading to the creation of the HALDE firstly targeted the French model of integration. The solution found was to

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universalize the principle of discrimination by extending the remit of the institution to cover all forms of discrimination, not only those based on ethnic and racial origins. Whereas, at first sight, the Directive challenged the integration model, it was not used as a scapegoat for the changes. European requirements were, rather, presented as a way to legitimize the model itself, but furthermore, in the context of the 2002 Presidential election, as a problem-solving recipe. Problem-solving usage of European resources is also at the heart of the reform process in the field of disability. The legislator recognizes that Article 9 of the law (employment and laid-out schedule for disabled) directly derives from Directive 2000/78.9 French NGOs involved in the management of disability subscribed to the social approach because they needed to address increasing dissatisfaction (Hassenteufel and Mohanu, 2010). The development of a comparison between the national situation and that in European countries introduced a window of opportunity in France, and brought new ideas and new examples to national debates. Also, explicit references to the Directive had been spun to answer national needs. The parties responsible for European and international issues at the inter-ministerial delegation for disabled people stressed that, the European ideology is about non- discrimination. ... The title of the law, ‘law for equal treatment and right, and the participation and citizenship of disabled people’ typically refers to a Community approach, that is, a policy defined according to the rights of the people. ... From the logic of protection founded by the law of 1975, the logic of the law of 2005 promotes a logic based on the rights. (Quoted in Hassenteufel and Mohanu, 2010) NGOs involved in the management of disability have filtered the European approach. These NGOs have focused on two elements: compensation and accessibility. There was also a debate between the NGOs involved in mental disability, which were aligned with the social approach, and those in charge of physical disability, which were more favourable to the medical approach and stressed a “reality principle”. The government did not deny this articulation between both approaches, but rather focused on the need to adapt the French policy to new stakes and new possibilities. As shown by the analysis of Parliamentary debates, the case of disability shows that European references were mainly presented through the identification of French backwardness when compared to other

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Table 2.2 Role and usages of Europe Policies

Role of Europe

Resources

Usages

Employment

Reform catalyst (but denied). Reform catalyst (but denied). Reform catalyst and agenda setter. Reform catalyst and agenda setter.

Cognitive and normative. Cognitive and normative. Legal, cognitive, normative and political. Legal, financial, political and normative resources.

Denial and boasting. Denial and boasting. Problem solving and boasting.

Pensions Antidiscrimination Disability

Problem solving and boasting.

countries.10 The need to implement Directive 2000/78 is not referred to, except when it comes to the defence of a particular definition of disability. In such cases, French MPs did not hesitate to refer to the European definition.11 Along with the other policy cases under study, promoters of the reform reasserted the political will to strengthened national solidarity. However, in the case of disability, it is noticeable that French NGOs played an important role in the agenda-setting process (Ponvert-Delucq, 2005). They gathered in the National Consultative Council of Disabled Persons (CNCPH) and they favoured the social approach promoted by the EU. European references were used more to stress the policy results of foreign models than focus on the need to transpose the Directive. Our cases demonstrate that the EU and its requirements have been diversely used and, hence, have to be differentiated according to the type of policy field, either “traditional” (employment, pensions) or “new” (anti- discrimination, disability). In traditional fields, the general trend is a denial of European impact accompanied by boasting about the French model. In new fields, the usages of Europe are more ambiguous. Indeed, in both types of welfare fields, political actors have shown a propensity to boast. However, in the case of new areas, European requirements are indeedused to legitimize reforms and provide opportunities to solve policy problems.

Conclusion: the need for a double contextualization In order to understand this ambiguous situation, we consider that analysis has to be contextualized, taking into account both the political and policy sector dimension.

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First, politics and past reforms matter. To understand the cautiousness of policymakers when it comes to referring to a European influence, the complex and difficult France–Europe relationship has to be included in the picture. The hypothesis of “goodness of fit” does not have sufficient explanatory power. It is a too static a conceptual instrument. None of the cases under study really fit with European requirements and this dimension is not sufficient to understand the role played by European incentives. In this misfit situation, we could expect that policymakers would either neglect or fully use the EU. This hypothesis is, however, not sufficient to understand their denial. Actually, typical French denial has to be connected with the elite and/or public opinion in relation to the EU. In France, this relationship is ambiguous since citizens generally favour European integration but see it as a threat to welfare fields. This situation should be linked with previous blame-avoidance strategies implemented by political leaders in the 1980s. As political actors realized that such strategies could backfire on them, using Europe to legitimize difficult welfare changes became a dangerous political game. Indeed, as French citizens are usually told that their political leaders are able to shape European outcomes, it is difficult to use such outcomes as a resource to legitimize welfare reforms. In such a case, political leaders would be seen as either losers of the European political game in Brussels or as supporters of reforms that have not been democratically discussed at the national level. Secondly, within this general context, the different types of usage are directly linked to the type of resources available at the European level. In cases of cognitive and normative resources (employment and pensions), French politicians can easily boast of their achievements. By contrast, when legal resources (Directives) are involved (antidiscrimination and disability), this is more problematic, lending themselves more to legitimizing reform promoters’ action. In such cases, the promoters of reforms do not challenge the national model. Rather, such actors tend to use European requirements to stress the need of reform, which would finally enhance the model rather than transform it. Such attitudes reflect the relevance of our membership hypothesis. As French elites cannot really use Europe to promote policy reforms, they instead underline the grandeur of domestic policy schemes. When confronted with European demands, requiring these schemes to change, French actors usually present the reforms as a way to enhance the traditional principles of a policy field. The role and influence of Europe within a reform process is, therefore, not acceptable when the reform

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Perception of the content of the reform and usages of Europe

Perception of the content of the reform

Reference to Europe by the reform promoter

Retrenchment (employment and pensions) Progressive (antidiscrimination and disability)

No reference or negative reference.

Type of usage Denial and boasting.

Direct but soft reference. Problem solving and boasting.

is in opposition to the French post-war myth-like social model. Since policymakers anticipated that the public might perceive reform negatively, adding another negative reference to Europe would be counterproductive. The alternative perspective is that the reforms made in these domains will “save” the French welfare state institutions – and so save their specificities (Palier and Petrescu, 2007). Table 2.3 summarizes these findings. In the traditional fields, European references and ideas are, thus, denied because they are understood as alien to and endangering the system. In short, they are thought to be neo-liberal, unfit for the national system, which must remain untouched. In a new field, such as the fight against discrimination, the usages of Europe can become a positive resource when either the reform conforms to the national model or when it adds something considered as positive to this model. In fine, all the policy cases under study have dramatically changed. France is certainly not “frozen” in terms of its welfare state, but the framing of reforms is indeed frozen.)

Notes 1. Pompidou put an end to the French veto with regard to the adhesion of Great Britain with the 1972 referendum and Giscard d’Estaing launched the European Monetary System (EMS) in 1978. 2. However, the issue is not specifically more important for them than for other countries: Ireland – 87 per cent; Italy – 83 per cent; UK – 72 per cent; Germany – 71 per cent. Source: Eurobarometer, Europe as the Europeans Sees It, 27 November 1973. 3. Eurobarometer, 28 December 1987, pp. 36 and 47. 4. Flash Eurobarometer, 171, June 2005, p. 17. 5. Special Eurobarometer, 251, The Future of Europe, 2006, p. 55. 6. European Council (2003), Joint Commission/Council Report on adequate and sustainable pensions (06- 03): 145.

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70 Hélène Caune, Sophie Jacquot and Bruno Palier 7. In the Presidential discourse of 14 October 2002, in Troyes, President Chirac introduced the idea of the creation of an independent authority to fight all forms of discrimination due to racism, religious intolerance, sexism or homophobia. Speech available at: http://www.elysee.fr/elysee/elysee.fr/francais_archives/interventions/discours_et_declarations/2002/octobre/discours_du_ president_de_la_republique_prononce_a_troyes.1560.html 8. ‘Ce texte place la France en avant-garde européenne’, Deuxième séance du mardi 7 décembre 2004, Assemblée Nationale. ‘This text sheds light on France as being at the cutting-edge in a European context’, Second Session of December 7th, 2004, National Assembly (authors’ translation). 9. Parliamentary report no. 1599, MP Jean-François Chossy, Assemblée nationale, 13 May 2004. 10. Jean-Michel Dubernard (UMP), Président de la commission des affaires culturelles, familiales et sociales. ‘Le retard français sur les pays d’Amérique et d’Europe du Nord ne se rattrape décidément pas’, Assemblée Nationale, Deuxième séance du 1er juin 2004. President of the Commission for cultural, familial and social issues: ‘When compared with the USA or Northern Europe, France has really not catch up’, Second Session of June 1st, 2004, National Assembly (authors’ translation). 11. Pascal Terrasse (SRC): ‘Toutefois, un des éléments fondamentaux de ces textes a toujours été la reconnaissance de la notion de handicap, dont la définition doit en outre s’inscrire dans la norme européenne puisqu’il faut transposer en droit français une partie de la réglementation européenne. Or, aujourd’hui, la notion de handicap telle que vous la définissez est contraire à ce principe européen et fait même l’unanimité contre elle. Quant à la position du Conseil économique et social, elle est exactement inverse à celle que vous prétendez’, Assemblée Nationale, Troisième séance du 1er juin 2004. ‘However, one fundamental element of these texts has always been the recognition of the notion of disability, which definition must be in line with the European norm, since European legislation must be transposed into the French legislation. Yet, your definition of the notion of disability contradicts this European principle and is unanimously rejected. As far as the position of the Economic and Social Council is concerned, it precisely contradicts the one you are defending’, Third Session of June 1st, 2004, National Assembly (authors’ translation).

References Barbier, J. C., and N. S. Sylla (2001), Stratégie Européenne pour l’Emploi: Les Représentations des Acteurs en France, December (Paris: Rapport pour la DARES et la Délégation à l’emploi du ministère du travail et de l’emploi). Belot, C., and B. Cautrès (eds) (2006), La Vie Démocratique de l’Union Européenne (Paris: La Documentation française). Calves, G. (2002), ‘ “Il n’y a pas de race ici”: Le modèle français à l’épreuve de l’intégration européenne’, Critique Internationale, no. 17, October.

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Caporaso, J., M. Green Cowles and T. Risse (eds) (2001), Transforming Europe: Europeanization and Domestic Change (Ithaca, NY: Cornell University Press). Cardou, C., and D. Poizat (eds) (2007), Désinsulariser le Handicap: Quelles Ruptures pour quelles Mutations Culturelles ? (Paris: Editions Eres). Caune, H., A. Dujin-Lemaire, M. Petithomme and Z. Truchlewski (2007), ‘Les Débats Suscités par le Traité Constitutionnel en France: illustration, Cristallisation, et Déplacements des Clivages Traditionnels’, Notes et Études de Science Politique et de Relations Internationales de l’Université Catholique de Louvain-la-neuve, no. 2. Caune, H. (2010), ‘Blame Avoidance (Évitement du Blâme)’, in L. Boussaguet, S. Jacquot, P. Ravinet, Dictionnaire des Politiques Publiques (Paris: Les Presses de Sciences Po). Chappe, V. A. (2008), La Construction Publique du Problème des Discriminations à Travers la Genèse de la HALDE: La Creation d’un Consensus a Minima, Mémoire de Master (Paris: Institut d’Etudes Politiques). Dehousse, R., and A. Menon (2009), ‘The French Presidency’, Journal of Common Market Studies, vol. 47, Annual Review, pp. 99–111. Eichenberg, R. C., and J. D. Russel (2007), ‘Post-Maastricht Blues: The Transformation of Citizen Support for European Integration: 1973–2004’, Acta Politica, vol. 42, pp. 128–52. Erhel, C., L. Mandin and B. Palier (2005), ‘The Leverage Effect: The Open Method of Co- ordination in France’, in J. Zeitlin and P. Pochet (eds) (2005), The Open Method of Coordination in Action: The European Employment Strategy and Social Inclusion Strategies (Brussels: PIE-Peter Lang), pp. 217–47. Esping-Andersen, G. (1990), The Three World of Welfare Capitalism (Cambridge: Polity Press). Evans, J. A. (2007), ‘The European Dimension in French Public Opinion’, Journal of European Public Policy, vol. 14 (7), pp. 1098–116. Falkner, G., O. Treib, M. Hartlapp and S. Leiber (2005), Complying with Europe: EU Harmonization and Soft Law in the Member States (New York: Cambridge University Press). Grossman, E. (2007), ‘Introduction: France and the EU: From Opportunity to Constraint”, Journal of European Public Policy, Vol. 14 (7), pp. 983–991. Hassenteufel, P., and A. V. Mohanu (2010), ‘La Loi de 2005: Une Loi Européenne?’, in O. Guerou, S. Manson (eds), Droit Public et Handicap (Paris: Dalloz). Inglehart, R. (1970), ‘Cognitive Mobilization and European Integration’, Comparative Politics, vol. 3 (1), pp. 45–70. Jacquot, S., and C. Woll (2003), ‘Usages of European Integration: Europeanisation from a Sociological Perspective’, European Integration Online Papers, vol. 7 (12), available at http://eiop.or.at/eiop/texte/2003- 012a.htm Key, V. O. (1961), Public Opinion and American Democracy (New York: Alfred A. Knopf). Lequesne, C. (2008), La France dans la Nouvelle Europe: Assumer le Changement d’Echelle (Paris: Presses de Sciences Po). Mandin, L. and B. Palier (2004), ‘L’Europe et les Politiques Sociales: Vers une Harmonisation Cognitive des Réponses Nationales’, in C. Lequesne, Y. Surel (eds), L’Intégration Européenne: Entre Dynamique Institutionnelle et Recomposition de l’Etat (Paris: Presses de Sciences Po).

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72 Hélène Caune, Sophie Jacquot and Bruno Palier Palier, B. (2000), ‘ “Defrosting” the French Welfare State’, West European Politics, vol. 23 (2), pp. 113–36. Palier, B. (2006), ‘The Long Good Bye to Bismarck? Changes in the French Welfare State’, in P. Culpepper, P. Hall, B. Palier (eds), Changing France: The Politics that Markets Make (Basingstoke and New York: Palgrave Macmillan), pp. 107–28. Palier, B. (2010a), ‘The Dualizations of the French Welfare System’, in B. Palier (ed.), A Long Good Bye to Bismarck? The Politics of Welfare Reforms in Continental Europe (Amsterdam: Amsterdam University Press). Palier, B. (2010b), La Réforme des Retraites, 3rd edn (Paris: Presses Universitaires de France, coll. Que sais-je). Palier, B., and L. Petrescu (2007), ‘France: Defending our Model’, in J. Kvist, J. Saari (eds), The Europeanisation of Social Protection (Bristol: Policy Press), pp. 61–76. Parsons, C. (2003), A Certain Idea of Europe (Ithaca: Cornell University Press). Ponvert-Delucq, A. (2005), Les Groupes d’Intérêt Face au Changement: L’Exemple de la Politique Publique en Faveur des Personnes Handicapées, Mémoire de Master (Rennes: Institut d’Etudes Politiques). Schmidt, V. (2007), ‘Trapped by their Ideas: French Elites’ Discourses of European Integration and Globalization’, Journal of European Public Policy, vol. 14 (7), pp. 992–1009. Simon, P., and J. Stavo-Debauge (2004), ‘Les Politiques Anti- discrimination et les Statistiques: Paramètres d’une Incohérence”, Sociétés Contemporaines, no. 53–2004/1. Weaver, R. K. (1986), ‘The Politics of Blame Avoidance’, Journal of Public Policy, no. 6, pp. 371–98. Woll, C., and S. Jacquot (2010), ‘Using Europe: Strategic Action in Multi-Level Politics’, Comparative European Politics, vol. 8 (1), pp. 110–42.

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3 Learning or Teaching? Germany and Its Complex Historical Relationship with the EU Patrizia Aurich and Anne Schüttpelz

1. Introduction Since the 1990s, a substantial revision of the welfare state has been observed which has been explicitly aimed at making European welfare states more employment-friendly (see Graziano, Jacquot and Palier, introduction to this volume; see also Ferrera et al., 2001, Häusermann and Palier, 2008). In this respect, a broad range of measures has been implemented to reform taxation and social protection systems (Armingeon and Bonoli, 2006; Cox, 1998; Goul Andersen et al., 2002). These include strategies to increase employment and reduce non-wage labour costs, which are a challenge in particular for conservative welfare regimes such as Germany (Esping-Andersen, 1999). In these times of increasing pressure on welfare states (Pierson, 2001), the most striking aspect about German welfare state reforms concerns the speed and degree of reform. After rather incremental reforms in the 1980s and the beginning of the 1990s (Mohr, 2007: 198) led to a characterization of a “frozen welfare state” (Esping-Andersen, 1996, Ferrera and Rhodes, 2000, Scharpf and Schmidt, 2000), the last couple of years have witnessed tremendous reform activity involving practically all aspects of the social insurance system. This includes a pension reform reducing the overall weight of the public pillar in 2001 (introduction of the private, so- called Riester-Rente), a major health care reform in 2003, and the restructuring of unemployment insurance and social assistance as part of the paradigmatic ‘Hartz reforms’ (2002/03).1 These reforms have radically changed the German welfare state and have been analysed as ‘an irrevocable path from a conservative welfare state to a new 73

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recombinant type’ (Lamping and Rüb, 2004, with respect to the 2001 pension reform) or even as a potentially “path-breaking” development towards a liberal model of welfare (Clasen, 2005; Fleckenstein, 2004; Mohr, 2004). This path of development makes Germany a particularly interesting research object from the perspective of which kind of influence the EU had on policy reforms. One might expect, for example, that outside influences, such as EU recommendations, played a fundamental catalysing role by providing innovative concepts and tools of conceptual learning. In other words: was the EU helpful in developing and initiating the reforms? Such influence would relate to the idea of “cognitive usage” (see Jacquot and Woll, 2003: Woll and Jacquot, 2010; Heidenreich and Bischoff, 2008), which implies the transfer of concepts and insights about policy effects. On the other hand, the parallel take- off of German reforms and the coordination of social policy at EU level could be interpreted as a necessary condition, building pressure for reforms and legitimating them at the same time. Such context may have enabled German politics to successfully argue for the implementation of already-existing reform concepts, a process that could be called strategic or legitimating usage (see Jacquot and Woll, 2003; Woll and Jacquot, 2010; Graziano, Jacquot and Palier, introduction to this volume). So the main question is to what extent and in which way the EU has facilitated German employment reforms. To analyse the linkages between German welfare reforms and the particular use of the EU in this respect, it seems helpful to look at the type of “employment-friendly” welfare reforms which the EU emphasizes (see Graziano, Jacquot and Palier, introduction to this volume). Therefore, we concentrate here on policy reforms that aim to change the behaviour of labour market actors on the supply side of the labour market: unemployment policy and, since there is a partial overlap, policies on early retirement. How have the preconditions for being allowed to leave the labour market been changed by national actors? While pension and health care reforms may indirectly decrease pressure on labour costs and thereby boost the competitiveness of the German economy, we consider these policy areas to be less directly involved with regulating individual employment relationships. Therefore, we suggest focusing on policies that influence individual decisions on the labour market for employment. This supply side focus emphasizing the role of social rights in promoting a retreat from or access to the labour market has become not only a main concern in the EU, but also a part of broader international policy developments (OECD, 1994).

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More specifically, we have included the changes induced through the Labour Promotion Law of 1997, the Job-AQTIV-law of 2001, the Hartz laws of 2002/03, as well as changes in the Regulations on early retirement (the Act on Part-time Retirement of 1996). These reforms include the last wave of “groundbreaking” reform activities (Hartz laws), as well as reforms paving the way for them, thereby allowing for a dynamic perspective on subsequent reform steps, so- called “sequencing” in historical comparative analysis (Mahoney et al., 2009; Pierson, 2004). With respect to these developments we have developed the following research hypotheses: (RH1) EU Membership: One very important aspect influencing the role of the EU in national policymaking concerns the relationship to the EU and, more specifically, the type of membership in a given case. Since Germany is one of the founding members of the European Community, we expect, in general, rather little political pressure for adaptation. Whereas it is essential for acceding countries to refer to EU policies when reforming national policies in order to show compliance with EU norms, as well as to legitimate changes to the population, for old member states the perception is often the opposite: it is not the EU that tells them what to do, but their input that makes up the overall success story of the Community. This self-perception as ‘policymakers, not policytakers’ tends to inhibit national actors from using EU resources and may lead to some kind of role-reversal, in which the influence of the EU is played down. (RH2) Relationship to Europe: However, apart from official membership status, other kinds of relations to the EU exist, which can be expected to exercise significant influence on the process of policy exchange. a) The usage of the EU for national welfare reforms could depend on the general relationship of national actors with Europe. As in Germany the national elites’ attitudes as well as public opinion are in favour of Europe, usage in this sense could be assumed to be both positive and explicit, if policy changes that are in accordance with EU regulations occur. b) Furthermore, it seems that the German relationship to the EU is also formed by its understanding of its role, not only as a founding member, but also as a “net contributor”. It could be expected that this strengthens the idea of supporting the EU (rather than the other way round), which would make usage rather unlikely.

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c) More specifically, in line with the argumentation on a ‘world of domestic politics’ (Falkner et al., 2005), we assume that positive attitudes of relevant domestic actors (parties, interest groups) towards specific European (social) policies foster the (explicit) usage of respective EU resources. This means, we would expect national actors to make reference to a European policy if they support it, and little or no reference if domestic concerns prevail in ‘a conflict of interests’ (Falkner et al., 2005: 323). (RH3) Misfit of the welfare regime: Lastly, applying a perspective of historical institutionalism, in which previous policy institutions influence the opportunities and pressures for later developments, some assume that the degree of fit or misfit between a country’s regulation and EU norms determines the pressure for reform. However, Germany’s position as a founding member makes the chance of a structural misfit between EU norms and German regulation rather slight. Nevertheless, the type of “employment-friendly” welfare reforms the EU has emphasized since the 1990s, constitutes a major challenge to conservative welfare states such as Germany. Accordingly, some problems and delays in implementing “Europeanized” social policies should be expected and usage of the EU is likely in order to justify reforms (but see RH2c). RH1, RH2a, b and RH3 refer to a comparison of Germany with other countries. Hypothesis RH2c, however, adds a comparative perspective within the country, as we feel it necessary to differentiate between policy sub-fields and the respective reform processes. Falkner and others have shown that different worlds of compliance exist in regard to EU policy implementation (Falkner et al., 2005). As Germany has been characterized as part of the “world of domestic politics”, in which compliance with EU regulation is mainly a function of political preferences of relevant actors, it can be expected that political preferences with respect to EU policies differ with the type of policy and the domestic actor constellation at the time of reforms. In that regard, it is also important to note that the “employment-friendly” policies emphasized by the EU do not simply form a coherent strategy. Instead, the frame of policies recommended is rather broad, containing even contradictory elements (Serrano Pascual and Crespo Suárez, 2005), which relate to different ideologies of activating employment reforms (Barbier, 2005). This chapter is structured as follows: focusing on the role of the EU as a resource for national reform, it is, first, necessary to describe in detail the context of the reforms in terms of the welfare regime and

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its relationship to Europe. Secondly, we will determine to what degree reforms took place and analyse the corresponding “European flavour”, before testing our above hypotheses on the role of the EU within these processes. Here we seek to interpret the role of different actors in these reform processes in terms of the usages of Europe framework (see Jacquot and Woll, 2010) to elaborate on the function of the EU for German welfare state reforms. To do this we analyse parliamentary debates, central policy documents (such as accompanying law papers, policy proposals etc.) and media coverage. However, it should be noted that Europeanization, in terms of policy change, is not the same as “using” the EU. For instance, policies could change towards EU contents without any reference to the EU at all. On the other hand, the EU could be used as a source of legitimization without reformers complying with EU law or EU recommendations. We will, therefore, need to examine carefully both trajectories, the German and the European one, identifying possible overlaps and searching in some detail for any reference to relevant EU policies made by national actors. The concluding section discusses the main research hypotheses of the project with respect to the German case.

2. The German path of reform and the EU context 2.1 Relationship to Europe As a founding member of the European Communities, Germany has traditionally worked to strengthen European political cooperation: first, as a way to foster its own political and economic integration into Western Europe after World War II, and, since the start of the system transformation in Central and Eastern Europe in 1989, on the very similar understanding that further European integration is very much in the political and economic interest of the country. This attitude is shared, in principle, by all major political parties. Article 23 of the German constitution, introduced in 1992 in the context of the ratification of the Maastricht treaty, defines as a national objective that Germany should aim to assist the development of the European Union. In budgetary terms, Germany has traditionally been the biggest net contributor to the EU. According to the 2008 Financial Report of the European Commission, Germany contributed 8.8 billion Euro more than it received from the EU budget (EC, 2009). In public opinion (as measured by Eurobarometer), there is stable support for the European Union, and Germans tend to be quite well informed about the EU. In the autumn 2009 Eurobarometer survey, 60 per cent of

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Germans stated that EU membership is ‘a good thing’ – compared to 53 per cent of all Europeans – and 57 per cent think, that Germany profits from membership (EC, 2010: 19–20). The image of the EU is significantly better among the more highly educated. The EU is positively associated with freedom of movement, the Euro, peace, democracy, a stronger political influence in the world and cultural diversity (EC, 2010: 22–23). In contrast to other countries with a more widespread negative attitude towards European integration, political elites in Germany could, therefore, in principle refer to the EU when seeking public support for their policies. As to the field of European social policy, Germany earlier had a very sceptical position towards the European employment policy for reasons of national sovereignty and budgetary discipline (Schulten, 1998). This position changed with the change in government in 1998. Since then Germany – as a country with a high level of labour market regulation – has been committed to harmonizing social standards and employment rights in order to maintain economic competition. In some cases, Germany – which had generally little regulatory misfit – even implemented the most non-binding recommendations of the EU labour law of the 1990s of all (old) EU member states, i.e. it followed more EU rules voluntarily than it was legally compelled to (Falkner et al., 2005).2 At the same time, Germany was one of the few countries to take advantage of the implementation of EU Directives to retrench existing standards to the EU minimum.3 These somewhat contradictory developments that are inconsistent with the misfit hypothesis can be explained by the fact that, in the German case, in practically all adaptation processes domestic party politics were of particular importance (see also Falkner et al., 2006; Treib, 2003). For instance, the parental leave Directive was transposed (and even significantly “overimplemented”) only after the government coalition of Social Democrats and Green Party came into power in 1998 and despite the fact that there was only a minor misfit between European and the existing national law. Treib (2003) has also argued that, in the German party system, even a small misfit with the EU labour law often caused political opposition from either the free market liberal FDP or from the conservative CDU.4 With respect to the world of compliance, the German case is, in particular, comparable to that of the UK and the Netherlands, two countries generally seen as high performers in welfare reform (Clegg, 2007). 2.2 The German welfare regime Domestic debates on the welfare state in Germany usually have a clear national focus and evolve around national conflicts: the issue of

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“social Europe” plays only a marginal role, whereas most debates arise with respect to the specific problems of the German welfare system. Germany is usually understood as a conservative welfare system (see Esping-Andersen, 1990, 1999), characterized by the following core elements (see also Aust et al., 2002): ●

●

●

social protection based on social insurance systems with a strong corporatist legacy and the basic principle of status maintenance (relating recipients’ benefits to their previous labour market status); a strong breadwinner model, attributing employment primarily to men and, as a consequence, integrating women and children into the insurance systems mainly as dependents of the male household head; a strong emphasis on the preservation of the traditional family and the principle of subsidiarity based on Catholic social philosophy, meaning that social service provision is marginal in favour of transfer payments, and the family takes more responsibility for covering social risks than do charitable organizations or state agencies.

By the end of the 1990s, it was widely recognized that this German welfare system had a number of serious problems. First of all, the social insurance systems faced massive financial problems from increasing imbalances between contributions and spending for a number of reasons (rising unemployment, the policy of “labour shedding”,5 an ageing population). These problems were exacerbated as the possibility of balancing social security deficits through transfers from the government budget was, at the same time, seriously constrained by German unification (see also Streeck and Trampusch, 2005). Secondly, the system was challenged when it began to fail to provide sufficient social protection to ever-larger groups of the population that did not fit the implicit norm of a “standard work arrangement” (because of changing life- courses and different forms of employment). Those working in atypical employment or living in incomplete families are particularly vulnerable to social exclusion and poverty (Bonoli, 2006; Taylor- Gooby, 2004). Generally, most of the reforms made since the mid-1990s have been inspired by the worsening employment problem. This discourse identified particular characteristics of the Bismarckian welfare state – funded through social security contributions and aimed at status maintenance rather than protection from poverty – as a major problem implying high costs of labour that affect negatively the level of employment. At the

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same time, the status protection principle produces a strong interest in maintaining the status quo inhibiting “real” reforms that would alleviate the financing problems (Clasen, 2005: 89). Furthermore, the belief in the overall success of the German policy model (Clasen, 2005: 67–73), which was transferred in its traditional form to Eastern Germany (‘unification consensus’, see Aust et al., 2002: 55), led to rather low levels of innovative activity. This changed after the recession of 1992–93 (which followed the re-unification boom). The interaction between the budgets of the welfare state and the federal government, as subsidies to pension and unemployment insurance funds (necessary to maintain entitlements), became a serious burden to the federal budget (Clasen, 2005). Still, however, this resulted mainly, at that time, in merely tinkering with schemes for labour market exit, such as early retirement and unemployment assistance, retrenchment measures and a supply side focus; the big changes brought about by reform were to come only in 2002/03.

3. The sequencing of German employment-friendly reforms 3.1 Setting the stage – context of policy development at both levels With the ‘Hartz reforms’ Germany conforms to the EU’s emphasis on “employment-friendly” welfare reforms and the analysis of EspingAndersen that the “welfare without work” strategy of conservative welfare states is not sustainable (Esping-Andersen, 1996). Therefore, an EU input and influence is quite plausible, but still has to be detected from available material. In the following section we will look at all dimensions of policy change (objectives, principles, instruments and procedures, see introduction to this volume) assuming that any change in one of these dimensions, whether its content is EU-related or not, can lead to the usage of Europe as a strategic tool. Labour market policies have changed significantly since the mid-1990s. In general, the reforms aimed at labour market integration by closing routes to “passive welfare” or “lock-in” to active measures (Larsen, 2005) and in this way to “activate” benefit receipt. In the mid-1990s the conservative–liberal coalition took some labour market initiatives according to these new objectives, including the establishment of an ‘Alliance for Jobs’ in 1995/96 (which failed with the withdrawal of labour representatives) and passing a law to reduce early retirement. These attempts were followed by the red–green ‘Alliance for Jobs’ in 1998 and a number of legal reforms including the ‘Job-AQTIV’ and ‘Hartz laws’. Whereas

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the focus in Job-AQTIV (similar to the Employment-Promotion Reform Act of 1997) was on skills, human resources and quicker reintegration into the labour market, the Hartz reforms presented a break with the status protection principle of previous policies. At the same time, employment policy was established as a new policy area at the European level (Caune, Jacquot and Palier, Chapter 1, this volume; Palier, 2010). The Treaty of Amsterdam introduced a new title on employment and thus expanded the scope for European action in the field of employment policy. Several measures were developed, resulting in the so-called Open Method of Coordination (OMC). Although some European elements can be seen at a first glance in German policy changes, the link to the European Employment Strategy (EES) is not easily made. First, the EES can hardly be reduced to a flexibilization and activation approach, since it also takes into consideration the inclusion of social partners, the recognition of negative effects of labour market flexibility and social inclusion (see Casey, 2004, for a comparison of EES and OECD jobs strategy). Accordingly, the EES itself contains highly contradictory elements allowing for considerable contingency (Serrano Pascual and Crespo Suárez, 2005). Secondly, the EES was developed further in the following years to include country-specific recommendations, setting quantified targets and making connections with macroeconomic policies (see also Schmid and Kull, 2004). And last, but not least, there are other relevant European resources including growing EU legislation in the field through the 1990s and a stronger steering capacity of the ESF as it became connected to the aims of the EES (see Caune, Jacquot and Palier, Chapter 1, this volume; Falkner, 2004) – which could have been used by national actors. An overview of the reforms in relation to EU development is presented in Table 3. 1. The following paragraphs discuss these sequences. 3.2 The sequencing of single reforms One of the first reforms was the gradual departure from the policies of “labour shedding” with regard to older workers (see Aust et al., 2002). The procedure of early retirement was characterized by a combination of an increased duration of benefits for older unemployed and the resulting possibility of retiring at 60 (instead of 63) without deductions in the amount of pension (‘57er-rule’). That way, employers were able to lay off older persons without them facing economic hardship. Already, during the 1990s, this arrangement proved too costly and was changed by the law on ‘promoting a gradual transition towards retirement’ in 1996. This increased the retirement age without deductions to 63 years, while introducing yet another form of early

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82 Patrizia Aurich and Anne Schüttpelz Table 3.1 Year

The sequencing of main German labour market reforms since 1990

Domestic reform

1993

1994

Employment Promotion Act: Introduction of private labour market services. Extension of active labour market policy instruments.

1996

Unemployment assistance Reform Act: Reduction of certain unemployment benefits. Act on part-time retirement: Subsidies to workers over 55 years reducing their working hours. Labour Promotion Reform Act: Introduction of a strong supply side focus into labour promotion, stressing individual responsibility and increasing the conditionality of benefits.

1996

1997

1999

2000

2001

Job-AQTIV Act: To make labour promotion more effective. Introduction of job rotation schemes.

EES development European Commission (Delors) White Paper on Growth, Competitiveness and Employment (to promote a European employment strategy). Essen European Council on Employment (to promote investment in vocational training, make growth more employment intensive, reduce indirect labour costs, increase the effectiveness of LMP, reinforce measures to help the groups at risk of exclusion from the labour market).

Treaty of Amsterdam (new title on employment). Luxembourg European Council (defined a yearly procedure of guidelines, national action plans and reporting for European employment policy –‘Luxembourg process’). First employment guidelines. Cologne European Council (resolution on the European employment pact). First country-specific recommendations. Lisbon European Council (‘Lisbon Strategy’, modernization of the social state – ‘from welfare to active citizenship’, quantified employment targets). Stockholm European Council (amendment of Lisbon targets).

Continued

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Continued

Year

Domestic reform

2002

First and Second Act on modern labour market services (Hartz I + II): New instruments. Stricter conditionality. Third Act on modern labour market services (Hartz III): Restructuring of the federal Labour Agency. Fourth Act on modern labour market services (Hartz IV): Replacement of two benefit systems. Stricter conditionality.

2003

2003

83

EES development

retirement: part-time retirement. In part-time retirement older employees receive a subsidy from the federal government if they reduce their working hours and the employer replaces them with an unemployed or young person. However, this initiative ran out in December 2009 and now covers only existing caseloads. Up to the introduction of the part-time retirement law in 1996, the EU had made almost no official statements about early retirement measures. The first explicit references can be found in the Commission recommendations, as well as in the integrated guidelines of 1999 (EU, 1999: 3). In unemployment policy, reforms took off in 1997 with the integration of the former Labour Promotion Act into the social security code (Bothfeld, 2007). The reform focused on reintegration of the long-term unemployed and eased the criteria for acceptable employment – and was thereby in line with the EES (under development at that time) although no reference to Europe can be found in public debates. At the same time, the conservative government had reduced, since 1992, the overall budget share for active labour market policies (Blancke and Schmid, 2003: 18).6 The next important step in the reform carousel was the ‘Job-AQTIV’ law in 2001 (Clasen, 2005), which changed the main emphasis of unemployment policy from a passive to an active approach, while adding a number of new instruments (‘jobseekers agreement’, job rotation, profiling, mobility grants, see: Bundesregierung, 2001). Qualifying periods for participation in employment and training measures provided by the public employment services were lifted and employers of young people without

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education or vocational training could receive significant subsidies. Employers were obliged to contribute to the maintenance of the employability of their employees, while employees were regarded as responsible for managing their professional development over the life-course. All in all, this reform was clearly intended to improve “classical” instruments of active labour market policy (Köhler et al., 2008; Martin, 2000) by taking an enabling path of activation (Barbier and Fargion, 2004; Dingeldey, 2007; Larsen, 2005) rather than to change the principles of the system. The contents of this reform are very much in line with the EU debate at the time. Already the Amsterdam treaty spoke of ‘promoting a skilled, trained and adaptable workforce and labour-markets responsive to economic change” (Title VI, Article B, as cited by Weber, 1997, emphasis added), and culminated in emphasizing ‘lifelong learning’ for ‘full employment in a knowledge-based society’ in the employment guidelines for 2001 (EU, 2001: 7). A similar direction was followed in the first wave of the ‘Hartz laws’ (I–III): these strengthened active labour market policies by introducing the Ich-AGs (“me-inc., as a special form of self-employment”), “minijobs” (not subject to social insurance) and personal service agencies. However, the last part of the reform was to become the most famous, because it represented a break with the social insurance tradition of the German (and for that matter continental) welfare state (Clasen, 2005; Eichhorst et al., 2008; Fleckenstein, 2008; Mohr, 2007). Unemployment and social assistance were merged into ‘unemployment benefit II’, granting former social assistance recipients access to “proper” labour market services while decreasing the level of unemployment assistance to that of social assistance. ‘Unemployment benefit II’ was now a flat-rate benefit without any relation to previous earnings and a rather strict code of conduct in European comparison (Aurich, 2009). The duration of ‘unemployment benefit I’ was shortened to a maximum of 12 months, thereby potentially enlarging the target group of the new benefit. This reform presents itself as only partially compatible with EU policy contents. While the EU promotes a “flexicurity” approach, making the labour market flexible while securing the living standards of the individual, this reform seriously threatens income security of workers: it enlarged a low-income sector of people who rely on benefits in addition to their working wages (so- called Aufstocker). Furthermore, it turns away from developing human resources for a knowledge-based economy as emphasized in the EES. Qualification is considered only the secondbest solution to labour market participation: access to labour market services in terms of the labour promotion law (Social Security Code III)

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has decreased for most unemployed. While for social assistance recipients the reform gave first-time access to public employment services, for previous unemployment assistance recipients the move into UB II can be considered a major loss of access to services, since their application is now at the discretion of the case manager: social rights have really become ‘discursive’ (Cox, 1998). The only right of recipients to some sort of activity exists in so- called “one- euro-jobs”, which are activities supposed to be additional (not offered on the labour market) and free of social security contributions. They are mainly low-level activities not having much in common with real employment situations and are paid at 1–2 Euros per hour to compensate for expenses. While both reforms (Job-AQTIV and Hartz) implemented an activation approach aimed at more effective labour promotion and a broader range of measures to integrate jobseekers into the labour market – both fully in line with the EES – some normative assumptions behind the reforms seem to differ. Whereas the Job-AQTIV reform follows a Scandinavian model of an enabling path of activation, the Hartz reforms have a much more “liberal” flavour, following rather a “workfare” understanding of activation. Overall, German labour market policy has developed from a very passively oriented, labour shedding strategy, to an “active” attempt (Job-AQTIV), towards, finally, a strategy of recommodification (Aurich, 2009). This in itself states a change in objectives: in Pierson’s terms, the rationalization of conservative policy has been replaced by “updating” policy arrangements towards new goals (Pierson, 2001), away from labour shedding towards the improvement of labour market integration via supply side policies. However, this development started with some changes at the lower levels of policymaking, namely with procedural changes: benefits were reduced and eligibility criteria for early retirement changed. Only when this didn’t prove successful were changes in the normative dimension and the instruments of labour market policy considered and implemented. The next section will discuss the role of Europe within this process: was there a specific moment at which Europe mattered? Did usages differ in relation to the policy dimension? And which actors utilized what kind of European resources?

4. The usages of Europe 4.1 A window of opportunity for cognitive learning? Most analyses of employment-friendly reforms refer to domestic aspects, such as the 1998 change in government (see e.g. Blancke and Schmid, 2003) and the circumstances giving rise to the Hartz commission and

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the subsequent reform laws of the same name (forged job placement statistics from the Federal Employment Agency at the beginning of 2002 opened a so- called “window of opportunity” for employment reform; see Fleckenstein, 2008; Heinelt, 2003). It is true that the reduction of mass unemployment was one of the main election pledges of the Social Democrats led by Gerhard Schröder. And after the break with Finance Minister Oskar Lafontaine,7 who represented the traditional social democratic wing, the government parted from traditional ideas on redistribution and Keynesian growth policies. Consequently, Chancellor Schröder took a more neo-liberal position developing the ‘Hartz reforms’ as a central part of the new red–green ‘Agenda 2010’ announced in a government declaration in March 2003. While some analyses recognize outside influences (EU, UK) in the process of policymaking (for example, this is very visible in the paper by Blair and Schröder, 1999), their role is mainly interpreted in terms of cognitive learning (Heidenreich and Bischoff, 2008) or ideational change (Büchs and Hinrichs, 2007). Combining domestic and EU perspectives, however, our study suggests a somewhat different interpretation concerning outside influence. First, the overlap of reforms with European ideas is partial at maximum: the last few reforms, in particular, were less oriented towards flexicurity and more towards recommodification due to the aforementioned fiscal problems. Secondly, the usages of Europe differed in relation to timing and content of reform. Surprisingly, more references to the EU occurred during later reforms than during earlier reforms, even though these were more in line with EU content. The legitimation was, thus, based on a different kind of usage: rather than pointing out the compatibility of the reforms with EU policy suggestions, the EU was used as a broader point of reference for German development. In the following we will discuss the utilization of EU resources and institutions for the different reform packages presented. 4.2 The unnecessary EU As already mentioned, with respect to early retirement the timing of the reform did not fit with EU initiatives. However, the EES was already in preparation and it can be assumed that on a policymaking level the topic of active ageing and the problems associated with early retirement were already being discussed. But only a few years after the law on early retirement, documented references to the EU can be found: the Hartz report cites active ageing as not only ‘a task for employment policy in Germany’, but also in ‘the European Union’ thereby connecting EU and

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German discourse. However, this statement is rather characteristic of the German policy community: often the EU is cited as a frame of reference, a comparative standard (how German policies compare on average), or as a common problem area. Only rarely are the actual guidelines and policy documents of EU institutions discussed. 4.3 A role-model for whom? Despite the compatibility of the ‘Job-AQTIV’ law, neither the EU nor its Employment Strategy was mentioned once in the parliamentary debate (Bundestag, 2001). The debate encompassed instead details on the statistics of unemployment and the amounts of money spent on active labour market policy. Blame was shifted between parties trying to make the other’s government (before 1998 or after) responsible for the damage. In the debate there was a consensus that public employment measures were not succeeding in integrating the unemployed into the first labour market, which culminated in the position of the liberal FDP, that they were a waste of money (Niebel, in Bundestag, 2001). The only reference made to Europe concerned Germany’s position as a leading country which had apparently lost its ability to function as an economic role model. Not once was Germany represented as subject to EU obligations, be it in relation to the Maastricht criteria or others. In the proposition for the law itself, the EES is mentioned at the beginning as the context of the reform, but with no further details. In contrast, for the Hartz reforms – which broke with the German welfare-state tradition – legitimation was much more needed. And indeed, even though discrepancies between the policy content of the EU and the German strategy can be observed (with the EU promoting a more investment- oriented strategy and German reformers embarking on a recommodification path), the EU content was used by some actors in this reform process. However, the usage remained rather unspecific: while the EES is mentioned in the policy paper of the Hartz Commission as the context in which the suggestions were initiated, the report itself – which was released shortly before the German general elections – contains only little on the different aspects of the EES. More references are made to Germany’s European neighbours, comparing their development with Germany’s (eight times), than to the European employment guidelines (four times). Considering the size of the report (about 340 pages), this seems a rather low number. In a few cases, it is stated that the report is in some way ‘oriented towards’ or ‘in line with’ the European guidelines (Hartz-Kommission, 2002: 56, 118, 158) but without further details. Only at the end of the report are

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European resources referred to (Hartz-Kommission, 2002: 341). These concern mainly cognitive exchange with other member states or the EU commissioner on employment and social affairs. As far as policy implementation is concerned, the degree of usage is much lower: in the parliamentary debate, in which Gerhard Schröder introduced his ‘Agenda 2010’ (of which Hartz IV was a part) the EU is again mainly mentioned as geographical reference: ‘This relationship between our economic and thereby our social opportunities, on the one hand, and our role in Europe and Europe’s role in the world, on the other hand, needs to be kept in view: as it is important for us, our society and our partners in Europe’ (Schröder, in Bundestag, 2003a). He further mentions that Germany’s role partly consists of being one of the biggest net contributors to the EU, which is acceptable because of the shared belief in the European social model in which ‘participation is more important than unbridled power of markets’ (Schröder, in Bundestag, 2003a). In the same debate, the opposition leader of that time (Angela Merkel) suggested that Germany should return to rank among the top three countries of Europe in terms of growth (Merkel, in Bundestag, 2003a). European ideas were not referred to specifically, but rather more general values such as economic growth, participation and the taming of market powers. This was also the case in the first draft of the Hartz IV law: the EES is mentioned in terms of its “full employment” goal, but this is then quickly glossed over with more specific values of the red and green parties: innovation, justice and sustainability (Bundestag, 2003b: 44). In terms of concrete policy measures, references are again made more readily to successful neighbours such as the Netherlands, UK and Denmark (Merkel, in Bundestag, 2003a). Furthermore, the role of Germany as a leader in Europe is never questioned: the EU is not seen as a helper in the reform process, but rather as yet another reason to perform well, as Germany has always done. Former Minister for Employment and Economy, Wolfgang Clement, formulates: ‘We aim at establishing a European oriented social market economy, which will not only be a strong foundation for prosperity in Germany this century, but can and will be that in the whole of Europe!’ (Clement, in Bundestag, 2003a). The role of Germany is not to be helped by Europe, but rather the other way around. However, this is not to deny that certain cognitive influences via learning processes have taken place (Heidenreich and Bischoff, 2008) or that normative and ideational adaptation has occurred (Büchs and Hinrichs, 2007). Nevertheless, the data used in this study (parliamentary and media debates) show only scarce references were made to

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the EU in public reform debates. Even more interesting is that a survey of media coverage from 2001 until now has not shown any significant reference to the European Employment Strategy as far as German labour market reforms are concerned. Of course, the development of the EES was followed by the general public, by, for example, setting targets and benchmarks (HA, 2006; VWD, 2004), and the use of the EU structural funds also induced public discussions on distributional matters (AP, 2003). But specific contents of German social-policy reforms were not explicitly linked to EU debates or guidelines. To conclude, it could be said that, as far as public representation is concerned, only very slight hints of a legitimating usage of the EU could be found; some references indicating use of budgetary resources from the ESF were identified, but none demonstrating usage of Europe as strategic resource. The legitimation is also rather indirect: to an extent, one could argue with the figure of “European interest” (see Woll and Jacquot 2010), which German actors view as greatly influenced by the performance of the German economy.

5. Conclusion: self- confident historicizing The multilevel governance of the EU allows a number of different resources to be used by member states (see Graziano, Jacquot and Palier, introduction to this volume). In the case of labour market policies, legislation on European Directives on the most relevant European norms is set within the framework of the ‘Open Method of Coordination’ and the ESF. In the German labour market reforms discussed here, European legal resources, as well as related cognitive resources such as European debates and ideas, were utilized only marginally in public debates. Only now and then are legitimating references are made to ‘the line of the EES’. The later use of the EU as a political resource worked much more in the reverse: it was the idea that Germany’s (leading) role in Europe gives leverage to political actors arguing for policy change. Change was legitimated with the necessity of giving a “good example” and of continuing to play a leading role in Europe. In sum, the break of the reform lock in German labour market policy can hardly be attributed to EU influence. While our result of rather little usage conforms to the hypothesis that it is not necessary for the old member states to demonstrate their compliance with EU policy (RH1), the general attitudes towards the EU led us to expect some strategic usage (RH2a). This hypothesis was supported by an overlap in contents – see sequencing of reforms – which would have made it easy for German

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policymakers to use the EES as a tool for legitimation. However, they did not use the EU, at least not in a positive way, and it seems that this is to some degree the result of having a rather biased attitude towards Europe: being an old and “important” member state Germany views itself as a financial and ideological contributor rather than one in the position of taking advice (Germany as a European policymaker, not policytaker, RH1 and RH2b). Therefore we believe that, as far as using Europe as a resource for policymaking is concerned, the following conclusions can be drawn from the German case: 1. Usage seems to differ in terms of the level of policymaking for which it occurs. While it is plausible that actors in positions of responsibility for policy innovation and development, such as ministerial and government officials, take on board new ideas communicated in the European context (Heidenreich and Bischoff, 2008), this cognitive usage does not necessarily translate into public usage. While public officials take part directly in the European coordination effort through joining in the common learning experience, developing new instruments and procedures through action plans and recommendations, this has no direct linkage to the German public. 2. As far as the public level is concerned, self- confident historicizing seems to be the more adequate term: the idea that Germany still has lots to offer and should be self- confident as an historic European leader. While there is some acknowledgement of the success of neighbouring countries, the EU is mentioned as hardly more than a geographical reference or benchmark, if it is referred to at all. 3. The degree of historicizing usage is highest when the need for legitimation is greatest. This is not related to a fit with EU policies, but rather to domestic matters: the occasions of usage we found were all related to the Hartz IV reforms – the most disputed reform in the package and a main part of the 2002 election campaign of the Social Democrats. The political pressure to legitimate the reforms resulted in a usage, which referred to Germany’s responsibility for Europe and thereby legitimated the need for this reform. In a way this is in line with the ‘world- of- domestic-politics’ hypothesis (RH2c), according to which domestic matters determine the relevance of the EU. The EU certainly has played a role in providing “problem understanding” in the adaptation of goals and in the process of developing ideas

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for reform. Its impact, however, in terms of strategic and legitimating usage – beyond the direct policymaking level – is of significantly different content than in other member countries due to Germany’s perceived role in Europe. History, therefore, seems to be a factor to be incorporated more deeply into future studies on policy transfer.

Notes 1. See section 3 for details. 2. This was mainly due to the implementation of a number of unbinding recommendations in the cases of the parental leave Directive and the parttime Directive by the red–green government, with the 2001 parental leave reform and the 2000 Act on part-time work respectively (see Treib, 2003, for details). 3. In the case of implementing the 1994 Young Workers Directive, Germany excluded adult apprentices from the specific protection hitherto offered by its young workers legislation (Treib, 2003: 138). 4. The FDP and CDU formed a coalition government until 1998 and have done so again since 2009. The CDU formed also part of the grand coalition with the SPD between 2005 and 2009. 5. As Esping-Andersen stated already (1996), the response of the conservative welfare states to rising unemployment has been a policy of “labour shedding”, meaning reducing the supply of labour by making alternative social roles (e.g. early retirement, family care, shorter work) more attractive (“welfare without work”). 6. The employment promotion act had also implemented additional measures to promote vocational qualification of target groups which were co-financed from the ESF. 7. Lafontaine’s classical social democratic employment strategy was in institutional conflict with the independent European Central Bank and the Maastricht criteria (Blancke and Schmid, 2003: 8).

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Eichhorst, W., M. Grienberger-Zingerle and R. Konle-Seidl (2008), ‘Activation Policies in Germany: From Status Protection to Basic Income Support’, in W. Eichhorst, O. Kaufmann, R. Konle- Seidl (eds), Bringing The Jobless Into Work? (Berlin and Heidelberg: Springer). Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism (Cambridge: Polity Press). Esping-Andersen, G. (1996), Welfare States in Transition: National Adaptations in Global Economies (London: Sage). Esping-Andersen, G. (1999), Social Foundations of Postindustrial Economy (Oxford, Oxford University Press). EU (1999), ‘Council Resolution on the 1999 Employment Guidelines’, in European Council. EU (2001), ‘Council Decision on Guidelines for Member States’ Employment Policies for the Year 2001’, in European Council. Falkner, G. (2004), Kontinuität Und/Oder Wandel? Zahlen Und Fakten Zur EuSozialpolitik (Wien: Institut für Höhere Studien). Falkner, G., M. Hartlapp and O. Treib (2006), ‘Worlds of Compliance: Why Leading Approaches to the Implementation of EU Legislation are only “Sometimes True Theories” ’, EUI Working Paper RSCAS No. 2006/22. Falkner, G., O. Treib, M. Hartlapp and S. Leiber (2005), Complying With Europe? EU Harmonisation and Soft Law in the Member States (Cambridge: Cambridge University Press). Ferrera, M., and M. Rhodes (2000), Recasting European Welfare States (London: Routledge). Ferrera, M., A. Hemerijck and M. Rhodes (2001), ‘The Future of Social Europe: Recasting Work and Welfare in the New Economy’, in A. Giddens (ed.), The Global Third Way Debate (Cambridge: Polity Press). Fleckenstein, T. (2004), ‘Policy-Lernen in der Arbeitsmarktpolitk: Das Beispiel der Hartz-Kommission’, Zeitschrift Für Sozialreform, no. 6. Fleckenstein, T. (2008), ‘Restructuring Welfare for the Unemployed: The Hartz Legislation in Germany’, Journal of European Social Policy, no. 18, pp. 177–88. Goul Andersen, J., J. Clasen, W. Van Oorschot and K. Halvorsen (2002), Europe’s New State of Welfare: Unemployment, Employment Policies and Citizenship (Bristol: Policy Press). Graziano, P., S. Jacquot and B. Palier (2011), ‘The Usages of Europe in National Employment-friendly Welfare State Reforms’, in P. Graziano, S. Jacquot, B. Palier (eds), The EU and the Domestic Politics of Welfare State Reforms: Europa, Europae (Basingstoke and New York: Palgrave Macmillan). Ha (2006), ‘Neue Hoffnung für Ältere Arbeitslose’, Hamburger Abendblatt. Hartz-Kommission (2002), ‘Moderne Dienstleistungen am Arbeitsmarkt’, Bundesministerium für Arbeit und Sozialordnung. Häusermann, S., and B. Palier (2008), ‘State of the Art Report: The Politics of Employment-friendly Welfare Reforms’, Socio-Economic Review, no. 6, pp. 559–86. Heidenreich, M., and G. Bischoff (2008), ‘The Open Method of Co- ordination: A Way to the Europeanization of Social and Employment Policies?’, Journal of Common Market Studies, no. 46, pp. 497–532. Heinelt, H. (2003), ‘Arbeitsmarktpolitik - Von “Versorgenden” Wohlfahrtsstaatlichen Interventionen Zur “Aktivierenden” Beschäftigungsförderung’, i

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94 Patrizia Aurich and Anne Schüttpelz n A. Gohr, M. Seeleib-Kaiser (eds), Sozial- und Wirtschaftspolitik unter Rot- Grün (Opladen: Westdeutscher Verlag). Jacquot, S., and C. Woll (2003), ‘Usages of European Integration : Europeanisation from a Sociological Perspective’, European Integration Online Papers, no. 7. Köhler, P.-A., K. H. Thorén and R. Ulmestig (2008), ‘Activation Policies in Sweden: “Something Old, Something New, Something Borrowed and Something Blue” ’, in W. Eichhorst, O. Kaufmann and R. Konle- Seidl (eds), Bringing The Jobless Into Work? (Berlin and Heidelberg: Springer). Lamping, W., and F. W. Rüb (2004), ‘From the Conservative Welfare State to an “Uncertain Else”: German Pension Politics in Comparative Perspective’, Policy & Politics, 32, pp. 169–92. Larsen, J. E. (2005), ‘The Active Society and Activation Policy: Ideologies, Contexts and Effects’, in J. G. Goul Andersen, A. M. Guillemard, P. H. Jensen, B. Pfau-Effinger (eds), The New Face Of Welfare : Welfare States, Marginalisation And Citizenship (Bristol: Policy Press). Mahoney, J., E. Kimball and K. L. Koivu (2009), ‘The Logic of Historical Explanation in the Social Sciences’, Comparative Political Studies, vol. 42(1), pp. 114–46. Martin, J. P. (2000), ‘What Works Among Active Labour Market Policies: Evidence from OECD Countries’ Experience’, OECD - Economic Studies, no. 30, pp. 79–107. Mohr, K. (2004), ‘Pfadabhängige Restrukturierung Oder Konvergenz? Reformen in der Arbeitslosensicherung und der Sozialhilfe in Groß-Britannien und Deutschland’, Zeitschrift Für Sozialreform, no. 50, pp. 283–312. Mohr, K. (2007), Soziale Exklusion im Wohlfahrtsstaat: Arbeitslosensicherung und Sozialhilfe in Deutschland und Groß-Britannien (Wiesbaden: Vs-Verlag). OECD (1994), OECD Jobs Study (OECD). Palier, B. (2010), ‘L’Européanisation des Réformes de Protection Sociale. Eléments pour une Histoire des Interactions Entre Construction Européenne et Evolution des Systèmes Nationaux de Protection Sociale’, Sociologie du Travail, vol. 4. Pierson, P. (2001), ‘Coping with Permanent Austerity: Welfare State Restructuring in Affluent Democracies’, in P. Pierson (ed.), The New Politics of the Welfare State (Oxford: Oxford University Press). Pierson, P. (2004), Politics In Time: History, Institutions And Social Analysis (Princeton and Oxford: Princeton University Press). Scharpf, F. W., and V. Schmidt (2000), Welfare and Work in the Open Economy: Diverse Responses to Common Challenges (Oxford: Oxford University Press). Schmid, G., and S. Kull (2004), ‘Die Europäische Beschäftigungsstrategie: Anmerkungen zur “Methode der Offenen Koordinierung” ’,Wzb Discussion Paper Sp I 2004-103 (Berlin: Wissenschaftszentrum Berlin für Sozialforschung). Schulten, T. (1998), ‘Perspektiven Nationaler Kollektivvertragsbeziehungen im Integrierten Europa’, in B. Kohler-Koch (ed.), Regieren in Entgrenzten Räumen (Pvs-Sonderheft 29) (Opladen and Wiesbaden: Westdeutscher Verlag). Serrano Pascual, A., and E. Crespo Suárez (2005), ‘The Paradoxes of the Active Subject in the Discourse of the EU Institutions’, Tijdschrift voor Arbeid en Participatie, no. 26, pp. 111–35. Streeck, W., and C. Trampusch (2005), ‘Economic Reform and the Political Economy of the German Welfare State’, German Politics, no. 14, pp. 174 –95.

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Taylor- Gooby, P. (2004), ‘New Social Risks in Postindustrial Society: Some Evidence on Responses to Active Labour Market Policies from Eurobarometer’, International Social Security Review, no. 57, pp. 45–64. Treib, O. (2003), ‘EU Governance, Misfit, and the Partisan Logic of Domestic Adaptation: An Actor- Centered Perspective on the Transposition of EU Directives’, EUSA 8th International Biennial Conference, Nashville, Tennessee (Köln: Mpifg). Vwd (2004), ‘EU Wird Beschäftigungsziel Für 2010 Wohl Verfehlen’, Vwd Wirtschaftsnachrichten. Weber, T. (1997), ‘Amsterdam Treaty Brings Small Advances for Employment and Social Policy’, Eurofound. Woll, C., and S. Jacquot (2010), ‘Using Europe: Strategic Action in Multi-Level Politics’, Comparative European Politics, no. 8, pp. 110–26.

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4 The Activation Turn in the Netherlands: ‘Home’-grown or Steered by Europe? Willibrord de Graaf and Rik van Berkel

Introduction In this chapter we will put forward the thesis that the Netherlands has seen a remarkable change in its welfare state arrangements in the past 25 years. From a rather generous but also conservative system, it has changed to a more liberal one, with a shift from collective solidarity to individual responsibility for social protection (van Oorschot, 2006). This change is also described as the shift from welfare state to a social investment or social activation state (Engelen et al., 2007). Activation is seen as a necessary adaptation towards new developments in the labour market and the family. More flexibility and mobility are producing new life- courses, which ask for more individual trajectories in the transitions between education, work, care and retirement. We will show how the broad concept of activation is part of the Dutch debate on reforms of the welfare state. In elaborating this debate and focusing more on the relationship between Dutch reforms and EU policy processes, we take three hypotheses as our guide. The first one is the idea that old members of the EU will not often refer to the EU as regards social policy, while new members are more under scrutiny of the EU. The second hypothesis pertains to the social support for the EU in the country: if elite and public opinion are both in favour of the EU, then social policies will be more in line with the EU; if not, then a more negative attitude is to be expected and therefore domestic reforms will be less connected to EU pressures. The third implies that there can be different forms of fit between the country and the EU. A great fit supposes no pressure to adapt to the EU, a small misfit leads to some EU 96

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influence and a great misfit can entail either neglect of the EU or full usage of the EU. We start, in the first part of the chapter, with a short overview of the position of the Netherlands in the EU and the shifting attitudes towards the EU since the 1990s. We will work out the relation of the Netherlands, as an old member, regarding the EU and the ways this relation has been more or less a good fit with EU policies. We also give a short overview of the transformation of the welfare state in the Netherlands as a background for the second and third parts of the chapter. Then, in the second part, we describe the developments in the Dutch welfare state with a view of the growth of activation, in connection with the EU arrangements in this field, as the context for our analysis of specific aspects of the Europeanization process. We will concentrate on the themes of unemployment policy, flexicurity and (early) retirement as related topics in the field of activation. In part three we will analyse the various usages that have been made of the EU in the Netherlands, and we will show how the double-sided process of Europeanization (the uploading or downloading of ideas and policies [see Graziano and Vink, 2007]) has been part of varying coalitions of actors. We conclude with an evaluation of the nature of the Europeanization process in relation to the shifts in Dutch attitudes and policies and we discuss whether the three research hypotheses hold true or not. As we will illustrate in this chapter, in general the Dutch governments are mostly in agreement with EU guidelines in the field of activation, while some political parties and unions show gradually increasing reluctance to accept them. Occasionally, this creates tensions and conflicts about the desirability of transforming the existing welfare state.

The Netherlands as a European welfare state The Netherlands is one of the forerunners of the EU and as such an ‘old member’. As co-founder of the EEC, Dutch governments and political parties have traditionally been strong defenders of European cooperation, both for political and economic reasons. Politically a united Europe was considered to be a factor of peace and stability, and, as an open economy, the Netherlands gained a lot from export facilities and profited from agricultural subsidies. European integration was, for a long time, a matter of experts and was hardly debated. Political parties, although voting in parliament about Brussels’ legislation and measures, were hardly concerned with the content of the agreed policies (WRR, 2007). When the EU was created (1992) and then enlarged (1995) the

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picture changed somewhat: the gains from subsidies decreased, the Regulations from Brussels were experienced as too burdensome and the fear of negative consequences from enlargement of the EU (extra expenses, immigration, less influence in the deciding process) provoked a more critical attitude in some political parties, such as the Liberal Party (liberal- conservative), the Socialist Party (left- conservative), Christian Union (Christian- conservative) and later the Freedom Party (right- conservative) (see e.g. van Apeldoorn, 2007). This discontent manifested itself in resistance against the level of the financial contribution to the EU, in complaints about the democratic deficit and especially in the dispute about Turkey as a future member of the EU: only 40 per cent of the population supported the membership (van den Brink and van Keulen, 2007). But in spite of these objections there remained a broad political consensus on the desirability of a cooperating Europe. This consensus remained, however, confined to a small elite, consisting of political parties, social partners (united in the Social and Economic Council1 and the Labour Foundation2), and cultural-intellectual circles. For the Dutch population Europe is a more vague and ambivalent entity. The Dutch prove to be rather uninformed about the EU and, although not against European cooperation, reject a supranational Europe with which they cannot identify themselves: during the 1990s support for the EU gradually diminished according to the European Barometer (SCP and CPB, 2007). They do not feel represented, and are sceptical about the policy choices of “Brussels”. This came to the fore when the Dutch population in 2005 (to the surprising dismay of most political parties) voted against the European constitution (with France and Ireland). The Dutch government grasped the opportunity to bargain a smaller contribution but tried in general to control the damage and to insert the Netherlands into Europe without giving the population further voice. This short overview demonstrates the rather consistent tension between public opinion and the political elite since the 1990s: both agree that the EU is positive (more then 70 per cent of the Dutch state that being a member of the EU is a good thing [SCP, 2010]), but they diverge when it comes to the consequences of strengthening cooperation. In the Eurobarometer 2008 the EU is considered good for the Dutch population because of its freedom of travel, work and study, the facility of the Euro (although not accepted in the beginning), but more integration or enlargement are judged to be negative because they bring more bureaucracy, less democracy and a loss of cultural identity (SCP, 2009; van den Brink and van Keulen, 2007). Interestingly, most political parties (except the Socialist Party, the Christian Union and

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the Freedom Party) are seen by the population as more in favour of European integration, which causes these parties to plead against the negative sides of the EU and, thus, unintentionally to confirm the public opinion that is already opposed to the EU in certain ways. So we can see the somewhat uneasy co-existence of a Euro-sceptic population with an elite which has to reckon with this major feeling of public opinion, but is in favour of European cooperation and the direction of the transformations in the socio- economic sphere. Within this contested field, the role of Europe in social protection, (de)regulation of the labour market or reconciling care and work are minor themes for the public debate but are more part of the struggle among the political elite – although van Apeldoorn (2007: 41) argues on theoretical grounds that the Dutch population is also resisting the socio- economic, neoliberal content of Europe. The question of “social Europe” does not dominate national controversies about the achievements of the welfare state – social security, employment protection, family allowances etc. (Hemerijck and Sleegers, 2007). These controversies are mostly framed as topics within the peculiar power structure of the Dutch ‘polder’3 where social partners and the government execute their respective roles in order to reach compromises (for a more extensive discussion on the polder, see e.g. Visser and Hemerijck, 1997). But this does not preclude the direction in which social policy solutions are sought being in line with EU perspectives. This coincides with the view of the Netherlands as a country that belongs to the compliance world of domestic politics (Falkner and Treib, 2008): domestic concerns prevail in the adoption of EU rules, where compliance is easy when the EU and the national state have corresponding mindsets (as is the case between the Dutch elite and the EU), but at times national actors may refuse to accept EU requirements. With this characteristic of the polder, the Dutch welfare state is described as “a strange case” in the EU, as a hybrid between the three welfare regimes of Esping-Andersen, or, better, as a combination of Christian- corporative, liberal and social- democratic principles resulting in the polder mechanisms of striving for consensus (van Oorschot, 2006). Sometimes the Netherlands is also categorized as belonging to a continental type of welfare regime, together with France, Germany, Belgium and Austria (WRR, 2006). Following this view, hallmarks are then a strong Bismarckian tradition of social security, with a strong role for employees and employers in contributions for this security and with an emphasis on the male breadwinner (women’s participation on the labour market has only risen over about the last 20 years, and then

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mostly in the form of part-time labour) (WRR, 2007). But other studies place the Netherlands in the Nordic regime, and this shows the difficulty of situating the Dutch welfare state in an ideal type (Goodin et al., 1999). Irrespective of its place in welfare typologies, as an old member, the Netherlands has always had certain influence in the EU and has mostly been one of the keen followers of the EU policies and ideas. This has certainly been the case with the European Monetary Union, the Growth and Stability Pact and the Lisbon Strategy, and we will show, in particular, how this has worked out in the field of activation policies. It is important to keep in mind the gradual break appearing between elite and public opinion, where the elite remains mostly in line with the range of thought in the EU, also in the social policy field, but where public opinion is more rejecting of “Brussels”. This shows itself especially when matters of flexicurity and pensions are at the centre of discussions.

The domestic welfare state context: a brief history of recent developments The Dutch welfare state developed from the end of the nineteenth century onwards, with an expansion after 1945 till the 1970s. This expansion ended with the economic crisis of the 1970s/80s. Since then, the rather generous system of social protection, based on the principles of solidarity by income-related contributions, for example, came under attack and retrenchments and changes have been the order of the day. A so- called historical covenant between social partners and government (the Wassenaar Agreement of 1982) opened the way for an exchange between creation of employment, on the one hand, and lower wages and shorter labour time, on the other. It is heavily discussed whether this agreement indeed produced the Dutch miracle of growing employment in the 1990s (see e.g. Becker, 2000; Salverda, 2005), but the main point is that from that time on the priority of employment as a goal and also as a means towards participation has been the dominant theme in Dutch politics. A report of the Scientific Council for Government Policy (WRR) in 1990 established further the need for labour participation and coupled welfare policy with activating labour market policy. In other words, this created the doctrine that more work is the best solution for all sorts of problems: the reduction of benefits, the growth of the economy, labour market participation as a prerequisite for full citizenship etc. Prime Minister Kok (formerly the chairman of the biggest Dutch trade union and as such co-founder of the Wassenaar

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Agreement) coined this mood for the motto for his governments in the 1990s – work, work, work. In addition, the former government had as its motto: living together, working together. This development towards (participation in) work coincided with the EU White Paper on Growth of 1993 and the Essen European Council on employment in 1994 as we shall see later (in part two). In fact, it seems fully plausible to speak of a certain cognitive agreement about the importance of labour market restructuration at EU level, inspired by a certain concurrence of political preferences, namely the coincidence of numerous social democratic governments at that time (van Gerven, pp. 20, 24). This primacy of work has led to a continuous reform of the arrangements of social protection, with the aim of stimulating labour participation by reducing benefits (in eligibility, duration and level) for unemployment, sickness and disability, by strengthening the conditionality of social assistance eligibility and by offering reintegration trajectories such as subsidized employment, training jobs and education. This emphasis on activation continues right up to the report of the ‘Commissie Bakker’ presented in 2008 (Commissie arbeidsparticipatie, 2008), which lays out several points to increase the level of employment and the activation of the unemployed. In fact, all these reforms and proposals to adjust the system of social protection have been at least legitimized by reference to the EU: since the EES of 1997, and especially the Lisbon Strategy of 2000, the Netherlands has pursued the theme of a competitive “knowledge society” to develop more employment-friendly measures and to modernize its labour market. Gradually these policies became intertwined by making benefit entitlements dependent on participating in a reintegration project. This counts for people on unemployment benefits, disability benefits or social assistance. The aim is to realize the principle of a comprehensive approach, also known as “work first”: the combination of duties to work activities and the enhancement of knowledge and skills of the participants. This change has also been described as a shift from income-based social protection to activation into work by individual trajectories (see e.g. van Berkel and Hornemann Moller, 2002; de Koning, 2009). According to some scholars, the Dutch welfare state has loosened its arrangements of collective solidarity and has introduced a system based on individual responsibility (van Oorschot, 2006). In addition to this, the Regulations for employment protection have comeunder discussion. Employability is seen as hampered by too many restrictions with regard to firing employees and the labour market is asking for flexible transitions. Thus, a new motto has arisen: from work into work (Hemerijck, 2004). Combined with this change in Regulations, the

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administration of social protection and the provision of employment/ activation services was restructured halfway through the 1990s, culminating in the Structure Administrative Organization Work and Income (SUWI) Act of 2002. The main outcome has been the pushing back of the role of social partners, who traditionally had a big influence in the institutions for providing benefits, and the transformation of the public employment service. A national agency for providing unemployment and disability benefits (UWV) was created, the Public Employment Services (PES) were restructured and slimmed down as a consequence of the privatizing of activation, and the role of the municipalities in activating social assistance recipients and reducing the numbers of social assistance recipients was increased (see van Gestel et al., 2009; de Koning, 2009). Recently, both the agency for providing the benefits and the successor of the PES have been merged in order to create one office for both benefit administration and reintegration. This new agency has to cooperate with the municipalities. Out of this complex field we have chosen to analyse three domains of activation in the Netherlands in relation to the EU. We shall concentrate on the development of a comprehensive approach regarding unemployment policies, of more flexibility in the labour market by, among others, changes in employment protection and of early retirement Regulations and raising of the pension age. With these three domains we cover also heavily contested topics in Dutch politics and policies. The process of the mutual influence of Europe and the nation states in the field of social policy has not been studied extensively in the Netherlands. There have been some studies on the ways the National Action Plans (NAPs) on social inclusion and employment have been effective in realizing European goals, which mostly showed that the effects were rather limited, partly because much would have been realized without the European Employment Strategy (EES) (van Zijl et al., 2002; RMO, 2004). Other studies have tried to detect forms of Europeanization by using the level of involvement of civil servants in the preparation and/or execution of EU policies as an indicator, and concluded that only a small number was active in areas of finance, foreign policies, agriculture, economy, and – interestingly – hardly any in the areas of social policy (Mastenbroek and Princen, 2007; de Beus and Mak, 2009). Another study states that, even at ministry level, EU matters are seen as complex and difficult to coordinate and that the ignorance among civil servants regarding European legislation is still great (de Gier et al., 2004). But these studies are hardly concerned with the dynamics of the mutual constitution of policies between the Netherlands and Europe. In general the bottom-up dimension has

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hardly been researched (van Keulen, 2003; Mastenbroek, 2005). It is, thus, difficult to present a broad overview based on scientific research. We have found only one study (van Gerven, 2008, see also van Gerven and Becker, 2009) that offers some empirical insight (through interviews with civil servants from the Netherlands and the EU) into the process of bottom-up and top- down use of the EU in the field of labour market and activation. Otherwise, we have to rely on passing remarks in scientific and policy texts. With this in mind, we present our analyses of the three domains.

Comprehensive approach of unemployment and activation The level of explicit reference to EU policy in national policy prior to the 1997 EES (and especially the Lisbon Strategy of 2000) can be seen as limited in that the Netherlands was already in the process of creating a more flexible economy and implementing activation policy before it became an explicit EU goal. Starting in 1984 with the subsidized temporary work schemes for youth up to the Guaranteed Youth Employment Act in 1991, the Netherlands operated under its own initiative to institute active employment policy reform. The reforms were designed to create jobs or provide training to young unemployed under the age of 23 and to help curb the ever-increasing unemployment rate in the Netherlands in the 1980s. In 1997, the Act of 1991 was replaced by the Jobseekers’ Employment Act (the WIW, effective from 1 January 1998), aimed at a comprehensive approach not only for the young unemployed but also for the long-term unemployed, who were supposed to be ‘at a long distance from the labour market’. The comprehensive approach included an integration programme, consisting of training and work experience, and the offer of a subsidized job when, after six months of unemployment for youngsters and 12 months for long-term unemployed adults, a “real” job was not found. However, “normal” unemployed persons were not included in this law. They were supposed to look for work independently. In a letter to the Dutch Parliament, Minister of Social Affairs Ad Melkert outlined the government’s standpoints regarding European Social Policy (Tweede Kamer der Staten- General, 1994) in which he specifically stated that national employment policy reform must conform to the measures outlined in the ‘White book on growth’ of 1993 and be in line with European standards. The main change in policy intended by Melkert was the expansion of an activating employment policy from youth to all age groups, the clearest example of this being the introduction of ‘Melkert Jobs’, in which 40,000 government-subsidized jobs

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were to help long-term unemployed find work. In preparation for the Dutch presidency and the Amsterdam summit, a Conference on Social Policy and Economic Performance was organized in January 1997 by Minister Melkert, during which the floor was set up to take social policy as a productive factor for the economy and not just as a cost factor. Melkert stated that solid social policy was crucial for the success of the monetary union, and it seems he convinced the other members that economic policy and social policy should go hand in hand (Visser, 2004). This made possible the formulation of the EES as it has been launched and the EES gave Melkert the possibility to strive for a comprehensive approach to combating unemployment (van Gerven, 2008; de Gier et al., 2004; Hemerijck, 2007). The introduction of the EES in 1997 and the Open Method of Coordination (OMC) in 2000 outlined clearly the goals of European policy in regard to employment and activation and instituted the National Action Plans (NAP, later renamed as National Reform Programmes [NRPs]) in which member countries report on their social policy and their conforming to the European guidelines. At the start, the Netherlands took the NAP as a document to claim that Dutch policies were in line with European guidelines and the NAP of 1998 already gives an indication of this strategy. In reference to the second guideline of the treaty, it stated: ‘This is legislated for in the 1992 Guaranteed Youth Employment Act which, since 1 January 1998, has been subsumed into the wider ranging Jobseekers’ Employment Act (WIW)’ (van Gerven, 2008: 28). This procedure to explicate the fit between the Netherlands and Europe gradually shifted towards a more active adaptation of national policies: ‘an analysis of the NAPs shows that the commitment of the Dutch grew as the years went by. ... the focus of the Dutch NAPs has shifted from describing the national situation towards reforming the national situation in line with the guidelines’ (van Gerven, 2008: 29). The recommendations of the Commission pertained to the insufficiencies in the comprehensive approach (especially the expansion to adults), its statistical monitoring, the priority for lifelong learning and defining the target for female participation in the labour market; this latter emphasis on female participation, accepted by the Dutch, was especially the effect of the EES and the OMC (van Zijl et al., 2002: 22). This shift in tone in the NAPs was made possible because Dutch agendasetting on the European level had some success: the Lisbon summit of 2000 juxtaposed economic sustainability and social cohesion and this was generally felt to reflecting the Dutch view on the necessity to see labour participation as a social asset.4 Since then, the Netherlands has

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been an active supporter of the Lisbon Strategy (Ministry of Economic Affairs, 2009). During its presidency in 2004, the Netherlands organized a conference under the heading ‘More People at Work’ in order to develop policies to activate Europe’s labour potential; another goal was to stress the importance of social cohesion. The Netherlands was committed also to streamlining and simplifying of the guidelines (van Zijl et al., 2002), especially integrating employment and economic guidelines. All in all, the Netherlands did not strive for a European social policy or employment policy, but wished to coordinate these at the European level by the OMC. The EES has only accelerated the introduction of the comprehensive approach. Since then, this approach has been extended, not only for the unemployed and disabled, but also for persons on social security. The SUWI Act of 2002 made it organizationally possible to extend this approach (van Gestel et al., 2009). The reintegration into work has been marketized, and municipalities have a greater role in managing the process of providing benefits and of organizing reintegration trajectories. Recently funds for reintegrationhave been under attack, because the effectiveness of reintegration activities has been questioned and economizing is the order of the day since the financial crisis. This may mean the loss of one of the cornerstones in the activation process, and that unemployed or disabled individuals are left to their own devices. It remains to be seen how this can be reconciled with the EU guidelines on activation. But the fight against unemployment and the emphasis on labour participation were not the only relevant issues during that period; the creation of a more flexible labour market was also an important matter. This was expressed in debates on the combination of flexibility and security, debates that had started already in the 1990s, before the issue became prominent on the European agenda.

Flexicurity and employment protection At the end of 1995, the already-mentioned Minister of Social Affairs, Melkert, produced a memorandum on flexibility and security. He proposed to loosen existing employment protection for standard work relations and to improve the position of workers in temporary work agencies. These proposals were, however, met with resistance in governmental parties. So the Labour Foundation was asked for advice. In 1996 unions and employers. as partners of the Labour Foundation brought

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forward a compromise on the matter, which led to the Flexibility and Security Act in 1999 (Wilthagen and Tros, 2004). The Ministry of Social Affairs was pleased with this result, and stated ‘We were proud about this policy and wanted to propagate it’ (van Zijl et al., 2002: 26). Also the enormous growth of part-time work, mostly by women, during the 1990s is taken as a sign of the flexibilization of the Dutch labour market. But it should be noted that this causes difficulties in career development for women, unequal pay for women and the lack of women at the top of management (Bekker and Wilthagen, 2008). These developments in the sphere of flexibility are generally seen as proof of the position of the Netherlands, next to Denmark, as a good fit with the European objectives of creating more flexible labour markets while offering security for workers. The EES already contained, under the heading of adaptability, guidelines on the necessity of flexibility, and the European Commission committed itself, after the Spring European Council in 2006, explicitly to the concept of flexicurity in 2007 (European Commission, 2007).5 Flexicurity was seen by the EU as a means to reinforce the Lisbon Strategy. Gradually, the consensus which made possible the Flexibility and Security Act in 1999 has been eroded. The difficulty was not so much the opening for temporary contracts, but the fact that the debate on flexibility has become concentrated on the much tougher issue of employment protection. The Green Paper on modernizing labour law (European Commission, 2006) indicated that the EU was looking for ways of adapting the existing law on employment protection and this effort put more pressure on the debate in the Netherlands. The Netherlands has a quite unique system of employment protection for regular employees: an employer can ask for a permit for dismissal at the UWV and, after six weeks, the approval is honoured (or not) and the dismissal can be effectuated. The employer can also go to the cantonal judge, who almost always grants the dismissal but lets the employer pay compensation for the dismissal. But there are also Regulations in the Collective Labour Agreements pertaining to the modalities of dismissal, which influence these basic procedures (WRR, 2007). This system of employment protection was deemed an obstacle for employment growth by employers and some political parties, while others resisted giving up this form of security for regular employees in an already flexibilized labour market. In 2007 this debate about employment protection came to the forefront in the public and political arenas when, with flexicurity and the Lisbon Strategy being agreed upon at the European level, the Dutch

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political parties and social partners discussed how far they were willing to go in complying with EU proposals. Within the Labour Foundation employers and trade unions were, even after several years, not able to come to an agreement and produced conflicting advice regarding the desirability of the relaxation of employment protection in 2007 (Labour Foundation, 2007). The new government that took office in 2007, however, wanted, in order to reach its goal of 80 per cent labour participation in 2016 and of 200,000 outsiders in the labour market before 2010, to bring employment protection policy in line with the EES guidelines for more flexibility in the workforce. The leader of this proposal was Piet Hein Donner (the Christian Democratic Minister of Social Affairs) who, in the now leading coalition government of Christian Democrats, Christian Union and Social Democrats, pushed this more European style of employment protection. However, there was massive opposition to this effort by the trade unions, the Socialist Party and also the governing Social Democratic Party. As a way out of this conflict the government proposed to install a committee of experts which had to advise on the measures necessary to reach the goals of more labour participation. The advice of this Commissie Bakker was met with mixed reactions (see above). References to the EU in the debate concerning employment protection were limited largely to the comparison of Dutch employment protection legislation (EPL) to that of the rest of Europe. Dutch EPL has been considered by employers and the liberal parties as among the most strict in all of the EU countries, although this in itself is a contested matter. Even the WRR stated in its report of 2007 that the Dutch EPL was moderate in the European context and not a hindrance for the functioning of the labour market. In the cases of the EPL and the flexicurity debate it is apparent that, while willingness is present to draw the Netherlands into line with EU employment and activation guidelines set out by the EES and Lisbon Strategy and, later, the adoption of the principle of flexicurity, pressure from some political parties and the labour unions make effective change a slow process, as can be seen in the recent coalition agreement of 2010, where one party was able to block further measures in this field. There is a great desire to comply with the EU in a “Dutch” manner rather than simply implementing policy without consideration of the effects for the national situation in the Netherlands. This pattern can also be observed in another debate, which relates to activation and flexibility: early retirement and raising the pension age.

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Pension and early retirement An early retirement system (VUT) was introduced in the 1970s that would allow workers to retire before the age of 65. This system was meant as a means to create more jobs for younger workers by enticing older workers to retire early and make room for the younger generation in the workplace. The early experiments with the VUT proved successful and it eventually became the norm for pension funds in the Netherlands. This situation lasted without much change until 2002. This is not to say that early retirement schemes were seen as unproblematic. The guidelines of the EU in the EES and EU recommendations on the NAP concerning more participation of older employees were discussed in the Social Economic Council and the Ministry of Social Affairs, and targets of 50 per cent participation of older workers set in 2010 have gradually been met. But, initially, attempts to promote the reinsertion of older workers took place without the abolishment of the early retirement schemes. This changed, however, in 2002, when the Barcelona European Council (European Commission, 2002) indicated that European member states needed to reform their pension systems to deal with the prospect of a rapidly ageing society. It stated that early retirement should be discouraged and the average pension age in Europe should rise by five years. In an ageing society it was deemed necessary to discourage early retirement as younger generations would not be able to absorb the losses of large amounts of the workforce retiring early. In 2003 the Dutch government coalition of Christian Democrats, Conservative Liberals and Social Liberals put forward a proposal to introduce disincentives into the early retirement system. This implied removing the tax benefits for the VUT and moving towards a system more in line with the ideals stated in Barcelona. The trade unions FNV and CNV delivered powerful opposition to the proposal. The debate eventually led to a mass demonstration and a transit strike in 2004 as a means of protest against the proposed changes. In 2006 the Dutch government instituted the ‘lifecourse savings scheme’ (Bovenberg, 2007), a new system that would serve to replace the VUT system and discourage early retirement – this in spite of the fierce criticism from the trade unions. With the introduction of this plan, the fiscal support for early retirement was ended. Those who wish to retire early are left to make individual financial arrangements. While the specific references to the EU may have been minimal in this debate, the question of raising the pension age, which also arises in the context of activation and enlarging labour participation, is more clearly placed in the European employment framework. The rise

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of the pension age has become a much debated issue. During recent years several proposals were made to increase the retirement age to 67, in accordance with the European wish to adapt the pension system to increased life expectancy. These proposals have been met with heavy resistance, especially from the trade unions and the Socialist Party and Freedom Party, with a more ambivalent role for the Social Democratic Party. During government elections in 2006, the theme of the rise of the pension age was highly contentious – for instance, comparisons were made to Sweden regarding the connection of pensions and life expectancy. The coalition parties of the government installed in 2007 chose not to make it an issue of policy because it was felt as too controversial. The economic crisis, however, changed this point of view: the billions poured into banks and insurance companies have doubled the budget deficit to around 6 per cent. The proposed rise of the pension age was now defended as part of a more general social policy of keeping the Dutch society on track socially. This intention was heavily resisted by the trade unions, which eventually won clearance to try to reach an agreement with the employers in the Social Economic Council. But the Council did not come to a compromise, and the government decided that in 2020 the pension age will rise to 66, and in 2025 to 67 years of age. The government wanted to make an exception for those who work in what is called ‘heavy labour’, but this element of the plans is heavily contested, both by employers and trade unions, who are pleading for a more flexible pension age. But overall the trade unions and the Socialist Party were strongly opposed to the rise of the pension age, and recently the right wing Party for Freedom (PVV) of Wilders has joined this opposition. The proposal has still to be decided in Parliament.6 In the meantime the social partners have succeeded where they failed before: they have developed a plan of which the main ingredients are raising the pension age by one year in 2020, and gradually up to two years by 2025, this with a view to life expectancy, and flexibility to choose early retirement or longer working with a penalty in the case of early retirement (Labour Foundation, 2010). With the new government in place, it seems that the chances for the realization of this plan are much higher than before.

The usages of Europe by the various actors In the field of activation the first indicator of Dutch use on European policy came in 1994 when the Minister of Social Affairs started to develop plans for a comprehensive approach to unemployment.

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He referred to the White Paper of Delors, but did so probably for strategic reasons, as we will show. After the introduction of the WIW Melkert intensified his efforts to strategically use the European platform in order to realize his wish for a comprehensive approach towards all unemployed persons, which was judged as too expensive by the Ministry of Finance and other important players like the Bureau of Economic Policy Research (CPB). He used the European policy debate preceding the EES as a means to exert pressure on the national level (van Gerven, 2008: 23). According to one evaluation report (van Zijl et al., 2002), this seems to have worked: it is stated that the introduction of the Dutch comprehensive approach for the adult unemployed, started in 1999, would not have been developed without the EES. Melkert could use the coming about of the EES, on which he exerted a great influence, as a means to push through the comprehensive approach in the Netherlands. A second example of ‘uploading’ Dutch ideas can be found in the same period, when the Amsterdam treaty was being prepared. The possible reconciliation of economic and social policy was a specific theme brought in by the Netherlands and Melkert seems to cognitively have persuaded his partners that this was a viable goal. Melkert also seems to have been a proponent of benchmarking and learning, and as such of the OMC, but this is not quite proven (van Gerven, 2008: 22). This is not to say that Melkert wished to undermine the principle of subsidiarity: he made it clear that the Dutch government saw social policy as its own prerogative. Since then, Dutch governments have always underscored this principle of subsidiarity and have referred to the OMC as a sufficient means to exchange good practices. A third case of uploading occurred when, during their presidency in 2004, the Netherlands organized another conference under the heading ‘More People at Work’ in order to develop policies to activate Europe’s labour potential, also with the goal of stressing the importance of social cohesion. The Netherlands also was committed to the streamlining and simplifying of guidelines, especially those pertaining to integration of employment and broad economics. Dutch policymakers believed that the EES was too complicated and that striving towards some broad guidelines would be more effective. This was seen to improve the OMC process and to counterbalance the possible detailed character of EU social policy (van Gerven, 2008). In line with these developments it is interesting to note that, in 2003, a European Employment Taskforce, chaired by Wim Kok, the former prime minister of the Netherlands, produced a report, Jobs, Jobs, Jobs, followed in 2004 by a High Level Group, also chaired by Wim Kok,

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in order to contribute to the Lisbon Strategy for growth and employment. Anton Hemerijck, as advisor of the Commission in the field of employment and as contributor to the Dutch discussions, also played an important role in defining the project of the transformation of existing welfare states into more social investment or activating states. The influence of the Netherlands in the personal sphere can not be mistaken. So in the field of activation and employment growth the Netherlands have been very active in cognitively and strategically proposing the formulation of a social policy that was taken up in the EES, and later have used the EES in order to legitimize reform projects nationally. The Lisbon Strategy, experienced as expressing the Dutch views, has been supported from the beginning. In the field of flexicurity and employment protection the Netherlands are considered to be one of the forerunners in Europe by the Flexibility and Security Act of 1999. Nevertheless, there has been continuous and fluctuating debate on flexicurity in the Netherlands. Some fear a form of deregulation that ends in an ‘American’ state of affairs; others claim that flexible work conditions promote both economic growth and employment. Creating an above-average growth of employment during the 1990s, the so- called ‘Dutch miracle’, was interpreted by some and disputed by others as the fruit of the path towards flexicurity. But the reforms of the welfare system in the Netherlands have not only installed new forms of activation and reintegration into work, but have also produced real cuts in the volume and level of benefits, which is hitting the unemployed (or occupationally disabled) hard. This provokes different accounts of the pros and cons of existing welfare arrangements, and thus of the effects of flexicurity. The Federal Labour Union FNV is, for instance, very apprehensive about the flexicurity concept of the EU because it would mean a loss of security for employees and more freedom for employers to get rid of their workforce. The employers’ organization VNO-NCW, in contrast, is a proponent of more pressure from Brussels towards flexibility of employment protection and more activating measures to realize work into work security instead of job security. As far as the political parties are concerned, on the one hand, the Socialist Party (SP), a steady winner in elections between 2000 and 2010, claims that flexible labour conditions do not favour the Dutch population because they mean a demolition of acquired rights on protection. On the other hand, the ruling coalition of the Christian Democratic Party (CDA), the Social Democratic Party (PvdA) and the Christian Union (CU), in place until 2010, argued that implementation of flexicurity would provide

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higher employment as well as security. Political parties like the Liberal Party (VVD) or the Social Liberal Party (D66) argue that employment Regulations focus too much on employment security rather than on flexibility and are in favour of more flexible arrangements. When the debate shifted more towards employment protection, a repetition of the same arguments as on flexicurity was evident and came to the fore in the different viewpoints that led to the installation of the Commissie Bakker. The commission published a report in 2008 outlining its findings on how to increase activation in the Dutch economy in the short and long term. In its report the committee states that increasing the flexibility of the job market will help create a workforce with a broader knowledge base that will be more easily adaptable to changes in the economy, as well as creating more job opportunities for the unemployed. The committee based its analysis of the labour market on the concept of transitional labour market as a European employment strategy and, in accordance with a report of the Scientific Council for Governmental Policy on employment security (WRR, 2007), stressed the importance of transition within jobs (job rotation) as well as transition from work to work (job mobility). In general it promoted a shift from job security to employment security, and where the WRR favoured changing employment protection into employability instruments (enhancing skills etc.), the committee pleaded for transforming the unemployment schemes into an activating employment insurance (paid by employers and individual employees), in order to stimulate both employers and employees to invest in looking for new jobs in case of dismissal. Trade unions and oppositional political parties on the left indicated that the report was overly superficial in its advice and focused more on making those with jobs work more and longer rather than finding ways to get the many people on unemployment benefits and social assistance back into the workforce. The debate surrounding Commissie Bakker helps to illustrate the differences of opinion in the Netherlands within the government and social partners about the implementation of EU employment strategies The committee’s advice is largely consistent with the EU position of increased flexibility in the workforce and of the necessity for activation policy. And while the debate is largely national, without much mention of the EU (although comparisons are made with practices elsewhere in Europe), the implications are that opposition to EU proposals is quite strong and has a voice within the Netherlands, also seen in the growth of the Freedom Party, which calls for the maintenance of some “old” values of the welfare state, like employment protection. The Netherlands is seen a one of the propagators of flexicurity, as, for

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instance, shown in an important advisory role for Ton Wilthagen, who is member of the European expert group on flexicurity that promotes the combination of economic efficiency and social equity (European Expert Group on Flexicurity, 2007). But this has not prevented a fierce debate about this matter, and on a cognitive and strategic level it is clear that EU proposals are contested among the different actors. In the field of the (pre)pensions, the national debate has been quite intense. The EU has been a factor as a means of chastising policymakers who are seen as being too interested in EU policy rather than national policy; up to 2006 debates argued for and against these measures. But, as before, the theme of the pre-pension was not debated with the EU at the forefront of the issue, but only in the background. In 2006 the government introduced the life-course savings scheme as a way of realizing a “generations-conscious policy”, which enhances the flexible use of schooling, work, care or even early retirement, according to the needs of the individual. The scheme allows for saving of 12 per cent per year of the gross year wage, in total no more than 210 per cent of the gross year wage. With the saved money one can take a period of unpaid leave and use this for the above-mentioned activities. This scheme thus combines both the element of flexibility and the realization of an individual option (one is not obliged to take part in this scheme) and thus abolishes collective arrangements like fiscal support for early retirement. The participation in this life-course scheme is rather limited; about 5 per cent of employees was making use of it in 2006. Evaluation of the scheme should have been undertaken in 2010, but was postponed by lack of data. While it takes a step in the direction of conforming to EU Regulations, the specific references to the EU in this particular piece of national policy were limited to a few minor comments of little actual consequence. This may have to do with the fact that the individual life- course perspective is not explicit in EU policy texts, because individual responsibility for employability has become more dominant (Knijn and Smit, 2009). In fact, the Netherlands have complied with EU wishes for the abolition of the early retirement Regulation, and are thus in cognitive and strategic accordance with the EU – even contributing to possible implementations by developing the life- course scheme. In recent years the debate about the rise of the pension age has been passionate, with a strong role for the social partners and with a growing convergence among political parties (except the Socialist Party and the Party for Freedom) on the necessity of longer working. The social partners seem finally to have succeeded in reaching an agreement, and this accord seems to put the social partners again in charge and creates

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a political momentum in the discussion. The main point is, however, that in the discussion the rise of the pension age, formerly heavily contested, is now accepted by the unions in exchange for a flexible introduction of this rise: people are allowed to choose to work longer or stop earlier – of course, with financial consequences. Overall, the debate between these actors has barely referenced the EU, although other countries like Sweden or Norway are mentioned as raising their pension age. The Dutch governments claim that they are interested in the OMC on pensions, but stress the national responsibility for the organization of the pension system (which is considered as one of the best developed systems in Europe). Table 4.1 gives an overview of the reforms. Table 4.1 Dutch political reforms

Policy area

Year

Subsidized 1984 work 1991 Guaranteed 1997 Youth 2000 Employment 2002 Act Jobseeker’s Employment Act Structure Administrative Organization Work and Income Act

Dimension of policy structure

Role played by Pro-reform actors Europe

Antireform actors

All dimensions. All dimensions. All dimensions. Instruments and procedures.

None. None. EES. Lisbon Strategy. None.

None. None. Ministry of Finance. CPB. None. None.

Government. Government. Ministry of Social Affairs. Government. Government.

Type of usage – Cognitive. Strategic. Cognitive. Strategic. –

Flexibility and 1999 Instruments Security 2003–08 and Act procedures. Discussion on Objectives, employment instruments. protection

EES. Government. Some EES, Green Government. political Paper, Employers. parties. Flexicurity Trade paper. unions, some political parties.

Cognitive. Cognitive. Strategic, legiti-mating.

Wassenaar agreement Pre-pension discussion Life- course saving plan Pension discussion

None. Barcelona. Council. Barcelona. Council.

– Cognitive, strategic, legiti-mating. Cognitive. Strategic, legiti-mating.

1982 Objectives, 2002– 06 procedures. 2007– 10 All dimensions. All dimensions.

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Government. Social partners. Government. Employers. Government. Employers.

None. Trade unions. Some political parties. Trade unions. Some political parties.

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Conclusion It is apparent from the analysis presented in this chapter that the usage of the EU in the Netherlands in employment and activation policy has not only that of following (‘downloading’), but also that of initiating (‘uploading’). This has happened both on the cognitive level – for instance, in the matter of a reconciliation of economic and social goals – and on the strategic level, as came forward in the formulation of the EES. In the field of flexicurity, the Netherlands is seen as an example for the EU, and the adoption of the flexicurity strategy in the EU certainly has been cognitively supported. The matter of (pre)pensions shows that the Netherlands is, in fact, following the EU proposals, but this happens without much reference to the EU and with serious national debate among various actors. Although committed to their own prerogatives in social policy, Dutch governments, backed by the social partners in many cases, from the 1990s onwards have mostly been very supportive of the EES, the Lisbon agreement, etc. This has even led to an increase in implementation of European guidelines since the introduction of the EES in 1997, as can be shown in the NAPs, where EU recommendations regarding the comprehensive approach were accepted. In the field of activation, the Netherlands displays a desire to be an active participant in the adoption, as well as the creation, of EU social policy. Also, on the themes of flexicurity and pensions, the Netherlands is both a precursor and supporter, but this desire is more clearly present at government level and among experts and less so on the level of societal actors. The role of experts like Kok, Hemerijck and Wilthagen shows that there is a narrow cognitive connection between the EU argumentation and the Dutch contribution. Notwithstanding this comment, the first hypothesis that “old” members are, in general, more in line with EU Regulations and refer less explicitly to the EU can be confirmed. In fact, this hypothesis does not seem very relevant for the Netherlands. This reflects itself also in the great fit between the Netherlands and the EU as regards the setup of the welfare state. The reforms of the Netherlands were initiated in some fields before EU Regulations were in place, and have later been adjusted according to OMC guidelines because there was little ground for rejection or resistance. The support for the Lisbon Strategy up to now is an expression of this fit. It is not, however, without opposition that these activation policies have come to pass in the Netherlands, and here the second hypothesis asks for a nuanced answer. There has been increasing debate concerning

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the manner in which, and extent to which, the Netherlands should adhere to or influence EU guidelines and Regulations; this is due to rising anxieties about Europe as a super state. It is felt by many who oppose the reforms that, in its attempt to implement the EU’s policies, policymakers could lose sight of what is best for the Netherlands as a (small) country. The trade unions are still very critical of any attempt by the government to introduce a more flexible EPL, although they have now more or less accepted the rise of the pension age. Not only does the opposition express these concerns; many proponents of EU activation policy also stress that the country must be afforded the freedom to enact policy in the manner it sees fit. Especially since the Dutch ‘no’ to the constitution in 2005, the Euro-sceptism that already was present in the Dutch population has spread also to the political and social elite, which was forced to account more for the pros and cons of the Brussels Regulations. The second hypothesis, that Euro-scepticism may imply a more negative usage of the EU, has, thus, to be addressed in a subtle way: until 2005 the elite and the population seemed almost unquestioningly pro-EU, while interest in the EU was not publicly debated. Under the surface, however, unease and fear about the growing EU (and globalization processes in general) was increasing and, in 2005, this came abruptly to the fore. In this context of anxiety about loss of certainty and nationality, the themes of employment protection and pension age, for instance, became more negatively evaluated as Brussels’ prescriptions. But the Dutch governments have, in these domains of policy, always supported the EU and even used EU guidelines as legitimation for their own policies. So there seems to be a fit between EU and Dutch strategies and policies as far the political elite is concerned, but more of a misfit where some actors and the population at large are involved. In other words, the second research hypothesis can be confirmed only with reference to the elite preferences and not in terms of public opinion: EU-driven policy change can be successful in cases where the elite is – unlike the public opinion – in favour. In fact, acceptance of European activation and employment-friendly policy in the Netherlands seems to be on a slow yet steady path towards greater realization. But it is clear that the societal tide has changed. While, during the 1990s, the Netherlands was even the forerunner in trying to develop a social activation agenda, since the beginning of this century the elite of social partners, political parties and others who supported these efforts has more or less broken apart. Employment protection legislation and the matter of the pension age have driven the social partners out of their habits of compromise, and some political parties (Socialist Party, Freedom Party) are clearly prepared to fight the proposed measures.

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The third hypothesis regarding the role of misfit in determining policy change and various usages of Europe in the Dutch case cannot be confirmed, although it is difficult to characterize in terms of “traditional” welfare state typologies what kind of welfare regime we are dealing with. In so far as the Netherlands has evolved from a more corporatist/continental regime to a more liberal regime, there is a fit between the EU orientation regarding activation: the reform processes that started back in the 1980s have continued up until today. Also the themes of flexibility, employability and pensions that are the cornerstones of much EU policy have, on the one hand, been adopted and elaborated, but have, on the other, become more contested in the specific Dutch polity structure of the polder. Summarizing the data we have gathered, one can say that the Netherlands influenced the EU more actively at the end of the 1990s and the beginning of the twentieth century, but since then has become more internally divided about EU proposals. Although the political elite seems more supportive of the EU, the resistance of the population against the EU has made explicit usage of the EU more problematic.

Notes 1. The SEC is a tri-partite advisory board, consisting of employers, employees and crown appointed members. 2. The LF is a board on which employers and employees work together. 3. The polder refers to the consensus model in which employers, unions and government deliberate about wages and conditions of employment, aiming at compromises and cooperation. 4. In another European project, Resore 2002–05, we held interviews with civil servants about activation. One civil servant confirmed that the Netherlands aimed at a social model as the main vehicle for social inclusion and realized this at the Lisbon summit (interview with Mr van Kalmthout, 19 August 2004). 5. Interestingly, the term ‘flexicurity’ seems to have been introduced by Dutch Professor Adriaanssens, one of the authors of the 1990 WRR report on labour participation. The term is further picked up and spread by Wilthagen (Wilthagen and Tros, 2004). 6. At the moment of writing, a new government is being formed of Conservative Liberals and Christian Democrats, tolerated by the Freedom Party. These parties reached an agreement according to which pension age will rise to 66 in 2020, abolishing the plans to raise the pension age to 67 in 2025.

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Bekker, S., and T. Wilthagen (2008), ‘Europe’s Pathways to Flexicurity: Lessons Presented from and to the Netherlands’, Intereconomics, pp. 68–73. Bovenberg, A. (2007), The Life Course Perspective and Social Policies: An Issue Note, SP Discussion paper no. 0719 (Washington, DC: World Bank). Commissie arbeidsparticipatie (2008), Naar een Toekomst die Werkt: Hoofdlijnen Advies (Rotterdam: Commissie arbeidsparticipatie). de Beus, J., and J. Mak (2009), De Kwestie Europa: Hoe de EU tot de Nederlandse Politiek Doordringt (Amsterdam: Amsterdan University Press). de Gier, E., A. de Swaan and M. Ooijens (2004), Dutch Welfare Reform in an Expanding Europe (Amsterdam: Het spinhuis). de Koning, J. (2009), Reforms in Dutch Active Labour Policy during the Last 20 Years: An Evaluation (Rotterdam: SEOR [SEOR working paper nr 2]). Engelen, E., A. Hemerijck and W. Trommel (2007), Van Sociale Bescherming naar Sociale Investering (Den Haag: Lemma). Ester P., R. Muffels and J. Schippers (2001), Flexibilisering, Organisatie en Employability (Bussum: Coutinho). European Commission (2002), Precidency Conclusions Barcelona Council 2002 (Brussels: European Commission). European Commission (2006), Green Paper. Modernising Labour Law to Meet the Challenges of the 21th Century (Brussels: European Commission). European Commission (2007), Towards Common Principles of Flexicurity. More and Better Jobs through Flexibility and Security (Brussels: European Commission). European Commission (various), Employment and Social Affairs, National Action Plans 1998–2004, available at http://ec.europa.eu/employment_social/ employment_strategy/national_en.htm European Expert Group on Flexicurity (2007), Flexicurity Pathways. Turning Hurdles intoStepping Stones (Brussels: European Commission). Falkner, G., and O. Treib (2008), ‘Three Worlds of Compliance or Four? The EU-15 Compared to New Member States’, Journal of Common Market Studies, vol. 46 (2), pp. 293–313. Goodin, R. E., et al. (1999), The Real Worlds of Welfare Capitalism (Cambridge: Cambridge University Press). Graziano, P., and M. P. Vink (eds) (2007), Europeanization: New Research Agendas (Basingstoke and New York: Palgrave Macmillan). Hemerijck, A. (2004), Recasting Europe’s Semi-souvereign Welfare States and the Role of the EU, Colloquium 16 December WZB, Berlijn. Hemerijck, A. (2007), Joining Forces for Social Europe: Reasserting the Lisbon Imperative of ‘Double Engagement’ in W. van der Donk, et al., Naar een Nieuwe Sociale Investeringsagenda (Den Haag: WRR). Hemerijck, A., and P. Sleegers (2007), ‘The Netherlands: Social and Economic Normalisation in an Era of European Union Controversy’, in J. Kvist and J. Saari (eds), The Europeanisation of Social Protection (Bristol: Policy Press). Hudson J., and S. Lowe (2004), Understanding the Policy Process: Analysing Welfare Policy and Practice (Bristol: Policy Press). Knijn, T., and A. Smit (2009), ‘Investing, Facilitating or Individualising the Reconciliation of Work and Family Life: Three Paradigms and Ambivalent Policies, Social Politics, vol. 16 (4), pp. 1–35. Kok, W. et al. (2003), Jobs, Jobs, Jobs: Creating More Employment in Europe (Brussels: European Commission).

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Kok, W. et al. (2004), Facing the Challenge: The Lisbon Strategy for Growth and Employment (Luxembourg: European Commission). Labour Foundation (2007), Commentaar van de Stichting van de Arbeid op de Adviesaanvraag ‘Hoofdlijnen Heroverweging Arbeidsovereenkomstenrecht en het Ontslagrecht’ (Den Haag: Labour Foundation ). Labour Foundation (2010), Pension Accord Spring 2010, Den Haag: Labour Foundation Mastenbroek, E. (2005), ‘EU Compliance Still a “Black Hole”?’, Journal of European Public Policy, vol. 12 (6), pp. 1103–20. Mastenbroek, E., and S. Princen (2007), ‘More Than an Add- on? The Europeanisation of the Dutch Civil Service’, paper EUSA conference, Montreal, Canada. Ministry of Economic Affairs (2009), Annual Progress Report 2009 The Netherlands in the Context of the Lisbon Strategy (Den Haag: Min. of Economic Affairs). Muffels, R., P. Ester, J. van Ours, J. Schippers and T. Wilthagen (2004), De Transitionele Arbeidsmarkt: Naar een Nieuwe Sociale en Economische Dynamiek (Tilburg: OSA). Raad voor de Maatschappelijke Ontwikkeling (RMO) (2004), Europa als Sociale Ruimte: Open Coördinatie van Sociaal Beleid in de Europese Unie (Den Haag: RMO). Safarti, H., and G. Bonoli (2002), Labour Market and Social Protection Reforms in International Perspective: Parallel or Converging Tracks? (Aldershot: Ashgate). Salverda, W. (2005), ‘The Dutch Model: Magic in a Flat Landscape?’, in U. Becker and H. Schwarz (eds), Employment ‘Miracles’: A Critical Comparison of the Dutch, Scandinavian, Swiss, Australian and Irish Cases versus Germany and the US (Amsterdam: Amsterdam University Press). SCP (2003), Social Europe (Den Haag: SCP). SCP, CPB (2007), Marktplaats Europa, Vijftig jaar Publieke Opinie en Marktintegratie in de EU (Den Haag: SCP/CPB). SCP (2009), Strategisch Europa, Markten en Macht in 2030 en de Publieke Opinie over de Europese Unie (Den Haag: SCP). SCP (2010), Europa’s Welvaart: De Lissabon Agenda in en Brederr Welvaartsperspectief en de Publieke Opinie over de Europese Unie (Den Haag: SCP). Tweede Kamer der Staten- General (1994), Brief van de Minister van Sociale Zaken en Werkgelegenheid over Voortgang Europees Beleid, 21 501-18, no. 37, The Hague. van Apeldoorn, E. B. (2007), The Political Economy of European Integration in the Polder (Den Haag: WRR), webpublication 15. van Berkel, R., and I. Hornemann Moller (eds) (2002), Active Social Policies in the EU: InclusionThrough Participation? (Bristol: Policy Press). van den Brink, T., and M. van Keulen (2007), ‘Rediscovering Europe in the Netherlands: Towards strengthened Legitimacy of Dutch EU Policy, Horizons Stratégiques, vol. 4 (6), pp. 64–72. van Gerven, M. (2008), Activating Social Policy and the Preventive Approach for the Unemployed in the Netherlands (Amsterdam: AIAS). van Gerven, M., and M. Beckers (2009), ‘Unemployment Protection Reform in Belgium, Finland, the Netherlands and the UK: Policy Learning Through OMC?’, in J. Zeitlin and M. Heidenreich (eds), Changing European Employment and Welfare Regimes: The Influence of the Open Method of Coordination on National Labour Market and Welfare Reforms (London: Routledge).

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120 Willibrord de Graaf and Rik van Berkel van Gestel, N., P. de Beer and M. van der Meer (2009), Het hervormingsmoeras van deverzorgingsstaat. Veranderingen in de organisatie van de sociale zekerheid (Amsterdam: Amsterdam University Press). van Keulen, M. (2003) ‘How “Home” Hits Brussels: Exploring an ‘Input’- oriented Europeanization Research Agenda’, Paper ECPR Conference, Marburg, 18–21 September. van Oorschot, W. (2006), ‘The Dutch Welfare State: Recent Trends and Challenges in Historical Perspective’, European Journal of Social Security, vol. 8 (1), pp. 57–76. van Zijl, M., M. van der Meer, J. van Seters, and H. A. Keuzenkamp (2002), Dutch Experiences with theEuropean Employment Strategy (Amsterdam: SEO). Visser, J. (2004), ‘The EES as Selective Amplifier for National Strategies of Reform’, paper at COST A 15 Final Conference, Nantes, 21–22 May. Visser, J., and A. Hemerijck (1997), A Dutch Miracle: Job Growth, Welfare Reform and Corporation in the Netherlands (Amsterdam: Amsterdam University Press). Wilthagen, T. (2004), ‘De Flexibiliteit-zekerheid Nexus’, in W. Arts, H. Entzinger and R. Muffels,Verzorgingsstaat Vaarwel (Assen: Van Gorcum). Wilthagen, T., and F. Tros (2004), ‘The Concept of “Flexicurity”: A New Approach to Regulating Employment and Labour Markets’, Transfer, no. 2, pp. 166–86. WRR (2006), De verzorgingsstaat herwogen (Amsterdam: Amsterdam University Press). WRR (2007), Investeren in werkzekerheid (Amsterdam and Den Haag: Amsterdam University Press/WRR).

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5 Usages of ‘Europe’ in Welfare Policies in Greece, 1981–2010 Dimitri A. Sotiropoulos

Introduction The Greek crisis of 2010 led to dramatic shifts in employment and social policy in a country in which, for decades, there was little change in the basic structure of the welfare regime: prior to the crisis, public sector employees and liberal professionals were minimally affected by policy changes, while the poor and the unemployed were scarcely protected. In a society with high poverty and unemployment rates, one would imagine that social and employment-friendly policies would have taken centre stage. And yet, in Greece, which belongs to the South European ‘world of welfare capitalism’ (Ferrera, 1996; Guillen and Petmesidou, 2008), such policies have been held hostage to historical traditions of statism, familism, polarized party competition and patronage-ridden distribution of transfers to favoured groups of beneficiaries (Matsaganis 2006, Petmesidou and Mossialos 2006, Giannitsis 2007, Featherstone and Papadimitriou 2008, Lyberaki 2008). The European Union’s (EU) impact has been visible but small, in the sense that policymakers used new tools of social policymaking and that their discourse contained references to the EU as a strategy to legitimize changes in employment and social inclusion policies. Despite Greece being a member state of the European Community (EC) since 1981, there is a misfit between the European Social Model (ESM) and the Greek ‘model’, which can be accounted for by the latter’s historical trajectory. In historical institutionalist terms, the path followed by Greek policies has been dependent on past decisions by policymakers which have “locked-in” later policy choices. Past decisions had favoured liberal professionals and public sector employees over private sector employees, 121

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women and the young. This pattern was not modified by Greece’s integration into the EU. In this context, the research question of this chapter is: what social and employment policy changes have taken place since 1981, when Greece joined the EC, and what kinds of usage of “Europe” have policymakers made? By “Europe”, we mean EU policies and institutions (Woll and Jacquot, 2010). The response to these questions involves three research hypotheses (Graziano, Jacquot and Palier, introduction to this volume). The first research hypothesis (RH1) is that Greece, an old EU member state in the period under study (1981–2010), was not “under scrutiny” by the EU as more recent member states have been. We hypothesize that national actors make few references to the EU and that fewer policy changes can be attributed to EU than to domestic pressures. Greece used its “old member” status to avoid constraints imposed on newer member states, which had to reform before joining the EU. This lack of constraints and the flow of EU funds turned Greeks in favour of the EU, at least since the mid-1980s. The second research hypothesis (RH2) is that, given the largely pro-EU attitudes of Greek elites and the general public, usages of Europe in welfare reforms will be both positive and explicit. The third research hypothesis (RH3) is that, given the significant misfit between the Greek social and employment policies and the ESM, there will be full usage of references to the EU since the social cost of reforms will be high. The analysis starts with a presentation of employment, pension and social inclusion policies in Greece from the EU perspective, using EU and OECD data (part 1). A discussion of welfare policies in 1980–2010 follows (part 2). The focus then shifts to usages of Europe by policymakers and to the legal, budgetary, cognitive, normative and political resources which they employ in policymaking (part 3). This part ends with an explanation of the usages of Europe in terms of Greek welfare policies. The main point of the conclusions is that the limited usage of Europe and the little impact of the EU on Greek policies can be understood in the context of the evolving party system, the discriminatory treatment of occupational groups by the state and the historical legacies of the Greek social “model”. Data used in this chapter include employment and social policy laws passed by the Greek parliament over a period of 30 years (1981– 2010), “introductory reports” accompanying 30 bills of law voted in that period and published interviews granted to the Greek press by Ministers of Labour and Social Security (hereafter ‘Ministers of Labour’) in 2004–10.

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1. The European social model and the Greek welfare state: a case of misfit Social protection in Greece from an EU perspective Greece has benefited from the flow of EC funds, but substantive welfare reform has not taken place. For instance, after the mid-1980s regional inequalities in Greece decreased owing to the Integrated Mediterranean Programmes (IMPs) which were followed in the 1990s and the 2000s by the Community Support Frameworks (CSFs) I, II and III. However, in terms of its compliance with EU social and employment legislation, Greece is classified as being in the ‘world of neglect’ (Falkner et al., 2005: 335–6). This is a subcategory of member states characterized by negligence and delay in the transposition and enforcement of EU Directives. The situation is similar in regard with EU “soft law”. In the Greek policy discourse, references to EU guidelines, such as the European Employment Strategy (EES), and to EU-inspired policy tools, such the National Action Plans for employment and social inclusion (NAP/emp and NAP/inc), are few and far between. Pension and social inclusion policies are embedded in a welfare regime which is familistic, fragmented along clientelistic lines (where some occupational groups enjoy disproportionate social protection compared to others), and based on social transfers rather than services. Employment policies are addressed to a labour market divided into three sectors: 1) a regulated sector, involving about 430 large businesses (with over 250 employees; see newspaper He Kathimerini, 29 August 2010) and a large civil service (with civil servants amounting to 27 per cent of all salaried personnel); 2) a practically unregulated sector, involving many small and medium enterprises (SMEs); and 3) a shadow sector, involving migrant labour, seasonal work and domestic help. Overall, there is a misfit between the Greek welfare regime and the ESM, if the latter is taken to be a public (state- or occupationally based), sustainable, adequate, universalistic, efficient prototype of social protection, mixing monetary transfers and social services. Nominally, the Greek welfare regime retains its public character as it is based on a large state- owned social insurance agency (IKA), covering people in private dependent employment, and dozens of state-subsidized occupationbased insurance and health schemes, covering public sector employees, the self- employed and the liberal professions. In 2008 the number of schemes was reduced from 133 to 13, and in 2010 the government passed a law aiming to reduce this number even further. It remains to be seen if this legislation will be implemented.

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The welfare system is not sustainable because, if no action is taken, by 2040 the deficit of the pension system will amount to approximately 13 per cent of GDP (Matsaganis, 2002: 116). The system is not adequate since the level of minimum pensions is low: in 2007 the proportion of poor people aged 65 and over who lived in poverty was 23 per cent (EU-27: 16 per cent). The system is not universalistic as it systematically discriminates in favour of public sector employees and liberal professionals and against private sector employees, women and the young. The former receive benefits disproportionate to their contributions because their funds grow in state subsidies or contributions channelled

Table 5.1 Social protection in Greece from the comparative (EU) perspective (%) Greece Total social expenditure as share of the GDP (2007) Employment rate (2007) Female labour force participation (2007) Unemployment rate (December 2009) Female unemployment rate (2007) Poverty rate (2010) Income inequality (ratio of total income of richest fifth over total income of poorest fifth of the population) Means tested benefits as share of total social benefits (2007)

EU-27 average

24

27

61.4 47.9 9.9 12.6 20 6

65.4 58.3 10.6 5(OECD) 17 5

7.8

10.5

Sources: Eurostat, 2009; European Commission, 2009b; OECD, 2009, www.poverty.org.uk/ summary/eu.htm

Table 5.2 Social benefits in Greece by function group: percentage share of total social benefits from a comparative (EU) perspective (2005) Greece Old age and survivors Sickness and health care Disability Family and children Unemployment Housing and social exclusion

51.2 27.8 4.9 6.4 5.1 4.5

EU-25 average 45.9 28.6 7.9 8.0 6.1 3.5

Source: European Commission, 2009b.

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to these ‘noble’ funds. For example, individuals or businesses placing an advertisement in the daily press pay a fee to the insurance fund covering journalists and other newspaper employees. Finally, the system is not efficient: in 2006 after social transfers (excluding pensions) the EU average poverty rate decreased from 26 per cent to 16 per cent. By contrast, in Greece it dropped only from 23.6 per cent to 21 per cent (EC, 2009a). In 1988–2010 unemployment oscillated between 13 and 8 per cent; and in 2008 the country was ranked 22 out of the 27 EU member states (the only other old member state to perform worse was Italy; World Economic Forum, 2008: 8). Labour force participation, which in 2002 had only been 56 per cent, in 2007 still stood at 61 per cent, considerably below the EU average of 65 per cent (Table 5.1). Notably, a small share of the female population works, while the inactivity rate of men in the 55–64 age group is approximately 47 per cent. Moreover, female unemployment rate is 12.6 per cent and youth unemployment 16 per cent (Table 5.1). Greece spends most of its social expenditure on pensions and health care. While this is typical of most EU countries, in Greece the share of total social benefits devoted to disability, family and childcare and unemployment is well below the EU-27 average (Table 5.2). Attitudes towards Greek elites and the public towards the EU In the past, centre and left-wing Greek political elites were ambivalent towards European integration. Until the mid-1980s the socialist government of Andreas Papandreou (in power since 1981) did not want to commit Greece to the EC. This changed after the tangible benefits of European policies, such the Common Agricultural Policy (CAP) and regional policies in the form of Community Support Frameworks (CSFs), became evident to elites and masses alike. Euro-scepticism gave way to strong support for Greece’s membership in the EU. Between October 1981 and April 2004, approval for Greece’s membership of the EU increased from 38 per cent to 71 per cent, while in autumn 2009 it was 61 per cent (EU-27: 53 per cent; see Eurobarometer data in http://ec.europa.eu/public_opinion/). In the late 2000s, despite scepticism towards some EU institutions (e.g. the European Commission), the majority of centre-right and socialist Greek parliamentarians were in favour of further EU integration (Nezi et al., 2009). In terms of our RH2, attitudes towards Europe have been positive and explicit. Whether policymakers capitalized on this remains to be discussed later in this chapter (part 3).

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2. A tale of inconclusive reforms in employment, pension and social inclusion policy sectors In Greece the sequencing of welfare reforms first reflected domestic political priorities of the governing socialist party in 1981–89. In the 1990s reforms reflected both such priorities (e.g. combatting unemployment) and the guidelines of the European employment and social inclusion policies. Reforms in the 2000s took an erratic course as alternating parties in power had a negative impact on the consistency of policies. Employment The evolution of employment policies over the past three decades (1981– 2010) reflected shifts in PASOK policy priorities more than anything else, as the socialist party ruled for 22 out of 30 years. In 1981–89 PASOK governments increased salaries, wages and pensions and recruited new personnel to the public sector on a massive scale. In the 1980s Greece intensified its “welfare effort”, as PASOK followed interventionist policies and pro-labour policies. In 1985 a law established a new system of protection from unemployment (Law 1545/1985), based on passive labour market policies. During the same decade Greece started receiving funds from the ESF for vocational training centres. However, absorption rates were very low, and the effects of vocational training on the labour market remained unclear (Sakellaropoulos and Oekonomou, 2006: 222). After PASOK’s fall from power (1989), a new law provided for part-time employment and protection of dismissed workers in regions undergoing de-industrialization (Law 1892/1990). After the mid-1990s, employment policies to a certain extent reflected EU developments (Essen summit 1994, Luxembourg jobs summit 1997) and the pro-European profile of Costas Simitis, who succeeded Andreas Papandreou in the leadership of PASOK and in government (1996– 2004). His government passed eight laws to promote job growth, fight unemployment and shift from active to passive labour market measures (Table 5. 3). In 1996 the socialist government attempted to link vocational training with the projected needs of the labour market and passed a new law (2434/1996) reflecting the Essen summit guidelines. In 1998 the same government passed a law reforming the labour market (Law 2639/1998) which regulated part-time and informal types of work, reorganized the Labour Inspectorate, and allowed for the foundation of privately owned employment recruitment agencies. The law introduced Territorial/local Employment Pacts, in order to promote employment growth at the

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regional and local level. This measure had little success, as it met with the indifference of employers and employees, while unions feared that through such Pacts nationwide collective agreements would be undermined at the local level. The Simitis government distributed “unemployment cards” to the unemployed and increased compensation for overtime work, in order to give incentives to businesses to hire new personnel (Law 2874/2000). However, business owners and employees did not take advantage of this incentive, but preferred to forge ad hoc agreements on matters of working time. The 2000 law referred to the implementation requirements of ESF and established a new state agency, entrusted with the monitoring of ESF operational programmes. In 2001 another law (Law 2956/2001) reorganized the Greek Labour Force Organization (OAED), in order to facilitate the implementation of the NAP/emp and the EES and also to make efficient use of ESF resources. The report accompanying the bill of this law claimed that Greece, having succeeded in entering the Eurozone, now concentrated on converging with the societies and economies of the rest of EU-15. PASOK established a new vocational training organization (Epaggelmatiki Katartise A.E.), in order to supervise institutes of vocational training (IEK). It also introduced a new system of vocational education and training; and created a new observatory (Paratiritirio Apascholisis – Erevnitiki Pliroforike) to monitor unemployment trends. Another measure was the foundation of new decentralized Employment Promotion Centres (Kentra Proothisis tis Apascholisis – KPA). These were meant to place unemployed people in contact with prospective employers. In 2003 the last Simitis government reorganized the dialogue which was planned to take place among social partners in view of the requirements of the Lisbon agenda and of the drafting of NAP/emp and NAP/ incl (Law 3144/2003). The introductory statement of law 3191/2003 claimed that the first implementation of NAP/empl showed the need for a better coordination between training and employment policies. For this reason, the law founded a new “national system” to coordinate vocational training with employment. In early 2004 a last PASOK law provided for subsidies offered to enterprises for every new unemployed person they hired, gave incentives to businesses to hire women and young people and established new procedures for career counselling. This law’s introductory statement made references to the EU only to boast about Greece’s comparatively higher growth rates in the early 2000s (e.g. 4.5 per cent of real GDP growth in 2000). In the spring of 2004 ND, headed by Karamanlis, replaced PASOK in power. ND passed three laws on employment (Laws 3250/2004,

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128 Dimitri A. Sotiropoulos Table 5.3

The main employment policy reforms in Greece, 1981–2010

Measure or reform

Focus

1985 Law 1545/1985 (coverage expansion and prolongation Labour of unemployment allowances, subsidies to businesses demand. to create new jobs) 1990 Law 1892/1990 (prolongation of unemployment Labour demand allowances, facilitation of part-time employment and and supply. of hiring workers dismissed by ailing enterprises, flexibility of working schedule) 1996 Law 2434/1996 (establishment of closer linkages Labour supply. between vocational training and employment opportunities, rationalization of unemployment management by state agencies, absorption of EU funds) 1998 Law 2639/1998 (reorganization of Labour Inspectorate, Labour supply. local employment pacts, regulation of atypical types of employment) 2000 Law 2874/2000 (rationalization of unemployment Labour management by the state, changes to Labour demand. Inspectorate, monitoring of labour market shifts, absorption of EU funds, reduction of employers’ insurance contributions for the newly hired employees, incentives to businesses to hire new labour instead of paying already hired workers for overtime work) 2001 Law 2956/2001 (administrative reorganization of the Labour supply. Greek Manpower Employment Organization – OAED, absorption of ESF funds) 2003 Law 3144/2003 (implementation of Lisbon strategy, Labour supply. NAP/empl and NAP/incl, new organs to oversee Labour supply. employment and social protection policies, dialogue among social partners) Law 3174/2003 (facilitation of part-time work) Law 3191/2003 (implementation of EES, creation of a new national system to coordinate vocational training with employment) 2004 Law 3227/2004 (incentives to women and the young Labour supply. to seek employment, creation of new agencies to offer Labour career counselling) demand. Law 3250/2004 (facilitation of part-time work in the public sector) 2005 Law 3385/2005 (facilitation of working time flexibility, Labour supply. abolition of clauses of Law 2874/2000 which had increased cost of overtime work) 2006 Law 3488/2006 (gender equality in the workplace, Labour supply. implementation of EU Directives) 2010 Laws 2846/2010 and 3863/2010 (increase in employLabour supply ment protection of dependent self-employed, decrease of employment protection in case of massive lay- offs) . Source: www.hellenicparliament.gr

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3365/2005 and 3488/2006). Only the last one, which transposed EU Directives on gender equality in the workplace (Directive 73/2002/EC), made explicit reference to the EU (i.e. to the Treaty of the European Communities, the Amsterdam Treaty and EU’s road map for gender equality 2006–10). The other two laws sought legitimization in policy rationalization and simplification. ND drafted the National Reform Programme 2005–08, as required by the Lisbon process (Matsaganis, 2009). In terms of fighting unemployment, the Karamanlis government attempted an individualized approach. OAED offered counselling to the unemployed and subsidized employers to hire new employees. A law was passed in 2004 to facilitate part-time employment in the public sector and another one in 2005 with the purpose of relaxing working time arrangements (Table 5. 3). In its second term in office (2007–09), ND integrated interventions in 12 prefectures severely hit by unemployment and set forth the Operational Programmes ‘Employment and Vocational Training’ and ‘Human Resources Development, 2007–2013’. After PASOK was returned to power (October 2009) the Greek crisis sparked major shifts in employment and pension policies. First, a law offered new guarantees on job security to the “dependent self- employed” – i.e. to those among the self- employed who regularly worked for the same employer (e.g. accountants or researchers who were not formally on the payroll of a certain company but offered their services to it on a daily basis). The law increased pay to those working overtime (by 10 per cent) and restricted the conditions under which temporary work might be used. It also facilitated massive dismissals from companies with more than 150 employees (Law 3846/2010). A second law (3863/2010) reduced the time period of advance notice which the employer is required to give an employee before he or she is dismissed and also allowed employers to pay the compensation they owe to dismissed employees in bimonthly instalments. In sum, between the mid-1990s and the crisis of 2009–10 the principles guiding employment policy were the adoption of active labour market measures and a closer interface between vocational training and employment, the reorganization of welfare administration and the introduction of some flexibility in work. The outcomes of all such measures (1998–2010) were not impressive, as unemployment fluctuated a lot: it rose from 10.8 per cent in 1998 to 12 per cent in 1999; then it fell to 9.7 per cent in 2003, only to rise to 10.6 per cent by December 2009 and to over 12 per cent in the autumn of 2010 (Eurostat data). Time and again, there was implementation failure, as shown by the fact that successive laws were passed on the management of ESF funds. Legislation

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was couched in a discourse of long-term domestic problems. However, seven of the eight laws, passed under Simitis, made reference to some EU aspect. This was true for only one out the four laws passed under Karamanlis (a sign of the latter’s more relaxed attitude towards Europe). In other words, references to Europe were not limited, but were only supplementary in comparison to domestic problems. Even though references to Europe were positive and explicit, they were not systematic. Pensions Since there is no common EU policy on pensions, one would not expect to find explicit references to the EU in pension legislation. This is the case for Greece even after the EU Laeken summit (2001), which outlined principles for sustainable and adequate pension systems. Some changes of the pension system took place in 1992, 2002 and 2010. However, numerous laws tried to fine tune the system without changing its basic parameters (Table 5.4). In 1990–92, the ND government lowered replacement rates (from 80 to 60 per cent), increased insurance contributions and the retirement age for employees first employed after the 1 January 1993 (Matsaganis, 2002: 114). Employees who had entered the labour market before that cut-off point and the self- employed (at the time almost half of the labour force) were not affected. A new financial scheme, the Social Security Funds’ Solidarity Account (LAFKA), aimed at redistribution: pensioners of well-endowed pension funds were to contribute to the new scheme through which transfers would be made to poorer funds. ND’s pension laws amended the excesses of favorable treatment of some groups, increased revenue and rationalized finances. One of the first laws of the Simitis government (Law 2434/1996, mentioned above in the section on employment policy) was a targeted social policy measure to increase the pensions of the poorest among those who would receive a new, means-tested Social Solidarity Allowance (EKAS). In 1997 another law increased the level of EKAS and tried to curtail insurance contribution evasion which had adversely affected the finances of IKA for decades. In this law’s introductory statement, the need for the Greek system to converge with its European counterparts was mentioned. In 1997 a new law introduced a contributory pension scheme for farmers, who until then enjoyed non-contributory, low benefits (Law 2458/1997). This was followed by Law 2676/1998, which reorganized pension funds without changing any basic parameters (levels of contributions and benefits, retirement age). In 2001 a substantive reform was attempted by the socialist Minister Tasos Giannitsis, who attempted to rationalize the pension system and

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curb pension inequalities. This reform was aborted because of massive opposition from trade unions, the hostility of the press and the about-face of other Ministers who had promised to back the reform. The reform would have touched upon benefits of insiders, namely wellprotected categories of employees in the wider public sector as well as the liberal professions. A watered- down version of this reform, passed in 2002 (Law 3029/2002) determined the replacement rate to be at 70 per cent. (This rate had been 80 per cent for the older generations of public sector employees.) Reference earnings, which in some occupational categories were calculated on earnings of the last year of employment, were now extended to the last five years for those insured in the most protected funds and to the best five out of the last ten years for those insured in the IKA, which was to become the only fund for wage earners. Mergers did not occur, since the most well- endowed funds were to merge with the IKA fund on a voluntary basis. Finally, state funding, equal to 1 per cent of GDP per year, was granted to IKA. In 2004, another PASOK law expanded the pension rights of disabled persons (Law 3232/2004). This was the only law in the long series of pension laws voted in 1990–2008 that, in its introductory statement, contained an explicit reference to the ESM. After ND won the elections of April 2004, it considered the LAFKA scheme unfair to public sector pensioners and abolished it. ND passed two more pension laws in 2007– 08 (Table 5.4). The first created an institutional framework for investments made by pension funds (Law 3586/2007), whereas the second was announced as a major pension reform but eventually amounted to administrative reorganization (Law 3655/2008). The law assigned a unique social security number to each citizen (a measure announced because a similar PASOK measure of the 1990s had never been implemented) and founded an intergenerational solidarity fund, meant to accumulate capital for future generations of pensioners. This law provided for a rise in the retirement age of various occupational categories, but the implementation of this measure was postponed until 2013. According to the same law, the 155 funds were to merge into 13 funds. However, powerful interests (e.g. journalists) were able to retain the status of their funds. Regulations providing for large discrepancies among funds in terms of contributions and benefits were not modified. The old funds were just placed under a new, umbrella-like organizational shell. In 2010, a new law voted under the constraints of the ‘Memorandum’ signed between PASOK’s government and three organizations overseeing the management of the Greek crisis (EC, IMF, European Central Bank [ECB]), reduced the number of funds even further and increased

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The main pension policy reforms in Greece, 1981–2010

Measure or reform 1990 Law 1902/1990 (measures against system abuse) 1992 Law 2084/1992 (decrease of replacement rates, rise of insurance contributions and rise of retirement age for those entering the labour market after 1992; some redistribution of funds from the well protected and to the less wellprotected funds through LAFKA scheme) 1997 Law 2458/1997 (development and change of farmers’ insurance from non- contributory to contributory scheme) 1998 Law 2676/1998 (some mergers among pension funds) 2002 Law 3029/2002 (introduction of a “second pillar” type of pension fund; decrease of replacement ratio to 70 per cent for public sector pensioners; reference earnings extended to last five years for those insured in the well-protected funds; voluntary merger of wage earners’ pension funds with IKA; additional state funding for IKA) 2004 Law 3232/2004 (benefits for the disabled) Law 3245/2004 (abolition of LAFKA)

2007 Law 3586/2007 (improving on the financial management of funds) 2008 Law 3655/2008 (155 funds merged into 13 funds, gradual rise in retirement age) 2010 Law 3863/2010

Focus Some streamlining of finances without significant changes. Streamlining of finances of IKA, without changing the replacement ratio, retirement age or benefit levels for the older generation of wage earners. No change in inequalities of social protection among funds.

Change to contributory coverage of farmers.

Administrative rationalization of some pension funds. Streamlining of finances of pension funds, but no change in inequalities of social protection afforded by public sector and liberal professions’ funds versus the rest of funds.

Expansion of insurance coverage for disabled and wage earners in agriculture. Decrease in redistribution among categories of pensioners. Managerial reform. Administrative reorganization.

Major change in the parameters of the pension system and administrative reorganization.

Source: www.hellenicparliament.gr

the retirement age (Law 3863/2010). The law stipulated that for three years there would be no increase in pension level; increased the minimum number years in work required for granting full pension from 37 to 40; provided for the gradual equalization of retirement for men and

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women, so that women are not pensioned off early; required civil servants to be integrated into the IKA fund by 2013; and reintroduced the charge on higher-level pensions which had been provided through the LAFKA scheme until 2004. With the exception of the aborted 2001 reform, the principles guiding pension policy reforms were financial streamlining and administrative reorganization rather than social solidarity or equity, while until the 2010 major shift in pension policy the influence of the EU remained limited. In sum, none of the introductory statements of bills of pension laws passed between 1981 and 2009 contained references to Europe (except for one Simitis law in 2004) and – despite everything – the pension system was not reshaped. Social inclusion The impact of the EU was slightly more visible on social inclusion policy than on pension policy. In 1990–93, under ND rule, there were the first adjustment programmes aimed at reintegrating the unemployed into the labour market and the first research programmes on poverty in the context of the CSF I. Under Simitis, two laws introduced a new allowance (EKAS) for the poorest among the pensioners and new programmes provided social services at home for the old and the disabled. Another social assistance law, which contained a direct reference to the 2001–03 NAP/inc (Law 3016/2002), targeted specific subcategories of the poorest strata (long-term unemployed, residents of poorest areas, low-income families with children). A step back from solidarity among social strata can be discerned in ND’s initiative, upon coming to power in 2004, to abolish LAFKA, the aforementioned scheme through which in 1992 the same party had arranged for redistributing revenue from financially well- endowed funds to poorer funds. ND succumbed to pressures from public sector old-age pensioners who had resorted to the courts in order to have the LAFKA scheme declared unconstitutional. The ND government raised pensions for farmers and the EKAS allowance and in 2006 expanded the distribution of family allowances, which had been granted to families with four or more children, to families with three or more children (Law 3454/2006, Table 5.5). In contrast to European trends to support children and their families irrespective of family size, in Greece the trend is to support families with many children (Matsaganis, 2009). In 2006 ND passed a new law to promote gender equality at work and to punish sexual harassment. It established a new National Committee on Gender Equality and a programme to promote female employment

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and entrepreneurship in nine regions of Greece. In 2007 the Karamanlis government passed a new Civil Service Code promoting reconciliation of work and family life for civil servants – for instance, through leaves of absence. Two laws were voted in during 2007 and 2008. The first law (3552/2007) provided for a new ‘Special Social Solidarity Fund’ (ETKA), with the purpose of offering assistance to middle-aged dismissed employees, such as workers who were formerly employed in rapidly deindustrializing sectors or resided in regions with high unemployment. The second law (3631/2008) laid the foundations for a new National Social Cohesion Fund, providing means-tested monetary transfers which were targeted towards the poorest households. This law focused on streamlining the allocation of funds earmarked for enhancing social cohesion (National Social Cohesion Fund, Law 3552/2008). In 2009 PASOK, upon coming back to power, abolished this Fund, which had not been implemented, and replaced it with an allowance for the most vulnerable groups. Except for a passing reference to the ‘ “European Year of Equal Opportunity for All’, included in the 2007 law, ND’s legislation did not make any reference to EU social inclusion policies (Table 5.5). Table 5.5

The main social inclusion policy reforms in Greece, 1981–2010

Measure or reform 1996

1997

2000

2002

2006 2007

2008

Focus

Law 2434/1996 (supplementary allowance, Income maintenance, EKAS, targeted to poor old age pensioners) targeted measures to reduce poverty. Law 2556/1997 (increase of EKAS) Income maintenance, targeted measures to reduce poverty. Law 2874/2000 (additional allowance for Targeted measure to the long-term unemployed over 45 years reduce poverty. old) Law 3016/2002 (implementation of NAP/ Income maintenance, inc, allowances for long-term middle-aged targeted measures to unemployed, residents of poorest rural reduce poverty. areas, poor families with children) Law 3454/2006 (child allowance for Protection of poor families with three children) families with children. Law 3552/2007 (new fund to increase Income maintenance, compensation for the middle-aged administrative problem unemployed) solving. Law 3631/2008 (new fund to supplement Targeted measures to fight income of poorest households) poverty.

Source: www.hellenicparliament.gr

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Overall, the ad hoc character of social inclusion measures was not curbed. It is telling that, in December 2008, ND announced the distribution of a one- off supplement to low-income pensioners and the unemployed, ranging between 100 and 200 Euros per person. Neither ND nor PASOK seriously considered establishing a nationwide minimum income guarantee. 3. Six usages of Europe by Greek policymakers The usages of Europe in Greek welfare policies How often and in what sense do policymakers employ usages of “Europe” and what resources do they employ? Some usage of Europe was made in 11 out of the 20 press interviews with Ministers of Labour collected for this research. Ministers mostly made passing remarks, such as that Greece follows EU priorities; Greece performs better than the EU average in terms of certain indicators; and that the government will resist unpopular policy choices recommended by the EU. The Ministers’ rationale primarily reflected concerns with domestic priorities, such as the ageing of the population and problems bequeathed from the past (e.g. social security fragmented along occupational lines). Among the 28 bills of Greek welfare laws between 1981 and 2009, only 12 had some reference to Europe (eight employment laws, three social inclusion laws and one pension law). In both sources (interviews, introductory reports) usages of Europe varied a lot (Table 5.6), but can be regrouped into six types: blame avoidance, political legitimation, implementation of EU legislation, adaptation to EU non-binding policy guidelines, pro-European discourse and comparative evaluation of Greece versus other countries. A first usage is blame avoidance (Weaver, 1986). Ministers alluded that strategies, such as flexicurity, or principles, such as gender equality in retirement age – which have been met with hostility by the press, unions and the public – were imported to Greece from the EU and that the government would see that they would not become part of the Greek welfare regime (Minister Fani Palli-Petralia, speaking on flexicurity in an interview with Naftemporiki, 22 September 2009); or that their implementation would be delayed (the same minister, speaking on the equalization of women’s retirement age to that of men, To Vima, 13 July 2009; Minister Savvas Tsitouridis, on the same issue, He Kathimerini, 9 April 2009). The PASOK government which came to power in 2009 and had to manage the Greek crisis resorted to this usage, in order to facilitate the passage of pension and employment reforms which dramatically altered the social protection enjoyed by public sector employees (facilitation of dismissals, wage and pension cuts).

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Still, overall this first type of usage is not common in welfare issues. This is because governments tend to assume credit for social policies, if measures favouring certain social categories, such as the unemployed, are taken. One would not expect governments, wishing to be returned to power, to let such credit slip from their hands and be attributed to the EU. In contrast to blame avoidance, which shifted the blame to supranational actors, other usages were meant to legitimize national policies. Thus, a second type of usage entailed an understanding of Europe as a set of advanced welfare states with which Greece wants to converge. For example, a 1990 law, which provided for privatizations in the public sector and initiated changes in the labour market (including prolonging the duration of unemployment benefits), made explicit references to Greece’s being a laggard in comparison with other European countries (Law 1892/1990). The relevant bill of law stated that Greece had not pursued the type of reforms witnessed in post-communist Eastern Europe. In other words, this usage does not apply to the EU, but to examples of other European countries. In another instance, the bill of law passed in 2000 for the promotion of employment (Law 2874/2000) stated that Greece was on a trajectory of convergence with other European economies. A further example was a law of 2001 which revamped the OAED (Law 2956/2001). The bill referred to the ‘effort to attain real convergence with the most socially and economically advanced countries of the EU’. Typically, policymakers who resorted to the aforementioned second type of usage of Europe employed financial and organizational resources. For example, the government focused on absorbing ESF and Cohesion Funds that contributed to the development of rural areas and to vast improvements in transport and communications. Already in the late 1980s, Greece benefited from the IMPs. After the reform of Structural Funds in 1988, the whole territory of Greece was classified as an ‘Objective 1’ area, which meant that the country was eligible to receive aid for underdeveloped areas. During the evolution of CSF I (1989–93), Greece’s 13 regions received a total 1.5 billion ECUs. The sum total of this CSF’s funds helped accelerate Greek economic growth by 1 per cent per year. During the second CSF (CSF II, in 1994–99), the total of funds channelled to the Greek regions reached 4.5 billion ECUs, while the acceleration of growth was 1.1 per cent per year. Between 40 and 50 per cent of all CSF funds were channelled to infrastructure, whereas 21–22 per cent went to human resources (Tsoukalis, 1998: 303, Sotiropoulos, 2004). CSF III granted 21 billion Euros to Greece, which contributed to a total increase of 6.2 per

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cent in the Greek GDP between 2000 and 2006 (Andreou and Liargovas, 2008: 257–8). In the current period (2007–2013) Greece is entitled to 20.1 billion Euros, to be drawn from Structural Funds, the Cohesion Fund and the European Agricultural Fund for Rural Development. On the other hand, policymakers tried to improve on the Greek state’s organizational resources. At various ministries, “Special Secretariats” or “Services” were founded. For example, in 2009 the Ministry of Labour had five Special Secretariats and Special Services. These units were staffed with outside experts, political appointees and public employees with scientific skills. Also new public agencies, such as the Unit of Organization and Management (MOD) and the Organization of Education and Vocational Training (OEEK, founded in 1992), oversaw the absorption of EU funds. Obviously, the central services of ministries were considered incapable for such tasks. A third usage of Europe refers to the legally binding and organizational requirements of implementing EU policies. In various press interviews, Ministers of Labour underlined the government’s priority to harmonize Greek labour law with EU legislation (Minister Savvas Tsitouridis, He Kathimerini, 9 April 2006); and to shape social policies under the constraints of the Stability Pact of the EU (Minister Vassilis Maginas, He Kathimerini, 25 November 2007). Also, new legislation was passed in order to facilitate the creation of infrastructure and the absorption of funds, provided by CSFs. For example, Law 2874/2000 stipulated that a new administrative unit was necessary for the ‘horizontal monitoring of ESF actions’. The new unit was to be responsible for the coordination of ESF actions in all CSF III operational programmes and for the programmes’ implementation. In making this usage of Europe, policymakers employed legal resources. Examples are direct references to EU legislation and to decisions of major EU organs, such as a decision of the Council of European Union or the European Parliament (EP). A first example is a law of 1998, on the allocation of working time (Law 2639/1998). The relevant bill of law makes explicit reference to Directive 93/104/EC on working time and explains that the law submitted to Parliament aims at the ‘harmonization’ of Greek laws with Community legislation. Another example is the set of Directives on working time (93/104/EC, 2000/34/EC and 2003/88/EC) which were transposed in Greece through two Presidential Decrees in 1999 and in 2005 (Presidential Decrees 88/1999 and 76/2005). Moreover, there is the possibility of “transposing” EU policies, not through the passage of a new law, but through pacts between the associations of business owners and the trade unions. This is the case of the

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Greek national pacts of 2006/07 which included EU-level agreements on work from home (Special Scientific Committee, 2008: 1068–9). A fourth type of usage of Europe is relevant to EU non-binding guidelines. A typical expression was that EU guidelines ‘underline the need to’ take a certain policy measure. For example, the preamble to the aforementioned law for the reorganization of OAED in 2001 envisaged OEAD’s transformation ‘so that it fulfils its role as an institution’, which is to implement the EES. Ministers have also resorted to this usage, announcing that the implementation of the NAP/emp is a government priority (Minister Palli-Petralia, He Naftemporiki, 22 September 2009 and He Imerisia, 3 October 2009). The resources employed for this type of usage were cognitive (Guillen and Palier, 2004). For example, the use of cognitive resources became evident in the government’s shift from top- down to more participatory decision-making. An indication of this shift was the creation of the Economic and Social Committee (EOK, founded in 1994 by PASOK). In 1997 the Simitis government started rounds of social dialogue on the reform of labour markets, labour relations and pensions. The rounds may be credited with facilitating two cognitive changes (Kioukias, 2003: 28): a relative shift from ideological to more technocratic discourse among trade union representatives and a “process of socialization” of union representatives in tripartite consultation (among the government, employers and employees). To some extent, another EU-inspired resource was the formation of expert committees. After the mid-1990s, under the influence of the EC’s White Paper of 1993 and the Luxembourg process, the Simitis government tried a global approach to policymaking, which differed from the fragmented and uncoordinated approaches of the past. The expert committees (working under John Spraos) conceptualized a fully fledged reform in each policy area. A fifth type of usage is discourse expressing belief in the project of European integration in general. For example, in 2002 two policy experts of the Ministry of Employment and Social Protection (then under PASOK) explicitly noted that the Greek NAPs were conceived with the purpose of contributing to the ESM (Lyberaki and Tinios, 2002: 28). A sixth and final usage is reflected in comparisons Ministers made between Greece and the EU. For instance, after 2004 ND Ministers made reference to how much better Greece was doing than other Eurozone countries in terms of economic growth (Minister Panos Panayotopoulos, To Vima, 18 December 2005); how more restrictive Greek labour law was – as far as massive dismissals were concerned – in comparison to

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other EU member states (Minister Fani Palli-Petralia, He Naftemporiki, 22 September 2009); and how the retirement age in Greece need not be raised, as it was higher than in the rest of the EU (an obviously debatable statement by Minister Savvas Tsitouridis, He Kathimerini, 9 April 2006). A resource associated with this type of usage was the drafting of NAPs, which obliged policymakers to work on the basis of indicators and benchmarks. However, this new cognitive orientation of policymaking, implementation and evaluation was not diffused to the rest of public services (e.g. directorates of ministries). It is noteworthy that none of the above six usages of Europe are common, either in public interviews or in bills of law. That is, to the rare extent that usages of Europe do appear, they can be found more in bills of employment and labour market legislation than in bills on social inclusion. The inconsistency and rarity in usages of Europe may be attributed to long-term trends of domestic politics: in Greece there is a high ministerial turnover. For example, under ND rule (2004–09), four Ministers of Labour succeeded one another in the span of five years. There is almost no organizational memory in public services as ministries lack permanent planning and policy units, the functions of which are usually assumed by political appointees coming in and going out with every ministerial reshuffling. In this context, it is not surprising that usages of Europe have been sporadic and haphazard. The privileges of an old EU member state In the 1980s the impact of the EU on Greek social and employment policies was only felt in terms of the absorption of funds in the last years of the decade. In the 1990s the pouring of financial resources from the EU to Greece was intensified, in the form of funds earmarked for agricultural and regional development. The moment of change came in 1996, when Papandreou, the founder of PASOK, resigned from the post of prime minister. He was succeeded by Simitis, a pro-European social democrat, who steered Greece into the EMU. The Simitis government increased social spending and introduced new measures, many of which were inspired by EU policies. Even though Greece, on the road to join the Eurozone in 2001, was subjected to pressures to streamline its public finances, the truth is that it entered the EMU without improving on social security finances. Looking at the policy changes under the rule of PASOK (1993–2004), it is difficult to perceive an influence of the EU on the Greek welfare regime’s structure. Major milestones of European social

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Table 5.6

Role and usages of Europe in Greek welfare policy reforms

Year and name of reform

Role of Europe

Policy phase

Resources

Usages

1990–92 Souflias pension laws 1997 Farmers’ pension law 1998 Employment/ regulating types of work L. 2639/1998 2000 Promotion of employment/ Working time, L. 2874/2000 2002 Reppas pension law 2003 Social dialogue L. 3144/2003 2003 Vocational training and employment L.3191/2003 2006 Gender equality law 3488/2006 2007–08 Two new social assistance funds 2008 Petralia pension law 2010

No role.

–

–

–

No role.

–

–

–

Reform Agenda supporter. setting.

Cognitive- Legitimation. normative, legal.

Reform initiator.

Agenda setting.

Cognitive- Legitimation. normative, political.

No role.

–

–

–

Reform Agenda initiator. setting. Reform Agenda initiator, setting. supporter.

Cognitive- Legitimation. normative. Cognitive- Legitimation. normative.

Reform initiator.

Agenda setting.

Legal.

Legitimation.

No role.

–

–

–

No role.

–

–

–

Reform Agenda initiator setting. (along with IMF and ECB).

Cognitive- Blame normative. avoidance.

and employment policy, such as the Treaty of Amsterdam (1997), the Lisbon agenda (2000) and the revamped Lisbon agenda (2005), did not visibly alter the content of Greek policies. There was noticeable change only in the creation of new institutions, entrusted with engaging social partners in debate over welfare policies or absorbing EU funds. In the spring of 2004, PASOK lost the general elections to ND, which was led by Karamanlis. The latter went on to win the following

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elections in the autumn of 2007 and stayed in power for another two years. During his term in office (2004–09), the impact of the EU could be traced in employment policies, but much less in social inclusion and pension policies. Despite sporadic references by Greek politicians to reform inspired by Europe, there was little progress in employment and social policies after 28 years of Greek membership of the EU (1981–2009). Even though, in the 1980s and the 1990s, living standards rose, the structural characteristics of the Greek welfare regime (excessive fragmentation and inadequacy of social protection, unequal and discriminatory treatment of different groups, unsustainability of social security finances) were not altered. In all reform instances noted in this chapter, the reform promoter was the government. The pro-reform coalition included the party in power and the limited circles of technocrats who had served as policy advisors. The anti-reform coalition included the parties of the opposition and the interest groups affiliated with them. There were negative reactions against all the aforementioned reforms by the two parties of the Left (KKE and Synaspismos). EU resources were almost exclusively employed by incumbent governments for the purpose of winning political battles in the short run. Resources were not drawn upon by a policy community for medium-run reform purposes, but were used by incumbent Ministers in order to prolong their party’s stay in government, if not simply to forward their own career. In the early 1980s, the impact of EU on Greece’s social policies was negligible, owing, among other things, to the country’s different policy priorities. Since the 1990s, the impact of the ESM has been felt, as this model was evolving from a set of not binding documents (e.g. charters) to a variety of concrete measures (e.g. guidelines, Directives). The impact of the EU was particularly felt when community legislation was transposed into the national legal order and EU-inspired modes of policymaking were adopted (e.g. NAP/inc and NAP/emp). Under Simitis (1996–2004), the impact of the EU on employment policies became more visible. Still many measures were the result of domestic pressures, while there were also a few pieces of legislation reflecting the impact of the EU. Examples of Europeanization were the adoption of technocratic methods of policymaking, the establishment of processes of dialogue among social partners on policy prospects, and the introduction of new structures to monitor policy implementation. However, some of the new tools (e.g. policy monitoring reports) were produced in a ritualistic

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manner, conforming to demands from Brussels, without any policy impact (personal communication with advisor to Minister of Labour, Athens, September 2008). Explaining the limited usages of Europe and the low impact of EU on Greek welfare policies Domestic factors, primarily discursive, institutional, political party system and interest aggregation legacies, have mitigated the usages of Europe and EU’s impact on Greek welfare policies. The lack of substantive reform until 2010 (when the Greek crisis hit) can be understood in the context of the party system, political culture and state–society relations. Since 1981 two major parties alternated in power, the socialist party (PASOK) and the centre-right party (New Democracy [ND]). With the exception of short-lived coalition cabinets in 1989–90, at all other times ND or PASOK formed single-party majority governments. There are also two parties of the Left, the more liberal Coalition of the Left (Synaspismos) and the traditional Communist Party (KKE), both of which are anti-European in their profile, even though Synaspismos has a pro-European faction among its rank and file (there is also a small extreme right-wing party, LAOS, which is also mostly anti-European). National politics and policies are dominated by a political culture of confrontation between government and opposition. The opposition immediately rejects almost any government initiative. For example, ND, a conservative, if not neo-liberal party, which was in opposition after loosing the elections of 2009 to PASOK, rejected the austerity policy of the socialists, dictated in 2010 amid the Greek crisis by the IMF, the EU and the ECB. The relations between the state and interest groups are more complicated. Parties closely monitor trade unions, the strategies of which are decided by union leaders who are party cadres of ND or PASOK. Unions couch demands in terms of a populist and statist political discourse, reminiscent of socialist and Communist Party platforms of the 1970s and 80s. However, union leaders also have their hands tied, as unions rely on funds distributed by the Ministry of Labour for their economic survival. Usually pro-government unions tend to support government measures, while pro- opposition unions reject them. In the 2000s, if a new measure touched upon any pension policy arrangement, including unfair or inefficient arrangements, then all unions, regardless of political affiliation, opposed the measure. Sometimes employers followed suit for their own reasons (e.g. to

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continue insurance contribution evasion). Interest groups resorted to boycotting the government-sponsored social dialogue on reform and then engaged in industrial action. As a result, the trust, allegedly built among social partners through the 1996–97 social dialogue, quickly evaporated and all pension reform attempts of either PASOK or ND in the 2000s were met with strong resistance “from below”, until the crisis of 2009–10 dawned upon Greek society. Until that crisis, every time a disputed measure became a law, interest groups fought to avoid its implementation. They resorted to the courts, in order to have the new law annulled, thus initiating a process which took years to complete, owing to the dysfunctioning justice system. Such groups also benefited from bureaucratic obstruction. For instance, since the inter-war period, successive laws repeatedly provided for the merging of small insurance funds with the IKA. Yet, for decades, mergers did not take place, as bureaucrats running the funds resisted mergers, the funds’ beneficiaries struggled to preserve their tailor-made social security arrangements and ruling elites quickly succumbed to their demands. Employers’ associations followed comparable tactics. If a new law required of employers to effect changes in the working environment (e.g. in regard to health and safety regulations), employers often did not abide by the law and counted on the absence of control mechanisms. To sum up this section, all sides completely ignored inconvenient legislation and were not sanctioned for opting out of new policies. Policymaking structures have traditionally been very centralized and the policymaking style is reactive, involving the imposition of decisions from the top. Decision-makers are a few individuals, namely Ministers and their advisors, who may accommodate clientelistic interests at the policy-formulation stage. For instance, a Minister may favour a certain electoral district and may have funds earmarked for improving the social assistance infrastructure of that district. Clientelistic practices, lack of administrative and technological know-how, and resistance from vested interests (e.g. liberal professionals and public sector employees benefiting from well- endowed insurance funds) have mitigated the otherwise positive effects of Greece’s integration into the EU. For example, EU legislation may have been adopted but never been implemented, as Ministers did not either follow-up on the legislated measures or issue the ministerial decrees necessary to adapt EU to pre- existing national legislation. This is a pattern that has led Falkner et al. (2005) to classify Greece in the ‘world of negligence’ as far as complying with Europe was concerned.

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Conclusions Following the analytical framework of the editors of this volume, we have advanced three hypotheses. Our first research hypothesis was that Greece, as a relatively old EU member state, was not subjected to reform pressures by external actors to the extent that younger member states were and also that Greek national actors would make scant reference to the EU. This hypothesis was only moderately supported by our analysis. On the one hand, until 2010 external pressure to reform was never strong enough. Greece overcame hurdles to join the EC in 1981 and the Eurozone (in 2001) without mainstreaming the finances of the social security system, which weigh heavy on public finances. National actors, namely governments which were the sole reform promoters, justified new measures primarily through references to domestic problems, such as the inefficiency, inequity and unsustainability of social protection. However, after the mid-1990s reformers also made periodic references to the EU in order to legitimize their policy choices. In addition to arguing for the rationalization and the modernization of policies, national actors referred to the need for Greece to converge with the rest of Europe and to the requirement to transpose EU legislation. Our second hypothesis was that national actors would capitalize on the overall positive view of the EU among the majority of Greeks and make explicit and positive references to the EU in order to impart legitimacy to reforms. In fact, politicians made explicit but sparse usage of Europe. They did not seek to capitalize on the aforementioned positive view, probably in order to avoid: criticism from the parties of the predominantly anti-European Greek Left; suspicion on the part of some anti-European cadres of PASOK; and resistance to reform on the part of Euro-sceptic trade unions and the populist press. As far as the third hypothesis was concerned (usages of Europe), in Greece the extent of usage of various EU resources varied a lot. For example, in terms of budgetary resources, the European funds poured into Greece after 1988 were particularly significant. For a period of 15 years (approximately 1990–2004) Greek policymakers mostly employed cognitive, normative and political resources. Overall, usages of Europe were very limited in pension and social inclusion policies and sporadic in employment policy. Reference to the EU played a legitimating role, supplementary to domestic problems. Our argument has been that, until 2010, the Greek welfare state remained fragmented, uneven in terms of contributions and benefits,

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inefficient in its function, and patronage-ridden in terms of personnel management and allocation of resources. Over the last 30 years, social services continued to be underdeveloped, transfers were primarily monetary, and – above all – the Greek family remained the most reliable institution upon which the unemployed or working poor family members could count for satisfactory living conditions. In conclusion, most changes in Greek policies were the result of domestic rather than EU pressures (Sakellaropoulos and Oekonomou, 2006: 215). The impact of the EU has been visible in terms of new policy tools and some shifts in employment policy, but has not succeeded in curbing the most disturbing patterns of Greek welfare regime. Between 1980 and 2010, Greece benefited from its status as a relatively old EU member state in two ways: first, it was aided in its economic and welfare development through funds flowing from the EU to Greece; and, secondly, Greece did not feel pressure to conform to standards imposed by the EU in the way more recent or candidate EU member states have done.

Note The author would like to thank Sophie Jacquot, Bruno Palier, Paolo Graziano, Antigone Lyberaki, Tasos Giannitsis and Platon Tinios for their critical comments and Panayota Toka and the ELIAMEP staff for research assistance.

References Andreou, G., and P. Liargovas (2008), ‘Effects of the European Union’s New Cohesion Policy and New Community Budget on the Greek Economy’, in N. Maraveyas (ed.), Greece in the European Union: Past, Present, and Future (Athens: Themelio), pp. 256–80 (in Greek). European Commission (2009a), ‘Joint Report on Social Protection and Social Inclusion 2009’, Directorate General for Employment, Social Affairs and Equal Opportunities, Brussels, March. European Commission (2009b), ‘Employment in Europe 2009’, memo/09/514, Brussels, 23 November. Eurostat (2009), Statistics in Focus: Population and Social Conditions, 40/2009 (Brussels: European Commission). Falkner, G., O. Treib, M. Hartlapp and S. Leiber (2005), Complying with Europe: EU Harmonization and Soft Law in the Member States (Cambridge: Cambridge University Press). Featherstone, K., and D. Papadimitriou (2008), The Limits of Europeanization: Reform Capacity and Policy Conflict in Greece (London: Palgrave). Ferrera, M. (1996), ‘The “Southern Model” of Welfare in Social Europe’, Journal of European Social Policy, vol. 6 (1), pp. 17–37. Giannitsis, T. (2007), The Social Insurance Problem as an Orphan of Policy: And a Solution (Athens: Polis) (in Greek).

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Graziano, P., S. Jacquot and B. Palier (2011), ‘The Usages of Europe in National Employment-friendly Welfare State Reforms’, in P. Graziano, S. Jacquot, B. Palier (eds), The EU and the Domestic Politics of Welfare State Reforms. Europa, Europae (Basingstoke and New York, Palgrave Macmillan). Guillen, A.-M., and B. Palier (2004), ‘Introduction: Does Europe Matter? Accession to EU and Social Policy Developments in Recent and New Member States’, Journal of European Social Policy, vol. 14 (3), pp. 203–9. Guillen, A.-M., and M. Petmesidou (2008), ‘The Public–Private Mix in Southern Europe: What Changed in the Last Decade?’, in M. Seeleib-Kaiser (ed.), Welfare State Transformations: Comparative Perspectives (Basingstoke: Palgrave). Kioukias, D. (2003), ‘Reorganizing Social Policies through Social Partnerships: Greece in European Perspective’, Social Policy and Administration, vol. 37 (2), pp. 121–32. Lyberaki, A. (2008), ‘Changing Labour Markets and their Implications for Social Protection’, in M. R. P. d’ Assuncao Carlos (ed.), The Challenge of Social Policy Reform in the 21st Century: Towards Integrated Systems of Social Protection (Athens: Kokkalis Foundation and I. Sideris), pp. 85–104 (in English). Lyberaki, A., and P. Tinios (eds) (2002), Work and Cohesion: The National Action Plans for Employment and Social Inclusion (Athens: Papazisis) (in Greek). Matsaganis, M. (2002), ‘Yet Another Piece of Pension Reform in Greece’, South European Society and Politics, vol. 7 (3), pp. 109–22. Matsaganis, M. (2006), ‘Muddling Through: The Trials and Tribulations of Social Security’, in E. Mossialos and M. Petmesidou (eds), Social Policy Developments in Greece (Aldershot: Ashgate), pp. 147–73. Matsaganis, M. (2009), ‘The Social Policy of the New Democracy Government, 2004–2009: A Critical Appraisal’, Metarithmisi, April 2009, www.metarithmisi. gr (in Greek). Nezi, S., D. A. Sotiropoulos and P. Toka (2009), ‘Explaining the Attitudes of Parliamentarians towards European Integration in Bulgaria, Greece and Serbia: Party Affiliation, “Left–Right” Self-placement or Country Origin?’, Europe-Asia Studies, vol. 61 (6), pp. 1003–20. OECD (2009), OECD in Figures 2009, OECD Observer 2009 Supplement 1 (Paris: OECD). Petmesidou, M., and E. Mossialos (2006), ‘Introduction: Addressing Social Protection and Policy in Greece’, in E. Mossialos and M. Petmesidou (eds), Social Policy Developments in Greece (Aldershot: Ashgate), pp. 1–21. Sakellaropoulos, T., and C. Oekonomou (2006), ‘National Priorities and European Challenges in the Reform of the Social Protection and Employment System in Greece 1980–2004’, in N. Maraveyas and T. Sakellaropoulos (eds), European Integration and Greece: Economy, Society, Policies (Athens: Dionicos), pp. 213–56 (in Greek). Sotiropoulos, D. A. (2004), ‘The EU’s Impact on the Greek Welfare State: Europeanization on Paper?’, Journal of European Social Policy, vol. 14 (3), pp. 267–84. Special Scientific Committee (2008), ‘Interim Report of the Committee on Flexicurity’, (Koukiadis Committee), Labour Law Review, vol. 67, pp. 993–1211 (in Greek). Tinios, P. (2005), ‘Pension Reform in Greece: ‘Reform by Instalments’ – A Blocked Process’, in K. Featherstone (ed.), Politics and Policy in Greece: The Challenge of Modernisation (London: Routledge).

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Tsoukalis, L. (1998), The New European Economy at the Threshold of the 21st Century (Athens: Papazisis) (in Greek). Weaver, R. K. (1986), ‘The Politics of Blame Avoidance’, Journal of Public Policy, vol. 6, pp. 371–98. Woll, C., and S. Jacquot (2010), ‘Using Europe: Strategic Action in Multi-level Politics’, Comparative European Politics, vol. 8 (1), pp. 110–26. World Economic Forum (2008), ‘The Lisbon Review 2008’, Davos.

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6 ‘Eppur si muoveva ...’ The Italian Trajectory of Recent Welfare Reforms: From ‘Rescued by Europe’ to Euro-scepticism Paolo R. Graziano and Matteo Jessoula

Introduction The Italian welfare state is generally classified as either an example of the continental or Bismarckian welfare regime (Esping-Andersen, 1990) or, adopting other conceptual lenses, a representative of the Southern European welfare state family (Ferrera, 1996). Since the “golden decades” of welfare state expansion (roughly 1950s–70s), the Italian welfare state configuration has been characterized by the predominance of the male breadwinner model, a deep gap between the “insiders” – mainly workers in core economic sectors and pensioners – and the “outsiders” – the unemployed, mostly women and young people – and by the crucial role of the family in providing informal social protection for its members (Saraceno, 1994). However, during the 1990s and early 2000s the Italian welfare state underwent an unprecedented process of reform. The interventions adopted in the fields of employment policy, pension policy and the social assistance sector were crucial components in this process aimed at “modernizing”– or “recalibrating” à la Ferrera and Hemerijck (2003) – the Italian welfare state. Various contributions have already illustrated how the interplay between domestic political dynamics – with the great political turmoil of the early 1990s and the shift from the so-called First Republic to the Second – and external constraints (“vincolo esterno”, cf. Ferrera and Gualmini, 2004) has eased the process of reform, and particularly the shift from distributive, “credit- claiming” (Pierson and Weaver, 1993) 148

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policies of the golden age to retrenchment interventions. More precisely, European inputs have been considered “necessary conditions” for institutional readaptation in Italy (Graziano, 2004, 2007; Jessoula, 2009) in the light of the strong public support to Europe – both on the elites’ and public opinion side – and the “joining the club” factor (see Graziano, Jacquot and Palier, introduction to this volume) has been particularly relevant, not with respect to the inclusion of Italy in the EU but with regards to the inclusion of Italy in the ‘Euroclub’ in the mid–late 1990s. By contrast, if we focus on other accounts of the Italian story – for example, by looking at the ‘worlds of compliance’ literature (Falkner et al., 2005; Falkner and Treib, 2008) – Italy is seen rather as a case of “neglect” (Falkner et al., 2005) or as a case of “dead letters” (Falkner and Treib, 2008) in responding to EU pressures. Both strands of literature have pointed at the marked misfit between Italian employment and social policies and the emerging European social policy structure. Since the early 2000s, however, three significant novelties may be identified: first, in some policy sectors the degree of policy misfit has declined as a result of the reforms of the 1990s; secondly, the “grip” of Europe on domestic (social) policymaking has become less evident; thirdly, both elites’ and public opinion attitudes towards Europe have moved away from traditional Euro- enthusiasm and “Brussels” has become a thorny and divisive issue. Therefore, in this chapter we first argue that, though necessary to create new political opportunities for policy change, European resources have not represented sufficient conditions for welfare state reform in Italy. In fact, the analysis of some failed reform attempts reveals that in some cases European resources have been mobilized by national actors but this has not led to policy change since the usage has been too limited or not shared by the most relevant domestic decision-makers. Secondly, we contend that, over the last three decades, not only European pressures but also the usages of European resources by national actors have varied significantly across policy sectors, also because different resources have been provided by the supranational level to national policymakers in the various periods and in the different policy fields. Thirdly, even within the same policy sector, Italian actors have mostly used European resources “selectively” in order to pursue their policy goals. The Italian case thus shows that it may not be appropriate to talk generically about domestic “worlds of compliance” but rather to think more in policy terms – i.e. domestic worlds of policy compliance. For example, as we will show below, the employment trajectory has been different from the pensions and the social assistance trajectories and

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this depends not only on the degree of policy misfit but also on the variance in supranational resources provided by the EU and on the “policy-specific” political dynamics. In our contribution we will provide an answer to the following research questions: what have the Italian politics of welfare state reform looked like? And, more specifically, how has Italy responded to the challenges provided by the EU at the end of the 1990s? How were the reforms supported at the national level? And who were the main actors involved? In the first two sections, the recent evolution of the relationship to Europe is discussed and a brief description of the Italian welfare state is provided, whereas the following third and fourth sections are devoted to analysis of the evolution of the various welfare state policies (1980–2010) and three main phases regarding the role and usages of Europe are identified (1980–91; 1992–2000; 2001–10). A concluding section ends the chapter. Italy and Europe: an evolving relationship Rome was the city where the treaty establishing the EEC was signed and Italy was among the six founding members of the European economic area in 1957, though it usually left to France and Germany the leading role in the construction of the supranational community. Despite such secondary role, at least since the mid-1970s there has been a favourable attitude by political, as well as social, elites towards the deepening of the integration process. Similarly, Italian public opinion has traditionally been Euro- enthusiast, as revealed by Eurobarometer surveys (see below, Figure 6.1). These elements remained unchanged at least until the early 2000s, and the “run up to EMU” (Ferrera and Gualmini, 2004) between 1992 and 1998 represented a phase characterized by widespread consensus for the unification process and an intense national effort aimed at matching the requirements to enter the “Euroclub”. Nevertheless, in recent years the general appreciation of Europe has significantly declined (Figure 6.1) from the 1981 peak of 70 per cent of Italians stating that ‘ “Italy’s membership of the EU is a good thing”, to 2009, when only 44 per cent of Italians made the same statement. The decline was particularly severe (a drop of 20 per cent) between 2001, when the overall appreciation was still high (64 per cent), and 2009. And this is of even greater interest if we focus on the EU average which, despite the enlargement processes, has virtually remained unchanged: from 52 per cent in 1981 to 53 per cent in 2009. The turning point for both public opinion and elite support of Europe was, therefore, the period 2001–02. The rapid move away from the Euro- enthusiasm of the 1990s is mostly a consequence of the adoption of the first anti-Europe positions by some political actors – above all

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100 90 80 70 60 Italy EU*

50 40 30 20 10 0 1981

1992

2001

2004

2006

2009

Figure 6.1 Percentage of Italians and EU citizens stating that the membership of their country to the EU is ‘a good thing’ Note: * 1981: EC9; 1992: EC12; 2001 and 2004: EU15; 2006: EU25; 2009: EU27. Source: Eurobarometer, various years.

Lega Nord – in order to obtain political gains within the electorate and the government (Albertazzi and McDonnell, 2005). These strategies were successful because of a number of interacting factors. First, after 1996 elections – won by the centre-left coalition against the centreright, not including Lega Nord – the bargaining power of Lega Nord vis à vis the other centre-right parties dramatically increased, as the northern party became indispensable to win elections. Secondly, the centreright coalition has governed the country for seven years out of nine since 2001, and Lega Nord has generally had a strong influence within the government, also redirecting Italian foreign policy and remodelling consolidated pro-Europe attitudes. Thus Europe was transformed from a consensual to a competitive issue, and then launched in the battlefield. This change, however, did not affect political elites only. Lega Nord, in fact, represents primarily the interests of the extremely numerous small, very small and medium-sized firms which are widespread in the northern, and most developed, part of the country (Diamanti, 2009). Also, the introduction of Euro in 2002 provided Lega Nord with a tasty opportunity to attack Brussels for the negative effects – i.e. the rapid and strong increase of prices – of the shift to the new currency in order to offer an easy target to the disappointed Italian people. The strategy was rather successful, as the progression of electoral successes shows (Diamanti, 2009).

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It is crucial to keep this in mind when we discuss the relevance of the first research question outlined in the introduction to this volume, which posits that ‘the more “under scrutiny” by the EU the countries are, the more probable it is for the European Union policies and institutions to be considered seriously and therefore be a fundamental motivation of and/or point of reference for the political behaviour of national actors’ and support usages of Europe aimed at policy change.

The main features of the Italian welfare state Originally designed as a Bismarckian welfare state, the Italian system of social protection currently displays the typical traits of the Southern European model of welfare: a mixed institutional architecture – that is, Bismarckian- occupational income maintenance schemes combined with a universal-Beveridgean national health care system – the decisive role of the family as welfare provider, the low “stateness” and the diffusion of particularistic-clientelistic practices (Ferrera, 1996). Moreover, as it is well known, the system has traditionally been characterized by the hypertrophy of the pension system for the protection of old age, the underdevelopment of other social policy sectors – namely employment, social assistance and family/reconciliation – as well as the low public expenditure in social services (activation measures for the unemployed, in kind benefits for children etc.). Both the “Bismarckian” nature of (a part of) the Italian welfare state and the typical features of the Southern European model of welfare are crucial in order to analyse the national trajectory of “employment friendly” welfare reforms in the light of the impulses coming from the supranational European level. In fact, on the one hand these traits of the Italian social protection system are behind the acute “welfare without work” syndrome that has affected the country since the 1980s and, on the other hand, they have placed Italy far away from the European social model in almost all social policy fields. More specifically, very high contribution rates (currently at 33 per cent of gross wage for private employees) to finance Bismarckian earnings-related benefits (especially pensions) have represented a major burden for firms – in particular, for the extremely numerous microsmall firms which are a typical feature of the national economy. This has possibly constrained the growth of regular employment and, due to the low control capacity of labour market institutions, it has provided incentives for the development of a wide “black economy” and an irregular labour market, which are typical of Southern European countries.

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Consequently, the availability of resources aimed at the protection of the so- called outsiders has been limited. Similarly, the Southern imprint was evident in the underdevelopment of the social assistance sector, the policy measures aimed at reconciling work and family, that have had a decisive impact on the life pattern of Italian women, discouraging their entrance in the labour market, and especially their re- employment after pregnancy and/or care activities. Family has thus far operated as an informal redistributive agency, at the expense of female employment and fertility rates, both dramatically low. From a different perspective, the high pension expenditure traditionally putting pressure on public finance, the fragmented and incomplete protection system for the unemployed, the strong employment protection legislation combined with low public expenditure on Active Labour Market Policies (ALMP), as well as the lack of a minimum income safety net and the rudimentary social care services (both for children and elderly), are all elements that stand far from EU recommendations and clash with supranational constraints. Until the mid-1970s, however, a number of factors – i.e. late industrialization favouring sustained economic growth, the export orientation of national firms supported by recurrent currency devaluations in order to increase competitiveness, together with a young population and solid family ties – have “hidden” the gaps and ineffectiveness of the Italian welfare state (Jessoula and Alti, 2010). Even more important, the unbalanced nature and the institutional fragmentation of the latter found their rationale in the peculiar “distributive policymaking” promoted by Italian governments since the early 1950s: this, in fact, not only constituted the best strategy of survival for usually weak cabinets, but also an anchor to stabilize the scarcely legitimated and “polarized” Italian democracy (Sartori, 1966; Jessoula, 2009).

National trajectories of reform in the light of EU initiatives In this section we illustrate Italian welfare reforms between 1980 and 2010, looking at three different phases: 1980–91, 1992–2000 and 2001– 10. These periods are, in fact, differently characterized with reference to a) the type of “European resources” available to national policymakers and the level of misfit with respect to an evolving EU policy structure, b) the attitudes of political elites and public opinion towards European integration/Union and c) the “inclusion push”, i.e. the presence of specific motivations to comply (in the Italian case, the inclusion in the EMU). Consequently, we expect usages of Europe to vary in the three

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phases and in the three selected policy fields – employment, pensions and social assistance. 1980–91: limited European resources and usages, limited domestic policy changes Before 1992 – despite the growing “endogenous pressures” (Pierson, 2000) deriving from the productivity slowdown, population ageing, households restructuring (i.e. the emergence of female availability to employment) and the connected female unemployment raise – the Italian welfare state did not experience significant policy changes. In this period, the availability of European resources was in fact very limited (see also Chapter 3 in this volume). Therefore, notwithstanding general public opinion (see above, Figure 6.1) and elite support to Europe (see Giuliani, 2006), the absence of relevant “vincoli esterni” (Dyson and Featherstone, 1996) connected to significant policy misfits provided very limited room for any kind of usage of Europe, and national policymakers had incentives not to abandon the traditional (predominantly Keynesian and pro-welfare) policy strategies. A few exceptions, illustrated below, may be identified. Employment policy In the early 1980s the second oil shock created severe occupational problems: in 1981 the unemployment rate was 7.7 per cent, rising to 12.2 per cent in 1989, while the employment rate decreased from 54 per cent to 52 per cent (OECD Social Indicators database). The Italian unemployment protection system, which provided limited standard protection to workers but increasingly became more generous for those employed in unionized sectors through ordinary and extraordinary earnings supplement benefits (Cassa integrazione guadagni ordinaria [CIGO] and Cassa integrazione guadagni strordinaria [CIGS]), was particularly under pressure due to the worsening of the employment and economic situations. Initially, the government responded to the new situation through the expansion of already-existent income maintenance programmes and, like the French and German governments, managed rising unemployment in large firms thanks to a new law (Law 155/81) aimed at subsidizing the exit from work through early retirement benefits. Furthermore, during the 1980s workers made full use of the above-mentioned CIGO or CIGS. Only in the second part of the decade were some active employment ideas rather than policies introduced into the employment policy debate (De Michelis, 1986) following the new approach of the government during the 1983–84 tripartite negotiations (Gualmini, 1998).

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What was the role of Europe in these limited policy changes? In general, since the creation of the European Monetary System (EMS), European countries could no longer ignore the existence of the broader European framework. In Italy, however, this was not sufficient to significantly redirect major economic – and employment – policy choices. In the early 1980s there were certainly some worried voices like that of Ciampi (at the time, Governor of the Bank of Italy) pointing at the public deficit and debt, and some measures were taken in order to introduce greater discipline in the budget session in Parliament; nevertheless fiscal deficits were justified – not to say considered necessary – in an overall Keynesian macroeconomic framework. As clearly stated by the socialist Prime Minister Bettino Craxi, the reduction of inflation and the struggle against unemployment were the priorities. In order to address the second issue, not only was strengthening “research and development” indispensable, but also innovative employment policy measures were to be taken. To sum up, during this period the limited European resources were of a cognitive type, but since Europe did not yet constitute a significant vincolo esterno, notwithstanding the overall high public and elite support of Italy’s EU membership (Ferrera and Gualmini, 2004), no major change occurred and no specific usage of Europe can be detected – except, perhaps, for a very limited cognitive usage by some political and institutional actors (such as the Labour Minister De Michelis and Banca d’Italia’s Governor Ciampi). Pension policy In the early 1980s the Italian pension system displayed a typical singlepillar configuration, with a means-tested social assistance pension (first pillar) and extremely fragmented, pay-as-you-go occupational schemes for the employed workforce (second pillar). Contributory schemes provided generous earnings-related benefits to employees in the public and the private sectors, while the self- employed were entitled to less generous contributions-related pensions. Moreover, for private and public employees compulsory severance-pay schemes existed, respectively labelled TFR (Trattamento di fine rapporto) and Indennità di buonuscita. Due to the long tenure of employment contracts in Italy, these schemes represented quasi pension (as benefits were only paid as lump sum) supplementary pillars. Proper second (occupational) and third (individual) pension pillars were basically unknown. The high level of contribution rates, the low retirement age for private employees (55/60 for women/men), the very favourable seniority pensions allowing workers to retire early – with 35 years of contributions in

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the private sector and with only 20 years in the public sector, regardless of age – were the major reasons for the acute “welfare without work” syndrome that started to affect the country in the 1980s. Moreover, a commission appointed by the Treasury Ministry in 1981 pointed at both financial sustainability (public pension expenditure was projected to reach 11.7 per cent of GDP in 1985 and 18–19 per cent in 2000) and equity (across the various professional categories) problems within the system. The government and major political actors were thus “forced” to acknowledge the “pension problem”, and during the 1980s all cabinets framed reform proposals aimed at containing old-age expenditure and harmonizing pension rules – thus involving the policy structure procedural dimension only. Nevertheless, no significant retrenchment interventions were adopted, while a number of further distributive measures were adopted in the decade, especially the extension of the earningsrelated method to the self- employed in 1990, which further worsened financial prospects and fairness problems. This sort of “schizophrenia” in Italian pension policymaking may be explained by considering the logics of political actors in the domestic and international context that characterized the 1980s. To put it in a nutshell, as national policymaking remained “isolated” from supranational pressures, political and social actors did not have enough incentive to break with the tradition of distributive “credit- claiming” policymaking and shift to loss-imposing “blame-avoidance” measures (Pierson and Weaver, 1993; Pierson, 1994). Actually, rather than cutting entitlements, pensions could be refinanced through the increase of contribution rates and state transfers, as this was allowed by the still Keynesian macroeconomic context and the possibility to turn to currency devaluations in order to counterbalance increased labour costs. Supranational budget constraints were, in fact, not stringent and the European anchor was virtually non-existent: thus, national actors did not make use of the limited European resources, nor did they refer to Europe in order to push forward cost-containment reforms. Social assistance policy Next to the “elephantiasis” of the Italian pension system, the comparative literature has often highlighted the underdevelopment of the social assistance sector, particularly emphasizing its critical traits. In fact, social assistance in Italy has traditionally attracted scarce resources, and it has been characterized by low generosity of monetary transfers, lack of a last-resort minimum-income scheme, inadequate provision of

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social services, a blurred distinction between social assistance and contributory benefits and, last but not least, the absence of a national regulatory framework which has allowed a high territorial variation as to the organization of social services (Ferrera, 2005). Furthermore, in line with the Southern model of welfare, the provision of social assistance and charity functions was implicitly delegated to family and Catholic institutions (Saraceno, 1994). During the 1980s, the “capture” of (re)distributive social policy measures by the most powerful groups – namely, the unions defending both workers and retirees – led to a further expansion of already quite developed sectors, like pensions and the new National Health System. At the same time, growing concerns about the conditions of public finances made policymakers reluctant to adopt expansionary interventions in the field of social assistance. Moreover, the traditional delegation of social assistance functions to family and Catholic institutions constrained public intervention in the sector. The marginal role of Italian social assistance therefore remained unaltered throughout the decade, and its main features were maintained. Even more than in the cases of employment and pension policy, EU resources were limited (nonexistent in this case) and, consequently, no public reference or usage of Europe can be detected in this period in the social assistance policy field. 1992–2000: Europe as the ‘lodestar’: multiple usages reach the target From the early 1990s on, the European integration process intensified and the EU resources available at the domestic level multiplied in the various social policy sectors. In fact, the 1992–2000 period was not only characterized by the start-up of the “run to EMU”, but also by the development of social policy structures in Europe – particularly in the field of employment policy, but to certain extent also in the fields of pensions and social assistance. Especially with respect to the policy structure, it became increasingly clear that the overall “misfit” (Green Cowles et al., 2001) of Italy was particularly high in the various social policy fields analysed. Furthermore, the enduring support of the Italian electorate (see Figure 6.1) and elite (Giuliani, 2006; interviews 1 and 2) was registered over the entire period. Employment policy The 1990s have been an extremely dense decade, characterized by important reforms in the employment policy field. If the 1980s already

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were characterized by very limited changes, in the 1990s the policy change has become quite visible. More specifically (for a comprehensive discussion, see Graziano, 2007), the main innovation regarded the new “activation” path increasingly followed by the Italian government. The key policies adopted comprised the introduction of new flexible contracts (in particular, temporary and “atypical” work contracts) and the re-launch of part-time work. To be sure, until 1997 temporary work was outlawed in Italy; only as a result of the so- called Treu reform (1997) under the centre-left coalition (Ulivo) were such contracts made possible and, over the space of five years, several multinational (as well as “purely” Italian) temporary work agencies opened headquarters and offices within Italian territory. Further to the Treu reform, the Biagi reform (2003) increased the number of non-standard contracts, making the employment regulation more “loose” than in the past. From the politics of employment policy perspective, it is interesting to point out that both reforms were in line with the European “adaptability” imperative, although the governments which approved them were politically different: centre-left (Treu reform) and centre-right (Biagi reform). During the first years of the 1990s, the tradition of passive policies was kept alive: for example, a specific active policy measure (“socially useful jobs”, introduced in 1991 but fully used in the second half of the decade), which was clearly inspired by a workfare ideology, has turned out to be a passive policy measure used especially in areas characterized by high unemployment such as the Southern regions: in other words, it provided means of fighting social exclusion rather than offering labour insertion opportunities (Graziano, 2007). Nevertheless, in particular during the second part of the decade and in the early 2000s, if we look at the overall employment policy expenditure (Table 6.1), there has been an impressive increase in active labour market measures (from slightly more than 6 billion Euros to almost 9 billion Euros) and a stabilization of passive employment policies (from 9.5 billion Euros to less than 8 billion Euros). Also, if we look at the number of beneficiaries, in the period 1996– 2001 there have been significant changes: the number of beneficiaries of active employment policies has almost doubled, whereas there has been a reduction in the number of beneficiaries of passive employment policies (Table 6.2). This shows how much the traditional policy configuration has changed over the years, moving away from a “passive” policy predominance towards a more equilibrated policy mix where activation (welfare to work) policies are more relevant.

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Table 6.1 Italian passive and active employment policies expenditure, in percentage of GDP, 1993–2004

Active measures Passive measures Total

1993

1996

1999

2001

2004

0.1

0.4

0.5

0.5

0.8

1.2

1.0

0.7

0.6

0.6

1.3

1.4

1.2

1.1

1.4

Sources: OECD, Social Indicators Database; OECD, Employment Outlook 2006, p. 273.

Table 6.2

Active measures Passive measures Total

Beneficiaries of active and passive policies, Italy, 1996–2005 1996

1999

924,587

1,708,917

–* –

2001

2005

2,023,971

1,357,181

–*

671,098

787,554

–

2,512,659

2,579,991

Note: * Data not available. Sources: Ministero del Lavoro e delle Politiche Sociali, 2003b, pp. 24, 43; Ministero del Lavoro e della Previdenza Sociale, 2007, p. 35.

Much of the policy reorientation towards activation has to do with Europe and the launch of the European Employment Strategy (Graziano, 2004). In fact, the role of the European Union institutions can be fully appreciated in the “benchmarking” procedure regarding employment policies launched in Luxembourg in 1997. Following Delors’ White Paper (1993), the European Employment Strategy (EES) was created in order to foster the “social” dimension of the European integration process. Such process has promoted some significant changes in the setting of policy objectives, in the definition of adequate policy instruments and specific policy principles and procedures. In sum, during the 1990s relevant changes have progressively affected the Italian employment policy, making it at the same time more flexible and more workfare- oriented. Traditional passive policies, although remaining an important distributive side of the employment policy coin, have been accompanied by increasingly relevant activation policies. The reorientation of Italian employment policy was facilitated by the launch, in the beginning of the decade, of the concertazione – i.e. a

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corporatist pattern of decision-making that involved all social partners and in particular the trade unions and employers’ associations (Ferrera and Gualmini, 2004). Such a method, providing a “double legitimation” (social and political) for the decisions adopted by the centre-left governments, made possible the adoption of policies (such as the Treu reform of 1997) that would hardly have occurred in other circumstances. With respect to Europe, the relevant strong policy misfit determined significant policy change – in all the policy structure dimensions, i.e. objectives, principles, procedures and financial instruments – via mainly cognitive (and some legal, i.e. directives such as the ones on part-time work) resources which have been used by supportive domestic actors (such as governments and social actors). Furthermore, the usage of Europe has clearly been both cognitive and legitimizing, since the key governmental actors and the social partners made public reference to Europe, believing that Europe was providing sound advice – especially with respect to the promotion of active policies – and public opinion was still very supportive of Italian EU membership (see Figure 6.1). Pension policy In contrast with the contradictory policymaking of the previous decade, the 1990s represented a crucial period for the transformation of the Italian pension system. Between 1992 and 1997 three reforms prompted the reconfiguration of the system based on two major ingredients: a) the change of the nature, the scope and the essential features of the first public pillar and b) the launch of the transition to a multi-pillar system through the development of supplementary funded schemes. However, also the failure of the reform plan proposed by the Berlusconi government (1994) was registered in the period. What allowed the shift from the distributive policymaking to retrenchment reforms? Which factors account for the success of three reforms and the failure of the 1994 proposal? Did national actors make reference to Europe in order to either facilitate the approval of reforms or introduce specific measures? We argue that both domestic political dynamics and external stimuli were crucial for the adoption of retrenchment reforms, and, among the latter, a major role was played by the resources channelled into national policymaking from the supranational arena. More specifically, the 1992–93 and 1995 reforms constituted the major interventions of the decade, though they were very different in their design. The 1992–93 reform contained a few measures directed at containing costs in the short term (among which was the change of the indexation method from wages to Consumer Price Index) and some

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incremental interventions – to be implemented gradually – on eligibility conditions, benefits calculation, as well as the level of contributions. In addition to these measures mostly affecting the procedures of the policy structure, the introduction of the first regulatory framework for supplementary funded pensions – which provided for the possibility to transfer the severance pay TFR to pension funds – also involved the financial dimension. Nevertheless, at this stage the earnings-related method for benefits calculation was not changed and the first pillar’s traditional income maintenance function was preserved. This, together with the unfavourable tax regime for supplementary pension funds, hampered the take- off of funded pillars (Jessoula, 2011). The impact of the so- called Amato reform was, instead, more incisive on the side of fairness, while the tightening of eligibility conditions also helped to tackle the welfare-without-work syndrome. The 1995 so- called Dini reform brought a radical transformation of Italian pensions, as it changed not only the rules of the first public pillar, but also its underlying principle. The shift from the traditional earnings-related method to a “notional defined contribution” (NDC) system for private/public employees and the self- employed in fact represented a “Copernican revolution” that replaced the income maintenance objective of the first pillar with the new “compulsory saving” goal, in accordance with the insurance principle. In fact, in the new system benefits depend on the sum of the contributions actually paid, the age of retirement (as flexible retirement age was also introduced), as well as economic and demographic trends. It is also important to stress that the shift to the NDC system has, first, allowed homogenization of pension entitlements among the five major schemes; secondly, it provides strong incentives to postpone retirement because of the links between retirement age and pension value; thirdly, it will entail a sharp reduction of replacement rates (from around 70 per cent in 2010 to around 50 per cent in 2030), thus calling for a reconfiguration of the system on different pillars especially for younger generations – to which the NDC system fully applies only. Therefore, the reform strengthened incentives for the development of supplementary pensions by making the tax regime more favourable. Between the 1992 and 1995 successful reforms, however, in 1994 the centre-right cabinet, led by Berlusconi, had to withdraw the plan to reform pensions, which included some retrenchment interventions mostly aimed at reducing costs in the short run. Finally, in 1997, the so- called Prodi consisted of an incremental adjustment of the pension rules introduced by Dini, and allowed limited but important savings for

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1998. How can we explain such different outcomes for the three reform plans? As anticipated, both external pressures and internal political/policy bargains were crucial for the shift to cost- containment pension reforms. EU budgetary constraints – also interacting with financial markets putting pressure on the Italian currency – constituted a new resource for Italian governments that used it strategically in order to forge pro-reform coalitions and/or to legitimize retrenchment interventions (interviews 8 and 9). In the case of the Amato reform, the strategic usage of European budgetary resources prevailed and it aimed to obtain the acquiescence of the unions in negotiation with the government (interview 8) as well as the acquiescence of opposition parties, which, in fact, did not take part in the final vote in parliament (see Jessoula, 2009, for a detailed analysis). In 1995, the “technocratic” Dini government used the vincolo esterno argument in order to launch a four-month concertation process with the social partners that led to a social pact between the government and the unions. The cabinet, in fact, managed to convince the unions that, under strong pressure from the EU and financial markets, the status quo was no longer sustainable. Before the final approval by Parliament, however, the reform proposal gained further “legitimacy” through a process of consultation of union leaders and affiliates (see Baccaro, 2002; Culpepper, 2002) ‘in the shadow of EU constraints’. Nevertheless, European resources and their usages were not sufficient conditions for reforms. In fact, also the Berlusconi government – in particular the Treasury Ministry Dini – made explicit reference to European constraints, but this did not help to stop unions protesting. Both the ability and the willingness of governments to craft “distributive packages” that might be accepted by the unions – the actual veto players in the field of pensions in Italy – in fact represented further necessary conditions for successful reforms (Jessoula, 2009). And the Berlusconi cabinet did not prove to be effective on this by threatening the unions with a reform plan that would have entailed significant savings in the short run, thus affecting retirees and older workers – the unions’ core constituencies. By contrast, the Amato and Dini government accompanied the usage of European resources with long settling-in periods for the new measures – key exemptions as well as radical regulatory harmonization that allowed the government to gain the unions’ acquiescence/support. Social assistance policy After a long-lasting immobility of the reform debate, new priorities emerged in Italian society in the early 1990s. Newly relevant social

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risks related to poverty and social exclusion on the one hand, and the recognition of the equity problems of the Italian welfare model on the other – particularly, the relevant gap between the over-protected (insiders) and the under-protected (outsiders) – revived attention to social assistance within the overall process of welfare state recalibration. In particular, the debate on the reform of social assistance focused on four major goals: a) reducing the fragmentation of the system, b) reinforcing anti-poverty measures and c) overcoming the traditional confusion between contributory and social assistance benefits by relying on an innovative principle labelled “selective universalism” (i.e. eligibility to social assistance benefits should be conditional on citizenship and need only, see Jessoula and Alti, 2010) – in order to d) fill (at least partly) the gap between “insiders” and “outsiders”. The first important actions were taken by the centre-left Prodi government. The budget law issued in 1998 established a ‘Fund for Social Policies’, regulated the creation and implementation of an “indicator of socio- economic conditions” for those applying for social benefits and services and, above all, introduced three new non- contributory meanstested measures to alleviate poverty: the allowance to families with more than three children, the maternity allowance and an experimental ‘Minimum Insertion Income’ (MII, Decree 237/98). The latter was designed as a non- categorical, means-tested measure, addressed to all people under a pre- defined poverty threshold, whose innovative character was especially related to both its non- contributory nature and the “activation” component, since the monetary benefit was accompanied by actions aimed at fighting social exclusion (interview 2). In 2000 Italian social assistance policy seemed to make another big step forward with the approval of a national framework law (Law 328/00), according to which an integrated system of social services and benefits, characterized by a strong cooperation between different levels of government, was to be developed. Moreover, the budget law for 2000 provided for a two-year extension of the experimentation of MII. The decisions adopted in the field of social assistance in the short time span 1998–2000 call for an interpretation for at least three reasons: 1) they represent expansionary changes, which contrast with most interventions approved in the field of old age, health care and disability policies over the last 20 years, 2) this sort of “path departure” from the traditional reliance on family and charity institutions challenges the prevailing theories of welfare reform – especially historical institutionalist approaches stressing the resilience of welfare arrangements (Pierson, 1994), also because 3) though resembling “credit claiming”

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actions, in the social assistance sector expansionary reforms usually entail a limited political return. Why, then, did Italian decision-makers start such a process of expansion and, above all, reconfiguration of the social assistance sector? We argue that such development was essentially driven by two factors: first, the usage of European cognitive resources by national experts, which imported policy ideas circulating in supranational “epistemic communities” (Haas, 1992) in order to innovate and reshuffle the Italian policy debate; secondly, the strategic usage of these new ideas by the centre-left Prodi government with the aim to build a pro-reform coalition. More specifically, the emerging European “social dimension” acted as a facilitator and a new frame of reference for the accomplishment of the reform. The wider circulation of information between member states and the day-by- day comparisons with other national experiences re- opened the debate about the delay in the development of some components of the Italian welfare state and offered precious learning resources. Experts involved in different committees both at the national and the supranational level constituted a crucial trait d’union providing argumentative strength to promote domestic reforms. At the national level, between 1996 and 2001 two groups of experts played a fundamental role in the formulation of major proposals for the reform of social assistance: the “committee on poverty and social exclusion” and the committee of experts on social security (Commissione Onofri) appointed in 1997 by Prime Minister Prodi. These experts operated as mediators and facilitating factors in the process of innovation, by channelling in the domestic policy debate the policy ideas circulating within European networks: particularly the idea of strengthening anti-poverty policies by reinforcing non- contributory benefits and establishing a last resort safety net, as suggested by the Council Recommendation 92/441/EEC and, later, by the European Commission (Communication COM(98)774). To sum up, though adaptational pressure was limited as only cognitive resources were available, in a phase in which Europe was widely seen as the “lodestar” among Italian political and (most) social actors, the vincolo esterno argument between Italian and European social assistance policy structure was used strategically by Italian centre-left governments in order to build a coalition that supported innovative reforms. 2001–10: the end of domestic adaptation to Europe? The period 2001–10 is characterized by the further development of European social policies, though the degree of the Italian misfit has

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reduced in the social policy field, due to the reforms approved in the 1990s. Specific elements distinguish this phase from the 1992–2000 period. First, there is a significant overall reduction in the support of Italy’s membership of Europe – both at the public opinion and elite levels (Figure 6.1; interviews 1, 2, 5 and 6); secondly, budget constrains have become softer, both because Italy has finally joined the EMU club and a relaxation of the Maastricht criteria occurred after 2003. As a consequence, the 2001–10 period is not characterized by groundbreaking reforms, but rather by different developments depending on the policy field: the “fine tuning” in accordance with the major changes adopted at the domestic level between 1992 and 2001, especially in the employment policy field; the adoption of contradictory interventions in the field of pensions (interview 8); the introduction of new measures in contrast with previous reforms as well as European suggestions, mostly in the social assistance sector. Employment policy The case of employment policy illustrates quite clearly how “fine tuning” policies occurred in Italian welfare state policies. In fact, the Berlusconi government (2001–06) continued what was initiated by the previous centre-left governments, although rather than corporatist agreements the government sought to keep only a sort of “social dialogue” with social partners: in this respect, the tripartite concertation was severely criticized and labelled as ineffective and scarcely innovative in the first important document released by the Berlusconi government, a White Book on the Italian labour market. Between 2001 and 2003, the trade unions were on the defensive, in particular after the governmental delegation draft bill – which followed the presentation of the above mentioned White Book – regarding, among other things, the liberalization of the labour market. Despite the resistance of one major trade union (CGIL), the government and the other major social partners (CISL, UIL, Confindustria) supported Law 30 – the so- called Biagi law – which introduced more flexibilityoriented labour market reforms and which was easily approved also by the Parliament. Law 30/2003 represented a clear step towards the “flexible” path supported by the EU policy structure from the late 1990s. Only CGIL remained particularly critical with respect to such a path since the adaptability/flexibility (later flexicurity approach) of the EU was not fully shared nor supported (interview 5), whereas other trade unions were more supportive of the law (see interviews cited in Graziano, 2004; interviews 3, 4 and 5). Nevertheless, if we look into the

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various European prescriptions regarding active policy measures, the EU support (and funding) of vocational training was considered to be quite relevant – and positively evaluated – by all the key informants, including the social partners (interviews 1–7, especially 4 and 5). After the 2003 reform (which, as already stated, was clearly connected to the previous sequence), the only relevant decision in the employment policy field related to an Article contained in the 2008 budget law (Law 244/2007), which extended the duration of unemployment insurance benefits to eight months (12 months for workers aged 50 and over) and increased the amount to 60 per cent of the previous average daily wage for the first six months. Finally, it is important to stress that even in the 2008–09 economic crisis the overall situation has not significantly changed. In fact, though the government seemed to acknowledge the risks for social cohesion that employment trends might entail in the light of the shortcomings of the Italian employment policy (employment rate decreased by 1.6 points between June 2008 and October 2009; unemployment increased from 6.7 per cent to 8.0 per cent in the same period), the Berlusconi cabinet refused to exploit the severe recession (GDP growth for 2009: -5 per cent) in order to put forward an encompassing reform of the compensation system for the unemployed. To sum up, between 2001 and 2010 – with the noteworthy exception of the 2003 law which was, in fact, launched in 2001 with the White Book – no significant innovation took place in Italian employment policy structure. Rather, “fine tuning” occurred in order to show to Europe that Italy was complying with the EES, but also – for the first time – the Italian government made clear in 2003 during the mid-term evaluation of the EES that some of the domestic problems could not be solved using European recipes (Graziano, 2004): a clear sign that governmental (and also trade union) support of European policy solutions was no longer as strong as during the previous period. Furthermore, the policy misfit – due to the policy innovations adopted between the late 1990s and early 2000s – became less significant and therefore the usage of Europe was increasingly limited to a cognitive and only partially legitimizing role, primarily based on cognitive resources contained the implementation of the European Employment Strategy. Pension policy In the field of old age protection three major steps deserve attention. First, in 2001 the Berlusconi cabinet prepared a reform proposal aimed at accelerating the transition to a multi-pillar pension system through

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the compulsory transfer of the TFR to pension funds, combined with further retrenchment measures in the first pillar. The plan provoked, as in 1994, harsh opposition from the unions that obliged the government to revise its proposal drastically. The reform was finally adopted in 2004 and 2005 (Maroni-Tremonti reform) and consisted of an incremental adjustment of the rules of public pension schemes – mostly regarding eligibility conditions for seniority and old age pensions – as well as the introduction of the so- called “silent consent” mechanism for the transfer of the TFR to supplementary funds (see Jessoula, 2011). The partial retreat of the government may be explained by looking at the interaction between domestic politics and resources deriving from the supranational arena. In fact, during the negotiation process, Berlusconi addressed a TV message, during which he explicitly referred to budgetary constraints and “Brussels’ demands” in order to legitimate the reform by gaining popular support. In the early 2000s, however, the conditions were very different from ten years before: Italy’s public finances were in a better shape than in the previous years; within the “Euroclub”, pressures were much lower; and, above all, it was extremely difficult for the all but pro-European Berlusconi cabinet to convince the increasingly Euro-sceptical Italians to accept further losses “in the name of Europe”. The Euro “grip” was thus too weak, the message did not reach the target. Meanwhile, the launch of “OMC pensions” in 2001, by including “adequate” protection, strengthened those national actors – namely, the unions – pointing at the consequences of previous reforms on the level of benefits for younger cohorts and, consequently, opposing further cost- containment provisions. The second step was the adoption of a reform by the centre-left Prodi government in 2007 (Damiano reform). This intervention was important because, by modifying the measures previously legislated by the Berlusconi government with reference to seniority pensions, it mostly represented an expansionary reform in an already hypertrophic sector. The reform was based on a social pact between the cabinet and the unions (Protocollo sul welfare, July 2007), and no usage of European resources was made by any national actors, thus testifying the even weaker “Euro grip” on the domestic milieu. Finally, the EU abruptly re- entered the domestic pension policy arena in 2008–09, following a sentence of the ECJ pointing at gender discrimination in schemes for civil servants: women were, in fact, allowed to retire earlier (60) than men (65). Two points need to be mentioned here. First, the strategic usage of legal EU resources by two Ministries (for Public Administration and of Equal Opportunities) in order to shape a

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pro-reform coalition, also by proposing the direct transfer to the social assistance sector of savings from pensions. Secondly, such intervention of “direct and formal recalibration” (Jessoula, 2010) jointly with the availability of binding supranational resources allowed for the emergence of a cross- cutting coalition that supported the harmonization of retirement ages for men and women in the public sector. Social assistance policy Since 2000, no significant innovations have been introduced in the social assistance sector (interview 2). By contrast, disregarding European suggestions, and openly in contrast with the trajectory of development of the late 1990s, the centre-right Berlusconi government cut the fund for social policies and put an end to the experimentation of MII, privileging a welfare model based on family and community networks (Ministero del Lavoro e delle Politiche Sociali, 2003a). Therefore, after the MMI experimentation, also due to the absence of a coherent pro-universalistic social assistance policy structure at the EU level and therefore no specific vincolo esterno, no European resources and no usage of Europe can be seen in the Italian social assistance policy from 2001 until 2010. Furthermore, the decline in elite and public opinion support for Europe did not help those (few) academic experts who still were in favour of social assistance reforms to make their voices heard. As hypothesized, reduced elite and public opinion support with respect to Europe has led to reduced (if any) usage of Europe in the Italian social assistance case.

Conclusion: the role and the domestic usage of Europe in Italian welfare state reforms What is particularly striking about this impressive wave of reforms is the timing: whereas all the “problems” or Italian anomalies were already quite evident by the end of the 1980s, it was only in the 1990s that significant reforms took place in Italy. The reason for this, as already argued in the presentation of the policy cases, is that Europe “came into” the picture, i.e. European opportunities and constraints were increasingly used by national actors in order to draft reform policy agendas and look for further domestic political and social support. Of great relevance, particularly with respect to employment policy and social assistance reforms (see Table 6.3), was the presence of a supportive epistemic community composed of academic experts and/or professionals – as those involved in the above-mentioned Commissione

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The Italian Trajectory of Recent Welfare Reforms Table 6.3

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Main features of social policy reforms in Italy, 1992–2008

Key features/ policy area Employment, Treu law (1997)

Year

Dimension of the policy Reform structure “promoter” involved

1997

Pro-reform actors/ coalition

All Government Ruling centredimensions. (centre-left), left parties, trade unions. epistemic community, trade unions, business associations. Employment, 2003 All Government Ruling centreBiagi law dimensions. (centre-right). right parties, (2003) business associations, trade unions (CISL and UIL). Pensions, 1992–93 Instruments Government Ruling centreAmato and (centre-left). left parties, reform procedures. business associations. Pensions, 1995 All Government Centre-left Dini reform dimensions. (“technocratic” parties, trade government). unions, (business associations). Pensions, MaroniTremonti reform

2004–05Procedures.

Government (centre-right).

Pensions, Damiano reform Social assistance, Law 328

2006–07Procedures.

Government (centre-left).

Pensions

2008–09Procedures.

2000 Instruments Government and (centre-left). procedures.

Government (centre-right).

Public Anti-reform reference actors/ to Europe coalition (yes/no) –

YES

Trade union (CGIL).

YES

–

YES

–

YES

Ruling centre- Initially trade right parties. unions, then also business associations. Acquiescence after agreement. Ruling centre- – left parties, trade unions. Epistemic – community, (some) ruling centre-left parties. Some Cross- cutting Ministries, coalition. some opposition parties: cross- cutting coalition.

YES

NO

YES

YES

Source: Authors’ own elaboration.

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170 Paolo R. Graziano and Matteo Jessoula Table 6.4 The role of Europe in Italian welfare reforms Role of Europe

EU resources

EMP – Treu law

Reform supporter. Cognitive.

EMP – Biagi law

Reform supporter. Cognitive.

PEN – Amato reform

Reform initiator/ supporter.

Cognitive. Political. Indirect resources (budgetary constraints). PEN – Dini reform Reform initiator/ Cognitive. supporter. Political. Indirect resources (budgetary constraints). PEN – MaroniReform supporter. Political. Tremonti reform Indirect resources (budgetary constraints). PEN – Damiano – – reform SA – Law 328/2000 Reform supporter. Cognitive. PEN – 2009 reform Reform initiator.

Legal.

Usage of Europe Cognitive. Legitimizing. Cognitive. Legitimizing. Legitimizing. Strategic.

Legitimizing. Strategic.

Legitimizing.

– Cognitive. Strategic. Cognitive. Strategic.

Source: Authors’ own elaboration.

Onofri and/or “committee on poverty and social exclusion” – who had been socialized to European ideas and used them as cognitive resources in order to help (or push, depending on the policy reform proposal) Italian government into taking political action. In other words, Europe has been a key (f)actor in all the reforms, both as a reform initiator and as a reform supporter (see Table 6.4). More specifically, if in the employment policy field – and to a certain extent in the social assistance sector – the European Commission has shaped, over the 1990s, a new cognitive framework (therefore, intervening “directly” though “softly”), in the pension policy field Europe has intervened in a rather “indirect” but “hard” manner (interview 9) – i.e. primarily via budgetary constraint. Another striking feature of EU-induced welfare state reforms is their rather consensual feature: only on a few occasions (Berlusconi’s attempts to reform pensions in 1994 and 2001–04, the Biagi law regarding employment policy in 2001–03) were there strong reform

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opponents (the unions in the former cases, the most representative Italian trade union alone, CGIL, in the latter). In all other cases, a general social consensus was reached. In line with the research hypotheses, in the Italian case European legal, budgetary and cognitive resources were used in an explicit, legitimizing way due to a combination of the presence of a strong vincolo esterno (the “join the club” factor, RH1), a generally high level of support – especially from a public opinion point of view, until the mid-2000s – of Italy’s membership to the EU (RH2) and the presence of a significant policy misfit in employment and pension policy, both cases characterized by “high costs of social reforms”(RH3). Cognitive resources have also been used by centre-left cabinets in the late 1990s in order to introduce innovative policy instruments in the field of social assistance in accordance with European guidelines; in the early 2000s, however, the declining support of Italy’s membership of the EU, combined with the change in governmental majorities, limited the usage of European resources and led to the overturn of previously legislated measures. Although some social actors continue to be strongly in favour of Europe (in particular, business associations; interview 4) and others are gradually becoming more pro-Europe (CGIL, interview 8), public support has declined and the government has increasingly considered the EU as a source of problems rather than a source of inspiration. In fact, already, during the mid-term review of the European Employment Strategy, the Italian government – supported by domestic experts’ opinions – started to question the European Employment Strategy and, at the time of writing, several social actors are worried by the fact that domestic specificities are not sufficiently taken into consideration by the EU (interviews 1, 2, 5 and 6). Therefore, we are progressively witnessing a weakened desire to comply with (increasingly) weak EU prescriptions, while supranational constraints continue to drive national policy developments only when “hard” pressure is exerted – e.g. via legal requirements – as in the case of the 2009 pension reform. To conclude, “soft” and “direct” (political and cognitive resources), as well as both “direct”/”indirect” and “hard” European resources (budgetary constraints and legal resources) have been used by Italian governments in order to overcome possible social resistance and avoid vetoes by social actors aimed at blocking any welfare state reform proposal. In recent years, however, Europe has been evoked almost exclusively in the case of direct and legally binding pressures, while the willingness of national actors to use European resources in order

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to adopt welfare reforms has declined in accordance with diminishing support for EU membership in the domestic arena and less intense indirect pressures from the supranational level. Put differently, both public opinion and elite support towards the EU has declined, possibly since the EU was not able to “deliver” the promises of the 1990s concerted reforms: whereas until early 2000s all the relevant political and social actors were in line with EU prescriptions and shared the view – although reluctantly, as in the case of some trade unions – that Italy had to adjust in order to fully benefit from the EU (and the EMU in particular), once the social benefits of EU policies were no longer so clear, overall support declined significantly both on the public opinion level and on the elite level. Furthermore, there was no “prize”, such as entrance into the EMU, to further motivate favourable EU opinions among Italian political and social actors. Also, the degree of misfit after the early 2000s was significantly less relevant than in the early 1900s and, therefore, also the pressures to comply became much more limited than in the past. Finally, with respect to the “worlds of compliance”, our analysis thus proves that Italy is much more similar to the “world of (policy-based) domestic politics” than to the “world of neglect”/ “world of dead letters” since the policy compliance depended primarily on the domestic politics of welfare state reform. Put differently, only when the overall policy-related support offered by political and social elites was high did policy compliance occur. Italy once was moving towards Europe “Eppur si muoveva ...” – paraphrazing the Galilean motto – but now that political and social actors are no longer as much in favour of EU policies, the degree of misfit and EU opportunities are limited, Italy seems to have returned to a fairly “immovable object”.

Interviews Interview 1 – European Antipoverty Network, February 2010. Interview 2 – CGIL Trade Union, Social Assistance Department, February 2010. Interview 3 – UIL Trade Union, Employment Policy Department, February 2010. Interview 4 – Confindustria, Industrial Relations, Security and Industrial Affairs, February 2010. Interview 5 – CGIL Trade Union, Employment Policy Department, February 2010. Interview 6 – CISL Trade Union, Social Assistance Department, February 2010. Interview 7 – CISL Trade Union, Employment Policy Department, February 2010. Interview 8 – CGIL Trade Union, Pensions and Social Insurance Department, February 2010. Interview 9 – Confindustria, Social Insurance Department, February 2010.

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References Albertazzi, D., and D. McDonnell (2005), ‘The Lega Nord in the Second Berlusconi Government: In a League of Its Own’, West European Politics, vol. 28 (5), pp. 952–72. Baccaro, L. (2002), ‘Negotiating the Italian Pension Reform with the Unions: Lessons for Corporatist Theory’, Industrial and Labor Relations Review, vol. 55 (3), pp. 413–31. Culpepper, P. D. (2002), ‘Powering, Puzzling, and ‘Pacting’: The Informational Logic of Negotiated Reforms’, Journal of European Public Policy, vol. 9 (5), pp. 774–90. De Michelis, G. (ed.) (1986), Il Lavoro si Crea (Milano: Franco Angeli). Denzin, N. K., and Y. S. Lincoln (2005), The SAGE Handbook of Qualitative Research (London: Sage). Diamanti, I. (2009), Mappe dell’Italia Politica (Bologna: Il Mulino). Dyson, K., and K. Featherstone (1996), ‘Italy and EMU as a “Vincolo Esterno”: Empowering the Technocrats, Transforming the State’, South European Society and Politics, vol. 1 (2), pp. 272–99. Esping-Andersen, G. (1990), The Three World of Welfare Capitalism (Princeton, NJ: Princeton University Press). Eurobarometer, Spring Surveys, various years. Fargion, V. (1997), Geografia della Cittadinanza Sociale in Italia (Bologna: Il Mulino). Falkner, G., and O. Treib (2008), ‘Three Worlds of Compliance or Four? The EU-15 Compared to New Member States’, Journal of Common Market Studies, vol. 46 (2), pp. 293–313. Falkner, G., O. Treib, M. Hartlapp, and S. Leiber (eds) (2005), Complying with Europe: EU Harmonization and Soft Law in the Member States (Cambridge: Cambridge University Press). Ferrera, M. (1996), ‘The Southern Model of Welfare in Social Europe’, Journal of European Social Policy, no. 1, pp. 17–37. Ferrera, M. (ed.) (2005), Welfare State Reform in Southern Europe.Fighting Poverty and Social Exclusion in Greece, Italy, Spain and Portugal (London: Routledge). Ferrera, M., and E. Gualmini (2004), Rescued by Europe? Social and Labour Market Reforms from Maastricht to Berlusconi (Amsterdam: Amsterdam University Press). Ferrera, M., and A. Hemerijck (2003), ‘Recalibrating European Welfare Regimes’, in J. Zeitlin, D. Trubek (eds), Governing Work and Welfare in a New Economy: European and American Experiments (Oxford: Oxford University Press). Giuliani, M. (2006), La Politica Europea (Bologna: Il Mulino). Graziano, P. (2004), ‘From a Guaranteed Labour Market to a Flexible Worker Model?’, Jean Monnet Series, Working Paper, Forum Européen, Fondation Nationale de Sciences Politiques, 4/2004. Graziano, P. (2007), ‘Adapting to the European Employment Strategy? Recent Developments in Italian Employment Policy’, International Journal of Labour Law and Industrial Relations, vol. 23 (4), pp. 543–65. Graziano, P., S. Jacquot and B. Palier (2011), ‘The Usages of Europe in National Employment-friendly Welfare State Reforms’, in P. Graziano, S. Jacquot, B. Palier (eds), The EU and the Domestic Politics of Welfare State Reforms. Europa, Europae (Basingstoke and New York: Palgrave Macmillan).

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Green Cowles, M., T. Risse and J. A. Caporaso (eds) (2001), Transforming Europe: Europeanization And Domestic Change (Ithaca, NY: Cornell University Press). Gualmini, E. (1998), La Politica del Lavoro (Bologna: Il Mulino). Haas, P. M. (1992), ‘Introduction: Epistemic Communities and International Policy Coordination’, International Organization, vol. 46 (1), pp. 1–35. Jessoula, M. (2009), La politica pensionistica (Bologna: Il Mulino). Jessoula, M. (2010), ‘Recalibrating the Italian Welfare State: A Politics Too Weak for a “Necessary” Policy?’, in M. Giuliani, E. Jones (eds), Italian Politics 2010 (Oxford: Berghahn). Jessoula, M. (2011), ‘Italy: Multi-pillarization in Adverse Conditions’, in B. Ebbinghaus (ed.), Varieties of Pension Governance: Pension Privatization in Europe (Oxford: Oxford University Press). Jessoula, M., and T. Alti (2010), ‘Italy: An Uncompleted Departure from Bismarck’, in B. Palier (ed.), A Long Good-bye to Bismarck (Amsterdam: Chicago University Press). Jessoula, M., P. Graziano and I. Madama (2010), ‘ “Selective Flexicurity” in Segmented Labour Markets: The Case of Italian “Mid-siders” ’, Journal of Social Policy, vol. 49 (4), pp. 561–83. Madama, I. (2010), Le Politiche di Assistenza Sociale (Bologna: Il Mulino). Mania, R., and G. Materiale (2002), Relazioni Pericolose: Sindacati e Politica Dopo la Concertazione (Bologna: Il Mulino). Ministero del Lavoro e delle Politiche Sociali (2001), Libro Bianco sul Mercato del Lavoro in Italia, Rome. Ministero del Lavoro e delle Politiche Sociali (2003a), Libro bianco sul welfare, Rome. Ministero del Lavoro e delle Politiche Sociali (2003b), Rapporto di monitoraggio 2003, Rome. Ministero del Lavoro e della Previdenza Sociale (2007), Monitoraggio delle Politiche Occupazionali e del Lavoro, Rome. OECD, Social Indicators Database, Paris. Pierson, P. (1994), Dismantling the Welfare State?: Reagan, Thatcher and the Politics of Retrenchment (Cambridge: Cambridge University Press). Pierson, P. (2000), ‘Path Dependence, Increasing Returns and the Study of Politics’, American Political Science Review, vol. 94 (2), pp. 251–67. Pierson, P., and K. Weaver (1993), ‘Imposed Losses in Pension Policy’, in B. Rockman and K. Weaver (eds), Do Institutions Matter? Government Capabilities in the United States and Abroad (Washington, DC: Brookings Institution). Saraceno, C. (1994), ‘The Ambivalent Familism of the Italian Welfare State’, Social Politics, I, pp. 60–82. Sartori, G. (1966), ‘European Political Parties: The Case of Polarized Pluralism’, in J. LaPalombara and M. Weiner (eds), Political Parties and Political Development (Princeton, NJ: Princeton University Press), pp. 137–76.

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7 A Compass or a Spear? The Partisan Usage of Europe in Portuguese Employment-friendly Reforms Sotirios Zartaloudis

Introduction1 This chapter examines the usages of Europe in Portuguese employmentfriendly reforms. The main policy areas where employment-friendly reforms were introduced are examined: labour markets, vocational training, social inclusion and pensions. The chapter is divided into four parts: the first succinctly presents Portugal‘s position with regard to Europe; the second discusses Portuguese employment-friendly reforms and the third examines the usages of EU resources (see Caune, Jacquot and Palier, Chapter 1) in these reforms. The argument is twofold: first, Portugal “complies” faster and better with EU soft law. Secondly, this paradox can be explained when one traces the usages of Europe in Portuguese employment-friendly reforms: soft law constituted an ideal tool for Portuguese actors for guidance (compass) and/or empowerment against opponents in the political arena (spear). This study drew on qualitative analysis of the literature, primary and secondary sources, such as EU and national official documents and European Industrial Relations Observatory (EIRO) reports and evaluations. Moreover, 25 semi-structured interviews with key policymakers (ministerial elites, academics, national experts) were conducted between March and May 2010. Although a variety of methods were employed in order to achieve triangulation (Denzin, 1970), process tracing is the chapter’s main method (Checkel, 2005).

1. Portugal and Europe: a Sisyphean catch-up story This section discusses Portugal‘s relationship with Europe. It first examines people’s perceptions of the EU by using data from Eurobarometer 175

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surveys and examining Portuguese governments’ perceptions of the EU and its social policy initiatives. Secondly, it succinctly presents Portugal’s EU social Directives’ transposition patterns. Thirdly, it examines the degree of fit/misfit between its welfare regime and EU resources. 1.1 Portuguese attitudes towards Europe: mind the gaps and people’s discontent Portugal joined the EU in 1986 and, therefore, the EU membership / “joining the club” hypothesis is relevant to the mid-1990s when it was trying to comply with the Maastricht criteria for the last stage of the Economic and Monetary Union (EMU). From 1985 (Portugal’s inclusion in Eurobarometer studies) to 2001 three features stand out (Lobo, 2003:100–3). First, Portugal had one of the lowest response rates, which can mean either as ‘permissive consensus’ (Bacalhau, 1993: 182) or as a sign of apathy and hostility towards the national political system and the EU (cf. Magone, 1997: 87–8). Secondly, respondents were quite enthusiastic towards the EU, as, between 1985 and 2001, Portugal belonged in the top five countries regarding positive perceptions of the EU and its EU membership; the peak (82 per cent) regarding Portugal’s EU membership was documented in 1991, but decreased considerably to approximately 67 per cent by 1997 and remained relatively stable until 2001 (Lobo, 2003: 102). After 2001, however, Portuguese positive attitudes towards EU membership decreased further: in 2003 they fell around to 57 per cent and remained relatively stable until 2008 (Eurobarometer 70). Thirdly, even though the Portuguese respondents have limited information regarding EU institutions, they trust them more than Portuguese ones. Finally, between 1986 and 2008 Portuguese people remained among the most dissatisfied with their life, their country’s political system, welfare state and economic situation. This disillusionment was exacerbated after the economic crisis of the 2000s and the decade of economic stagnation that followed. In contrast, Portuguese elites favour strongly EU membership – much more so than the Portuguese public – creating a significant mismatch between them (cf. Hooghe and Marks, 2009). In addition, all Portuguese governments have had very similar positive views regarding the EU (Pizarro, 2003: 5) and the catching- up effort, while respecting the European social model (Pizarro, 2003: 19). The only deviation from this general pro- EU pattern has been Barroso’s 2003–05 Social Democratic Party–People’s Party (Partido Social Democrata[PSD]–Partido Popular[PP]) coalition government

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which was sceptical of the Lisbon Strategy and the Open Method of Coordination (OMC), in particular (interviews with numerous Portuguese experts and bureaucrats). Secondly, the Portuguese Socialists (Partido Socialista[PS]) were strong supporters of the OMC on employment and social protection, with input into key decisions regarding EU social and economic policy coordination (Cadeiras, 2004: 1). In contrast, the Barroso government viewed the OMC as a bureaucratic burden of low – if any – value for Portuguese employment policy (interview with Mr Luís Miguel Pais Antunes, Secretary of State for Employment (PSD–PP government). Consequently, the ‘relationship to Europe’ hypothesis is formulated as follows: until 2001, when both elites and voters were in favour of Europe, the usages are expected to have been both positive and explicit; after 2001, when public opinion became disenchanted regarding the EU and the Barroso government was sceptical of the EU’s involvement in social policy, either no usage or a denial of usage is expected. However, after 2005 the pro- EU social policy PS government is expected to have used more EU resources in national reforms but in a more subtle fashion than during its previous term in office. 1.2 Portugal’s compliance record: between “neglect” and “dead letters” In the renowned “worlds of compliance” typology (Falkner et al., 2005), Portugal was classified in the “world of neglect”. In this type, neither political nor administrative elites adhere to the norm of compliance with EU social Directives (Falkner et al., 2005: 325). More recently, Falkner and Treib (2008) renamed this type “world of transposition neglect” and added the “world of dead letters” to their typology. In this type, despite the quick transposition of EU Directives, the latter are not systematically enforced and implemented. Therefore, the impact of EU Directives on national policy is doubtful. These two worlds share one key characteristic: compliance is often superficial as shortcomings in enforcement and application are quite common. Even though Falkner and Treib (2008) try to address this conceptual inconsistency by arguing that enforcement and application problems are not the defining characteristics of the world of transposition neglect, this cannot be said for Portugal, since its typical procedural pattern during the transposition stage was neglect, along with significant enforcement and application problems (Falkner et al., 2005: 275). Consequently, Portugal combines the characteristics of both the world of transposition neglect and that of dead letters: inactivity/negligence

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during transposition and problematic enforcement and application of EU social Directives. 1.3 The Portuguese welfare regime: a Southern outlier? The literature on the features of Southern European – including Portugal‘s – welfare systems follows three distinct approaches. First, the Southern European welfare states are perceived as the underdeveloped/poor version of Esping-Andersen’s (1990) conservative/corporatist model. Secondly, they share a set of distinctive features, which lead to a unique type of welfare model. Despite the numerous differences between these two schools, both agree that Southern Europe forms a group; yet they disagree on whether the similar characteristics result in a variety of Esping-Andersen’s conservative type or a new one (for a detailed discussion of these schools’ main propositions, see Arts and Gelissen, 2002: 141–6). A third approach understands Portugal as a unique case with features found in both liberal and Scandinavian models, that is, a “mongrel”: ‘a system which embodies a diversity of inherited characteristics or a mixed parentage’ (Crouch, 2001: 183). In this vein, Portugal presents the following unique features: intensive labour market participation for both sexes; large parts of the population working in low paid jobs; social protection weak, with high income inequality and poverty levels; and familism decreasing due to high levels of female full-time employment rates (Silva, 2003: 114; Zartaloudis, 2011). Nonetheless, Portugal’s uniqueness should not be overstated, as high poverty rates are typical of Southern Europe. Similarly, Portugal provides low levels of support and services to families. Moreover, a large percentage of the workforce – especially women – is employed in lowskilled jobs even by Southern European standards (Katrougalos and Lazaridis, 2003: 55). Further, the Portuguese economy entered a long period of recession in 2001, which increased unemployment – especially for women – despite maintaining relatively high employment levels (Tables 7.1 and 7.2).

Table 7.1

Portuguese employment rates – total (1997–2008) (per cent)

Total Males Females

1997

2003

2009

65.7 75.5 56.5

68.1 75.0 61.4

66.3 71.1 61.6

Source: Eurostat.

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Table 7.2 Portuguese unemployment rates by gender (1997–2008) (per cent)

Total Males Females

1997

2003

2009

6.7 8.8 7.6

6.4 7.3 7.3

9.6 9.0 10.3

Source: Eurostat.

2. Portuguese employment-friendly reforms: between muddling through and innovation This section discusses Portuguese employment-friendly reforms. It examines four key areas: labour markets; vocational training; social inclusion; and pensions. It argues that despite Portuguese governments’ consistent reform activism, there is variation between policy areas: in labour markets and pensions there is muddling through, whereas in vocational training and social inclusion innovation is observed. 2.1 Labour market reforms: reform activism between consensus and partisanship Since Portugal‘s accession to the EU, the first labour market (LM) reform took place in 1987 and introduced measures which made non-permanent contracts more difficult: severance payments for atypical work; nonpermanent workers were given incentives to move to permanent jobs; and the conditions under which such contracts could be used were limited (Katrougalos and Lazaridis, 2003). Since then, a number of “social pacts” have been agreed between the government and social partners. In the following, the basic features of the most important pacts are presented. First, the 1990 ‘Economic and Social Agreement’ was one of the most important LM reforms of the decade. Also referred to as AES, it was a tripartite social contract produced within the framework of the Council for Social Concertation signed by social partners (except the largest Portuguese trade union (Confederação Geral dos Trabalhadores Portugueses [CGTP-IN]). The AES aimed to improve the international competitiveness of Portuguese firms and increase real wages, the target being the EU average (Katrougalos and Lazarides, 2003: 56; Petmesidou, 2001: 85). It signified a clear departure from previous social pacts as it entailed changes in a variety of issues, surpassing the limits of incomes policy, such as forecasting a rate of inflation and a rate of pay increases to be agreed upon through collective bargaining. In essence, the AES

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was an agreement on social, fiscal and LM policy issues. The signatories committed to negotiating further pacts on vocational training policy (e.g. the 1991 Agreement on Vocational Training Policy; see EMIRE, 2007b), social security reform, health and safety at work and the labour courts system. Numerous proposals for future legislation were also made, including changes to collective bargaining, working hours, dismissal, annual holidays and minors’ employment. Finally, they agreed on the regulation of areas previously not covered by labour law, such as working from home and the employment status of certain employees under a “special relationship” arrangement (EMIRE, 2007a). Consequently, in terms of LM policy structure (see Graziano, Jacquot and Palier, introduction to this volume), the AES meant an overall change in objectives, principles and procedures. The next LM reform occurred in 1996 with the so- called ‘Strategic Social Pact’ for the period 1996–99, known as the ‘short-term social pact’. The agreement introduced, among others, regulations for child labour, adopted a policy of local initiative programmes for job creation and facilitated the implementation of measures, such as more flexible organization of working time based on functional flexibility. In addition, the regulations governing temporary and part-time work were revised in order to give incentives for part-time work (Katrougalos and Lazarides, 2003: 56). Moreover, the pact included the “40-hour Law” (Law No. 21/96), which was drafted in order to transpose the EC Directive on working time (93/104/EC) into Portuguese law (Cristovam, 1997); the same applied for the European Works Councils (EWCs) Directive (94/45/EC), the transposition of which was extensively discussed during negotiations over the Pact (Cristovam and Martins, 1997). However, the transposition of these Directives was delayed by a year due to disagreements over the interpretation of key terms relating to the regulation of working time (Cristovam and Martins, 1997; Rodrigues, 1997). The pact aimed at changing policy procedures and objectives. However, it was – at best – partially implemented (Cristovam, 1998). Thus, the Socialist government re-initiated the “strategic concertation” process with the social partners by proposing the negotiation of a new tripartite central agreement – the “Euro-pact” – as a joint strategy for EMU that ‘increases overall competitiveness and social cohesion’ (Cristovam and Martins, 1997). According to the government, the Europact’s objective was to create a “strategy for the Euro”. Not only did the re-launch reiterate the previous pact’s measures, but it also aimed to reach consensus on structural policies in the post-May 1998 period, that is, after the initiation of the EMU’s final phase (Rodrigues, 1998).

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Finally, in 1997 the Minister of Finance proposed a moderate pay rise of 2.6 per cent to meet EMU’s convergence criteria. The social partners reacted immediately and opposed this rate, arguing that Portuguese real wages should continue to grow at a higher rate than the EU average because of higher than average Portuguese productivity rates. In contrast, employers argued that wages should not increase by more than 1 per cent of the inflation rate. In any case, the Minister of Finance followed this restrictive policy to achieve EMU entry (Rodrigues de Sousa, 1997). The next LM reform occurred in 2003 and it was the most emblematic reform of the newly elected Social Democratic Party–Popular Party (PS -PP) government. Its main priority was to promote greater flexibility in labour relations, which became the greatest source of social conflict at the time (Capucha et al., 2005: 253). The centre-right Barroso government’s Minister of Social Security and Labour presented a new 700-article Labour Code in July 2002, which was eventually passed by parliament in April 2004 (Cristovam, 2002b). While it became law (Law 35/2004) in July 2004, it had been considerably watered down by then due to widespread protests (Lima and Neumann, 2005). The new code replaced legislation dating from the late 1960s and mid-1970s and sought to adapt regulations to new LM structures and conditions. In some respects, such as penalties for companies violating labour regulations, the changes strengthened employee rights. However, employers benefited by provisions which limited the bargaining power of trade unions; promoted greater functional and geographical mobility; facilitated working time flexibility and fixed-term contracts (their maximum period was extended from three to six years); tightened strike regulations; and controls over absenteeism, which was typically twice the EU average. The new code also facilitated the dismissal of workers who were in breach of contract, although employers could still only dismiss employees if there was “just cause”. Compulsory redundancy payments, previously the equivalent of one month’s pay for each year of employment, were made more flexible (Ferreira and Lopes, 2003). The most contentious provisions of the law were those in conflict with the Portuguese Constitution. This concerned lock- outs (forbidden by Article 57 of the Constitution), limitation of the rights that workers’ commissions enjoyed (protected by Article 54) and limits on the time- off period that trade union leaders could take (Article 55). However, there were also other issues that attracted opposition from the trade unions, such as the broadening of the concept of working from home, the limitation of working students’ rights according to their academic performance

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and the absence of provisions regarding the initial training of young workers (Lima and Neumann, 2005). Consequently, this code altered the LM policy structure‘s objectives, principles and procedures. The final LM reform took place in June 2008 after almost three years of deliberations between the government and social partners and it aimed to revise the 2004 Labour Code – the latter being one of the PS‘s electoral promises. However, the agreement was not signed by the largest Portuguese trade union (CGTP-IN). After their electoral victory in 2005, the Socialists initiated the revision process by inviting experts to analyse the Portuguese LM. Moreover, following the recommendations of the EU’s Green Paper on Labour Relations, the government initiated a public debate on “flexicurity” in 2006 (EIU, 2007: 20). The result was the 2006 Green Paper on Labour Relations, whereas the 2007 White Paper on Labour Relations included specific recommendations for the corresponding revision of Portugal‘s Labour Code. The trade unions’ fierce opposition to the White Paper, however, diminished hopes of an agreement between the social partners and the government (Lima and Naumann, 2007). In June 2008, two months after the Minister of Labour and Solidarity tabled a revised proposal, the social partners (with the exception of CGTP-IN, which withdrew from the social dialogue) and the government reached an agreement (Lima, 2008a). Overall, the new Labour Code extended external, working time and wage flexibility, and, therefore, modified the LM policy structure‘s procedures without altering its objectives and principles. 2.2 Vocational training: the EU defining national policy Vocational training (VT) was rudimentary in Portugal prior to its accession to the EEC. The state could not afford the expense, while social partners were unwilling to make a significant contribution to this cause. However, VT increased dramatically after Portugal’s accession as a result of funding from Structural Funds (CSFs and ESF), while both active labour market policies (ALMPs) and gender equality measures were introduced. EU funding was used, first, as an important tool for the generalization of vocational training in order to tackle the extremely low levels of qualification of the Portuguese workforce and, secondly, as the main mechanism for the expansion of the educational system (Guillen et al., 2001: 22). Thirdly, it helped to develop social policies and the construction of infrastructures related to them. Moreover, on many occasions, the Structural Funds allowed Brussels to ‘develop (or “tenderly impose”) both the development and character of measures, programs and initiatives that were far from being a priority from a national point of view’

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183

Sequencing of EU and national developments: employment policy

EU resources

National developments

1986–96 • EU Directives • ESF/CSF Funds

1986–96 • 2 LM reforms (1987 and 1990) • Significant upgrading and expansion of vocational training

1997–2010 As above, plus: • EES • EMU

1996–2010 • New terms (activation and flexicurity) • 1996 (short-term pact) 1997 Euro-pact: (strategic – scapegoat for domestic defence) • EU Directives (working time) • 2003 PSD LM reform • 2005–08 PS LM reform (2007: flexicurity debate)

Source: Author.

(Guillen et al., 2001: 25). These new policy measures/goals comprised the following (Guillen et al., 2001: 21–2): ALMPs; the linking of ALMPs with social security benefits; anti-poverty programmes; organizational changes in social services; a new culture of policy implementation spread among policymakers; territorialized policies and local partnerships. In addition, the ESF contributed to employment creation and the rapid development of third-sector services (Cabral, 1999). Hence, EU budgetary resources changed the objectives, principles, procedures and financial instruments of the VT policy’s structure (Table 7.3). 2.3 Social inclusion: activating the poor In the area of social security, the introduction of the Guaranteed Minimum Income (GMI) constitutes the most significant reform in Portugal since 1986 (Guibentif, 1997; Capucha et al., 2005; Ferreira, 2005). The GMI was introduced as a pilot scheme in 1996 as part of the short-term pact and it was applied nationwide in 1997. The reform was influenced significantly by the European resource of the 1992 recommendation of the European Commission (EC) on sufficient resources and social assistance establishing common principles for minimum income schemes (see Caune, Jacquot and Palier, Chapter 1). The latter were seen as an important contribution to the fight against poverty and they were considered to be more effective when they actively help beneficiaries to become integrated into the labour market (European Commission, 1998). The GMI altered radically all dimensions of the Portuguese social protection policy structure which had been established before Portugal’s accession to the EU (Capucha et al., 2005;

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Table 7.4

Sequencing of EU and national developments: social inclusion

EU resources

National developments

1986–2000 • EU anti-poverty programmes • EU social exclusion debate • 92/441/EC Recommendation

1986–2000 • Until membership, poverty a taboo • No political debates • No academic research After 1990s • Debates on social inclusion/exclusion • 1996–97: GMI (Socialists)

2000–10 • OMC inclusion

2000–10 • No reforms besides some GMI flexibilization (PSD–PP)

Source: Author.

Ferrera, 2005). Although, at first sight, the GMI did not appear to be an employment policy measure, it had significant implications for the protection of the unemployed. What is more, the GMI was essentially an employment-friendly reform as its basic objective was to promote the reintegration of the beneficiaries into the LM by imposing penalties on beneficiaries who turned down a job or refused to participate in integration measures; additionally, recipients were obliged to accept an occupation through a ‘social insertion contract/Acordo de inserio’ (Katrougalos and Lazaridis, 2003: 103; Guibentif and Bouget, 1997). Despite the fact that the PSD–PP government made minor changes towards more flexibilization and stricter selection criteria that altered GMI policy procedures, its initial core features still remain (see Capucha et al., 2005: 235–54) (Table 7.4). 3.1 Pensions: searching for consensus on cost containment The first major pension reform after EU entry was pursued in 1993 (Decree-Law 329/1993), when the PSD majority government passed a cost- containing reform, which altered the eligibility criteria, the retirement age and the benefit formula concerning old age and disability pensions (Chuliá and Asensio, 2007: 641; for the pre-1986 reforms, see: 624–40). Moreover, in 1996 the newly elected PS government started a process of extensive consultation, which was concluded successfully with a pension reform (see Chuliá and Asensio, 2007: 642–5). First, an “experts committee” with members from academia, the social security system and the private pension funds known as the White Book Commission of Social Security was established to deal with the issue. Second, the Commission’s deliberations involved many actors and,

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even though it forecast that the social security system would start running a deficit between 2010 and 2015 (OECD, 2004), they did not agree on the problems and solutions for the Portuguese pension system (Ferreira, 2005: 336). The law introducing the reform was extensively discussed in the Portuguese Parliament from 1998 to 2000. After lengthy negotiations (Chuliá and Asensio, 2007: 645–7), Parliament approved the 2000 Framework Law (Law 17/2000), which pushed the system towards universalism. While the changes were minor (Almeida and Cristovam, 2000; Carrera et al., 2010), they nonetheless changed the policy structure‘s objectives and procedures. However, the new pension benefit formula did not improve the social security system’s financial sustainability considerably. Additionally, the system’s rules became more complex making it more difficult for beneficiaries to understand them and administration costs were initially increased (OECD, 2004: 119). Nonetheless, the timing of these reforms is intriguing as Portugal joined a pan-European phenomenon, whereby national governments justified numerous pension reforms by invoking the need to meet the Maastricht criteria (Palier, 2004: 4). The next two reforms took place in the context of Portugal‘s breach of the Stability and Growth Pact (SGP). In 2002 Portugal’s significant breach of the SGP, with the general government deficit rising from 2.9 per cent of GDP in 1999 to 4.4 per cent of GDP in 2001, led the EC to open an excessive- deficit procedure (EDP) against it. The PSD–PP government quickly introduced a large number of emergency reforms, which included the following pensions-related measures: a new social security bill was passed, allowing workers to divert part of their pension contributions to capitalized funds run by either the public or the private sector (June 2002); Parliament approved a new Social Security Framework Law (Decree-Law 35/2002) which introduced reforms broadly similar to those of the 2000 law. The latter emphasized the relevance of creating a second-pillar complementary regime, based on a contributory ceiling on general regime contributions, above which contributions must be channelled to private or public funds (Chuliá and Asensio, 2007: 645–50). The 2002 reform was never properly implemented as the decree law needed for its enforcement was never voted upon due to the political turmoil that dominated Portuguese politics until 2005. Shortly after taking office in February 2005, the Socialist premier José Sócrates commissioned the governor of the Bank of Portugal to conduct an in- depth audit of public finances. The latter concluded that the 2005 government budget deficit would reach 6.83 per cent of GDP, that is,

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more than twice as high as the SGP’s 3 per cent ceiling. The audit also calculated that the budget deficit in 2004 would have been 5.2 per cent of GDP (rather than the official 2.94 per cent) without the one- off special measures. Unsurprisingly, in June 2005 the EC launched its second EDP against Portugal. The government subsequently presented its deficit reduction plan to the Commission, carrying forward many of the reforms proposed by the previous centre-right government. Among a series of structural reforms intended to reduce the deficit, the government presented its plans for pension reform in April 2007. After four months of negotiations with social partners, Sócrates announced that a deal had been achieved in October. Despite slight amendments, the main elements of the government’s proposals remained intact (Law 4/2007): the introduction of a “sustainability” mechanism linking pension payments to changes in life expectancy, the indexation of payments to GDP and inflation, higher penalties for early retirement and changes to the pension entitlement formula. Notwithstanding some reservations, the four business confederations representing industry, agriculture, services and tourism all signed the agreement, as did the União Geral de Trabalhadores (UGT), the second-largest trade union confederation. However, the larger CGTP-IN remained opposed, arguing that the reforms would reduce current pension entitlements. In addition, the government included in its 2007 budget, among other austerity measures, a gradual increase in the age of retirement for public sector workers from 60 to 65, in line with developments in the private sector. Hence, the 2007 pension reform changed significantly the policy structure‘s principles, objectives and procedures as it was the most important of the decade (Carrera et al., 2010: 15) (Tables 7.5 and 7.6).

3. Usages of Europe: a compass or a spear? This section discusses the Portuguese usages of Europe in employmentfriendly reforms. Although most European resources were used in all policy areas under study, the most important one was EU’s soft law. Portuguese actors used it either as a compass guiding reforms or as a spear to attack political opponents and, hence, empower themselves in the political arena. 3.1 Labour market reforms: using EU resources for own agenda promotion All the aforementioned LM reforms were introduced in order to improve Portugal‘s national economic competitiveness. Portuguese

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Sequencing of EU and national developments: pensions

EU resources

National developments

1986–92 • No resources

– 1993 reform: • Main concerns: sustainability, public finances, preventing early retirement • References to Maastricht criteria – legitimizing usage (EU as scapegoat)

1992–2000 • EMU criteria

2000 reform: • Main concerns: sustainability, public finances, along with impact on poverty, redistribution • No EU references/usage 2001–10 • EDP • OMC pensions

2001–10 2002 and 2007 reforms: • Main concerns: sustainability and public finances • EDP reference – legitimizing usage (EU as scapegoat)

Source: Author.

actors used EU resources both in the pre-EMU entry and post-EMU entry period, but in a different fashion. Indeed, in the first two LM reforms of the late 1980s (1987 and 1990), national actors did not explicitly use Europe for the following reasons: first, Portugal had just joined the EU, which meant that the necessary adjustments to Europe had already been made. Secondly, EU social and economic policies were miniscule compared to the post-Maastricht period. On the contrary, Europe was used as a source of legitimacy for the pre-EMU entry LM reforms. In particular, in the 1996 Strategic (or short-term) Social Pact the government made a reference to Europe by arguing that it was proposing this agreement in order to meet EMU criteria (Guillen et al., 2001: 23). Similarly, the government made an even more direct reference to Europe in 1997, when it proposed a limited pay rise in order to meet EMU convergence criteria by naming the 1998 social concertation agreement ‘Euro-pact’. However, the pacts were designed and implemented to tackle the Portuguese LM’s problems and they were the result of demands by and negotiations between Portuguese governments and social partners. Especially in the case of the Euro-pact, the government tried to revitalize the social concertation process, which had “lost steam” throughout 1997 (Rodrigues, 1998). Similarly, the Finance Minister’s reference to the convergence criteria (see above) was consistent with the rather deflationary logic of EMU (see Dyson and Featherstone, 1999). In other words, EMU entry criteria and the goal of entering the

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Table 7.6

Policy area LM reforms

Europeanization of employment-friendly reforms: Portugal

Year

Dimension of the policy structure involved

AntiPro-reform reform Reform actors/ actors/ “promoter” coalition coalition

Public reference to Europe (y/n)

Post 1986 (EU)

More spending All Social on vocational governments. partners. training by using EU (ESF and CSF) funds (all dimensions)

None.

Yes.

1990

AES (objectives, principles and procedures) 2 social pacts (short-term and Euro-pact) (objectives and procedures) NAPs • Activation • Employability • Gender equality

Centre-right None. government.

CGTP-IN.

Yes.

Centre-left None. government.

Trade unions.

Yes, only at the Europact.

1996– 97

1997– 2003

Centre-left Government None. government. and social partners.

Yes (but minimal).

Centre-right Government Trade government. and unions employers. and legal experts.

Not by the government but from opposing legal experts. Yes (but minimal).

2003

LM reform (objectives, principles and procedures)

2005

NRPs Centre-left Government None. (as NAPs government. and social but more partners. employability)

2005– 08

LM reform (objectives, principles and procedures) Flexicurity (objectives)

2008

Centre-left – government.

CGTP.

Centre-left Labour All trade government. Minister, unions. President, Experts Commission

No.

Yes.

Continued

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Continued Dimension of the policy Pro-reform structure Reform actors/ involved “promoter” coalition

AntiPublic reform reference actors/ to Europe coalition (y/n)

Social 1997 Inclusion

Guaranteed Centre-left Minimum government Income (GMI) and expert scheme commission. (all dimensions)

None

Yes

Pensions

Reducing public Centre-left All Social spending on government Partners pensions and expert (principles, commission. objectives and procedures) Centre-right – government.

–

No

All Trade Unions

Yes

Policy area

Year

2000

2002

2007

All Trade Unions

Centre-left All CGTP. government. employers and UGT.

Yes.

Source: Author.

Eurozone provided the perfect legitimization tool for this national strategy. Hence, in these three reforms the national government used EU financial resources (EMU economic and budgetary constraints) in a legitimizing fashion, making the EU the scapegoat for reform defence. The transposition of the two EU Directives included in the 1996 Pact into Portuguese legislation proved difficult and especially the transposition of the Working-time Directive was delayed due to significant disagreements over the legal interpretation of “breaks”, “effective working time” and “normal working period”. The reason behind these disputes and the subsequent extension of the tripartite consultation process was the fact that this Directive altered Portuguese labour relations significantly: first, working-time regulation was out- dated and confusing, leading to different interpretations; secondly, the national limit for working hours per week was in excess of the Directive’s 40-hour limit. Hence, the social partners tried to influence the final text of the national law and its definitions. After lengthy negotiations, the 40-hour

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statutory working week finally came into force in Portugal in December 1997 and was adequately enforced (Cristovam, 1997). Thus, the social partners used EU legal resources strategically and the EU acted as reform innovator/initiator/agenda-setter. In the 2003 LM reform, the government made no reference to EU resources as it presented the new Labour Code as the tool that would solve some of the Portuguese LM’s traditional problems and ‘revitalize collective bargaining’. Hence, Europe had no role in this reform. The centre-right government’s scepticism towards the Lisbon Strategy and the OMC in particular (see section 1.1), explains the neglect of EU resources. Similarly, no social partner made direct references to Europe or used any EU resource: Portugal‘s leading business representatives supported the reform, but appealed for more de-regulation in order to ‘tackle the taboos resulting from the 1974 Revolution’. In contrast, trade unions had serious reservations about the Code, claiming that some parts of it were unconstitutional, and warned about its negative impact on industrial relations, but made no reference to Europe whatsoever. Surprisingly, references to Europe were made only by the independent Portuguese law experts who found that the government’s proposals were ‘moving away from the European Social Model’, which was understood as a model that promoted social dialogue and collective bargaining (Cristovam, 2002a), and they were not taking sufficiently into account Portuguese and European case law. Moreover, they agreed with the trade unions that certain provisions of the proposed Code ‘breached the Portuguese Constitution’ adding also that they were in breach of ‘certain EU Directives’ (Cristovam, 2002a). Hence, in this reform Portuguese actors used cognitive and normative resources (the notion of the European social model) along with legal resources (EU Directives). However, these actors were not government officials but independent experts who opposed the reform. On the contrary, in the 2008 LM reform, both the Socialist government and independent legal experts used cognitive and normative resources (flexicurity). The experts who produced the Green Paper on Labour Relations assessed Portugal‘s performance in comparison to other EU countries and the EU-15 in terms of all the aspects of the employment protection legislation’s (EPL) composition. Additionally, they criticized the OECD’s understanding of flexibility, which focuses only on external flexibility, and therefore, classifies the Portuguese LM as one of the most rigid; they argued that if all aspects of EPL (collective redundancies, temporary employment) were taken into account, Portugal would turn out to be quite close to, or even more flexible

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than, most of the other EU-15 countries. The Green Paper concluded in favour of flexicurity and identified priorities for action. First, spending on ALMPs should be increased in order to reach 60 per cent of the EU average. Secondly, it suggested that the proliferation of atypical forms of employment, along with unregistered, short-term and precarious forms of employment should be tackled. Finally, it defined a successful flexicurity approach, which entailed a threefold metamorphosis of Portugal’s labour law, collective agreements and the social partners‘ role (Lima and Naumann, 2006). When it was presented to the social partners, the Green Paper did not cause any serious controversy, apart from the CGTP-IN’s comments, according to which the document favoured flexibility (Cerdeira, 2007: 48). After the Green Paper’s publication, the government appointed another experts committee that would make concrete proposals for the upcoming LM reform, which would be included in the 2007 White Paper on Labour Relations. In the meantime, the Minister of Labour and Social Solidarity, Veira da Silva, initiated a public debate on flexicurity. In his early speeches and interviews he was very cautious about adopting the flexicurity model and he emphasized that importing foreign models was impossible and that, whatever the solution might be, it had to be found by the Portuguese social partners (Cerdeira, 2007). Gradually, however, he started to express a more favourable attitude towards implementing flexicurity reforms. Even though both employers and employees were sceptical about the notion of flexicurity, the endgame began after the President of the Republic argued in favour of flexicurity (Cerdeira, 2007). As a response to the President’s remarks, the trade unions launched a full-blown attack on the European Commission’s “neo-liberal project” which, according to the CGTP-IN, aimed to destroy the European social model and European workers’ rights, whereas the UGT argued that the EU recommendations regarding flexicurity were driven by employers’ demands. Both unions ridiculed the idea of transferring the flexicurity approach to Portugal: the CGTP-IN highlighted the massive gap between Portuguese and Danish social protection levels, whereas the UGT stressed the great differences in qualification attainment between the two countries’ workforce (for a comprehensive analysis of Portuguese press concerning flexicurity, see Michalaki, 2009: 13–14). Hence, for these trade unions the real goal of the government was to promote flexibility in order to satisfy employers (Cerdeira, 2007). The result of this backlash was the complete omission of flexicurity from the White Paper’s analysis and recommendations (Lima, 2008b). In sum, the experts, the President of Portugal and the

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Employment Minister referred to the concept of flexicurity at the start of the reform process. They used cognitive and normative EU resources and the EU could be perceived as a reform innovator/initiator, agendasetter. However, this resource was not accepted by the social partners and, hence, it was not used by the policymakers involved in the 2008 LM reform. 3.2 Vocational training: follow the EU money EU budgetary resources were paramount for the financing of ALMPs and the general development of VT in Portugal. Moreover, EU budgetary resources helped in the promotion of new social policy measures and the construction of infrastructures related to them (see: Guillen et al., 2001). Without EU funding the increase in social expenditures would not have been sustainable. In other words, through its Structural Funds the EU provided national actors with significant financial resources in their domestic reforms. Hence, domestic actors used EU budgetary resources strategically in domestic reforms with the EU acting as a reform innovator/initiator, agenda-setter. 3.3 Social inclusion: when EU soft law results in groundbreaking change European legal, cognitive and normative resources were crucial for the introduction of GMI. In particular, until the mid-1980s, poverty and social exclusion were neither openly discussed by politicians, nor a subject of academic research in Portugal. Only since the early 1990s have they reached the agenda of political parties and become a policy concern ‘in part because of external factors – EU debates on poverty and social exclusion, the Social Charter and the Council Resolution on social exclusion, and EU initiatives to combat poverty’ (Guibentif, 1997: 203). The 1992 (92/441/EC) Recommendation was introduced during Portugal’s Presidency when the right-wing PSD was in office. However, once the Labour Minister (Silva Peneda) responsible for putting it on the agenda was replaced, the government was not keen to implement the recommendation. Subsequently, the Portuguese Community Party and the PS presented two separate bills in parliament during 1992–93 but the PSD voted against them, while the issue did not gain salience (Silva, 2009: 83). Nonetheless, the increasing poverty of the early 1990s and the fact that the Socialist Party made the GMI’s implementation one of its 1995 electoral manifesto’s top priorities put the issue at the top of the domestic agenda (Silva, 2009). The PS did this for the following reasons: first, to address the problems of the Portuguese social security system;

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secondly, to converge with the advanced welfare states of other EU countries and the 1992 European Council’s Recommendation (Ferreira, 2005: 335); thirdly, the country’s commitment to rigorous macroeconomic measures in order to join the final stage of EMU necessitated ‘considerable political innovation’ (Capucha et al., 2005: 236); fourthly, the GMI could differentiate the PS from the PSD in the eyes of the electorate (Silva, 2009: 83–5). Indeed, the GMI became one of the most controversial issues of the 1995 election, with parties defending their positions fiercely. Their disagreement peaked during the final face-to-face televized debate when the PS candidate (António Guterres) showed the PSD candidate (Fernando Nogueira) the 1992 recommendation’s text and asked him if he knew who had signed it. The fact that Nogueira did not know that a fellow member of his party and government favoured the GMI was decisive in PS’s clear victory in the debate (interviews with various former politicians and experts; interview with Dr Paulo Pedroso, Secretary of State for Employment and responsible for the GMI’s implementation). Hence, in concordance with the 1992 recommendation, Portugal adopted the model prescribed by the EU: for most recipients (with the exception of those facing serious health problems), qualifying for the GMI depended on job or training availability with the ultimate goal of ensuring that recipients would find employment (Martins, 1997). Accordingly, the Socialist government (reform promoter) used the EU’s normative and cognitive resources to implement one of the most radical reforms of the Portuguese social protection system. In this reform, therefore, the EU acted as reform innovator/initiator/agenda-setter. 3.4 Pensions: Europe empowering governments and legitimizing unpopular reforms In the 1993 pension reform, the pressure stemming from the Maastricht criteria coincided with Portugal‘s domestic problems (recession, increasing evasion of contributions). As a result, the right-wing PSD government implemented a cost-containing reform (Marques, 1997, pp. 32–5 as cited in Carrera et al. 2010). Hence, the EMU provided domestic actors with additional legitimacy to push their agenda. On the contrary, in the 1996–2000 pension reform the government did not use EU resources. Even though the reform coincided with EMU entry, the government and social partners were more concerned with the Portuguese social security system, that is, its viability and its effects on social protection, poverty and equality. The reform process started with significant disagreements over its content and agreement was only reached after EMU entry. Hence, the reform

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Table 7.7

Usages of Europe: Portugal Actors who used EU resources

Legal resources

Governments (PS) and social partners.

Financial resources

Governments (all).

Political and Governments and cognitive experts. resources

Type of usage

EU role

Governments: no EU as reform innovator/ usage (need to initiator/agenda-setter. comply). Social partners: strategic. Strategic and EU as a reform catalyst/ legitimizing. supporter (positive financial resources); EU as scapegoat for reform defence (economic and budgetary constraints). Cognitive and EU as a reform innovator/ legitimizing. initiator and as a reform catalyst/supporter.

Source: Author.

was not dictated or influenced directly by Portugal’s effort to join EMU. In contrast, in the 2002 and 2007 reforms the context was set by the EDP initiated by the Commission (Cristovam, 2002a). Portuguese governments used the EU’s financial resources (budgetary constraints) to speed up the reform processes, which were implemented as emergency actions. Consequently, in these two reforms the usage of Europe was legitimizing, as domestic actors used EU financial resources (EMU’s economic and budgetary constraints) to push their agenda, while the EU acted as scapegoat for reform defence (Table 7.7).

Conclusions While LM and pension reforms took place in the 1990s, only in some (the ‘short-term’ and Euro pacts, the 1993 pension reform) did national actors use EU resources (the Maastricht criteria) in a legitimizing and strategic fashion where Europe was used as a reform innovator and/or reform catalyst. Surprisingly, EU resources were also used in the 2002 and 2007 pension reforms (after EMU entry), which were introduced and legitimized with reference to Europe (breach of the SGP and the subsequent EDP). Similarly, after EMU entry, two major LM reforms took place mainly in order to tackle domestic problems reflecting the political preferences (for more or less flexibility) of Portuguese governments. Nonetheless, in both reforms Portuguese actors (2003: experts; 2005–08: governments and experts) made references to Europe and used EU resources strategically to empower themselves against the

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government. Hence, apart from rejecting the ‘joining the club’ hypothesis, the Portuguese case seems to challenge the arguments regarding the rise (pre-EMU) and fall (post-EMU) of social pacts (Hancké and Rhodes, 2005) and the strong (pre-EMU) versus soft (post-EMU) conditionality on Southern European countries (Blavoukos and Pagoulatos, 2008). Secondly, the Socialists – who were not only supportive of the EU, but also its social policy – used EU resources extensively in all policy areas examined: in social inclusion, in all LM reforms that they implemented (the ‘short-term’ and Euro pacts; the 2005–08 reform). On the contrary, the PSD–PP government – which was sceptical about EU social policy – made significantly fewer references to Europe and used EU resources much more hesitantly. The post-EMU entry pension reforms, where the EDP against Portugal served its cost-containment agenda, were the only exception where Europe was used strategically as a scapegoat for reform defence. Although this conclusion should be qualified with regard to vocational training, as both parties used EU funds, elite preferences still mattered as both parties favoured using EU positive financial resources in a strategic manner with the EU acting as a reform initiator. Moreover, public references to Europe followed – albeit loosely – public opinion’s gradually increasing Euro-scepticism (see Section 1.1). It is also plausible that the negative usages of Europe in the pension reforms after EMU entry, along with the harsh recession that Portugal experienced and continues to experience, decreased positive attitudes towards the EU. As a result, in contrast to the pre-EMU entry period, the social partners were openly hostile to flexicurity and the government quickly dropped the term. Finally, fit/misfit cannot explain Portuguese usages of Europe. First, in the case of LM reforms, there was no misfit between EMU and the social pacts (see Monastiriotis and Zartaloudis, 2010). Rather, EMU provided a good excuse for governments to implement the reforms they preferred. Hence, governments purposively engineered the misfit (Dyson and Goetz, 2003: 19). Secondly, after EMU entry, when references to the notion of flexicurity were made, there was no misfit. Similarly, there was no pressure to comply with the 1992 Council’s recommendation regarding the minimum income scheme, whereas the EES’s soft law provided national actors with significant resources for domestic reforms. Additionally, there was no misfit between Portuguese employment rates which were higher than the Lisbon targets throughout the 1990s and 2000s. Hence, Europe was not used in domestic reforms to increase employment levels. In those cases where a misfit existed (EU social Directives and in the EDP) Portugal‘s reaction exhibited variation: the

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transposition of EU Directives was slow, whereas the reaction to the EDP was quite rapid, as Portuguese governments tried to meet the SGP criteria. The reaction to the EDP was faster because it coincided with the PSD–PP government’s agenda of reducing public deficits. Hence, the government tried to empower itself against the opposition (PS, unions) by making references to Europe in a strategic and legitimizing fashion. Moreover, Portugal delayed the transposition of EU Directives, it incorporated non-binding EU soft law, such as the 1992 Council’s recommendation on poverty and the EES guidelines. Hence, a paradox is observed: Portugal “complies” faster and better with the EU’s soft law than the EU’s hard law (cf. Silva, 2009; Zartaloudis, 2011). This can be explained if one traces the domestic usages of EU resources in Portuguese employment-friendly reforms: soft law constituted an ideal tool for Portuguese actors for guidance (compass) and/or empowerment against opponents in the political arena (spear).

Note 1. The author is grateful to the task coordinators and members, two anonymous reviewers and to Kevin Featherstone, Waltraud Schelkle, Christa Van Wijnebergen and Kyriakos Moumoutzis for their constructive comments that improved this chapter. Special thanks go to all Portuguese interviewees for providing their time, help and the empirical evidence necessary for the completion of this research. Funding from the Propontis Foundation, Bodossaki Foundation, LSE and RECWOWE is gratefully acknowledged. Any errors are the author’s responsibility.

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Lima, M. C. (2008b) ‘White Paper on Labour Relations Highlights Adaptability and Security Issues’, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa.eu/eiro/2008/02/articles/pt0802029i.htm, accessed 30 April 2009. Lima, M. C., and R. Naumann (2005), ‘Annual Review for Portugal‘, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa. eu/eiro/2005/01/feature/pt0501202f.htm, accessed 18 May 2009. Lima, M. C., and R. Naumann (2006), ‘Green Paper on Labour Relations Paves the Way for Reform’, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa.eu/eiro/2006/06/articles/pt0606019i.htm, accessed 18 May 2009. Lima, M. C., and R. Naumann (2007), ‘Social Partners have Mixed Reactions to First Draft of Labour Law Reform’, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa.eu/eiro/2007/06/articles/pt0706059i. htm, accessed 22 April 2009. Lobo, M. C. (2003), ‘Portuguese Attitudes towards EU Membership: Social and Political Perspectives’, South European Society and Politics, vol. 8 (1), pp. 97–118. Magone, J, M. (1997), European Portugal: The Difficult Road to Sustainable Democracy (Basingstoke and New York: Palgrave Macmillan). Martins, P. F. (1997), ‘Base-line Income System Established’, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa.eu/eiro/ 1997/03/feature/pt9703107f.htm, accessed 30 June 2008. Michalaki, S. (2009), ‘Flexicurity, Flexigurança, Evasfaleia ... Different Perceptions Through Major European Newspapers’, ELIAMEP, http://www.eliamep.gr/en/ wp- content/uploads/2009/04/michalaki_consent_f lexicurity_ 27april2009.pdf, accessed 15 January 2010. Monastiriotis, V., and S. Zartaloudis (2010) ‘Beyond the Crisis: EMU and LM Reform Pressures in Good and Bad Times’, LSE ‘Europe in Question’ discussion paper series, LEQS paper no. 23/2010, European Institute, LSE, http://www2. lse.ac.uk/europeanInstitute/LEQS/LEQSPaper23.pdf, accessed 25 August 2010. NAP (1998–2005), National Action Plan for Employment – Portugal, various years. NRP (2005–07), National Reform Programmes – Portugal, various years. OECD (2004), Economic Surveys 2004: Portugal (Paris: OECD). OECD (2001), Economic Survey of Portugal 2000 (Paris: OECD). Palier, B. (2004), ‘The Europeanization of Welfare Reforms’, paper presented at Post Conference 20–22 May, http://palissy.humana.univ-nantes.fr/msh/costa15/ pdf/nantes/palier.pdf, accessed 4 October 2006. Petmesidou, M. (2001), ‘Employment and Labor Market Policies in South Europe’, in M. Kohli, M. Novak (eds), Will Europe Work? (London: Routledge). Pizarro, N. (2003), ‘GOVECOR National Report for Portugal – Third Round’, http://www.govecor.org/data/20030616175745_ Portugese_ Report3_final.pdf, accessed 6 August 2005. Rodrigues de Sousa, C. A. (1997), ‘EU Convergence Criteria Set Framework for Pay Guidelines in Portugal‘, European Industrial Relations Observatory online (EIRO), http://www.eurofound.europa.eu/eiro/1997/09/feature/pt9709135f.htm, accessed 10 May 2009. Rodrigues, N. (1997) ‘Delays in Transposing Working Time Directive into Portuguese Law’, European Industrial Relations Observatory online (EIRO),

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200 Sotirios Zartaloudis http://www.eurofound.europa.eu/eiro/1997/12/inbrief/pt9712156n.htm, accessed 22 February 2009. Rodrigues, N. (1998), ‘Government Re-launches Social Dialogue on Strategy for the Euro’, European Industrial Relations Observatory online (EIRO), http:// www.eurofound.europa.eu/eiro/1998/03/inbrief/pt9803171n.htm, accessed 10 April 2009. Silva, P. A. (2009), Waving the European Flag in a Southern European Welfare State: Factors Behind Domestic Compliance with European Social Policy in Portugal, EUI PhD theses (EUI: Florence). Silva, P. A. (2003), ‘Building a Welfare State in a Context of Austerity: The Portuguese Case’, in F. Monteiro, J. Tavares, M. Glatzer and Â. Cardoso (eds), Portugal: Strategic Options in European Context (Lanham: Lexington). Zartaloudis, S. (2011), ‘When Soft Law Overshadows Other EU Resources: Portuguese Reconciliation Policies and Usages of Europe’, European Journal of Social Security, vol. 13 (1), Intersentia.

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8 EU and Czech Instrumentalism in Employment and Social Inclusion Strategy Tomáš Sirovátka

Introduction The European Employment Strategy initiated in 1997 and the Social Inclusion agenda outlined in 2000 and promoted by Open Coordination Method (OMC) were intended to be milestones in the promotion of employment and social cohesion within Europe, along with economic growth and competitiveness. However, since social policies are based on the principle of national sovereignty and implemented within the different national contexts of the enlarged EU-27, the impact of these strategies in the individual member states is not uniform. In this chapter we will examine how developments in two fields of social policy, employment policies and social inclusion, have been influenced by European strategies and principles as applied in the Czech Republic. In doing so we examine three central hypotheses about the influence of the EU on national policies (see Graziano, Jacquot and Palier, introduction to this volume). The first hypothesis is about the role of EU membership (the “joining-the- club” effect), which presumes that EU pressure and influence is particularly strong during the accession period. The second hypothesis is the hypothesis of relationship to the EU: this hypothesis presumes that the attitude of political elites and the public towards the EU (and consequently the “culture of compliance” to the EU) represent a crucial factor for mediating the influence of EU policies. And finally, the misfit hypothesis suggests that if there is no misfit between national and EU policies, then there is no reason to resort to the Europe issue as major instrument in policy discourse and policymaking. On the other hand, a small misfit would indicate some 201

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usage of the Europe issue, and a major misfit implies full usage if supported by domestic actors or neglect or rejection of the EU in case of low/no domestic support. The chapter is based on case studies of two policy fields (employment and social inclusion). From a methodological standpoint, the analysis of real policy development is based on legislation, institutional analysis and available statistical data, combined with secondary analysis of sources such as implementation studies for specific programmes, etc. We also focus on policy discourse as reflected in policy papers, the programmes of political parties, public administration documents and existing studies on the issue. Finally, we make use of information gained through series of interviews done in 2005–06 as part of a national research project on implementation of the social inclusion agenda (75 interviews) and about 30 interviews carried out with the policymakers in this field later at various workshops, conferences and personal meetings. The chapter is divided into five sections. In the next section we describe the relationships of the key Czech actors with the EU, and the main features of the Czech welfare state. The third section examines the development of employment policies and social inclusion policies from the 1990s to the present, with focus on the influence of the EU. In the fourth part we assess how European “resources” have been used in the process of policymaking (while identifying the types of “usage” of the Europe issue), and the mechanisms that stand behind them. In the concluding part, we discuss the relevance of the key research hypotheses on the role of Europe. The Czech Republic and the EU The Czech attitude towards EU membership The Czech Republic joined the EU in 2004. One of the leading political parties (Civic Democrats [CDP]) and the President (once prime minister at the head of this party, between 1993 and 1997) had always criticized the EU for encroaching too much on national powers, and for being socialist and bureaucratic. The other political parties (except the Communist Party) supported EU membership. The Social Democratic minority government, which was tolerated by the Civic Democratic Party in opposition during 1998–2002, as well as the coalition between the Social Democrats, Christian Democrats and Liberty Union in 2002–06, prepared for EU membership with enthusiasm. Likewise, public opinion had been somewhat pro-European, though reserved in several respects: between 1997 and 2002 the share of citizens supporting EU membership was between 54 and 59 per cent, while opponents

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were only 20–29 per cent (CVVM, 2002). In the June 2003 referendum on membership, the participation rate was 55 per cent, with 77 per cent of the vote positive. The Czech Republic was among the countries with lower rates of participation in their referendum; nevertheless the result of voting was actually near the average when compared to the other eight new member states in 2004 (ČSÚ, 2009). According to a special Eurobarometer survey in February/March 2004 (Eurobarometer, 2004), at the time of accession 41 per cent of Czechs considered EU membership as a positive (the EU-27 average was 47 per cent) and 17 per cent as a negative (the EU-27 average was the same). Also, 35 per cent of Czechs trusted the European Commission and 44 per cent the European Parliament (while the EU-27 average was a clearly higher 48 per cent and 54 per cent). According to a recent national survey, satisfaction with the EU membership prevails slightly: 40 per cent of citizens expressed satisfaction with membership, 15 per cent were not satisfied and 39 per cent indifferent. On the other hand, only 34 per cent believed that decisions made by the EU are in the interest of the Czech Republic, 41 per cent did not believe so much and 17 per cent did not believe so at all (CVVM, 2008). Finally, in March 2009 only 32 per cent of respondents said that they knew what the Lisbon treaty is. While 38 per cent thought the Senate should adopt it, 25 per cent were against and 37 per cent were undecided (CVVM, 2009). In the event, the Senate did not accept the Lisbon treaty until May 2009 due to the resistance of the combined majority of the Civic Democratic Party and Communist Party in the Senate. Negotiations were still ongoing when the treaty was ratified on 7 May 2009 by the Senate, with 20 out of 79 members of the Civic Democratic Party voting against, and five Communists abstaining. A group of senators from the CDP submitted an appeal to the Constitutional Court for revision of the treaty as incompatible with the Czech Constitution; however, the Constitutional Court decided that the objections submitted by the Senate and the President were not relevant. In October 2009 the President insisted that the EU should provide an exemption to the Czech Republic, that the EU guarantee of general rights of EU citizens would not be applied to the Czech Republic, and this condition was accepted. All of this shows that the attitude of the Czech public is rather positive towards the EU, but at the same time some key political actors and parts of the public have strong reservations or objections to the EU. The Czech welfare state The Czech welfare state shares a strong Bismarckian tradition which shaped its key features even during the communist regime (see Cerami,

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2006; Inglot, 2008). Besides this, the legacy inherited from the former communist welfare state was an unfinished, “emergency” welfare state characterized as a “hybrid” of various models. This is a system in constant flux, surprisingly effective at adapting to frequent crises, and well consolidated in order to preserve its effectiveness. The system is resistant to the pressures which challenge it, and to change in its key features, in spite of frequent political turn- offs and subsequent ideological/political pressures (see Inglot, 2008). After 1989, a trend towards a low social expenditure welfare state emerged in the Czech Republic, with social expenditure reaching about 20 per cent of GDP on average (while the average in the EU during late 1990s and 2000s was between 26 and 27 per cent).1 It was based on generous, but essentially ad hoc and politically targeted welfare benefits used deliberately by post- communist political elites in order to win support for economic and social reforms, by means of dividing the losers in transformation into different social and administrative categories, and providing them selective material benefits (see Vanhuysse, 2006a). The transition began during a period when neo-liberal ideas had great influence throughout Europe. In the Czech Republic the communist past had discredited the ideas of solidarity and social justice, while the trend towards “individualization of the social sphere” gained dominance, as it did in the other post- communist countries, under conditions of economic pressure (e.g. Offe, 1996; Ferge, 1997). Neo-liberal rhetoric that rejected the ideas of social solidarity and influenced the mass media continued to dominate the discourse. This discourse influenced policymakers (as apparent from interviews undertaken in 2005/06 with those involved in the social inclusion agenda), as well as strategic documents like National Reports on Social Inclusion (see next section). However, for years policy discourse has been diverging from the actual policymaking process. In policy practice, emphasis has been placed on the social and political acceptability of reform (the “blameavoidance strategy”). A relatively generous social safety net was established, and social insurance schemes were geared increasingly towards redistribution. Compliance with the EU The pattern of low social expenditure, pragmatic policies, divisive and targeted social transfers, combined with neo-liberal discourse, has created an environment not supportive of most of the objectives and principles of the social OMC (Employment Strategy and Social Inclusion). Falkner et al. (2005) and Falkner and Treib (2008), who studied the

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transposition of EU Directives to the EU member states, have elaborated the typology of their “compliance cultures” (characterized by shared interpretative schemes, sets of cognitive rules and recipes and implementation patterns).2 The Czech Republic, along with countries like Hungary, Slovenia and Slovakia, falls into the category that we call the “world of dead letters” in which the transposition in terms of legislation has been relative good, even better than in many of the old EU states. This may be explained to a large degree by the pressure on these countries created during pre-accession stage (the “joining-the- club” effect). However, a huge gap can be observed between the letter of the law and practice on the ground. These countries are all plagued by a multitude of problems that have so far prevented legislation from being implemented in practice. Shortcomings in the enforcement system may be explained by several factors. First, for a number of reasons there is no culture of litigation among citizens who also lack support from civil society. Also, the institutional standing and resources needed to implement legislation have not been achieved: the existing bodies are plagued by lack of visibility, so that their actual performance has thus far lagged behind their formal competences. Finally, to complete the list, there are shortcomings in the organization of jurisdictions. In this context it is interesting to explore how the accession of the post- communist countries to the EU has influenced their social policy, the agenda of which is coordinated in particular by the OMC of the EU (in areas such as employment strategy and social inclusion strategy). In this respect there is criticism of the structural asymmetry (Ferrera et al., 2002; Scharpf, 2002) between economic or “market-making” interests, on one hand, and social protection or “market-correcting” interests at the European level, on the other. According to several authors it is the level of political commitment of the national actors that is the crucial factor influencing the adoption of the EU recommendations in the “social OMC”. For this reason the employment strategy and social inclusion strategy of the Czech Republic may, in some cases, represent a mere “rhetorical exercise” (Scharpf, 2002; Zeitlin and Trubek, 2005). However, we need to reflect on the dynamic character of the transformation, and that the OMC merely initiates the process of “mutual learning” rather than imposing hard requirements. In terms of the potential cognitive effect and institutional learning (see de la Porte and Pochet, 2004; Jepsen and Serrano Pascual, 2005), the convergence at the level of ideas (ideational convergence) and the legitimating function of the discourse (Radaelli, 2003) should be taken into consideration, as

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well as the new system of governance which stimulates participation, bottom-up policymaking, experimentation and institutional learning (Begg and Berghman, 2002; Radaelli, 2003). And finally, discursive transformation as Schmidt (2008) argues may often bring a crucial point of departure in policies. In sum, the mechanism of destabilization of the existing understandings and discursive diffusion may contribute to changes in policies (Trubek and Trubek, 2005: 91–7). Furthermore, the EU agendas may be used as a “strategic” instrument by the policy actors in order to empower themselves to achieve their objectives. The influence of the OMC, however indirect, may work through several mechanisms: shaming, discursive diffusion, deliberation, legitimization, experimentation, learning and networks. The analysis of how the policy actors are “using” the OMC may help to understand these mechanisms, which are not often transparent. Czech reform of employment policy and social inclusion: from compliance to neglect of Europe? During the period 1989–2009 we have witnessed three stages, each of them characterized by different attitudes towards and usages of Europe. In the first transformational stage (1990–92 in the old Czechoslovak federation), the government of national consensus and most of the policymakers adopted cognitive and strategic usages of Europe, learning about principles and policy tools that had not existed under the conditions of the command economy. In the second stage, between 1993 and 1997, when the government was dominated by the centre-right Civic Democrats, European social policies were criticized; instead, the agenda of the OECD emphasizing economic incentives and low labour costs gained support. In the third period (1998–2002), the Social Democratled governments elected in 1998 and 2002 clearly declared their preference for taking lessons from Europe; on their part, this was a kind of strategic legitimization demonstrating rhetorically their willingness to adopt the European Employment Strategy and Social Inclusion Strategy. In the fourth period (2003–04), we observe quick formal adaptation of the EU social policies for pragmatic reasons to show formal compliance with EU strategy and gain access to the EU Structural Funds. In the fifth period (2005–08), national policy preferences clearly gain dominance, while the EU is used instrumentally: selective use is made of arguments in support of national policy objectives, and pro-forma adoption of the employment and social inclusion strategy is undertaken in order to channel EU Structural Funds into the country.

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Employment policy Transformation and pre- accession period The Czech Republic started the process of making cognitive usage of the EU in the field of employment policy in the early 1990s. Policy learning and transfer of knowledge in this new policy field became possible through two main channels. The first was represented by Czech emigrants returning to the country, and other knowledgeable people who possessed international experience, who occupied key positions in public administration. The other channel was direct expert assistance provided through the Twinning programme (to the Ministry of Labour and Social Affairs) and the Phare programme that financed small innovative initiatives in the field of employment policies. In this way the Czech unemployment benefit system, public employment services and employment policies were influenced by German and UK examples; however, they were adapted to the Czech conditions. The first Czech Minister of Labour and Social Affairs, Milan Horálek (who lived in Germany prior to 1989), presented to the directors of employment offices at the beginning of 1990s his idea of building a ‘Trabant version of the Swedish model of employment policy’3 and recommended that they ‘capture but not copy’ foreign expertise. Although, at the beginning of the 1990s, the Czech unemployment benefit system corresponded well to EU standards (benefits at 65 per cent of the replacement rate were provided for a period of 12 months), it was continually restructured during the 1990s to make it more severe (50 per cent and 40 per cent of the replacement rate, provided for a total of six months). This tendency corresponded to the “liberal welfare regime” or embedded neo-liberalism (Vanhuysse, 2007), and also corresponded to the election programme of the centre-right government that was in power during 1993–98. Active labour market policies were little developed, the government instead preferring an anti-bankruptcy policy in order to avoid the risk of public protest during the early transition period. Thus, it did not consider specific measures in pursuit of an active labour market policy to be important. Thanks to the “soft” version of transformation, the registered unemployment rate rose to above 5 per cent only after 1996. But by 1999 it rose to 9.4 per cent after the economic slowdown, the subsequent privatization of banking sector and a wave of business bankruptcies. In 1998 the Social Democratic Party formed a minority government tolerated by the Civic Democrats. This government was much more EU- oriented. The government reacted promptly to the new European Employment Strategy of 1997: the Ministry of Labour and Social

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Affairs declared a National Action Plan on Employment (NAPE) similar to those of the other EU countries in 1998, under the supervision of strongly pro-European Vladimír Špidla, who was Minister of Labour and Social Affairs in 1998–2002 and Prime Minister after elections in 2002.4 Although adoption of the NAPE was something of a symbolic procedural act aimed at demonstrating growing compliance with the EU, the cognitive effect was also significant: policymakers gained a point of reference and benchmarks to contextualize problems in labour market performance, as well as the policies and measures designed to alleviate them. The adoption of NAPE was perceived as appropriate in the context of growing unemployment, and it coincided with increased policy effort in terms of active labour market policy expenditures and numbers of participants in ALMP measures. 5 Since 1989 we have seen evidence of increasing cognitive usage (policy learning) of Europe by several political actors (elected officials, opposition) and policymakers (thanks to the Twinning and Phare projects and direct experience gained through study visits and contacts with partners in other EU countries). At first Czech policymakers learned through “knowledge transfer” from the individual EU countries. Over time they became more selective in the knowledge and experience they chose to acquire: they were concerned with specific policy tools/instruments that would help to realize specific national objectives, while remaining more inspired by OECD recommendations concerning policy objectives. Later, with the advance of the Social Democratic Party, more systematic attention was paid to EU policies, and EU employment strategy was formally “downloaded” (Table 8.1). During the period 1999–2002 (pre-accession) we see a process of moderate convergence towards the EU Employment Strategy. We will now show how this trend continued to some extent during the accession process; however, it has become more “selective” and, since 2006, it has partly deviated from the general principles of the EU Employment Strategy. Accession 2003–4 In the election campaign of 2002, as in 1998, the Social Democrats utilized Europe as a strategic political resource, which helped them both to legitimize their election programme (in social and employment policies) and improve their image as a pro-European party that has nothing to do with the collectivist ideas of the past regime.

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Twinning programme, Phare reform initiator and catalyst. 1993 White Paper 1994 OECD Jobs Strategy 1997 EES No role!! Downloading EES reform initiator and catalyst.

Role of EU

Source: Author.

2002/3 Reform Reform of Public enforcement Finance agent. (in order to reduce budget deficit)

1999–2001 Pre-accession Adoption of National Action Plan on Employment

1993–98 Transformation Non-reform

1990–92 Transformation Policy learning

Sequence of reforms

(Centre-right government), policymakers, MLSA.

Goals/principles (negative on EES–monetary union). Financial instruments (cuts in employment programmes).

Government (Social Democrats, Christian Democrats), policymakers, MLSA.

Goals/principles. Government Instruments. (Social Procedures. Democrats), policymakers, trade unions, MLSA.

No reform.

Goals/principles. (Government), Instruments. policymakers, Procedures. MLSA.

Increasing: Cognitive. Strategic.

Usage of Europe

Decreasing: Strategic. Cognitive/ instrumental (selective). None. Strong: Cognitive. Strategic. Legitimating. Symbolic (expressing compliance). KSCM Strong: (Communists). Strategic (negative integration). Legitimating. Symbolic.

None.

None.

Dimension of Anti-reform policy structure Pro-reform actors involved actors /coalition coalition

Table 8.1 The role of Europe in policy reforms: employment during the pre-accession period

Political. Legislative (Stability and Growth Pact).

Cognitive (ideas). Political (objectives). Procedural (NAPE).

Cognitive (ideas on policies). Political (objectives). Financial. Cognitive.

Resources from Europe

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Thus, in 2003, the government was eager to meet the obligatory EMU economic criteria as given by the Copenhagen summit (1993) and the Stabilization and Growth Pact (1997), since otherwise it would be labelled by the opposition as harmful to the interests of Czech Republic (and would also be criticized by the European Commission). This implies a “blame-avoidance strategy” where the strategic usage of the Europe issue indirectly but negatively affected the implementation of EES. It was an imperative to diminish the public budget deficit, which was over 3 per cent. Public finance reform implemented by the coalition government led by Social Democrats in 2003 reduced social insurance payments for labour market policies from 3.6 per cent to 1.6 per cent of the payroll to shore up the deficit-plagued pension fund, and thus fixed the pattern of low priority given to employment policy. Because of these cuts, the implementation of the EES was effectively impossible for most of the guidelines due to the insufficient capacity of the public employment services and their budgets. The “world of dead letters”, with regard to the implementation of the EES, was the inevitable result. At the same time, the process of policy learning and imitation (diffusion), as well as the strategic usage of Europe in the Czech context, has intensified. In the Employment Act of 2004, as well as in policy practice, the Czech Republic has adopted some of the guidelines (measures) of European Employment Strategy, while neglecting some of the other measures which were not affordable in terms of cost. Thus, the key accent was put on “making-work-pay” measures aimed at improving economic incentives, and strengthening administrative pressures imposed on the unemployed to intensify their job search. Job creation and training measures continued to lag behind EU standards. Paradoxically, although the Social Democrats and the Minister of Labour and Social Affairs wanted to adopt the European Employment Strategy as a comprehensive set of policies, due to the priority of the economic agenda over the social agenda they lost command of the resources necessary for this. Consequently, the objectives and guidelines of the EU Employment Strategy were used in selective ways. The shift towards making-work-pay measures has continued, and this corresponds to the existing preferences of policymakers who have been strongly influenced by neo-liberal discourse since the 1990s. With respect to the low unemployment rate, they harboured reservations concerning the role of ALMPs in general, and instead preferred economic incentives to eliminate long-term unemployment. For example, in 2003 directors and heads of key divisions from all employment offices in the country considered the most influential measure, in terms of reducing

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unemployment, to be ‘an adequate setting of the level and conditions of social benefits’ (Sirovátka and Rákoczyová, 2009). The emphasis placed on the issue of work incentives has been supported by policymakers irrespective of changes in the political orientation of the government – this “selective strategic usage” of the EU Employment Guidelines was consistently in operation during 1993–2003. Post-accession period (2005–8) The reforms initiated during accession stage have continued in the direction of making-work-pay measures; however, they have become more selective than before, putting more emphasis on “punitive” sanctions than on positive incentives. At the same time, ideas of “flexicurity”, understood again in a selective manner (as flexibilization of labour contracts), have gained influence. This tendency has been underpinned by a low expenditure strategy with cuts in the employment policy budget, and due to a shift in the EES guidelines: although still it has remained a comprehensive strategy, more emphasis has been placed on the economic conditions for job creation and incentives to work (European Commission, 2005a) and flexibility (Commission of the European Communities, 2007). The Employment Act of 2004, the National Reform Programme 2005–08 and the National Action Plan on Social Inclusion 2006–08 entailed a strong preference for measures aimed at improving incentives to work, based on the assumption of individual failure on the part of the unemployed to genuinely search for a job. After several years of preparation, a new Employment Act came into effect in September 2004 (Act no. 435/2004), speeded by the necessity to harmonize legislation on the rights of EU citizens. Also measures such as “making work pay” were implemented, as well as a broader definition of a “suitable job” (including even temporary jobs), with harsh sanctions against the unemployed (complete loss of benefit entitlements for a period of six months). The law also established Individual Action Plans (IAPs) as a standard tool to activate the unemployed. Changes in social assistance benefits were adopted by Parliament in the first half of 2006, and came into effect in January 2007. A “minimum existence level” was set amounting to about two-thirds of the subsistence minimum for a single person, applied in cases where willingness to work or cooperation on improving income is assessed as deficient. Secondly, adult children and parents sharing accommodation are considered a household when testing means of subsistence – which excludes many young people from benefit entitlements. Thirdly, only

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70 per cent of income from work and 80 per cent of income from sickness and unemployment benefits is taken into account when testing means of subsistence – this increases the amount of social assistance benefits available to those who are working. The new Parliament elected in 2006, which produced a fragile majority for the centre-right coalition of Civic Democrats, Christian Democrats and Greens, adopted the Social Reform Package in August 2007. The automatic indexing of subsistence and existence minimums was cancelled, and is now at the discretion of the government alone. In-kind benefits or benefits directly paid to “substitute” recipients (like owners of rented housing) are possible in cases of misconduct (misuse of benefits, unpaid rents, etc.). Finally, in September 2008, the Parliament approved a bill, saying that after five months of unemployment the Employment Office is obliged to propose an Individual Action Plan for the unemployed individual. Rejection of the plan or failure to fulfil the obligations of this individual contract (or refusal to undergo vocational training) without “serious reasons” can lead to severe sanctions: removal from the register, and loss of social assistance benefits for six months. Thirdly, after six months, unemployment assistance recipients’ entitlements are downgraded to the “existence minimum” instead of the “living minimum”. Only if they participate in public works (between 20 and 30 hours per month) would they be entitled to the living minimum; if they work more than 30 hours they would receive a bonus of half of the difference between the existence minimum and the living minimum. We see that after accession to the EU even symbolic compliance with the EU Employment Strategy was only a secondary aim, with no important differences depending on the political composition of the government. The Czech government selectively followed only those EES guidelines that were currently compatible with its actual goals, which were to reduce public debt and improve incentives to work. The economic agenda was more important than the OMC, and only those guidelines which did not contradict (but instead legitimized) the preferences of domestic political actors were selectively used. Thanks to the ESF, the scope of active labour market policies has grown. However, the steps finance from the ESF have tended only to replace what was formerly covered by the national ALMP: They covered 50.3 per cent of all participants in the ALMP in 2007, 35 per cent in 2008 (the share of participants among the unemployed dropped to 24 per cent), while in 2009 the share of the ESF in total labour market policies grew to twothirds6 while the scope of ALMP did not increase much in spite of the crisis and the steep rise in unemployment (Table 8.2).

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Source: Author.

Goals/ Principles. Procedures.

Government None. (Social Democrats, Christian Democrats, Liberty Union) policymakers, MLSA. 2005–06 2005: revised Principles (some). Government None. Post-accession EES – Kok (Financial) (Social Implementation report instruments. Democrats, of ESF projects. Agenda-setter Procedures, Christian (national modes of Democrats, filter – selective). governance. Liberty Union) policymakers, MLSA, private agencies, NGOs. 2007–09 2007 EU adopts Goals/principles Government, Political Post-accession flexicurity (only some). policymakers, opposition Social reform – Agenda-setter Instruments. MLSA. (Social strong activation (national Procedures, Democrats, and flexibility filter – selective). modes of Communists, elements. governance. Trade Unions).

2003/04 Agenda-setter Accession (initiator and New Employment catalyst). Act Reform (new coordinator instruments). (formal only).

Role of EU

Dimension of Anti-reform policy structure Pro-reform actors involved actors /coalition /coalition Cognitive (ideas). Legislative (Directives). Procedural (NAPE). Financial (ESF).

Financial. Procedural.

Cognitive. Normative (some).

Moderate: Cognitive (selective). Legitimating. Symbolic. Instrumental (finance-ESF). Moderate: Cognitive. Legitimating. Instrumental (finance-ESF).

Modest: Cognitive (selective). Instrumental (finance-ESF). Strategic (selective).

Resources from Usage of Europe Europe

The role of Europe in policy reforms: employment in the accession and post-accession periods

Sequence of reforms

Table 8.2

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Summarizing the role of Europe in employment policies Since accession to the EU we have observed the strong influence and adoption of measures compatible with those EES guidelines which correspond to the already prevailing policy discourse over the lack of incentives and passivity on the part of the unemployed, and giving priority to the economic agenda. In this case we can observe a cognitive usage of the EES in the form of instrumental eclecticism. This “use of Europe” as an issue has been already observed and characterized as the selective amplifier described in the case of the Netherlands by Visser (2005). However, there is one difference: what is learned from “Europe” is focused on as an instrument for Czech policymakers in two respects: they aim to obtain the technical knowledge of possible measures which might enable them to achieve their own policy objectives, or they selectively take advantage of examples from some EU countries (often those that are less pro-European) as a tool to win permission to implement the specific measures they prefer. Secondly, they aim to gain access to ESF resources which temporarily enable an increase in the scope of active labour market policy. Nevertheless, this increase is soon halted, as these measures are not considered so necessary by policymakers. The usage of Europe as an instrument in domestic affairs is apparent, but in line with the objectives of the domestic actors. The inclination towards a narrow approach based on making-work-pay measures and the use of punitive sanctions is due to the coincidence of several factors: the traditional policy discourse since the early 1990s, the long-term preferences of the policymakers, the pressure of the EU economic agenda on cuts in social/employment policy expenditure (negative integration) accepted by the Social Democratic government during accession and the political shift towards the centre-right government in 2006. The strategy of social inclusion: agenda and implementation Transformation and pre- accession (1990–2002) In the Czech Republic, policy measures to protect vulnerable groups in society against the risks of transformation were adopted during the period of market transition in 1990s in the form of the social safety net (social assistance), guarantees of minimum pensions for retirees and minimum wages for the working population. Similarly, new “emergency” social services have been designed for the socially excluded (homeless, people dependent on drugs, and others) in the form of national, municipal, or NGOs initiatives. “Social acceptability” was, from the very outset of the reforms, the concern of political representatives (the protest avoidance strategy, Vanhuysse, 2006b). During the initial transformation

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period under the first federal government of Czechoslovakia (1989– 92), social policies of the EU have been presented as a reference point, and the creation of a social safety net (and the setting of adequate standards) was influenced and legitimized by EU standards as well as the Council (1992). Later, the central-right government (1993–98), led by Civic Democrats, distanced itself from the social standards of the EU in its political discourse and adopted openly ‘Thatcherist’ jargon disparaging the principles of solidarity and social justice. They also effectively blocked EU agendas and policies from the domestic policy discourse and public discussion, and directly criticized them as nonconforming to the market, bureaucratic and centralistic. On the other hand they were pragmatic in their actual policymaking, and continued to maintain levels of social assistance benefits. During this period, in spite of the reserved attitude of political representatives towards the EU, policy learning by policymakers and cognitive usage of the EU, although selective, still continued thanks to frequent contacts with EU experts and policymakers. Although Social Democrats acknowledged the “European social model” and the Government Declaration of 1998 as a point of reference in their election programme, and also were willing to show compliance with the EU social OMC (social inclusion agenda) in order to gain “political points” in internal politics and at the EU level, they nonetheless faced increasing unemployment and public budget deficits associated with the economic slowdown of 1997–99. Thus, they elected to adopt public finance reform in 2003, and slowed increases in the living minimum and family-related benefits. EU accession (2003–04) The initial experience with the social inclusion agenda in the Czech Republic seems to bear out the broadly shared assumption about an asymmetry between economic and social agendas (see above). The European Union’s requirements for convergence of economic criteria before joining the European single currency brought cuts in welfare state expenditures and deviation from the social inclusion course in social policy (Potůček, 2004). Awareness of limited opportunities prevented the Social Democratic government in 2002–06 from adopting strong measures towards meeting the social inclusion agenda. The government continued to rely on previous effective systems of social assistance and state social support, although it constantly delayed the indexing of social assistance benefits; thus the income-replacement rates of social assistance benefits dropped (OECD, 2008). For these reasons

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the first programme documents on social inclusion were adopted in order to display symbolic compliance. In 2003 the Czech Republic, like other new EU members, adopted the Joint Memorandum on Social Inclusion, later the first National Action Plan on Social Inclusion (NAP-INCL 2004–6). But, although the government led by Social Democrats was willing to exhibit strong compliance with this EU agenda, the political commitment to real policy change on the part of key actors at the national and regional/local levels was feeble. The first NAP-INCL 2004–6 represented a typical product of the administrative process due to requirements put on new member states. The policymakers responsible for drafting the document were aware of the limitations caused by the legitimacy gap, and therefore abandoned the use the EU agenda as a window of opportunity or a legitimization resource for setting up new objectives and measures (see interviews with the members of the national commission for preparation of NAP-INCL). Goals were deliberately formulated in general terms, while monitoring of goals was avoided. The NAP-INCL of the Czech Republic, unlike the plans in most other countries, contained no specific or indirect input targets or outcome targets (European Commission, 2005a: 37; Marlier et al., 2007: 211), nor was it specific on financial resources, or on responsibilities for accomplishing goals or meeting key measures. However, in the formal sense the Czech Republic has adopted the guidelines for formulation of NAP-INCL quite effectively. The main reason for the vagueness of goals and measures has been the combination of rather solid political compliance in adopting the formal rules of the social OMC, with a limited institutional capacity to make substantial advancements in this area, and a variable degree of political commitment to the contents of the social inclusion agenda at different levels of public administration (Sirovátka and Rákoczyová, 2009). Post- accession (2005–09) In the period after accession, a further reduction of the aspirations and content of the plan (NAP-INCL) was observed. There were almost no quantified targets set in NAP-INCL 2006–8 except the target of diminishing the “at-risk- of-poverty” rate in incomplete families with children, target of including at least 200 municipalities in the planning of social services on the local level, and creating 14 regional plans for development of social services. Not only are quantified targets scarce, but targets that might somehow challenge existing policy efforts by responding to the already-identified social problems in NAP-INCL 2004–6 (like policies tackling unemployment of the most vulnerable groups and their

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participation in active labour market policy programmes, etc.) were omitted. NAP-INCL 2006–8 assigned more importance to social services, while abandoning the multidimensional approach. The government and policymakers have focused instead on redesigning the system of social assistance and social services. The key planned change in social assistance was to improve incentives to work, and provide better costof-housing compensation for social assistance claimants. This effort was to some extent inspired by selective learning from the practice in other EU countries with respect to the instruments suitable to achieve national goals. For example, in NAP-INCL 2006–8 (adopted when Social Democrat-led government was in power) we repeatedly find the greatest emphasis on incentives and promotion of claimants’ individual skills, where the shift towards the individualization of the social inclusion agenda has dominated. Nevertheless, in the field of social services we have seen more EU influence: implementation of the notion of social inclusion (in the Act on Social Services no. 108/2006), development of community planning, broadening of the range and scope of available services, and implementation of quality and professional standards. These principles are in line with the recommendations of the OMC concerning social inclusion, thanks to the crucial role of policymakers at the Ministry of Labour and Social Affairs. In addition, the agenda of the OMC and social inclusion has to some degree indirectly influenced the policymaking process in the sense that the responsible national, regional and local bodies have adopted “European jargon” or “language codes” in order to gain access to EU Structural Funds. While their approach is rather instrumental, some innovative and viable new initiatives are emerging in this way. Moreover, the relevant national authorities became accustomed to regularly assessing and updating their specific strategies (and related conceptual materials) on social inclusion of vulnerable groups like the Roma, disabled or elderly people and foreigners. Specific advisory groups or committees have also been established to tackle these agendas. Thus, in the case of social services, we do observe a certain leverage effect (Erhel et al., 2005), since European and national programme documents based on the OMC are used as a strategic resource by several actors: by the Department of Social Services of the Ministry of Labour and Social Affairs in particular, but also by NGOs and local actors, in order to push through reforms in social services and the like. When the centre-right government came to power in 2006 in times of economic growth, decreasing unemployment and decreasing budget

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deficits, the political card of EMU criteria and SGP was used again, much as it was used by the Social Democrats in 2003, but in a different context. The Civic Democrats preferred to delay adoption of the Euro in order to create a “more favourable economic environment”, but what they wanted most was to cut public spending and taxation. The government promised to reduce the public budget deficit within a short-term horizon: the way to achieve this goal would be to implement systemic social reform. The social OMC was not mentioned in the Government Declaration of January 2007. Only the intention of making make use of EU funds was prioritized. In October 2008, a new National Strategic Report on Social Protection and Social Inclusion was issued in which the social inclusion issue seemed to have diminished. The formulation of objectives was rather vague for all of the priority objectives, none of which were ambitious. Quantified targets were completely lacking, in spite of strong emphasis by the European Commission on the setting of quantified targets (Guidance note 2008). Similarly, no specifications of the resources available or more concrete measures were formulated. The usage of Europe and resources from the EU in the area of social inclusion is elaborated in more detail in table 8.3. To summarize, in the field of social inclusion a modest convergent trend of the national agenda with the EU agenda was exhibited before accession in 2003/4, whereas since accession strong diverging tendencies have been apparent. Usages of Europe throughout the reforms In the Czech Republic, as in other post- communist countries, the domination of political actors in policymaking is strong, with a key role being played by ruling political elites, while the role of the social partners and civic society in general is weak (compare e.g. Howard, 2003). Consequently, political opposition in decision-making about social policy issues is practically absent, in spite of the fragile majorities of the government coalitions in Parliament. For this reason the processes of reform and non-reform are influenced mainly by changes of the government’s political orientation. We also observe that emphasis on usage of Europe changed several times over the period 1990–2009, depending on the stage of the transformation process. At the beginning of the 1990s, Europe represented an inspiration because of the aspirations of post- communist Czechoslovakia to join the market democracies as soon as possible. Before and during accession, the impact of the EU OMC was strongest at the symbolic level

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(and compliance with the EU appeared to be strong). Over the whole period, usage of Europe has been stronger when the more pro-European Social Democrats were in power (by coincidence during the accession period), and weaker during the periods dominated by the centre-right Civic Democrats, who have been consistently reserved towards the EU. Cognitive usage of the EU was the most frequent form of EU usage; however, this usage was always rather instrumental, selective and followed domestic preferences, which depended on the political “colour” of the government. The “negative” integration with use of the EU economic agenda is present throughout the period in the field of employment strategy, and in that of social inclusion as well, which has restricted the scope of the measures in the field of employment strategy and social inclusion. In 2003 cuts were made in public spending on active labour market policies in order to stabilize the public budget according to the EMU criteria (blame avoidance); cuts were also made in “social reform” spending by the centre-right government in 2007. However, we may conclude that the EU challenge in this policy field has put pressure on domestic actors and their policies. In particular, a continuous process of cognitive usage/policy learning of public administration has continued both at the national and local levels, and affected other actors, such as NGOs. The first Czechoslovak government led by the Civic Forum in 1990– 92 was clearly pro-European. The prime concern at that time was the transition to a market economy and the establishment of democratic institutions. For this reason the process of policy learning in all fields of public policy was initiated and deliberately promoted by government. The policies common in the EU served as a model for national reforms, facilitated by new political and policymaking elites knowledgeable regarding EU standards. Cognitive, legislative and normative resources from Europe have been effectively used for the legitimization of the new systems. After the breakup of the Czechoslovak federal state, a centre-right government was in power between 1993 and 1997. The strongest party, the Civic Democratic Party led by Václav Klaus, was, in contrast to their coalition partners the Christian Democrats and Civic Democratic Alliance, openly anti-European, and advocated a “pure market” economic policy. A deliberate anti-bankruptcy policy represented their main strategy, combined with an effective social safety net. With the CDP party dominating, an anti-European climate in policy discourse and policymaking prevailed during this period. The EU was held up at that time rather as an example of “bad practice”, labelled as too protectionist and, in some

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Procedures. Instruments (selectively).

No reform.

None.

Agenda-setter, Goals/principles. Government None. reform catalyst Instruments. (Social-Democrat (2000 Lisbon Strategy). Procedures. led). Reform coordinator (formal).

Government None. (central right, Civic Democrats led), policymakers, MLSA.

Goals/principles. Government Procedures. (Civic Forum), Instruments policymakers, (social safety net MLSA. established 1991).

Agenda-setter, reform catalyst. 1992 EC recommendation on social assistance.

1990–92 Transformation Policy learning (social assistance). 1992–97 Transformation Policy learning (income-tested benefits). 1998–2002 Pre-accession

Anti-reform Pro-reform actors actors/ /coalition coalition

Role of Europe

Dimension of policy structure involved

The role of Europe in policy reforms: anti-poverty and social inclusion measures

Period

Table 8.3

Resources from Europe

Moderate: Symbolic and strategic (election programme of Social Democrats).

Moderate: Cognitive (selective). (Income-tested benefits.)

Cognitive.

Cognitive.

Moderate: Cognitive Cognitive – (ideas). established Legislative social assistance. (Directives).

Usage of Europe

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Goals/principles. Government Political Moderate: Instruments. (Civic Democrats, opposition Cognitive Christian (Social (reorientation). Democrats, Democrats, Legitimating Green Party), Communists, (selective). policymakers, Trade Unions). MLSA.

No role. Formal coordination only. 2008 Renewed Lisbon agenda.

Source: Author.

Goals/principles. Government None. Instruments. (Social Democrats, Christian Democrats, Liberty Union), policymakers, MLSA, NGOs.

Agenda-setter, reform catalyst (national filter). Reform coordinator (formal).

Strong: Symbolic. Cognitive. Strategic. Legitimating (programme documents). Moderate: Strategic (some actors). Cognitive (reforms based on selective learning).

2005/06 Post-accession New Acts on social services, living and existence minimum, New NAPSI 2006. 2007–09 Post-accession Social reform and strong activation – new NRSPSI.

Goals/principles. Government (Social None. Instruments. Democrats), Procedures. policymakers, MLSA.

Agenda-setter, reform catalyst. Reform coordinator (formal).

2003/4 Accession Adoption of JMSI 2003, NAPSI 2004.

Cognitive. Strategic (negative integration). Financial (ESF).

Cognitive (ideas). Political/ (social OMC objectives). Procedural (NAP-INCL). Procedural (NAP-INCL). Legislative (SGP). Financial (ESF).

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respects, similar to the just-abandoned communist model. However, within the public administration, thanks to “exchange- of-knowledge” and programmes such as Twinning and Phare, the influence of Europe was still present. When the pro-European Social Democrats came to power in 1998, they declared a change in the country’s orientation towards the EU. They were committed to taking symbolic steps in order to show compliance with the EU. The EU social model was among the key principles of their election programme in 1998 and 2002, and they were favourably inclined towards the European Employment Strategy and the OMC social inclusion agenda (in their Government Declarations the fight against unemployment, poverty and social exclusion, as well as EU social standards, represented crucial issues). The government adopted a National Action Plan on Employment in 1998 and a National Action Plan on Social Inclusion in 2004 in line with the OMC. We may characterize these steps as strategic in the general context, but somewhat symbolic considering the real impacts of the NAPE and NAP-INLC: our analysis suggests that real policy changes were insignificant. We also suggest that after the preaccession and accession period, when compliance with the EU was quite convincing in the procedural sense, national preferences still prevailed in terms of real policy. And in the post-accession period national concerns clearly prevailed as well, while compliance with the EU weakened. Within a short period of time after accession (2005–6) national priorities clearly gained more weight, even in the national strategic documents submitted to the EU. Access to the resources of the European Social Fund became the key priority for the government. Consistently we observe a kind of reinterpretation of the EU agenda in line with the preferences of the political actors. While Social Democrats preferred to legitimate their politics via the EU social model, including comprehensive agendas on social inclusion and employment strategy, the right-wing Civic Democrats criticized it as ineffective and expensive and unsustainable, and redirected its employment and social inclusion policy selectively as a narrow strategy of punitive sanctions and making-work-pay measures. Over time the instrumental approach prevailed, which presented national policies as being in compliance with the EU, with use of the European “terminology”/language codes. On the other hand, some of the actors, like the Social Department of the Ministry of Labour and Social Affairs and some NGOs, have used European resources in a

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strategic manner and achieved some changes in legislation aimed at improving social services (leverage effect).

Conclusions In this final section we discuss our hypotheses of the Europeanization of national social policies, and the mechanisms through which the European policies influence national ones, in light of the findings presented in the previous sections. We also discuss how the Czech Republic fits into the “worlds of compliance”. We start with the hypothesis of the attitude towards Europe. We have seen that the attitudes towards Europe on the part of the political parties, which (along with a narrow group of professional policymakers) are the main policy actors, differ greatly. The differences are shaped not so much by the right–left divide, but rather by the emphasis by some political subjects on the issue of “national interests”. While the Social Democrats, Christian Democrats and some centre-right wing parties have been in favour of the full integration into the EU, the centre-right Civic Democratic Party and the Communist Party have been reserved and opposed several principles of the EU social OMC. These differences in attitudes to the EU play a role mainly at the level of programme materials and administrative procedures by the political actors (formal compliance). However, when looking at actual policy related to employment strategy and the social inclusion strategy promoted by the OMC, we see that general pro-/anti-European attitudes of some political players have played only a minor role. The government led by the Social Democrats in 2003, like the centre-right government led by the Civic Democratic Party in 2007, opted to curtail employment and social policies in order to comply with the economic criteria of the EMU (public finance reforms). Neither the Social Democratic government nor the government led by Civic Democrats advanced the agenda of employment strategy and social inclusion through comprehensive and multidimensional measures. After accession, the Social Democratic government refocused on cutting welfare benefits and increasing pressure on benefit recipients (activation). The general attitude towards Europe seems to be more relevant in the context of political and election campaigns than in actual social policymaking, which is instead influenced by national goals and backed by the preferences of the public. The EU membership hypothesis (joining–the- club effect) seems to be more relevant. We have observed that, during the pre-accession period, compliance with EU social policy increased. The adoption of a National

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Action Plan for Employment in 1998 and subsequent years, as well as strong references to the EU social model in the Government Declaration of 2002 and the comprehensive approach towards the social inclusion agenda in the programme documents from 2003 and 2004, show a temporary increase in compliance with the EU. However, the abovementioned declarative and formal steps have not been translated into policies effectively implemented. This situation corresponds to the label “world of dead letters” (Falkner and Treib, 2008). Finally, the misfit hypothesis is highly relevant. Analysis of policy implementation in the field of employment and social inclusion has shown that no concrete objectives or measures have been accepted that would contradict the preferences of the key political actors, either on the left (Social Democrats) or the right (Civic Democrats). Secondly, the key actors (governments and policymakers) were highly selective in their approach to the EU employment guidelines and social inclusion agenda, opting for policies fitting their already- existing preferences and previously planned policy changes. The OMC had had only weak influence on employment and social inclusion policies in 2004–08. The selective preference for “making-work-pay” and “activation” measures corresponds well with the prevailing policy discourse on unemployment and poverty as “individual failures”. On the other hand, some of the European employment strategy guidelines like “making work pay” or “activation” gave them more legitimacy among policymakers, and inspired them to invent and implement a broad spectrum of such measures in terms of increased conditionality of unemployment and social assistance benefits, cuts in benefits, workfare instruments or disregards on low earnings (instrumental eclecticism). When considering the mechanisms that mediate the impact of the European social policies, we suggest that politics matters a lot. The usage of Europe as an issue in the Czech Republic seems to be a highly politicized matter. Politicians can afford to make it so since civic society is weak; and bottom-up pressure on partisan politics is feeble. Besides, in some periods EU agendas were not properly communicated to the public or relevant actors, as they were not considered desirable by politicians and policymakers (due to the misfit with their preferences). Thus, the OMC has not been very influential. However, an indirect influence by Europe may be identified: ESF funds helped to augment the resources available for labour market and social inclusion policies. At the same time, the framework of governance is being modified through projects financed under the ESF that involve third parties like NGOs and local authorities. Lastly, the

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changing discourse on the OMC and social inclusion has spurred the policy learning process among professionals in the field at the national, regional and local levels. Some departments of the Ministry of Labour and Social Affairs that have their hands on the technical process of “social planning” (and also other actors like NGOs) have learned to use the “social OMC” as a resource to help them to push their objectives through (strategic usage, leverage effect). Some progress has been achieved in the field of social services, and this policy area becomes central to social inclusion agenda. Based on our findings, one additional hypothesis may be raised: budgetary considerations matter. This hypothesis suggests that political representatives are highly interested in adopting the formal procedures and rules required to gain access to EU Structural Funds. Success in doing so becomes important in two respects. First, it enables them to meet expectations in various policy areas, while saving national budgetary resources. Secondly, this brings political gains since the public appreciates the ability of the politicians to bring in direct profits for the country as a result of EU membership. This all implies a rather instrumental approach towards the EU by Czech political representatives. We see, for example, that although ESF projects have increased the scope of active labour market policies, in the latter phase they have tended rather to displace national policies than to broaden them. Our findings also confirm the assumption discussed earlier that Europeanization has a negative impact on social policies stemming from strong pressures to meet the economic criteria for adopting the Euro and for cutting budget deficits. Finally, with respect to the typology of the “worlds of compliance”, we must correct the conclusions of Falkner and Treib (2008). They place the Czech Republic in the “world of dead letters”, while emphasizing the high level of compliance in adopting some of the obligatory legal instruments (Directives), which, however, are not adequately implemented in practice due to ineffective public administration and lack of pressure from civic society. They also suggest that the main barrier is not the lack of the political will, but rather the economic pressures of the transition. Our analysis of the implementation of the OMC agenda does not suggest that a real political commitment to these agendas exists. Political compliance with the EU seems to be merely declarative, instrumental and selective, even in the case of pro-European actors; it does not affect real policymaking. There are two reasons behind this: the EU economic agenda has gained more influence; and domestic policymakers and

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politicians have chosen to selectively adopt some of the measures of the EES compatible with their preferences. In fact “national interests” and/or considerations of political gain represent the strongest motives behind all the steps adopted in these policy fields. This finding tells us that, in the post-accession stage, we can label the Czech case as a mixture of “word of neglect” and “world of domestic politics”. Formal and instrumental compliance with the EU appears to be motivated by gaining access to different EU resources (budgetary, political, normative), which are used to promote “national” or partisan interests (instrumental and strategic usage of Europe).

Notes Financial assistance, under Grant MSM 143200002, provided by the Czech Ministry of Education is gratefully acknowledged. 1. Eurostat database, http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init= 1&language=en&pcode=tps00098&plugin=1 No reliable data are available on social expenditure before 1989. We should note that the comparison with the situation after 1989 is irrelevant, since before 1989 some parts of social security system did not exist (like unemployment policies or social assistance), while the state subsidized directly prices of many consumer goods (typically necessities) and also prices of some services like public transport: thus, the need for expenditure on social benefits was significantly diminished. Nevertheless, Inglot (2008: 130–1) compares expenditure on social security benefits, which include pensions, sickness, maternity, family, parental: during 1980s these represented about 15 per cent of GDP, while in 1995 they dropped to 10 per cent and in 2002 increased to 11.5 per cent due to increasing expenditure on pensions while expenditure on other benefits has, in fact, dropped again. 2. Countries of the “world of law observance” transpose EU Directives in a timely and correct, well-considered manner. Its court systems are equipped with sufficient resources to fulfil their tasks. Countries of the “world of domestic politics” transpose EU Directives in a timely and correct manner if no domestic concerns predominate – but if there is a manifest conflict between EU requirements and domestic interest politics, non- compliance is the likely outcome. In countries of the “world of transposition neglect”, compliance with the EU law is not a goal in itself, and transposition obligations are often not recognized at all. The typical response to the EU obligation to implement is inactivity. 3. The Trabant was small, cheap, very simple and poor- quality car produced in Eastern Germany before 1989. 4. From November 2005 to November 2009 he served as EU Commissioner for Labour, Social Affairs and Equal Opportunities. 5. The Czech Republic slightly increased its active labour market policy expenditures, but still did not reach the standards common in the EU countries – such expenditures came to about 0.12 per cent of GDP, which is five to even

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seven times less than in countries with comparable unemployment rates (see OECD, 2007). 6. Own computations based on MLSA data from web portal.

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228 Tomáš Sirovátka Member States (European Commission: Luxembourg). Document drawn up on the basis of SEC (2004) 256 final. Falkner, G., and O. Treib (2008), ‘Three Worlds of Compliance or Four? The EU15 Compared to New Member States’, Journal of Common Market Studies, vol. 46 (2), pp. 293–313. Falkner, G., O. Treib, M. Hartlapp and S. Leiber (eds) (2005), Complying with Europe: EU Harmonization and Soft Law in the Member States (Cambridge: Cambridge University Press). Ferge, Z. (1997), ‘The Changed Welfare Paradigm: The Individualization of the Social’, Social Policy and Administration, vol. 31 (1), pp. 20–44. Ferrera, M., M. Matsanis and S. Sacchi (2002). ‘Open coordination against poverty: the new EU’social inclusion process’. Journal of European Social Policy, vol. 12 (3), pp. 227–39. Howard, M. M. (2003), The Weakness of Civil Society in Post- Communist Europe (Cambridge: Cambridge University Press). Inglot, T. (2008), Welfare States in East Central Europe, 1919–2004 (New York: Cambridge University Press). Graziano, P., S. Jacquot and B. Palier (2011), ‘Introduction: The Usages of Europe in National Employment-friendly Welfare State Reforms’, in P. Graziano, S. Jacquot and B. Palier (eds), The EU and the Domestic Politics of Welfare State Reforms: Europa, Europae (Basingstoke and New York: Palgrave Macmillan), pp. 1–18. Jepsen, M., and A. Serrano Pascual (2005), ‘The European Social Model: An Exercise in Deconstruction’, Journal of European Social Policy, vol. 15 (3), pp. 231–45. Lendvai, N. (2004), ‘The Weakest Link? EU Accession and Enlargement: Dialoguing EU and Post- communist Social Policy’, Journal of European Social Policy, vol. 14 (3), pp. 319–33. Marlier, E., A. Atkinson, B. Cantillon and B. Nolan (2007), The EU and Social Inclusion: Facing the Challenges (Bristol: Policy Press). MPSV (Ministry of Labour and Social Affairs) (2004), Analýza Vývoje Zaměstnanosti a Nezaměstnanosti v Roce 2003 (Analysis of the Dynamics of Employment and Unemployment in 2003) (Praha: MPSV ČR), available at http://portal.mpsv.cz/ sz/politikazamest/trh_prace MPSV (2006), Národní zpráva o sociální ochraně a sociálním začleňování 2006–2008 (Praha: Ministerstvo práce a sociálních věcí ČR). MPSV (2008a), Analýza vývoje zaměstnanosti a nezaměstnanosti v roce 2007 (Analysis of the Dynamics of Employment and Unemployment in 2007) (Praha: MPSV ČR), available at http://portal.mpsv.cz/sz/politikazamest/trh_prace MPSV (2008b), National Report on Strategies for Social Protection and Social Inclusion for 2006–2010: Czech Republic, available at http://ec.europa.eu/employment_social/ spsi/strategy_reports_en.htm OECD (2007), Employment Outlook (Paris: OECD). OECD (2008), Benefits and Wages: Tax-Benefit Model, available from www.oecd. org/els/social/workincentives Offe, C. (1996), Modernity and the State: East, West (Cambridge: Polity Press). Programové prohlášení vlády Mirka Topolánka, (2007), Govermental Declaration by Government of Mirek Topolánek, available at http//:www.vlada.cz. In Czech. Potůček, M. (2004), ‘Accession and Social Policy: The Case of the Czech Republic’, Journal of European Social Policy, vol. 14 (3), pp. 253–66.

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Radaelli, C. M. (2003), The Open Method of Coordination: A New Governance Architecture for the European Union? (Stockholm: SIEPS), available at http://www. sieps.su.se Scharpf, F.W. (2002), ‘The European Social Model: Coping with the Challenges of Diversity’, Journal of Common Market Studies, vol. 40 (4), pp. 645–70. Schmidt, A. V. (2008), ‘Discursive Institutionalism: The Explanatory Power of Ideas and Discourse’, Annual Review of Political Science, no. 11 (June), pp. 303–26. Sirovátka, T. et al. (2003), ‘Problémy Trhu Práce a Politiky Zaměstnanosti’ (‘The Problems of Labour Market and Employment Policy, Czech Republic’), Výzkumná zpráva (research report), Masarykova University, Brno. Sirovátka, T., and M. Rákoczyová (2009), ‘The Impact of the EU Social Inclusion Strategy: The Czech Case’, in A. Cerami, P. Vanhuysse (eds), Post- communist Welfare Pathways (Basingstoke: Palgrave Macmillan), pp. 199–214. Trubek, D. M., and L. G. Trubek (2005), ‘The Open Method of Coordination and the Debate over “Hard” and “Soft” Law’, in J. Zeitlin and P. Pochet (eds), with L.Magnusson, The Open Method of Coordination in Action: The European Employment and Social Inclusion Strategies (Pieterlen: Peter Lang), pp. 83–106. Vanhuysse, P. (2006a), Divide and Pacify (Budapest: Central European University Press). Vanhuysse, P. (2006b), ‘Czech Exceptionalism? A Comparative Political EconomyInterpretation of Post- Communist Policy Pathways’, Czech Sociological Review, vol. 42 (6), pp. 1115–36. Vanhuysse, P. (2007), ‘Workers without Power: Agency, Legacies, and Labour Decline in East European Varieties of Capitalism’, Czech Sociological Review, vol. 43 (3), pp. 495–522. Visser, J. (2005), ‘The OMC as Selective Amplified for National Strategies of Reform: What the Netherlands Want to Learn from Europe’, in J. Zeitlin and P. Pochet (eds), with L.Magnusson, The Open Method of Coordination in Action: The European Employment and Social Inclusion Strategies (Pieterlen: Peter Lang), pp. 173–216. Zeitlin, J., and D. Trubek (eds) (2005), Governing Work and Welfare in a New Economy (Oxford: Oxford University Press).

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9 Sweden: The Reluctant Rule Follower Åsa Casula Vifell

Introduction The aim of this chapter is to enhance the understanding of how Sweden, a member state with a strong and well- developed model for policymaking within the domain of labour market and employment policy, dealt with the reform of the European Employment Strategy (EES). The chapter presents a reform at the European level, in which Sweden took part. But it also tells the story of how that process affected the national structures for policymaking as well as the policy content when national actors’ started making use of Europe. It is consequently a study of national policy change, although not presented as a coherent reform. The chapter takes as its point of departure the three hypotheses elaborated to explain variations in national usages of Europe: 1) The time of entry into the union, 2) the general relationship towards the membership and towards European integration and 3) the fit/misfit of the national welfare regime. In the case of the EES, Sweden is a recent joiner as the reform process was initiated just a few years after accession. The general hesitant relationship towards increased integration may be well in line with the soft mode of governance used here. Finally, the fit of the national welfare regime and the EES seems high. All in all, this would predict a high level of active usage in Sweden. But we will return to these questions later on. Following the introduction (Graziano, Jacquot and Palier, introduction to this volume), the chapter consists of three parts. The first presents a theoretical framework for understanding complex decision-making processes through which national and European reforms become entangled. This section starts out with a general description of the Swedish relationship to the EU and the national welfare regime. The second part presents the empirical study of the reform process of writing new employment 230

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guidelines at EU level and Sweden’s attempts to convey its ideas to other member states.1 The third part analyses the empirical case, as well as discussing in greater depth the long-term effects on organizational identity and the dynamics of national policy change incurred by different usages of Europe in a national context. The usages discussed here are divided into cognitive, strategic and legitimating usages. Although the two later categories tend to be entangled, as legitimizing action could at times be considered a strategy, but in this case it is referred to as usage based on discursive references at the presentation level. Hence, talk is not considered an action in a strict sense. The reasons for separating these when trying to discern the EU effects on national reforms is, above all, linked to the fact that we are particularly interested in how and if actors make use of Europe in presenting reforms. Is the EU visible in the member states and how? Are citizens made aware of where new policies originate from? If the European level always plays the role of the scapegoat for inconvenient but necessary reforms, it is hard to see that we could anticipate stronger support for a widened EU mandate for reconciliation policies. Finally, the concluding section returns to the hypothesis for how and why we may expect a particular usage of Europe and discusses how the Swedish case plays out in the defined dimensions.

1. Sweden and the EU: hesitant membership? Following the decision of a popular referendum, Sweden became a full member of the EU in 1995 after years of hesitation. The popular referendum was passed by a rather scant margin and, in 2003, the popular vote became a “no” to the third phase of the EMU. Already, from the outset, it was clear that Sweden was one of the more sceptical member states when it came to considering European integration. The social democratic government’s seeming unwillingness to increase EU regulation in various policy areas, such as labour law, social welfare and defence, can be seen as indicative of its adherence to the popular mandate. Some of the spelled-out reasons for popular Euro-scepticism prior to membership, besides the issue of neutrality in foreign and defence policy, were the perceived threats to the Swedish welfare model and the advanced Swedish environmental regulation, in terms of a downward pressure on levels of social and environmental protection. In the public debate, as well as at the political level, the general characterization was that Sweden could contribute to EU cooperation in many ways in these areas, but that there was little to be gained for Sweden. Uploading rather than downloading was hence the prevailing image of the Swedish relationship to the EU.

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The hesitant approach is mirrored in a mainly reactive approach to EU politics where there have been few proactive initiatives at EU level on behalf of Sweden (Johansson, 1999; Tallberg et al., 2010; Casula Vifell, 2009b). Furthermore, few formal changes have been made in the political system as a direct consequence of the membership; i.e. few specific policymaking bodies or new organizations have been created. Studies also show that EU issues have contributed to an increased fragmentation of the administration since only parts of ministries and agencies have become embedded in EU-related work – a type of work that also tends not to become politicized (Jacobsson et al., 2004; Jacobsson and Sundström 2006). Also the Swedish courts have been hesitant to make use of Europe in their work, contributing to the analysis of Sweden as a hesitant member state. The possibility to make a reference for a preliminary ruling from the European Court of Justice, henceforth the ECJ, is a means for national courts to become active in the interpretation and development of community law but this has rarely been acted upon in Sweden (Tallberg et al., 2010; Bernitz, 2010). Such a strategic usage would have enhanced the visibility of community law at national level but also made Sweden more proactive as a member state. The four-party centre-right government appointed in autumn 2006 and re- elected in 2010, although more positive towards the EU in general, seems to have embarked on a similar political path. At the outset it indicated the desirability of a slimmer EU, touching on fewer policy areas, although they could envision deeper integration within other areas. Still, some formal changes indicating increased attention to EU affairs have been introduced. The appointment of an EU Minister and the move of the EU coordination office to the Prime Minister’s Office from the Foreign Ministry are two symbolically important changes undertaken in recent years. In parallel, we also see increased popular support towards EU membership, where Swedish citizens are no longer among the most critical ones in Europe. In 2006, 49 per cent replied that they believed membership to be an essentially “good thing”, compared to only 27 per cent in 1997 (European Commission, 2006; Holmberg, 2007). The rare public debates on the EU – for instance, in connection to referenda – have, according to the same study, also generated positive results in terms of greater interest and clearer opinions among the public. The Green Party also recently abandoned their political goal to have Sweden apply to leave the EU. However, several parties still have a divided electorate, which makes it difficult for them to engage in debate on EU affairs and the election campaign in 2010 did not feature any EU-related matters.

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Although generally reactive and reluctant, there are exceptions where Sweden has taken on a more proactive role at community level: the establishment and development of the Open Method of Coordination, henceforth the OMC (a soft law measure for coordinating member state policy), is one such example. At the initiation of this particular EU mode of governance, Sweden was one of the most committed member states in developing and promoting the model (Jacobsson, 2005; Ekengren et al., 2001). Former Swedish Minister of Finance, Allan Larsson – at the time director of DG Employment and Social Affairs – played an important role in shaping the policy tools (Ekengren et al., 2001: 37; Goetschy, 1999). The Swedish government declared that the OMC was a suitable model for conducting employment policy at EU level, as it preserved formal decision-making competences at national level. This view was also shared by the administration and national social partners. When the OMC was put in place, the Swedish government, furthermore, argued that Sweden had little need for adjustment since existing national policy was already in line with the common guidelines.2 This view is also held by the current government. This could be seen as an argument in line with ideas on fit/misfit in relation to pressures of Europeanization. It should, however, be pointed out that the fit/misfit relation to the EU is not an absolute condition, as the EU itself is a changing entity; hence whether or not a member state policy or structure is in line with pressures stemming from the EU level is not a static condition. Neither is it always equivalent across different dimensions. As argued by Lòpez- Santana (2009) the distinction between soft law governance and hard law governance should lead us to look more carefully into ideational fit/misfit, and not only focus on more tangible policy and institutional dimensions. Hence, preferences and beliefs of the involved actors should also be included, as their usages of Europe are important for understanding the choice of national reform. Furthermore, these beliefs may concern procedural issues as well as policies, as pressure to conform to procedural arrangements is an important factor in terms of the increased embeddedness of states into international settings.

2. Sweden and the European Employment Strategy: proactivity and reluctance In looking at how the EES and the usage that national actors make of the EU transform Swedish modes of governance and policy choices, one has to relate the transformation to the starting point of that reform

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trajectory (Cf. Heidenreich and Zeitlin, 2009). The Swedish welfare model is often portrayed as universalistic (Esping-Andersen, 1990; Rothstein, 1998), and is also often the focus for international interest and, to some extent, admiration. Besides universalism another characteristic that is often attributed to Swedish welfare is generosity – i.e. the high replacement rates of its benefits (Lindbom, 2008). The formalized inclusion of social partners into the policy process as well as in central government agencies is also an important aspect of the Swedish model often characterized as a corporatist system. This is something which served as inspiration to the EES and the European social dialogue. Furthermore, employment policy has traditionally been linked to economic policy, not only to welfare policies, which has led Sweden to pursue the same quest at European level, thus strongly supporting ideas of integration between policy areas as pronounced in the Lisbon Strategy in general and the EES in particular.3 This is a view that Sweden also shared with European trade unions (Foden and Magnusson, 2002). At the policy level a focus on active labour market policy, preventive measures and the prioritization of low unemployment rates until the early 1990s are also central. From the mid-1970s to the early 90s Swedish unemployment rates were also lower than most comparable countries (OECD, 2003). But when Sweden, later than most other western industrialized countries, turned towards low inflation politics, the unemployment rates quickly increased from 1.7 per cent to 8.2 per cent in only three years (Lindvall, 2006). 2.1 Recent reforms: still a perfect model? As for developments over time, a number of indicators point towards a trend from a universal model towards a more market- conforming “liberal” welfare model. Also, the changes in the centralized bargaining system and the breakdown of the corporatist arrangements indicate a clear institutional shift. It should, however, be noted that these corporatist arrangements still served as model for the EES, and even after their disappearance from the Swedish system formed part of the Swedish polices uploaded at EU level, and diffused through various twinning projects within the EU realm. Still, welfare institutions tend to be sticky and several authors point to the fact that most features describing the model remain valid for describing the Swedish welfare state (Bergquist and Lindbom, 2003; Korpi and Palme, 2003; Lindbom, 2001). Nevertheless, publically financed, generous welfare schemes have been subjected to pressure for change and the previous political opposition, headed by Moderaterna, continuously

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urged for tax cuts. However, in the wake of the disastrous election result in 2002, the party re- evaluated its position on the issue since it was clear that the voters did not prioritize of such changes. The current government has initiated cutbacks in replacement rates of unemployment benefits, but so did the Social Democrats in the mid-1990s, making it more difficult for them now to criticize these measures as a dismantling of the welfare state (Lindbom, 2008). A large health insurance reform, which primarily aims at limiting the number of days of long-term sick leave and employee is entitled to, is also at present underway. The intent is to move those leaving the health insurance scheme into employment. The reform was highly contested at its outset by the trade union representing social security and unemployment benefits administrators, and some of the initial results showed that there was a need for adjustment as the application of the new rules to certain illnesses became the object of media coverage, showing unjust treatment of citizens. Several cases still wait for their judgment in higher instances, as the responsible authority has demanded clarification of the application of rules concerning for instance pregnant women. It is, however, too early to make a clear assessment of the impact on the overall welfare regime. In relation to the pressure from the EU level to conform to mainstream European welfare agendas, the collective agreements have been a major source of political contestation and have challenged an important part of the Swedish welfare regime. The question of whether or not collective agreements are to be seen as a valid means for the transposition of Directives and the Laval case on foreign labour in the construction sector (ECJ 2007) are two key issues. Still, the results of the ECJ ruling on Laval and its interpretation remain disputed and it is difficult to draw any conclusions on the future impact of these developments for the time being. To conclude, it is not possible to speak of change of welfare model or that the perceived threat towards it is about to come true. It should also be noted is that certain aspects of the national welfare policy, such as gender regulation and social rights (for example, the right to health care in other countries), have strengthened the rights of citizens and improved social protection (Tallberg et al., 2010). Hence, the EU has not only provided difficulties to battle but also improvements to embrace. In a way, it is possible to argue that the Swedish model has been challenged in the sense that ideas coming from outside of Sweden could improve it – it was, thus, by no means a perfect model. But let us turn towards the more specific case of the reform of the EES which may serve as an example of the latter challenge.

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2.2 Reforming the European Employment Strategy At the beginning of the 2000s, the EES involved the formulation of common guidelines, which were translated into national action plans (NAPs).4 The European Commission monitors the plans, as do other member states, and, in light of this, country-specific recommendations are issued. In 2002, an evaluation of the EES was undertaken and, at the same time, the employment guidelines were synchronized with the Broad Economic Policy Guidelines (BEPG). It was also decided that new employment guidelines would be developed after the revision (European Commission, 2002a, 2003). This reform process was primarily handled by the EU Commission’s Directorate for Employment and Social Affairs and the Directorate for Economic and Financial Affairs (DG Ecfin). Two important points in time were the Commission’s first communication on new guidelines in January 2003, as well as its contribution to the Spring Council (European Commission, 2002a, 2003). The final decision was made at the Council meeting for Employment, Social Affairs, Healthcare and Consumer Affairs in June 2003. Prior to this, the Commission proposal was to be discussed in the four advisory committees – EFC, EMCO, EPC and SPC. These committees, as the only ones preceding the Council meeting, were considered by all interviewees to be very central in the process. Although formally under the Council, these committees arguably hold a position in between the Council and the Commission, as the Commission hosts the secretariat and is also a full member of each committee (Jacobsson and Vifell, 2005, 2007). Some issues, such as countryspecific recommendations, go through COREPER and/or a council working group, but this is for the most part a mere formality and there are seldom discussions of the proposals. The European Parliament, as well as the European social partners, was also to be consulted in the guideline process. The Parliament’s rapporteur on the issue – a Swedish MEP (Member of European Parliament) from the Left Party – also had close informal contacts with DG Employment and Social Affairs. As for the EU social partners, they were satisfied with the final Commission proposal and felt that their views had been taken into consideration by DG Employment (author’s interviews, ETUC [2003] and UNICE [2003]). These types of contacts were seen as important for the Commission to be able to incorporate other actors’ views, as well as to present a broadly supported proposal (Cf. Borràs, 2007). Concerning the content of the guidelines, DG Ecfin was, above all, opposed to setting quantitative targets at the EU level, since it was

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believed that targets for employment policy might constrain economic policy and thus reduce the options for economic policy coordination (author’s interviews, Commission DG Employment and Social Affairs, DG Ecfin and DG Enterprise, 2002). Several drafts of the Commission proposal were sent between the DGs, where the appendix of targets was alternatively removed and attached each time. DG Enterprise also argued in favour of maintaining the four-pillar structure of the EES, although this idea was later abandoned. This part of the process was, at times, invisible to the member states, therefore limiting its influence, partly due to the fact it was mainly conducted informally. 2.3 Drawing on domestic experiences and expertise: the Swedish uploading strategy During the process of writing new guidelines, Sweden was very active and the question of the EES was a priority issue at Ministry level. In light of the general relation to the EU and the particular fear of Europeanization of the Swedish model, the question of continuing the uploading of Swedish policy ideas was pertinent. Sweden was believed, by the central state actors, to be “ahead” of the rest of the member states and, therefore, able to contribute with helpful advice for others. The central actors in Sweden were the Ministry of Industry, Employment and Communication and the Ministry of Finance.5 These Ministries were jointly responsible for the NAP and the EES. Swedish representatives recognized the importance of early action in the guideline process to gain influence. They were, thus, active participants in preparatory forums such as EMCO (where the chair for one of the sub-groups was held by a Swedish civil servant from the Ministry of Industry, Employment and Communication) and EPC. Also a position at the secretariat for EMCO was secured for another employee from the same national Ministry, and this was seen as an important aspect of the Swedish uploading activities. As put by one representative: ‘Normally we are not able to have someone who is on the lookout upfront so this really made a difference in this case’ (author’s interview, Ministry of Industry, Employment and Communication, 2004). This also involved trying to gain early support from other member states prior to EMCO meetings. The delegation from the Ministry of Industry, Employment and Communication sent out briefs called “non-papers” prior to meetings. Non-papers were contributions to the discussions that were not to be regarded as official submissions by the Swedish government. These documents were circulated to members of the committee, but also to Commission officials and MEPs.

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The non-papers discussed the Swedish view on the new guidelines. It emphasized, among other things, the need to reduce the number of guidelines and make them less complicated, to clarify their structure and to increase the focus on general targets rather than on specific policy measures. All in all, the Swedish view was believed to correspond fairly well with the Commission’s initial proposal and the ideas brought forward by DG Employment and Social Affairs (author’s interviews, Ministries of Finance and of Industry, Employment and Communication, 2002). Other member states also produced these kinds of non-papers, but none were thought to be so widely spread and ambitiously presented as the Swedish one (author’s interviews, DG Employment and Social Affairs, other member state representatives in EMCO, 2002). The motivation for this was to convince others early on, before their own views were too strongly set, and to serve as a point of departure for discussions (author’s interview, Ministry of Industry, Employment and Communication, 2002). This was done with the hope of convincing other actors to focus their discussions on Swedish priorities. This could be described an attempt to reshape the EU agenda in accordance with that of the Swedish government. In that way, one would avoid competing rules and retain legitimacy of the administration, as it would not need to adjust to any EU-level demands. In addition to boosting other member states’ support of the Swedish view, seeking support from Commission officials in order to increase the Swedish administration’s room for manoeuvre was also seen as important. Since officials at DG Employment and Social Affairs draft proposals and documents to be presented to EMCO, this was seen as an important channel for influencing the content of such documents. Informal contacts and networking were the primary tools. However, networking also served other purposes than just gaining support for national positions. Those involved in the process described good communication with other parties in the process as necessary to gain information about what was happening (Casula Vifell, 2009b). As the process was, to a large extent, informal and somewhat unpredictable; this information was needed to know when and where it was beneficial to act. During the process, Sweden tried to speak from its own national experiences, and thereby gain credibility through its significant experience in active labour market policy and high degree of social partner involvement. These types of arguments were believed to be valid and to create an advantage for Sweden as one of the sources of inspiration for the EES itself (author’s interviews, Ministries of Finance and of Industry, Employment and Communication, 2002, 2004).

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However, this positioning created a rather intriguing situation in relation to the exchange of best practice and learning that supposedly occurs between member states. Although Sweden participated in these exchanges, in the domestic debate it was claimed that no adjustment was needed. It was instead a question of aspiring to serve as a role model for others rather than to be inspired by others. This position was not seen as legitimate at the EU level as it raised the question of the Swedish government’s commitment to the core ideas of the EES. Other actors, such as the non-socialist opposition in Parliament and both employers and employee organizations, expressed discontent with the government’s position on several occasions. One could speak of a clear ideational misfit as, here, Sweden did not share the ideas and beliefs that mutual learning was an important aspect of the EES. Furthermore, the Swedish administration felt the need to be well coordinated in order to “speak with one voice” in different committees and at different levels of the process. Consistency was seen as important to give the impression of being a well-prepared and serious partner in the negotiations. However, it was also believed that other member states sometimes used an opposing strategy. If an argument was not well received in one forum, another member state representative would state the opposite in another, blaming the first statement on dysfunctional coordination. Several members of the Swedish delegation believed this behaviour came with the risk of being seen as a strategic and self-interested member state (author’s interviews, Ministry of Industry, Employment and Communication, 2002). It was also perceived as making the process more difficult and uncertain for others due to risk of not knowing if and when representatives have coordinated positions with the political leadership and/or all Ministries back home. National coordination to present a common front at the EU level was concentrated within Ministries and the small core group working on the EES composed of representatives of the Ministry of Industry, Employment and Communication and the Ministry of Finance. In practice, this meant informal contacts and networking outside the formally established organizational structures, partly due to the short time frames and the informal networking at EU level. It should be noted that national coordination was seen as largely unproblematic, without the tension traditionally perceived between the Ministry of Finance and the so- called spending Ministries, this time represented by the Ministry of Industry, Employment and Communication. The inter-ministerial coordination also seems to have improved due to the EES (Jacobsson and Vifell, 2007). It was believed that there were

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fewer differences between national actors than those found between Sweden and other member states – and also fewer than the internal differences in many other member states (author’s interviews, Ministries of Finance and of Industry, Employment and Communication [2002] and SACO [2002]). This, however, was not the case in relation to other national actors, including the central and local social partners and the Labour Market Board, as these actors did not have any real possibilities to influence national coordination. Although regular meetings were held at the Ministry of Industry, Employment and Communication with representatives from both central and local social partners, only previously agreed-upon positions about the guidelines and the EES in general were discussed (Jacobsson and Vifell, 2007). These meetings, thus, served as a channel for one-way communication from the government, rather than actual coordination of views and debates on policy. The demands from EU level to include social partners and local actors were, thus, accorded only lip service; they were not believed to be an important demand at national level for legitimacy reasons. 2.4 The importance of being seen as a rule follower In order to be perceived as a committed and legitimate actor at EU level, it was regarded as important to show compliance with agreed-upon EU rules. This concerned both policy and procedure. In fact, in the current case, it was perhaps even more important to show conformity in other ways than policy implementation, since the soft nature of the rules makes pressure mechanisms weaker. This was achieved by showing support for the Commission’s view on how to handle the EES nationally, but also through appropriate behaviour during the negotiations. Sweden could be seen as a newcomer, since full membership was achieved in 1995 and the studied process took part not many years after. On the other hand, the OMC itself is a new model of governance and decision-making for all member states. Another important variable pertains to whether or not a member state has a strong compliance culture – something that may be of particular importance when it comes to soft modes of governance. Sweden has, in many cases, been shown to be a strong rule follower and, within the EU, it has one of the lowest scores in terms of bad compliance or non- conformity with agreed regulations. Several instances are illustrative of the Swedish quest to maintain its image as a rule follower. First, the Commission increasingly emphasized the need to involve a broader set of national stakeholders, including parliaments, in order to ensure the legitimacy and the implementation

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of EES in member states (European Commission, 2001, 2002b). In the case of the guidelines, Sweden showed compliance with these requests by allowing the social partners to comment on the Swedish position and the Commission’s proposal on the guidelines. However, as previously mentioned, these discussions were undertaken at such a late stage in the process that the relevant documents were already determined and not subject to change. The social partners were also critical. In fact, the local employees’ organization did not even bother to attend all such meetings as they were seen as a waste of time and resources (author’s interviews, SALAR, 2003). The government’s argument for the delayed involvement of other actors was that employment policy was still a purely national concern and nothing that was altered by the EES. Sweden also met the requirements regarding parliamentary involvement, as the Swedish Parliament was consulted. However, in practice, the Parliament was not part of the guideline process, and only played a minor role in the regular NAP process (Jacobsson and Vifell, 2007). Most MPs also had vague perceptions concerning the EES and the OMC and discussions concerning the guidelines were not in- depth, especially as MPs saw it as an extremely technical and bureaucratic issue. Hence, it was difficult to see how and why domestic actors, who already participated in the national process, could or should contribute at the EU level. The EU-level guidelines were described as nothing more than the established Swedish view, thereby denying that the EES was the source of any domestic change. However, the political opposition, as well as social partners, did not believe the government took the EES seriously enough. For instance, the non-socialist opposition used the recommendation on lowering taxes on labour in their case for tax cuts. Some also expressed the view that national policy could be improved by following EU rules more wholeheartedly, and that the current attitude risked Swedish credibility in the future (author’s interviews, SACO, TCO and Swedish Enterprise, 2002). The guidelines and the recommendations are other examples of conforming to the established rules that the Swedish government believed necessary to be seen as a legitimate actor. Mandates and assignments given to the Labour Market Board were, thus, in line with the EU guidelines and/or recommendations. One example was the individual action plans for unemployed. However, the connection between national policy and EU policy was never made explicit, giving no indication as to the origin of assignments and provisions given to agencies. This strategy of showing conformity at EU level while domestically denying the influence of Europe is analysed more in detail below.

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3. Speaking with forked tongues 3.1 Swedish usages of Europe: using and denying The empirical study suggests that the Swedish administration had to reconcile the conflicting demands of close participation and apparent adherence to EU norms with the need to keep the EU at arm’s length. On the one hand, the EU environment requires the Swedish administration to act and behave in a specific way in order to influence the EES process. On the other hand, national opinion on employment policy was not believed to allow any EU influence on the content or on established practices. As mentioned, the national debate had shown apprehension in light of Europeanization of the Swedish model. At the same time a developing European coordination requires some type of national adaptation if the legitimacy as a devoted EU member state was to be upheld. It thus seemed as if national and EU-level demands were incompatible. Analytically, the way this has been dealt with could be described as “decoupling”. The strategy of decoupling refers to the disparities that often exist between talk and action or between decisions and their implementation, and is a means for organizations to live up to irreconcilable demands (Meyer and Rowan, 1991). Decoupling can occur by allowing separate parts of the organization to handle different issues and/ or by separating the presentation of activities from their implementation, perhaps over time (Brunsson, 1998). However, as recent theoretical developments have shown, one should not overestimate the effectiveness of such a strategy. Things can slip through the built-in barriers due to socialization of actors (Checkel, 2006; Sahlin and Wedlin, 2007). In the context of the EU and Swedish public administration, this could mean that Swedish organizations start thinking of themselves first and foremost as Europeans and the particular usages of Europe that are prevailing could shift accordingly. The first illustration of decoupling was the separation of activities between and also within ministerial and agency levels. At the two relevant Ministries, only a few civil servants within a single unit dealt with EES issues, thus partly insulating the rest of the administration from any influence. In this way, separate parts of the organization can be displayed to different parts of the environment and respond according to opposing norms of appropriate behaviour, thus retaining organizational legitimacy (Oliver, 1991; Pfeffer and Salancik, 1978; Scott and Meyer, 1994). Secondly, there is a decoupling of presentation and activities. Sweden actively follows the rules of the EES in drafting NAPs, receiving

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recommendations and networking at the EU level. This portrays Sweden as a legitimate, European player with the ability and right to participate in negotiations for the new guidelines. Yet, there is no mention of the EES and the EU when employment policy measures are undertaken domestically, as the government decouples the completion of tasks from their presentation at the national level, a usage of Europe which could be characterized as denial. For instance, when the Labour Market Board was tasked with looking into how to improve integration of immigrants into the labour market following the EU recommendation, there was no reference to the EES. Instead, the idea was presented as a Swedish initiative. One explanation for this is that it is not perceived as legitimate to implement employment policy measures that stem from the EU. One result of this decoupling linked to the close national coordination is the ability to exclude certain actors from the process. Local actors, as well as the social partners and the Labour Market Board, were clearly left out. In the regular NAP process, the Labour Market Board also only played a marginal role and criticized this (Jacobsson and Vifell, 2005). This was possible since the government claimed employment policy was only of national concern. In this way, it became pointless for these actors to take part in what was purely a “presentation for Brussels”, since the “real” Swedish employment policy was created through the normal national channels, where these actors play central roles. 3.2 Sub-national and non-state actors making use of Europe Despite the seeming accomplishment of decoupling, there are signs that certain usages of Europe prevented the strategy from being entirely successful. Although local actors were excluded from influencing the guideline process, they were encouraged and supported by the Commission to write Local Action Plans (LAP). Besides the financial resources that became available, this connected them to the EU level and facilitated their participation in conferences and meetings with other local and regional actors from around Europe, where we can speak of a cognitive usage of Europe. For instance, some municipalities became involved with the organization Eurocities, which works to strengthen the local dimension in the EU. The exchange of experiences with other local actors around Europe, perceived as a valuable resource for handling concrete problems, means that ideas could be transferred directly from other cities or municipalities without involving higher levels of the organization. And if lower levels of the national administration pick up and make use of EU-level ideas, a change may occur within the organization as a whole. New self-perception prescribes new ways to

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behave and opens up the possibility of making new resources available. However, the availability of these resources is dependent upon a change in the self-perception of the involved actors. Since the state level had excluded local actors from the EU process, the recognition of learning potential had to occur for sub-national actors to become aware of the availability of such resources. This corresponds well with the idea that norm entrepreneurs bring ideas into an organization as an alternative explanation to differential empowerment caused by external factors that in turn redistribute domestic resources (Börzel and Risse, 2000; Sahlin and Wedlin, 2007). The Commission was one source for ideas on sharing experiences with other organizations in the same situation through its attempts to mobilize local actors to strengthen the impact of the EES (Jacobsson and Vifell, 2007). Thus, local actors in Sweden have increasingly come to define themselves as actors belonging to the European project and made clear use of the available budgetary resources. An increased interest in LAPs from Ministry level can also be noted over time. Another example of actors making use of Europe can be found in the anti-poverty NGO that also was repeatedly refused participation in the NAP process, but finally managed to get access to the NAP process on social inclusion within the Department of Social Affairs. Although the NGO representatives recognized that the NAP process served mainly as a presentation for Brussels, they also viewed the contacts established through the process as an important access point to Ministry level. Social partners, in Sweden just as in many other member states, have been opposed to the inclusion of a wider set of stakeholders into the area of employment policy, but this was a way for previously excluded actors to make strategic use of legal resources in order to make contact with and network with government officials, as the EES clearly stipulates such inclusion. 3.3 Enclaves of Europeanized actors The decoupling of actions at the European level and presentation at the national level also seems to be challenged by the socialization of national civil servants participating at the EU level – thus also creating pressure for change from above. These actors start making use of Europe in terms of picking up policy ideas and incorporating the common knowledge base and categorizations created at EU level (Jacobsson, 2004). This would, hence, be referred to as a cognitive usage. But, since the national pressure for not letting the EU have an influence on Sweden is perceived stronger at the central political level, this usage is

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more problematic than the one we saw at the sub-national level. The fact that the usage is actually denied and instead masked as national ideas and policies arguably makes Sweden speak with forked tongues (Vifell, 2009a). One way to describe the development is that a specific logic of action is created within the tight networks of employment policymakers active in the EU arena. These networks were created around the EU committees, where central actors from the respective member states and the Commission come together to discuss and develop employment policy. The cooperation and close contacts facilitated informal interaction as well as exchanges of ideas and best practices. In turn, this created a common understanding of problems and challenges. In this way, new ideas may be picked up, developed and transferred within the EU networks and lead to national-level changes. It also seems increasingly legitimate to receive criticism and suggestions on national policy choices through this intense interaction; the actors have been socialized (see also Jacobsson and Vifell, 2005). And although Sweden at the outset did not see any interest in learning from the other member states, there seems to have been a change in this self-perception. The networking between central actors in the national policy processes has led to exchanges of ideas. In 2002, a senior Ministry representative stated there was ‘no role for the local actors in the EES’ since it was an issue dealt with by the government. Two years later, a quote from the same official talking about the inclusion of stakeholders confirms an attitude shift: ‘You could call it a “children’s disease”. We looked at it differently and, from the point of view we had back then, they were not important’ (author’s interviews, Ministry for Industry Employment and Communication, 2002, 2004). And participating in benchmarking and NAP production, where national ideas are presented in light of common challenges, has in some respects disproved the notion that the EES has little or no relevance to Sweden. In short, the Swedish positions are, to a great extent, created through interaction with other member state representatives and Commission officials. The small and closely coordinated group or enclave working on the EES furthermore has limited contacts with other parts of the Swedish administration, partly due to the time-consuming activities of networking at the EU level. They were, hence, fully embedded in the EU process and at the same time disembedded or disconnected from influence from other national actors. This also includes working far from national politicians, both within the government and the parliament. The group is, thus, rather part of a European network, and spends a lot of time in

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an environment where different working procedures and ideals prevail. Since this organization is purely ad hoc and informal, the formal procedures of the Swedish administration are, in a sense, bypassed and the group could be seen as an enclave disconnected from the organization to which it formally belongs (Vifell, 2009b). Tools such as written instructions and government approval documents, which are seen as the major instruments for governing the public administration, are not applied and regarded as too inflexible for the guideline process. The demands and responses described by the administration have very little to do with relating to the formal requirements of political governance at the national level. In addition, elected officials at the Ministries, as well as the national parliament, were, as was noted, not involved in the complex EU-level decision-making. Furthermore, even though an adjustment might only pay the situation lip service, other processes enforce the changes taking place. The theories on institutionalization demonstrate that when organizations present themselves in a certain way, they will be judged and treated according to this norm. In this case, Sweden presented itself as a member state believing in the collective benefits of the EES and was treated as such by other member states and the Commission, who continuously evaluate Sweden’s performance. An organization that acts as if it shares ideals and goals with others may initiate a process of identity transformation. Combined with the development of shared frames of reference with other member states within the EU network (Jacobsson and Vifell, 2005), this has arguably led to an identity transformation among those officials working with the EES. The accepted forms of behaviour have changed through a process that forces national actors to work informally, to closely coordinate their activities, to follow EU rules and to adjust national priorities to the EU agenda. Practical activities may also change the rationale behind the actions from mere lip service to an actual belief in the benefits of the changed behaviour. We could, for instance, observe how beliefs regarding the role of local actors changed. Generally, there was a clear difference in the way these actors talked about the benefits of EES three or four years later. Comments such as ‘you can’t always think that we have already found the best solution’ (author’s interview, Ministry of Industry, Employment and Communication, 2004) represent a common view presented during the second round of interviews; such was unheard of in the first. Cognitive usages of Europe, where the EES has become an arena for policy development and for appropriating new policy ideas to be implemented at the national level, are indicative of this change.

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However, there was still a strong desire to claim that EES did not affect national policies which can be characterized as a case of denial. Still we find clear correspondence with Swedish policy changes and the EES, such as assignments given to the National Labour Market Board coinciding with the new guidelines and increased focus on integration issues and the employability concept. In other cases the EES just tended to reinforce policies already in place (see also Lòpez- Santana, 2009). Furthermore, the interviewees point to the use of national models in other member states from which they learned and became inspired in their national work. Finally, another important conclusion is that the management of conflicting demands and the denial of the usage of Europe have led to a situation where altered practices have not been met by corresponding changes in formal structures. Due to Euro-sceptic public opinion, it was not believed to be a viable option to give credit to the EU when initiating new initiatives in national employment policy.

Conclusions: towards more coherence? Returning then to our initial hypothesis, what can the Swedish case tell us about whether and how the EU contributed to change national reform trajectories in welfare policies? The first hypothesis concerning the membership predicted that a new member state would be more inclined to consider pressures from the EU level, and also make reference to the EU in the national reform processes. Sweden is today no longer one of the newer member states, but, during the time of the initiation of the EES, its accession was still relatively recent. And although the EES in itself also was partly a case of uploading of a Swedish policy model, there was surprisingly no mention in national policy debate or in the implementation of new initiatives stemming from the EES, that there was any European link. When considering the second qualifying hypothesis, the story, however, becomes clearer. The second hypothesis predicts that specific usages of Europe in national reform processes will depend on overall relationship to the EU. This relationship is here defined as opinions and attitudes, both within the political elite and among the public. In the Swedish case we find clear support that the relationship to the EU is of great importance when it comes to the presentation of (if not the actual) usages of Europe. Negative national opinion did make it difficult for the political level to embrace and admit any pressures for change and reform, and,

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hence, such activities were masked as national initiatives. The general internal division among several political parties and, in particular, the Social Democrats also created a situation where the national debate on EU issues was not active. Finally, the third hypothesis on the fit/misfit of the care and welfare regimes becomes particularly interesting in the Swedish case as Sweden has a high degree of fit in relation to the EES at the policy level (see also Lòpez-Santana, 2009). Still, Sweden makes only selective use of Europe and legitimating use is never seen from central policymakers. Turning to the ideational dimension, preferences and beliefs also display a low degree of misfit, especially in terms of the governance forms. The policy linkages between issue areas are standard procedure in Sweden, as well as social partner consultation. Still, there is a large degree of misfit on a more general level as Swedish central policymakers do not, at least at the outset of the studied process, believe that the EU should at all interfere with Swedish employment policymaking. In support of this conclusion, arguments for hesitation vis à vis increased European cooperation were rarely attributed to a policy mismatch, even though such has been identified in tax policies, gender exclusion and labour market policies for immigrants (Lòpez- Santana, 2009). Instead, the main reason was ascribed as the importance of showing that formal decision-making remains at national level. It is thus clear that the general relationship to the EU impacts here, as well as shaping the beliefs and preferences of the central policymakers. Also, the EU is not portrayed as an arena for learning or policy development as it is conceived at the EU level; rather Sweden is seen as someone able to teach others how to create successful policies without being affected itself in the process. But what the particular case study in this chapter has, above all, taught us is that this is not a viable description of the processes taking place within the EU-policymaking arenas. It, therefore, seems that the hypothesis on the general relationship to Europe holds great explanatory power. It is not the policies or processes for policymaking per se that pose a problem for making use of Europe. It is the mere fact that they originate from the EU. This also means that political resources such as blame avoidance are unavailable. What is more, the soft feature of the rules makes the strategy of decoupling easier to deploy. The structure of the OMC, with its focus on quantification of indicators, systematic comparisons, statistical analyses and so forth facilitates the decoupling, as the EES gives the impression of being bureaucratic and, hence, not political. However, these practices become highly regulative and also shape the cognitive frames of policymakers

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in choosing future reform trajectories (Cf. Miller and Rose, 1990). The fact that the EU is only seldom used by policymakers in public debate – while various EU processes shape the way policy is being made as well as provide new ideas and cognitive usages – then becomes highly problematic from a democratic point of view, as politicians are largely absent from the processes. In parallel to the Europeanization of central policymakers within this area, Swedish public opinion has, as mentioned at the outset, shifted towards a less negative position. Some of the highlighted reasons for the change are related to initial fears regarding membership and the way the public believes that these have played out (Holmberg, 2007; Lindahl, 2006). First, people do not believe that environmental policies in Sweden are impacted on in a negative sense. Secondly, the fear concerning the Swedish neutrality seems to have ceased to be a concern of public opinion. However, employment policies remain an issue, with a widespread belief that the EU has impacted negatively on the Swedish situation. A more positive view of the EU in the public view could provide an opportunity to make more active use of Europe in national reform efforts, but this partly hinges on why opinion changes and, above all, on how people perceive the linkages between EU politics and the national level. Given the situation today, where talk and action are being decoupled, the public cannot be expected to have a good understanding of European employment policies and the conditions under which these are being made, or of their impact at national level. Hence, any new usages would need to be explained and actively promoted in order to be seen as legitimate. Also, the current government might feel less ownership of the EES as such and may have difficulty in engaging Sweden in a similarly active role at EU level in the future.

Notes An earlier version of the chapter with a different theoretical focus was published as Casula Vifell (2009a) ‘Speaking with Forked Tongues’. 1. The empirical material consists of a process study of Swedish participation in the reform of the European Employment Strategy (EES) in 2003. In addition to written material, such as government propositions, position papers and other statements regarding the Swedish standpoint, the study also draws on interviews with national civil servants involved in the process under investigation. A total of 53 in- depth interviews were carried out with 39 informants. The main actors were Swedish representatives from the national Ministries of Finance and Industry, Employment and Communication. In addition, representatives from central (SACO, TCO and Swedish Enterprise) and local

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2.

3.

4.

5.

(Swedish Association of Local and Regional Authorities [SALAR]) social partner organizations, Swedish NGOs (Nätverket mot Social Utestängning), the national parliament and local governments (Malmö stad) were included. Representatives from EU-level organizations, national administrations in other member states (notably Finland, Greece and the UK) and interest organizations, such as the European Trade Union Confederation (ETUC), Union of Industrial and Employers’ Confederation of Europe (UNICE) were also included. Participant observations were carried out on four occasions: during a local conference on the LAP results (13 February 2003), during an internal lunch meeting at TCO (5 June 2003), during a national seminar held by the government to discuss the Swedish recommendations (6 April 2004) and, finally, during an EU conference on the results of the EES organized by the Observatoire Sociale: La Stratégie Européenne pour l’Emploi(SEE): Débats et Institutionnalisation (Brussels, 30–31 August 2004-). Altogether, this enabled triangulation and provided a general overview of the process, as the proceedings are poorly documented. Author’s interviews with representatives from the Ministries of Finance, and of Industry, Employment and Communication and a national MP from the Parliamentary Committee on Employment and Social Affairs 2002. This is, in evaluations of the EES, often described as having an important impact at national level (see, for instance, Büchs, 2007; Lòpez- Santana, 2009), but in Sweden this is arguably a traditional part of the welfare regime and rather a case of policy transfer to EU level. After a number of reforms, the EES is currently part of the renewed Lisbon Strategy for Growth and Jobs, which is based upon integrated policy guidelines agreed on by the member states. The results of national achievements in relation to these guidelines are then presented in National Reform Programmes, instead of in the previous NAPs. Attempts to evaluate the impact of the OMC and the EES are ripe (see, for example, Borràs and Conzelmann, 2007; Nedergaard, 2006; Schäfer, 2006; Trubek and Trubek, 2005; Zeitlin et al., 2005). Some of them also focus more specifically on the organization of national activities in relation to EU-level processes – a body of literature that contributes to fulfilling the aims of this chapter (Büchs, 2007; de la Porte and Pochet, 2002; Heidenreich and Zeitlin, 2009; Jacobsson, 2004, 2005; LópezSantana, 2006). The organizational separation between small ministries and large, to some extent independent executive agencies – the dualistic trait of the administration, means that the capacities for knowledge production, statistical data collection and expertise are mainly found at the agency level. The agency dealing with labour market and employment issues is called the National Labour Market Board (Arbetsmarknadsstyrelsen). Established in 1948, it has since been a central organization in the national development of employment policies and holds a particularly important position in national politics.

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López- Santana, M. (2006), ‘The Domestic Implications of European Soft Law: Framing and Transmitting Change in Employment Policy’, Journal of European Public Policy, vol. 13 (4), pp. 481–99. López- Santana, M. (2009), ‘Soft Europeanization? The Differential Influence of the European Employment Strategy in Belgium, Spain and Sweden’, in M. Heidenreich and J. Zeitlin (eds), Changing European Employment and Welfare Regimes: The Influence of the Open Method of Coordination on National Reforms (London: Routledge). March, J., and J. P. Olsen (1989), Rediscovering Institutions: The Organizational Basis of Politics (New York: Free Press). Meyer, J., and B. Rowan (1991), ‘Institutionalized Organizations: Formal Structure as Myth and Ceremony’, in W. J. Powell and P. J. DiMaggio (eds), The New Institutionalism in Organizational Analysis (Chicago: Chicago Press). Miller, P., and N. Rose (1990), ‘Governing Economic Life’, Economy and Society, vol. 19 (1), pp. 1–31. Nedergaard, P. (2006), ‘Learning in the European Union: The Case of the European Employment Strategy’, Policy Studies, vol. 27 (4), pp. 311–23. OECD (2003), Economic Overlook 74 (Paris: OECD). Oliver, C. (1991), Strategic Responses to Institutional Processes’, Academy of Management Review, vol. 16 (1), pp. 145–79. Olsen, J. P. (2002), ‘The Many Faces of Europeanization’, Journal of Common Market Studies, vol. 40 (5), pp. 921–52. Pedler, R. H., and G. F. Schaefer (eds) (1996), Shaping European Law and Policy: The Role of Committees and Comitology in the Political Process (Maastricht: European Institute for Public Administration). Pfeffer, J., and G. R. Salancik (1978), The External Control of Organizations (New York: Harper & Row). Rothstein, B. (1998), Just Institutions Matter: The Moral and Political Logic of the Universal Welfare State (Cambridge: Cambridge University Press). Sahlin, K., and A. Wedlin (2007), ‘Circulating Ideas: Imitation, Translation and Editing’, Sage Handbook of Organizational Institutionalism (Thousand Oaks: Sage). Schäfer, A. (2006), ‘A New Form of Governance? Comparing the Open Method of Co- ordination to Multilateral Surveillance by the IMF and the OECD’, Journal of European Public Policy, vol. 13 (1), pp. 18–36. Scott, R. W., and J. Meyer (eds) (1994), Institutional Environments and Organizations, Structural Complexity and Individualism (London: Sage). Tallberg, J., N. Aylott, C. F. Bergström, Å. Casula Vifell and J. Palme (2010), 15 år efter EU-inträdet, Demokratirådets rapport (Stockholm: SNS Förlag). Thedvall, R. (2006), Eurocrats at Work (Stockholm: Almqvist & Wiksell). Trubek, D., and L. Trubek (2005), ‘The Open Method of Coordination and The Debate Over ‘Hard’ and ‘Soft’ Law’, in J. Zeitlin, P. Pochet, L. Magnusson (eds), The Open Method of Co- ordination in Action: The European Employment and Social Inclusion Strategies (New York: PIE Peter Lang). Zeitlin, J., Pochet, P., Magnusson, L. (eds) (2005), The Open Method of Co- ordination in Action: the European Employment and Social Inclusion Strategies (New York: PIE Peter Lang).

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10 Europeanization and Welfare State Change in the UK: Another Case of ‘Fog over the Channel’? Jonathan Hopkin and Christa van Wijnbergen1

Introduction A well-known, but probably fictitious headline in a London newspaper once read ‘Fog over the Channel, Continent Isolated’. Whether or not such a headline was ever written, it reflects an Anglo- centric view of the world which can still be detected in contemporary British politics. A historically documented example is Margaret Thatcher’s claim that ‘during my lifetime most of the problems the world has faced have come, in one fashion or other, from mainland Europe, and the solutions from outside it’ (Thatcher, 2002: 320).2 In other words, Britain has nothing to learn from Europe. As well as underpinning British suspicion of European Union initiatives to further European integration, this view also acts as an obstacle to policy-borrowing from other European countries. The UK would appear to be unpromising terrain for EU efforts to promote policy coordination in welfare and labour market policy. This chapter charts the evolution of labour market and welfare policy in the UK since the mid-1990s, with the aim of gauging the impact and influence of European-level policy initiatives on the policymaking process, and the usages of Europe (Woll and Jacquot, 2010; Graziano, Jacquot and Palier, introduction to this volume) by political actors at the UK national level. We test out the hypotheses relevant to the UK case (that is, RH2, the impact of traditions of Euro-scepticism or – enthusiasm, and RH3, the impact of fit/misfit of national with European institutions). Our main focus is on the “welfare to work” agenda developed by the Labour government after 1997, a programme of changes to labour market regulation, social benefits and labour activation 254

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institutions which in many interesting ways parallels the agenda of the European Employment Strategy. This case is of particular importance to the understanding of how Europe impacts on welfare reforms for a number of reasons – first of all, because Britain has undergone quite sharp transformations in its welfare regime over the past three decades, beginning quite soon after the UK joined the European Community. This provides an opportunity to gauge what influences have shaped an important case of quite radical welfare reform. Secondly, Britain is notoriously an ‘awkward partner’ (George, 1998) in the EU, with a traditionally Euro-sceptic political class and electorate. Assessing how Europe is used in such a crucial case is therefore a key test of theories of Europeanization. Finally, British governments’ attitudes to Europe have varied quite markedly as parties alternated in power, providing us with a large degree of variance in one of the key variables of interest. This chapter analyses the political context and discursive presentation of UK policy changes in this area, in the form of a brief historical narrative of the reform process and its political backdrop, and then goes on to address specifically how the European employment-friendly welfare agenda has interacted with recent developments in the UK. What we find is that, paradoxically, the UK has been remarkably in line with European initiatives, yet has been one of the most reluctant to draw on Europe for templates of or inspiration for policy change. Indeed, if anything, Europe is seen as a counter-model against which UK policy has been framed. The contradictory result of these developments is that Britain has converged substantially with other European countries’ welfare arrangements while rejecting Europe as a source of ideas or “political cover” for welfare reform. The next section presents some background on the UK’s relationship with Europe, followed by an account of the process of welfare reform, and then by an assessment of the influences and usages of Europe, and other sources of policy ideas, in the UK case. The final section concludes.

The background to the British case: from “awkward partner” to the “heart of Europe”? The UK is a tough test for “Europeanization” hypotheses for a variety of reasons. First, and most obviously, it is one of the EU member states with the highest proportion of unfavourable reactions to Europe in opinion polls, a consistent result over time and across surveys (Evans and Butt, 2005). This contrasts markedly with more Euro- enthusiastic member states where popular opinion has tended for most of the history of the

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European project to have positive reactions to the concept of Europe and to European initiatives. Moreover, this generally reluctant attitude towards European integration is shared across the political spectrum, with the possible exception of the Liberal Democrats. The UK chose to remain on the sidelines during the initial discussions on European integration and joined the then European Community only in 1973 under a Conservative government, after a difficult period in which France opposed British membership (George, 1992). However, the Conservatives were never wholly the party of Europe; at the time they perhaps just seemed more so than Labour. Both parties, however, have vacillated on Britain’s place in Europe and at various times have been riven by internal splits on the issue. In the referendum held on continuing British membership of the EEC in 1975, the Labour Party split starkly between the leadership, in favour, and the membership and trade unions, mostly against. The Labour left, in particular, was hostile to Europe, and in the 1983 election manifesto managed to win a commitment from the party to withdraw from the Community. Labour’s crushing defeat in that election and the resulting moderation of party policy across a range of issues under Neil Kinnock, shifted Labour back to a pro-European position, where it has remained since. The Conservatives, in contrast, supported continued membership in 1975, but the mood changed in the 1980s. Margaret Thatcher was initially rather favourable to European initiatives, strongly backing the move to deregulatory market integration represented by the Single European Act of 1986, in which the Commission Vice-President Lord Cockfield, another British Conservative, had played an important role. However, the pro-integration activism of Jacques Delors alienated Thatcher, who by the late 1980s began to express increasingly strident criticism of Europe. Her famous Bruges speech in 1988 expressed her strong opposition to what she saw as attempts to ‘suppress nationhood and concentrate power at the centre of a European conglomerate’,3 and she also rejected moves to monetary cooperation through the Exchange Rate Mechanism. Importantly for our purposes here, Thatcher’s opposition to Europe was not only about nationalism and sovereignty, but also about policy and institutions, particularly in the labour market. In the same Bruges speech she railed against ‘new regulations which raise the cost of employment and make Europe’s labour market less flexible and less competitive with overseas suppliers’ and insisted that ‘we in Britain would fight attempts to introduce collectivism and corporatism at the European level’. The UK’s objection to further European integration was therefore

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related to the fact that the British labour market and welfare state is in many ways an outlier, at least in Western Europe. Esping-Andersen’s ‘Three Worlds’ typology (1990) – and, for that matter, Hall and Soskice’s LME/CME distinction (2001) – place the UK, with Ireland, in the liberal category of welfare regimes, along with the other most developed English-speaking nations, all of them outside Europe. Although it would be hard to argue a case for British welfare state exceptionalism in the European context, its similarity with other welfare states outside Europe provides a natural non-European policy community on which UK policymakers can draw, and creates particular difficulties in coordinating with other member states in this policy area. Moreover, Britain is quite exceptional among European countries for the limited coverage of coordinated wage bargaining and general political weakness of the trade union movement. Its legal emphasis on freedom of contract and consequent individual approach to industrial relations, and its tradition of voluntarism, gives primacy to the workplace as the main determinant of the employment relationship (Hyman, 2008). Furthermore, there is a clear institutional separation in Britain between industrial relations on the one hand, and other dimensions of social protection and citizenship on the other (Hyman, 2008: 5). Again, this constitutes a structural feature militating against the adoption of European models of EU-wide initiatives in such a politically sensitive area as welfare and labour market policy. But opposition to European integration among British Conservatives was not confined solely to welfare and labour market issues, where problems of institutional “goodness of fit” were particularly severe. Thatcherites were opposed to macroeconomic coordination (through monetary cooperation) too, as well as extensions of European cooperation to the two new pillars of Justice and Home Affairs and Foreign and Security Policy. For these reasons the Maastricht treaty was a flashpoint, and although John Major, Thatcher’s successor, adopted a more compromising position, he faced open revolt within the Conservative Party over the ratification of the treaty in 1992–3 (Best, 1994). Since then the Conservatives have developed an increasingly hostile platform to Europe, most recently through David Cameron’s decision to pull Conservative MEPs out of the European Popular Party group in the European Parliament. At the same time, as the Conservatives have become entrenched in more or less Euro-sceptic positions, the Labour Party, first under Neil Kinnock and then under Tony Blair, became more and more enthusiastic about Europe. Blair in particular made a commitment to return Britain to the “heart of Europe”, seeking close relations

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with other centre-left leaders in France, Germany and Italy and even tentatively considering British entry into the Euro. During Blair’s tenure as Prime Minister, the UK was not only engaged more constructively with Europe, but even on occasion took on a proactive role, particularly in the development of the structural reform agenda at the Lisbon summit in 2000 (Sapir, 2006). However, given a sceptical public, neither party can afford to wholeheartedly embrace the European project, and Blair certainly avoided pushing European issues if they threatened to derail his domestic agenda (Evans, 1999; Bache and Nugent 2007). In addition to the general toxicity of everything reeking of Brussels in the UK domestic debate, there are also other, less obvious reasons why the UK is less likely to provide examples of Europe being used as a facilitator of reforms in the area of welfare and labour markets. The UK is a majoritarian democracy. The “Westminster model”, conceptualized by Lijphart (1999), concentrates political power in the hands of the executive and, in particular, the prime minister, who almost always enjoys a comfortable parliamentary majority. Although policy agendas change and various social interests intervene in the policy process, government policy objectives often depend heavily on commitments made by parties during election campaigns and placed in their election manifestos. Much of the policy agenda of the Labour government elected in 1997 was developed while in opposition, and policy commitments present in the election manifesto were taken to be legitimized by popular approval. Such policies were therefore less subject to the kind of negotiation with social actors or coalition parties in which Europe could be evoked. This limited need for negotiation with domestic interest groups (let alone coalition partners) may also explain why, despite a generally sceptical public and elite attitude towards European integration, the UK nevertheless has a decent record on compliance with EU Directives. In their study of the transposition record of member states, Falkner et al. situate the UK in a world of domestic politics, where domestic concerns prevail in case of a conflict of interest with EU objectives and each EU Directive is evaluated individually on its likely effects (2007: 405). But whereas it is certainly true that disobedience in terms of European duties by domestic actors by and large go unpunished, the UK’s majoritarian system puts the onus fully on the government to realistically challenge EU legislation. The preference of the party in power and its electoral calculation inform whether domestic concerns dominate compliance debates, not interest group pressure or opposition hackling per se. In sum, Britain’s membership of the “Anglo” or “liberal” group of political economies, and its majoritarian political institutions, seem

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to offer little scope for Europeanization of welfare policy. However, Europe is, of course, not absent from political debate in the UK, and the “fog over the channel” metaphor does not entirely preclude policyborrowing or appeal to external constraints to justify politically difficult reforms. Europe intervenes in British policymaking, albeit not in predictable and obvious ways. Most paradoxically, Europe can be “used” in a wholly negative way by British politicians, emphasizing the limitations and faults of the European social model, a popular strategy for both Conservative and New Labour politicians over the past two decades in seeking to justify the UK’s deregulated economic model. However, this usage has been quite different under the Blair government, keen to engage in European policy debates, than under the recalcitrant Thatcher and Major administrations, and a reluctance to use Europe at all is a constant feature in the British case. The following account of labour market and welfare policy in Britain focuses particularly on the New Labour reform programme, and assesses the role of Europe and other external realities in the Blair and Brown governments’ policy development and discourse.

The British trajectory of reform and European policy initiatives The employment and welfare dilemma in the UK The election of a Labour government in 1997 – which coincided with the launch of the European Employment Strategy just a few months later – marked a major change in approach in the area of welfare and labour market policy. The Conservative governments of 1979–97 had overseen a major increase in long-term unemployment, which they addressed with a series of measures designed to “free” the labour market of rigidities: legislation restricting trade union rights, reduction of the reservation wage, abolition of the minimum wage and reduction of employment protections. Although the Conservative period saw two very high spikes in unemployment (around 1982 and around 1992), by the mid-1990s Britain’s employment performance looked relatively good in comparison to the major continental European economies. The OECD’s Job Study (1994) identified Britain, along with the USA, as models of labour market flexibility and pressed other European countries to follow its deregulatory path. However the British case also suggested a sharp trade- off between employment performance and social justice, as Britain experienced a very sharp rise in income inequality through the 1980s and the early 1990s. The Labour government led by Tony Blair

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therefore faced a different dilemma to many other European governments: unemployment was not a particularly acute problem by comparative standards, but poverty and inequality were much worse than in most of the rest of Western Europe. To some extent, the European Employment Strategy (EES) – which focused more on job creation than on redistribution – did not match Britain’s specific labour market concerns. The thinking behind the EES was strongly influenced by circumstances prevailing in large continental EU member states such as France and Germany, which faced stubbornly high levels of unemployment, and whose macroeconomic policy priorities were focused on the process of European Monetary Union. By 1997, unemployment in Britain was on a clearly downward trajectory, and the UK already had levels of employment close to the benchmarks established in the EES. Moreover, having opted out of Monetary Union, British policymakers did not have the pressing need to compensate for the fiscal squeeze imposed by the convergence criteria in the Eurozone states. However, the content of the EES was, broadly speaking, consistent with New Labour thinking and compatible with policymaking traditions in the UK. Tony Blair was, therefore, an enthusiastic backer of the EES, as the strategy fitted neatly with Labour’s commitment to the labour rights in the European social chapter, which the new UK government had now signed up to, dropping the opt- out negotiated by John Major’s Conservative government. The election of the Blair government in May 1997 presents us with a methodological hazard: a change in government in a majoritarian system of government implies a 100 per cent ministerial turnover, with a clear shift in power from (in this case) a dominant party of the right to a dominant party of the left. This event usually presages substantial policy change. Just a few months later (November 1997), the European Employment Strategy was formally launched at the Luxembourg European Council. Two competing explanations of policy developments in the UK – a change in government in the domestic sphere and an institutional innovation at the European level – coincide very closely in time. A more nuanced tracing of the processes leading to these events can help us develop a clearer understanding of the extent to which European initiatives influenced British policy developments, but a degree of ambiguity inevitably remains, since these processes are both influenced by broader changes in the ways in which academics and policymakers think about welfare systems. We will attempt to resolve this methodological dilemma by juxtaposing a chronological analysis of policy developments with an attempt to discover the intellectual and

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political origins of the policies and strategies adopted at the UK and EU levels. Welfare to work: employment-friendly welfare policy, British style The ideological and discursive underpinning of Labour’s approach was the “Third Way” doctrine developed by Anthony Giddens (1998), which emphasized the importance of globalization, and critiqued both the market fundamentalism of the right and the overemphasis on state interventionism of the traditional left. As Blair himself put it in a Fabian pamphlet in 1998, the Third Way located itself between an ‘old Left preoccupied by state control, high taxation, and producer interests and a New Right treating public investment, and often the very notions of society and collective endeavour, as evils to be undone’ (Blair, 1998). This centrist approach also provided a response to Labour’s electoral dilemma: in order to win a parliamentary majority, Labour needed to move beyond its natural support base among manual workers, public sector workers and welfare dependants and appeal also to the aspirational middle-income groups which had benefited from some Thatcherite reforms. Labour’s response to labour market problems was, therefore, a mix of social concern, on the one hand, and pro-market and business-friendly thinking on the other, and it was reluctant to openly redistribute income from the wealthy to the poor. In practice, therefore, Labour intended to resolve the problem of poverty by encouraging greater participation in the labour market, so that the poor could improve their situation through paid work rather than increased government transfers. As Brown himself clearly stated, ‘the best form of welfare is work’ (1999, cited in Sloam, 2007). This approach ticked a number of boxes for Labour’s ambitious political leadership: it covered political fronts on both the left and right, fitted in with the rhetorical and ideological shift the party was seeking to make, and, fortunately, also could inform policies which had a chance of working effectively. This focus on supply side measures fitted in with the emerging consensus around the possibilities for social democratic interventions in an increasingly globalized economy (Boix, 1998), a strategy adopted by the Clinton administration in the USA and which therefore achieved a high profile in intellectual and policy circles. This restrictive approach to progressive politics excluded the macroeconomy from consideration, since it was assumed that fiscal or monetary policies would provoke immediate and negative responses from financial markets (the Mitterrand presidency’s experience of the early 1980s constituting the key stylized fact in this argument). A supply side focus was also visible

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in the EES, with its emphasis on ‘employability, entrepreneurship, adaptability and equal opportunities’. With fiscal and monetary policy locked in by EMU, the EES also restricted its attention to supply side measures, so European-level initiatives did not enter fundamentally into conflict with the objectives and priorities of the Labour government in London. The rolling out of Labour policies in this area coincided to a significant degree with the European-level initiatives related to the EES. However, there is some evidence to suggest that Labour’s employmentfriendly welfare reforms were in the pipeline before the European level had the chance to influence UK policy. The main features of the EES were laid down at the Luxembourg jobs summit and adopted at the European Council of November 1997. By this time the Labour government in London was already in an advanced state of preparation for legislating on labour market issues. Labour’s push for a supply side solution to unemployment built on existing patterns of labour market and welfare state organization, which were at least superficially based upon the principle of active rather than passive support. Conservative reforms in the 1980s had pared back the insurance principle by de-indexing and cutting unemployment benefits, culminating in the elimination of passive unemployment compensation in the Jobseekers Act of 1995 (King, 1995). The 1995 reform formally made receipt of benefits conditional on “active” jobseeking, requiring recipients to provide proof of their efforts and placing restrictions on eligibility for benefits if job opportunities were turned down. Although this reform, in the absence of other measures, was not particularly close to the thinking behind the EES, it did constitute an institutional legacy which could easily be adapted to a more activation-based agenda. Further evidence that the main ideas in the EES had been picked up by Labour well before can be found in the Labour Party manifesto of 1997, which made a clear commitment to ‘get 250,000 young unemployed off benefit and into work’, and a more generic commitment to an ‘early Budget to get people off welfare and into work’. Very soon after, policy announcements were made that laid down the basic contours of Labour’s welfare and labour market policies over the successive period. The July 1997 Budget, presented by Gordon Brown, contained a number of commitments which had a good deal in common with the thinking behind the EES, but preceded European developments chronologically. The Budget speech4 stated that ‘in place of welfare there should be work’, and outlined four work and training options for 18-to 25-year- olds on Jobseekers’ Allowance, measures to support lone

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parents and the disabled seeking to work, a National Childcare Strategy, individual learning accounts (lifelong learning), and announced the imminent adoption of a minimum wage and tax credits to support lowpaid workers and incentivize employment. Although the subsequent legislation for these measures was spread out over the following years (in particular 1997–2002), the intellectual framework for policy was publicly announced at various points before and immediately after the 1997 elections, and in any case comfortably before the European Employment Strategy was finally decided. Labour’s welfare and labour market strategy certainly was consistent with the EES. The first move was in the area of active labour market policy: the “New Deal”, initially aimed at the young (18–25 years), and subsequently rolled out to other groups of the long-term unemployed or economically inactive. The New Deal provided supplementary guidance and training in job-search and interview skills, and a range of options for those failing to find work after this first stage: education, paid voluntary work or subsidized paid work. The option of remaining on benefits, without choosing any of these alternatives, was eliminated for the 18–25 age group. The New Deal for Young People (NDYP) programme announced in 1997 was implemented in April 1998 after the conclusion of pilot projects; it was followed by the New Deal 25 Plus (ND25+) in June 1998 for long-term unemployed people above that age, the New Deal for Lone Parents (NDLP) in April–October 1998 (pilots launched in July 1997), the New Deal 50 Plus (ND50+), launched in April 2000 (pilots in October 1999), and the New Deal for Disabled People (NDDP) in October 2001 (pilots launched in September 1998) (ECOTEC, 2005). These programmes were clearly in line with the 1998 Employment Guidelines under the EES, which exhorted member states to tackle youth and long-term unemployment, and adopt active rather than passive measures to meet the problem.5 Yet it is equally clear that the Labour projects were developed before, or at the least contemporaneously with, the development of the EES (see Table 10.1). The same can be said for other measures which complemented and consolidated the New Deal activation strategy. The national minimum wage was a well- established Labour commitment and its introduction was announced in Brown’s July 1997 Budget, although a commission was established to determine the level at which it would be set and the minimum wage was not implemented until April 1999. Again this is consistent with the EES’s insistence in the Employment Guidelines that poverty traps blocking the employment of those out of work should be removed, and again this was a longstanding Labour policy, which

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264 Jonathan Hopkin and Christa van Wijnbergen Table 10.1 Timeline for European employment strategy and labour market reforms in Britain Europe 1992–93 1993 1994 1995

Maastricht treaty Social Chapter Delors White Paper Essen summit, launch of EES UK Jobseekers’ Act (Conservative government) Publication of Labour Manifesto Labour government elected First Labour Budget announces broad “welfare to work” package of measures; first “New Deal” pilots launched

1997 January May July

October November

1998 April June 1998 July December

UK

Amsterdam treaty signed Luxembourg jobs summit (1998 Employment Guidelines) NDYP, NDLP launched ND25+ launched National Minimum Wage Act Vienna summit (1999 Employment Guidelines)

2000 April 2001 October

ND50+ launched NDDP launched

effectively dates back to the abolition of the wages councils by the Major government in 1993, opposed by the Labour Party at the time. The incentive effects of the minimum wage were particularly relevant to unemployed people without family responsibilities; however, a poverty trap would remain for the unemployed with children, since their higher level of benefits would be removed if they rejoined the labour market. The response to this was the adoption of tax credits, which subsidized the income of low-paid workers according to certain criteria to ensure a higher minimum income for families. These credits (Working Families’ Tax Credit and Child Tax Credit) enabled low-skilled workers to earn enough in the labour market to compensate for the loss of social benefits on achieving employment. Complementary to these measures were moves to provide more widely available and affordable childcare facilities – in which Britain lagged badly behind most of the EU in the

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mid-1990s – in order to encourage unemployed lone parents to take up paid employment. These measures contributed to the increased attractiveness of employment for workers at the low-wage end of the labour market and were therefore in line with EES guidance for 1998, which advocated ‘gradually reducing the overall tax burden and, where appropriate, a target for gradually reducing the fiscal pressure on labour and non-wage labour costs, in particular on relatively unskilled and low-paid labour’. The tax credits were again trialed in Labour policy announcements before the 1997 election and referred to in the July 1997 Budget, although design and implementation took rather longer than in the case of the New Deal: the Taylor report recommending these changes was published in 1998,6 and the Working Families’ Tax Credit (WFTC) launched in October 1999. The tax credits had the effect of significantly reducing the wage at which an unemployed person with dependent children would be better off in work than on welfare benefits; by 2001 with Working Families’ Tax Credit a family with one person in full-time employment would be guaranteed a minimum income of £214 a week (a 40-hour week at the minimum wage for 2001 would deliver only £154 per week). These measures were outlined in some detail in the 1998 Budget delivered by Gordon Brown as Chancellor of the Exchequer, under the rubric “Making Work Pay”. The chronology of welfare reforms in the UK and the development of the European Employment Strategy suggest strongly that the Labour Party was already committed to implementing these measures before the EES had taken shape, and certainly before any substantial requirements to adopt these policies had been presented by the European institutions. Field research by Mikkel Mailand, based on interviews, concluded that policymakers barely ever referred to the European Employment Strategy (EES) in policy debates (2009: 164). Indeed, there is some evidence that the causal chain was inverted, with Britain claiming some credit for having pushed Europe into adopting British-style reforms (for instance, Gordon Brown’s 1997 Pre-Budget Report stated that ‘the Government launched its own Employment Action Plan in October and suggested other EU member states do the same’7). However, given the ambiguities involved in establishing the exact temporal causal order of these largely contemporaneous events, we require more evidence before rejecting the hypothesis that European influences affected British policy. The next section reconstructs the genealogy of Labour’s welfare to work reforms, and shows how influences from the USA, and to an extent from non-EU countries (before 1995) such as Sweden, predate EU-wide developments, and suggests that

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these experiences were more important in shaping the thinking of UK policymakers.

Usages of Europe and alternative models: Labour’s reforms in Britain and the British reform agenda in Europe The “third way” and the progressive agenda in Europe and the USA If the European Employment Strategy was not the driver of UK welfare and labour market reforms, what was, and what usages of Europe can be discerned in these reforms? The “welfare to work” package of measures represents an interesting hybrid, combining elements of the flexibility agenda pushed by the OECD and IMF in the first part of the 1990s (see Howell, 2005), but with a much greater social dimension, as characterized by the thinking behind the European Employment Strategy and Lisbon agenda which became more prominent from the late 1990s on. The Labour leadership – both Blair and Brown – were longstanding admirers of the US model of capitalism and American employment performance appeared to outclass the major European economies through the 1990s (appearances may be deceptive to some degree; see Howell et al., 2007). At the same time, the unpalatable inequalities created by US deregulation were inconsistent both with Labour’s ideological tradition and with the demands of Labour’s electoral base, which called for action to address the poverty resulting from Britain’s own deregulation programme under Thatcher. The resulting mix, interestingly, uses state intervention – both supply side and redistributive – to enhance flexibility as an anti-poverty measure. Flexibility could only work as an anti-poverty strategy because of two specific characteristics of worklessness in the UK: the low replacement rates and ungenerous welfare benefits available to the workless, and the very low wages paid at the bottom end of the skills spectrum in the British labour market. This meant that, with a combination of activation and some transfers, large numbers of the poor could be made better off by joining the labour market, while their entry into paid work would enhance the efficiency of the labour market and reduce government spending overall. This very third way solution, however, was not easily transferable to other European countries, since in most of the other EU member states wage dispersion was much lower than in the UK, while out- of-work benefits were either more generous, or in some cases, non- existent. The peculiarities of the British labour market were, therefore, a further limiting factor in Labour deploying European-level

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political resources to legitimize domestic policy choices, or in downloading European policy templates. What were the policy templates for the welfare reform programme? Here the story becomes complex. On the one hand, the long history of activation- oriented policies developed in small Northern European social democracies (which incidentally partly shared Britain’s Eurosceptic instincts, and in the case of Sweden and Finland only joined the EU in 1995) provided a rich stock of experience in the implementation of these kinds of measures. That these experiences were noted and drawn upon is indicated by the close involvement of experts such as Richard Layard,8 who had studied the Swedish case at some length, in policy design. On the other hand, Labour had no intention of broadcasting any interest in adopting policies from other European countries. To the extent that any overseas examples served as inspiration, the United States, ironically enough, was the example most frequently invoked. Prior to the 1997 election, contacts between Labour leaders and highlevel members of the Clinton administration intensified, and the perceived success of Clintonomics encouraged Labour to adopt features of the US economic model of the post-Bush era.9 Therefore, although the Labour tax credits policy was different and generally more progressive than the model adopted in some US states, Gordon Brown’s Treasury paid very close attention to the American experience in designing and implementing the British policy (Dolowitz, 2003). Of course, Labour could not simply adopt wholesale an American line on welfare reform, given the well-known dramatic socio- economic divisions in the USA. The policy discourse was therefore careful to navigate between established socio-economic models – the third way – and between geopolitical sources of inspiration – Europe and the United States. The coincidence of left-of-centre governments being elected in France, Germany and Italy around the time of Labour’s victory in 1997 brought brief and ultimately unsuccessful attempts to bring together a coalition of progressive governments from both sides of the Atlantic which could develop a shared reform agenda. The Third Way summit in Florence in 1998, and Blair’s joint document with Gerhard Schröder (1999), showed an interest on Labour’s part in developing a European angle to the third way strategy. However, Jospin and Schröder’s difficulty in adopting the Blairite agenda, and Clinton’s departure from the White House, ended the experiment. For the most part, the political rhetoric underpinning the New Labour reform programme drew on British experiences and arguments, or on the inexorable logic of globalization, to explain and justify their policies to the electorate and social actors.

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So how did Labour defend its case? Rather than drawing on Europe as an institutional framework within which policy would be structured, Labour appealed instead to globalization as an external constraint on policy which UK governments would have to cope with. Giddens’ Third Way provided an intellectual framework for this discourse, which fitted in neatly with Labour’s anxiousness to avoid a conflictual relationship with business interests, and particularly the financial interests of the City of London, once in office (Hay, 1997a). Previous Labour governments had been derailed by currency crises and capital flight due to the mistrust among financial interests with regard to the Labour Party and its strong ties to the trade union movement. In order to reassure these interests of Labour’s intention to follow “responsible” economic policies, policy commitments to keep fiscal policy tight and contain tax increases were backed up with a strong rhetoric emphasis on globalization as an ineluctable constraint on contemporary governments. Labour, in other words, bought into a “logic of no alternative” – there was no alternative to orthodox macroeconomic policy and restraint on government interventionism, because these were the only policies that would prosper under globalization (Hay, 1997b; Hopkin and Wincott, 2006). In such a context, supply side measures to improve productivity and labour market efficiency became the only possibilities to enhance social justice without jeopardizing economic performance (Boix, 1998). Despite the frequent references to globalization as an external constraint, Labour’s policy discourse on welfare and employment paid little attention to Europe, since Europe barely appeared in Labour’s political rhetoric about welfare policy and the labour market, except as a countermodel juxtaposed to the Labour project (see final section). British public opinion in the mid-1990s was showing signs of increased scepticism towards the European project, which made appeals to the European constraints an unlikely source of domestic political support. But there were also further reasons for Europe not being invoked in Labour’s discourse. By the mid-1990s, Britain was recovering well from the currency crisis of 1992 and unemployment was falling consistently, while most of the rest of the EU was suffering slow growth and persistent unemployment. In these circumstances continental Europe appeared an unlikely model for British reforms, and the success stories of welfare-friendly employment generation such as Denmark and the Netherlands were not yet prominent in the public debate. Moreover, Labour was dealing with the difficult dilemma of whether or not to reverse Conservative policy of securing an opt-out from monetary union, and wished to avoid too much focus on European issues. The delicate balance struck by Blair – claiming to ‘put

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Britain back in the heart of Europe’ while appeasing Euro-sceptic opinion in newspapers such as The Sun – meant invoking Europe as little as possible in justifying policy choices. New Labour’s rejection’s of Europe as an aid to implement its agenda of welfare to work During New Labour’s election campaign, Tony Blair promised to ‘put Britain back in the heart of Europe’, and as soon as Labour took office, Blair signed up to the Social Chapter of the Maastricht treaty. The following month he signed the Treaty of Amsterdam, which, among other things, formalized the procedures for the European Employment Strategy, without the kinds of polemics associated with earlier treaty ratifications. All this indicated a new, more pro-European approach, in contrast to the attitude of predecessor Conservative governments which had torn themselves apart over the question of Britain’s proper place in Europe. In spite of this apparent step change in Britain’s relationship with Europe, New Labour was, in fact, rather more interested in removing Europe from the centre of the political debate in the UK than in engaging with the process of European integration. Britain, after all, is the only major member state where the very idea of EU membership itself is seriously questioned by both the political elite and the public (Schmidt, 2006), and Labour has its fair share of Euro-sceptics among its backbenchers too. Thus, New Labour embarked on a deliberate effort to neutralize the EU in the British domestic reform debate for fear that any references to the EU, be it positive or negative, would risk sidetracking the reforms. The early commitments to the Social Chapter and the unproblematic ratification of Amsterdam were not followed by other substantive policy changes. Labour’s policy towards Europe was to replace the Conservatives’ confrontational anti-European agenda with a policy of “constructive engagement”, but this did not mean the adoption of a pro-integration stance: the 1997 Labour Party manifesto, in fact, only differed from Conservative policy in its embrace of the Social Chapter (Bache and Nugent, 2007: 532). Although Blair was in favour of British participation in the first wave of European Monetary Union, his Chancellor Gordon Brown was opposed, and their policy differences were fudged by the adoption in November 1997 of five economic tests which would have to be passed before Britain joined the Euro. In practice, this amounted to maintaining the British opt- out negotiated by Blair’s predecessor John Major, and pushed the UK to the margins of economic policy debates in the EU.

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This timid approach meant that there was little hope of changing British public opinion on Europe, which remained firmly sceptical. In fact, Eurobarometer surveys show that, if anything, voter opinion on UK membership became slightly more negative over the decade of Tony Blair’s premiership (Bache and Nugent, 2007: 541). The Labour leadership sought instead to downplay the issue and remove it from the domestic political debate, with some success; in 2001 and 2005 Europe figured low on the list of voter concerns (Whiteley et al., 2005). This strategy was based on the understanding that legitimizing reform proposals by referring to European citizenship duties is not an option for any UK government intent on seeing its reforms actually implemented. By blaming the EU for embarking upon reforms, the government would simply hand the opposition an easy target to undermine its proposals. As Mailand argues, ‘Euroscepticism ... represents a barrier to the impact of the EES, because references to it under such circumstances may not be helpful’ (2009: 167). Neither can the government effectively use Europe as a stick or carrot to push its reform agenda. Where in other member states reform coalitions can sometimes be formed against the threat of otherwise missing the boat of European integration (Cf. Italian and Spanish entry into EMU), Brown’s five criteria for membership of EMU effectively ruled out entry into the foreseeable future. Similarly, the UK cannot be spurred into action by reference to compliance with the Lisbon Strategy. The British record on market liberalization, employment and growth is, in fact, relatively good; if anything, the UK reformed ahead of the other member states in economic areas. Thus, the need to meet targets agreed at Council level does not carry the same weight in the British domestic debate as it may in some other member states for the simple reason that the UK either is not interested in joining (as in the case of EMU) or because it already out-performs other member states (as on many of the items on the Lisbon agenda). The European Employment Strategy has had little impact on UK policy simply because the UK was already in compliance before 1997 (Mailand, 2009: 167). Finally, the UK’s balance of power between the government and opposition (described with only a little exaggeration as an “elected dictatorship”) obviates the need for the executive to use Europe to strengthen its hand vis à vis the parliament. In the Westminster model (Lijphart, 1999) governments rest on majority control of the House of Commons, and the fusion of government and parliamentary leadership around the Prime Minister, allied to tight party discipline, gives governments a relatively free hand in normal circumstances to enact legislation. This

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deprives the British domestic debate of yet another possible usage of Europe, namely as a bargaining asset for the government over legislators with less direct access to discussions in Brussels. Usages of Europe: the EU as an arena for British policy entrepreneurship Though there appear to be few (or no) incentives for British politicians and policymakers to evoke Europe in the domestic reform debate, we do not want to claim that there are no usages of Europe in the UK. For example, the same tilted balance of power towards the executive that deprives the government of the need to use the information advantages offered by Europe to improve its position over Parliament, forms part of the explanation for the UK’s comparatively good record on the implementation of EU Directives. But we find evidence for Europeanization more through “obligatory” rather than soft channels. It is relatively easy for the British government to get European Directives translated and adopted into domestic law through its parliamentary majority, and as Falkner et al. (2007) find, Britain’s compliance with EU measures revolves around domestic politics. However, there is no real incentive for the government to be as vigorous on recommendations. Thus, for example, in the area of social policy, Annesley (2003) finds evidence for Europeanization from above (for example, with the implementation of the working time Directive), but not for policy changes emanating from the various OMCs. The working time Directive is an instance of very clear usage of Europe in the policy process, but the difficulties faced by the Blair government in reconciling the European measure with the demands of British employers (and to some extent employees) demonstrate clearly the limitations of downloading policies which fit ill with national institutions. Another area is parental leave, where the Labour project of enhancing maternity and paternity rights was facilitated by European-level developments (Hyman, 2008). However, these measures were located at the periphery, rather than the core, of Labour’s employment reforms, which focused predominantly around employability and removing obstacles to labour market involvements of the socially excluded. Another area where we observe evidence for usages of Europe is on the conduct of consultation between levels of government and societal actors. Even if the various OMCs have not had discernible policy effects, they have significantly changed governance structures in the British political landscape. The OMC process, with its explicit involvement of multiple levels of authority and societal actors, and its implicit

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quest for consensus, was, in terms of institutional fit, perhaps furthest away from established practices in Britain. However, participation in the OMC processes has transformed the working relationship between central and devolved government and societal actors (Armstrong, 2006; Smith, 2008), although Bache and Nugent argue that British attempts to influence EU policymaking provide opportunities for the executive branch to centralize power around Whitehall and the Cabinet (2007: 534). The usages of Europe in terms of institutional power balances are therefore ambivalent. In sum, though, we find that participants in the domestic political debate deliberately abstain from invoking European references to introduce, discuss and defend reform proposals. This goes further than a strategic denial of European influences; policymakers and politicians from both the government and opposition parties simply seem not to have any incentives to use Europe in the domestic arena for fear of creating a backlash among a sceptical public and among its own supporters. Moreover, in the area of employment-friendly welfare reforms, the UK seems to have been ahead of the curve in Europe. New Labour, particularly during its first term in office, has been an early, enthusiastic experimenter with employment-friendly welfare reforms, taking its cues mainly from other Anglo-Saxon countries. It introduced its flagship workfare programme, tax credits for working families, and other programmes to tackle social exclusion when the EES was still nascent and other OMCs were not yet on the horizon. In fact, the UK’s head start on employment-friendly reforms in addition to its ability to present a coherent platform in Brussels (the strong executive leaves much less room for internecine fighting among various Ministries) has arguably presented the UK government with an opportunity to upload its preferences to the European level on issues such a welfare reform and social inclusion. Here we find stronger evidence of a connection between European initiatives and the British policy process. Part of Blair’s project of putting Britain ‘back into the heart of Europe’ was as a proactive policy leader, persuading European governments of the need for economic reform. There was a foreign policy rationale behind this policy of engagement, as Blair himself explained: ‘the fact is that Europe is today the only route through which Britain can exercise power and influence. If it is to maintain its historic role as a global player, Britain has to be a central part of the politics of Europe’ (cited in Bache and Nugent, 2007: 533). This policy was derailed by the shift in US foreign policy which placed Blair in the awkward position of mediating between an aggressive

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American president and the main EU members states, hostile to Bush’s approach. However, Blair tried hard to use Europe to promote Britain’s international status, and to advance institutional change and structural reform in a liberalizing direction. He was an enthusiastic advocate of the Lisbon agenda as a way of pushing other EU member states in the direction of more flexible labour markets and more market-friendly welfare institutions. In a sense, this was not entirely consistent with the attitude to Europe displayed by previous, more Euro-sceptic governments. Where Margaret Thatcher saw Europe as a threat to her achievement of “rolling back the state” in Britain, Tony Blair appeared to want to convince other member states of the virtues of British liberalizing reforms so that they would implement them too. Rather than “enforced” Europeanization (Rosamond, 2003), Labour’s social policy preferences fitted with a process of diffusion of more promarket institutions, which to some extent were uploaded by Britain onto the European stage (Börzel, 2002). Blair’s protagonism in the European debate on economic reform provides ample evidence of this. One of the key drivers behind the Lisbon agenda, Blair consistently sought to influence and shape the debate on structural reform in Europe, notably in his speech to the European Parliament in 2005, where he insisted on the need to ‘modernize Europe’s social model’ arguing that ‘the purpose of our social model should be to enhance our ability to compete, to help our people cope with globalisation, to let them embrace its opportunities and avoid its dangers. Of course we need a social Europe. But it must be a social Europe that works.’10 By placing a British “fingerprint” (Bulmer and Burch, 2008: 50) on EU policy initiatives on economic competitiveness, the Labour government was able to head off criticism from other member states for Britain’s traditional obstructionism, while protecting itself from criticism at home for caving in to European demands and adopting (purportedly) inappropriate European policies. Domestically, Blair and Brown also used Europe as a counter-model to legitimize their own policy agenda, emphasizing their apparent success at achieving low unemployment. For example, Gordon Brown’s Mansion House speech in 2005 argued that ‘just as Britain has to reform to meet the challenges of the new global economy, so must Europe’ going on to berate Europe for its slowness in adopting Anglo-Saxonstyle policies: facing worldwide competition, this new global Europe has no alternative but to embrace flexibility and liberalisation in product and capital markets ... with more than 18 million Europeans out of work,

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a globally orientated Europe must combine a new labour market flexibility with policies that equip people with the skills they need for work.11 This kind of discourse was aimed mainly at business interests within the UK, rather than at other EU member states, which would be likely to resent such sermons; the purpose was to reassure conservative-minded elites in the UK that New Labour was committed to the free market model. Contrasting Britain’s virtuous record on open and flexible markets with the purported recalcitrance of the large continental European economies served to showcase New Labour’s conversion to the marketliberal orthodoxy.

Conclusion The adoption of “welfare to work” by the New Labour government in the UK has paradoxical implications for our discussion of usages of Europe in welfare and employment policy. On the one hand, Labour’s policies challenge the traditional view of the UK as a Euro-sceptic nation happy to defy European initiatives and content to follow its own distinctive path. The “welfare to work” programme adopted by Labour fits so neatly with the priorities of the European Employment Strategy that it is tempting to conclude that Tony Blair succeeded in reversing Britain’s slide towards “semi- detached” status in the European Union. On the other, close analysis of the twin processes of policy change in the UK and the development of European initiatives in the field of employment and welfare suggest otherwise. The goodness of fit between UK and European policy is instead the result of British policymakers being influenced by the same thinking that also influenced the European Employment Strategy, drawn from the experiences of non-EU countries such as the United States and Sweden. The UK and the European Union were influenced, together and separately, by the flexibility agenda promoted by international institutions (particularly the OECD), but this agenda could not be neatly applied to European welfare capitalism without dramatic (and improbable) institutional changes. Instead, labour market flexibility had to be crafted onto existing welfare arrangements, a tall order for EU member states with Bismarckian institutional legacies, high wage and firing costs, and generous welfare benefits. The UK, with its flexible labour market, dispersed wage structure and minimalist welfare provision, was much better placed to adopt “welfare to work” policies, and not surprisingly did

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so before most other EU countries. As a result, the UK was ahead of the curve with regard to the agenda of welfare reform which ultimately formed the basis of the European Employment Strategy. To an extent the coincidence between British and European policy developments is also the result of the UK governments’ attempts to influence the content of the EES, and encourage other European countries to adopt British policies. Tony Blair had contradictory objectives in Europe: on the one hand, he wished to improve the UK’s relations with the other member states and ‘put Britain back into the heart of Europe’. Engagement with the EES, even if only to exhort other European countries to adopt British policies, was consistent with that aim. On the other hand, Blair, mindful of the explosive nature of the European debate in the UK, deliberately set out to take Europe out of the centre of British politics. For this reason, Europe was practically never deployed as political cover or justification for the adoption of particular policies, for very obvious reasons. In sum, British political leaders, even under a Labour government, have proved reluctant to fully engage with Europe. However, the Labour government, especially under Blair, was interested in pushing a liberalizing agenda at the European level, to an extent seeking to upload British policies and institutions to the European level, thus enhancing British leadership in Europe and increasing the fit between British and European institutions. When the “fog over the channel” clears, Britain hopes to see a European Union made in its own image (Table 10.2). With regard to the central hypotheses of this project, the British case offers substantial support to RH2 and RH3 (RH1 not being directly relevant to the UK case, a relatively “old” member state). RH2 predicts that countries with strong traditions of Euro-scepticism will see less and less positive usage of Europe in reform processes, and this prediction is amply borne out by the UK case: in Britain, both elites and (especially) public opinion are instinctively at the Euro-sceptic end of the scale, and this has been accompanied with at best neglect, and at worse rejection and denial, of Europe in policy discourse. RH3 predicts that institutional “misfit” will also provoke negative usages of Europe, and again the British case offers supporting evidence, although more ambivalent in this case: Britain found it rather easy to adopt the liberalizing measures contained in the European Employment Strategy and Lisbon agenda, since those projects were in part the result of British pressures to push Europe towards policies more amenable to the UK. However, the broad institutional framework of British labour market and welfare policy was rather less well adapted to European initiatives,

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276 Jonathan Hopkin and Christa van Wijnbergen Table 10.2 A panorama of different reforms: dimensions of policy change, actors and usages

Policy

Dimension/ degree of Year change

Reform promoter

Jobseekers’ 1995 Second- order Government Act change (right). (change of objectives): goal change but not instrument change. New Deal 1997 Third- order Government change (left). (change of principles): new activation strategy. Minimum 1998 Third- order Government Wage change (left). (“principles”): new institution. Tax 1998 Third- order Government Credits change (left). (“principles”): new institution.

AntiPro-reform reform coalition coalition

Usages of Europe

Employers, Trade Neglect. government unions, party opposition (right). party (left).

Government Opposition Policy party (left), party transfer, economists. (right). but formal denial.

Government party (left), trade unions.

Employers, Neglect. opposition party (right).

Government Opposition Neglect. party (left), party economists. (right).

Source: Authors.

since measures such as the working time Directive clashed with British labour market flexibility and employer autonomy. Here then, the findings are more ambiguous; even though Labour was enthusiastic in its support for the liberal and flexicurity agendas in Europe, it did not evoke them openly to justify its own reform strategy, even when the fit was quite high. In sum, usages of Europe in British labour market reform were broadly negative and often absent, and the dynamics of reform seem to respond to domestic political imperatives, on the one hand, and international, even global, economic imperatives, on the other. Europe remains the “elephant in the room” in British politics, a problem rather than a resource, and one which will not go away.

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Notes 1. The authors would like to thank Paolo Graziano, Bruno Palier, Philippe Pochet and other participants at the RECWOWE WP04 taskforce on Employment-friendly Welfare Reforms for their comments on earlier versions of this chapter. 2. Former Prime Minister Gordon Brown is not markedly more enthusiastic about Europe; see, for example, the speech reported at http://news.bbc. co.uk/1/hi/uk_politics/4117770.stm 3. http://www.margaretthatcher.org/speeches/displaydocument.asp?docid=107332 4. http://archive.treasury.gov.uk/pub/html/budget97/speech.html 5. The relevant parts of the Guidelines read: ‘every unemployed young person is offered a new start before reaching six months of unemployment, in the form of training, retraining, work practice, a job or other employability measure; unemployed adults are also offered a fresh start before reaching twelve months of unemployment by one of the aforementioned means or, more generally, by accompanying individual vocational guidance’. 6. M. Taylor (1998), ‘Work Incentives: A Report by Martin Taylor’, in Modernisation of Britain’s Tax and Benefit System series 2 (London: HM Treasury). 7. 1997 Pre-Budget Report, at http://webarchive.nationalarchives.gov.uk/+/http:// www.hm-treasury.gov.uk/pre_budget_report/prebud_pbr97/report/prebud_pbr97_ rep04.cfm 8. Founder and director of the influential Centre for Economic Performance and an expert in labour economics who advocated many of the policies underpinning the welfare to work agenda of New Labour. 9. These contacts are documented, for example, in ‘Tony Blair’s Secret Weapon: Bill Clinton’s Experience’, Business Week, 21 July 1997. 10. Tony Blair’s speech to the European Parliament, 23 June 2005, http://www. number10.gov.uk/Page7714 11. Gordon Brown’s Mansion House speech 2005, http://www.hm-treasury. gov.uk/press_56_04.htm (the Mansion House speech is given by the serving Chancellor of the Exchequer to representatives of the City of London annually).

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11 Social Security Reform in Turkey: Different Usages of Europe in Shaping the National Welfare Reform Cem Utku Duyulmus

Introduction Social security reform in Turkey involved the restructuring of pension and health care systems and the administrative reform of social security institutions with enacted reform laws in 2008. This study focuses on the usages of Europe in the social security reform process in Turkey adopting an actor-based Europeanization theoretical framework to understand how EU membership process has shaped the development of social policy at the national level in Turkey (Graziano, Jacquot and Palier, introduction to this volume). The reform represents a major restructuring of the pensions, health care system and the administrative structure of the social security institutions formulated and implemented by the Justice and Development Party (JDP [Adalet ve Kalkınma Partisi – AKP]) government from 2003–08. The reform of the pensions, health care system and administrative structure represents a change in the multiple dimensions of the policy structure: national health insurance aimed at covering all segments of the population as a policy goal, changes in the parameters of pension system concerned principles and financial instruments and administrative unification changed the operational mechanisms. Accordingly, changes included elements of universalist policy orientation such as the administrative unification and health care reforms as well as elements of “retrenchment” represented with the reform of the pension system. The JDP government was committed to introducing social security reform, claiming a 280

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“reformist” position in the Turkish political system, and aiming, since 2002, to introduce the necessary structural reforms. Social security reform has been shaped by various factors, such as: the fiscal crises of the state, the pressure of international financial institutions like the IMF and the World Bank for budgetary discipline, the parallel support of Turkish business circles, societal and labour demands, the conservative liberalism of the JDP government and Turkey’s prospects for the EU membership. (Buğra and Keyder, 2006: 212)1 Accordingly the purpose of the research is to assess the degree of social policy change in Turkey and analyse different “usages of Europe” by various political actors and social partners during social security reform in Turkey, enquiring whether EU resources, EU membership conditions, the adoption of the acquis communautaire, the social security systems of the EU member states, the EU standards and norms on social protection, pensions and sufficient health care or discussions concerning the European Social Model had any impact on the content and the dynamics of the reform process. Considering timing and sequencing of the social security reform, this process has interwoven with the EU membership process where various EU resources became available for the government, the relevant Ministries and state agencies and domestic actors. The usages of Europe approach allows empirical study of European resources and constraints as compared to other resources and constraints; consideration of multiplicity of domestic and international actors in the process, concentrating on the national dynamics of the reform process under the pressure of other international institutions such as the IMF and the World Bank (Graziano, Jacquot and Palier, introduction to this volume). This chapter proceeds through three sections, first providing background information on the Turkish case regarding the national welfare regime and the social security system, as well as presenting the evolution of Turkey’s relationship with the EU with the aim of generating a “country characterization”. In the second part, attention turns to how the social security reform process has evolved since 2003 in order to analyse the national trajectory of the social security reform in Turkey in the light of the EU orientation. The third part of the chapter focuses on “the usages of Europe”, aiming to clarify who has been involved in the usages of Europe and how.

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The analysis concentrates on the usages of Europe in the official documents and the discourses of the main political actors, the JDP government in the Turkish Grand National Assembly (TGNA), as well as the references made to the EU and membership process by social partners such as employer associations and union confederations during the social security reform. The overall aim of this research is to examine the explanatory power of the three research hypotheses suggested by Graziano, Jacquot and Palier (introduction to this volume) in explaining the usages of Europe; this will be addressed mainly in the conclusion. The analysis will be based on the scholarly literature on the welfare regime and social security system in Turkey, policy position papers of the Ministry of Labour and Social Security and the JDP government, EU documents concerning Turkey’s accession, such as Progress Reports, Accession Partnership documents and screening reports, World Bank and OECD reports and data and seven interviews conducted with key informants at the EU Commission and at the Ministry of Social Security in Turkey.2 The research method is based on the historical neoinstitutionalist process tracing (Pierson, 2004).

Welfare regime and social security system in Turkey In comparative social policy,3 welfare regime types developed focusing on the advanced industrial countries, describing various principles embedded in institutions and policies shaping the relationship between states, markets and families in the provision of welfare. Turkey does not fit completely into these typologies of countries with mature welfare regimes due to context of “late development” and to particular historical evolution. Accordingly the welfare regime in Turkey is associated with regime types developed for Southern European welfare regime4 and welfare regimes in the development context. The domestic and international dynamics in Turkey share some commonalities with the Central and Eastern European countries as well. The welfare regime of Turkey has been evaluated as exhibiting similar characteristics with the Southern European welfare regime in the literature (Yakut- Cakar, 2007: 103). Burcu Yakut- Cakar emphasizes that Turkey’s welfare regime shares main characteristics with Southern European types, such as highly protective employment regimes for a core workforce that enjoys strong legal protection; segmentation of the labour market distinguishing between insiders in the core sectors and outsiders such as young people and long-term unemployed in the informal economy; and the institutionalization of social insurance

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programmes with the segmented labour market based on occupational status with separate schemes for private-sector employees, civil servants and the self-employed people (Yakut- Cakar, 2007: 104). The social security system in Turkey shares this dual characteristic of the Southern welfare regime, providing social security according to occupational status and excluding those in the informal economy. However, there are also significant differences if one considers the social assistance mechanisms and the development of universally provided, right-based social policies in Spain and Portugal and the patchy and institutionally weak character of social assistance in Turkey. The accession of these countries to the EU has been an important factor in explaining the evolution towards more universal and right-based social policies (Guillén et al., 2003). The literature on welfare regime and social policy characterizes the Turkish welfare regime as an “inegalitarian corporatist regime” following Seekings’ typology developed for welfare regimes for developing countries referring to ‘the corporatist element where claims are highly dependent on membership of occupationally defined corporate groups’ with an inegalitarian quality considering the social exclusion of the poor, lacking the opportunities to enter into formal employment (Seekings, 2005: 13). In Turkey, informal mechanisms have emerged based on traditional community and family relationships for those not covered by the formal social security system (Keyder, 2005: 131). Strong family ties and informal channels of welfare have been also an important pillar of the Turkish welfare regime (Eder, 2010: 152; Buğra and Keyder, 2006: 212). The context of the domestic and international dynamics in Turkey shares some commonalities with Central and Eastern European countries. Scholars such as Keyder (2004), Pamuk (2008) and Buğra and Keyder (2006) indicate that corruption in state institutions constitutes an important dimension of state–society relations in Turkey since the introduction of liberalization measures in the economy, with exportoriented strategy in the 1980s. Ferge (2002) emphasizes the absence of societal demands for universal and generous social policies in Eastern European countries due to lack of trust towards state institutions and widespread corruption. Accordingly, the transition to market economy in Eastern European countries and the liberalization period since the 1980s in Turkey combined with several economic crises shaped the demand side for social policies. In Turkey and Central and Eastern European, the domestic context is also under the constraints of World Bank and IMF programmes. In Central and Eastern European countries, the IMF and World Bank have engaged in policy reforms in order

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to mitigate the transition process due to growing demand from the national governments for policy financing and advice (Deacon, 2000). In Turkey, the liberalization process started in the 1980s has been followed by close cooperation with the World Bank and IMF where their leverage has increased as the fiscal crisis of the state has limited the availability of funds during the 1990s (Pamuk, 2008: 287–90; Önis and Fikret, 2007: 256). Political instability, large public sector deficits, high interest rates, weak structure of the banking sector and increasing vulnerability to external shocks have led to economic crises in 1994, 1998, 2000 and 2001 in Turkey, the last of which was the most severe (Pamuk, 2008: 286–90). Turkish governments have signed, in this period, IMF stand-by agreements (in 2005, 2002, 2000 and 1999) that constrained government expenditure in order to sustain the budgetary discipline.

Social security system in Turkey A principal dimension to approach Turkey’s welfare regime is to focus on the social security system and its evolution. Accordingly the social security system covering pensions and health insurance consisted of three institutions; the Retirement Chest for civil servants (ES), the Social Insurance Institution (SSK), established for workers, and Bag-Kur (BK), which covers the self- employed.5 This tripartite institutional structure of the social security system established different protection schemes of pensions or health in terms of eligibility and benefit determination according to different occupational situations. The imbalances in the social security system increased in the 1990s, exacerbating public sector fiscal deficits (Yakut- Cakar, 2007: 110). The deficit of the social security system as a percentage of GNP rose from 0.3 per cent in 1990 to 4.5 per cent in 2004 (Brook and Whitehouse, 2006: 7). It is not the ageing of the population, as in developed countries, but structural problems of the economy that have mainly led to the increasing deficit (see Table 11.1 in Appendix). Adem Y. Elveren indicates that the high level of dependency ratio, the worsening of active–passive ratio with the existence of a large number of children in families and low labour force participation have been the main reasons for increasing imbalances (Elveren, 2008: 218; see Table 11.2 in Appendix). Turkey had a demographic advantage for the sustainability of the social security system. However structural problems of the economy, especially the size of informal economy6 as well as the inefficient administrative structure based on three separate social security institutions have been identified as the main impediments

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for the sustainability of the social security institutions (Brook and Whitehouse, 2006: 15). The size of the informal economy and informal employment constitutes a major issue as only 58 per cent of the working population in 2003 was actively insured. Table 11.3 indicates that the share of informal employment in total non-agricultural employment has reached 33.2 per cent in the 2000–07 period (OECD, 2009: 2; see Table 11.3 in Appendix). Pamukcu and Yeldan emphasize the informal setting as the main factor that influences the imbalances of the social security system with the low compliance of employers with social security laws and poor enforcement of this legislation by authorities (Pamukcu and Yeldan, 2005: 1). The reform of the social security system came onto the agenda during the 1990s with increases in imbalances within the pension system, where contributions that were collected did not cover the pension expenditures. In the Turkish social security system, pension benefits have relied on the state-funded pay-as-you-go (PAYG) system,7 which is financed by contributions of employees and employers with a deficit guarantee of the government. Turkey–EU relations: from candidacy status in 1999 to the launch of accession negotiations in 2005 Turkey has a long association with the European Union, since the Ankara Agreement in 1963, and the institutional relationship evolved with the signing of a Customs Union between the EU and Turkey in 1995, the recognition of Turkey as a candidate country at the Helsinki European Council in 1999 and the launch of accession negotiations in 2005(Öniş, 2009: 3; Muftuler Bac, 2005; Tocci, 2005). The EU became a major actor after 1999 in terms of triggering major political and economic reforms in order to comply with EU membership conditions.8 The EU membership process also evolved from 1999 to 2008, where the accession negotiations on specific chapters, including social policy and employment, started in 2005. During the period from 1999 to 2004,, reforms concerned compliance with the political criteria (Grabbe, 2004: 1). The EU Council decision of opening accession negotiations with Turkey in October 2005 represented an important step towards the membership of Turkey to the Union, denoting that Turkey had fulfilled the political conditions of the Copenhagen criteria. The Commission, since 2005 with the launch of the accession negotiations and screening process, has more extensively examined the social security system and social policies in Turkey. Even though the Copenhagen criteria did not include the social security system reform, the economic criteria regarding the

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existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union required Turkey to address the fiscal imbalances arising from the social security system. The political elite in Turkey has been supportive, in general, of Turkey’s membership to the EU, embedded in the Kemalist state orientation for westernization, even though political parties had different positions concerning the reforms necessary to comply with the membership conditions (Keyman, 2005: 274). From 1999–2002, the Democratic Left Party (Demokratik Sol Parti [DSP]) –Motherland Party (Anavatan Partisi, Nationalist Action Party [ANAP])–(Milliyetci Hareket Partisi [MHP]) coalition government had expressed a general commitment to Turkey’s EU membership. These three political parties, as the partners of the coalition government, had different positions regarding the EU membership and the reforms that should be introduced to fulfil the Copenhagen criteria (Avci, 2003: 157). Major reforms for fulfilling the political criteria have been implemented rigorously since 2002, when a majority government of the Justice and Development Party was formed. This new government wanted to demonstrate a high degree of commitment to the goal of EU membership. The JDP as a party developed a pro-EU stance from its foundation as manifested in the party programme (Dogan, 2005: 422). The JDP government introduced reform packages covering the most contested issues, such as extending cultural rights and curbing the role of the military from 2002–04 (Dogan, 2005: 421). The reformist attitude exhibited by the JDP government until 2005 has changed relatively in 2006. In fact, the crucial reforms no longer at the forefront of the political agenda of the government after the EU Council was formally given a date to open accession talks (Yildirim et al., 2007: 20). Marcie Patton characterizes this slowdown of the reform process as “reform fatigue” of the JDP government (Patton, 2007: 339). As the JDP government managed to attain its primary goal of opening accession negotiations in 2005, the political reforms lost their urgency in the JDP’s political agenda due to presidential elections due in 2006 and a general election in 2007. Moreover, Patton indicates that the EU’s negative criticisms and non-reciprocal EU demands, such as Austria’s and France’s insistence on a “privileged partnership status” for Turkey, instead of full membership, weakened the JDP government’s willingness to push for more radical reforms. The political elite in Turkey had mostly been committed to the membership goal; the JDP government demonstrated a pro-EU stance, especially in implementing crucial reform from 2002–04.

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The general public’s attitude towards EU membership changed from 2004–08, demonstrating a decreasing trend for support of EU membership (Delegation of EU Commission in Turkey, 2008: 23). Eurobarometer data indicates that those who thought that Turkish membership to the EU was a good thing dropped from 71 per cent in 2004 to 54 per cent in 2006; to 52 per cent in 2007 and to 49 per cent in 2008. Ali Carkoglu’s survey data analysis of 2002 demonstrates that ‘those who would vote in favor of full EU membership in a referendum comprise 64% of the sample while 30% indicate they would vote against’ (Carkoglu, 2003: 173). In regards to the contextual hypothesis on the general relation of Turkey to the EU, the JDP government developed a pro-EU stance regarding the membership to the EU in 2002. After the beginning of the accession negotiations, scholars indicated that the JDP government demonstrated “reform fatigue” in 2006 and in 2007 related to the stalemate concerning the accession negotiations. The support for membership, between 2004 and 2008, also decreased among Turkish citizens, as different survey data and Eurobarometer data demonstrate. Accordingly, Turkey’s general relation with the EU in terms of elite and public attitude could be conceived as less pro-EU membership from 2005–08 compared to the elite and public attitude in the period from 2001–05.

Trajectory of the social security reform: domestic and international dynamics Budgetary transfers to and deficit of the social security system considerably increased during the 1990s, during which different populist policies regarding early retirement schemes exacerbated the problems of financial sustainability. The first phase of the reform process was set out in 1999, with a reform package including changes regarding the retirement age, contribution periods and the introduction of voluntary private pension schemes in 2001 (Yakut- Cakar, 2007: 110). The reform package introduced in 1999 included the minimum retirement age for all new entrants in the ES, BK and SSK schemes, set as 58 for women and 60 for men, as well as expanding the reference wage period to the full contribution period for SSK and BK pensioners (increasing from 5,000 days to 7,000 days). Moreover the Consumer Price Index became the norm for pension indexation following World Bank recommendation, as well as measures to discourage unregistered employment. Yakut- Cakar and Elveren indicate

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that the establishment of private pension schemes with the law on the Individual Pension System (IPS) in 2001 followed World Bank and ILO recommendations (Yakut- Cakar, 2007: 111; Elveren: 2008: 219). Elveren emphasizes that the ILO report, titled ‘The Turkish Government Social Security and Health Insurance Project’ (1995), based upon research funded by the World Bank, was the main guideline proposing a variety of pension reforms, including alternative mixtures of a reformed and expanded pay-as-you-go and new private funding schemes and institutional reforms. The ILO and World Bank urged the Turkish government, during the 1990s, to make urgent reforms in order to control the deficit caused by the social security system and were very influential in the formulation of different reform programmes (Yakut- Cakar, 2007: 117). While almost all governments since 1995 announced that they would carry out social security reform and prepared draft laws, only the coalition government 9 that was in power from 1999–2002 could have introduced the first phase of the reform that had a limited character involving mostly the pension system. The reform measures taken between 1999 and 2001 did not assure the sustainability of the social security system where the imbalances of the social security institutions had grown. The JDP government was in power from 2002, adopting a “conservative-liberal” ideological orientation rooted in political Islam, reflected in the mixture of neo-liberal economic policy choices, conceptualization of socio-economic relations, including social policies based upon a traditional and patriarchal value system and a limited populist orientation in distributional politics (Buğra and Yakut- Cakar, 2010: 517; Eder, 2010: 152; Buğra, 2007: 46; Buğra and Keyder, 2006: 213). The JDP’s programme in 2001 insists that: social security services, having reached a significant budget size, are active within the organisms of various ministries and they appear scattered. The social security units shall be brought together under the roof of a single ministry and a consolidated social security budget shall be created with the inclusion of social insurance, social services and social aid regimes and sub-sectors. (JDP, 2001) The JDP government showed a strong commitment to the formulation and implementation of social security reform as part of its political and economic reform agenda after taking office in 2002 (Hale and Özbudun, 2010: 55). The Action Plan, prepared by JDP government in 2003, included reform of social security institutions, health services and social assistance (58th Government Action Plan, 2008). The JDP

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government assigned the preparation and formulation of the draft proposal to a team of bureaucrats and experts, including Sabahattin Aydın and Tuncay Teksöz, from the Ministry of Health, Ministry of Labour and Social Secuirty, Ministry of Finance and Treasury. The reform proposal was composed of administrative restructuring, pension reform and the Health Transformation Project was prepared as a White Paper by the Ministry of Labour and Social Security in April 2005 (Yakut- Cakar, 2007:116). This proposal was composed of four components: the establishment of universal health insurance, the restructuring of social assistance and services, the reform of pensions and the foundation of an institutional structure aiming to harmonize the other three pillars. The institutional and political context favoured the reform agenda of the JDP government, having a comfortable majority in parliament following the 2002 election (Hale and Özbudun, 2010: 5).10 The political environment – characterized by weak opposition parties in the parliament – allowed the executive to dominate the parliamentary agenda and policymaking process, giving strong party discipline. The reform was opposed by main union confederations and professional associations represented under the Labour platform,11 that organized several rallies and protests against the reform proposals between 2006 and 2008. Although the JDP government accused these groups of representing particular interests, which did not want to lose privileges of the pre-reformed system, it communicated the reform proposal to the social partners and negotiated under certain institutional mechanisms, such as Social Security High Advisory Board and Economic and Social Council. However, the reform process had a more top- down character dominated by the executive, relevant Ministries and state agencies, rather than more inclusionary policymaking where the reform proposal was drafted with the social partners. The main barrier to the social security reform process emerged from “veto players” in the Turkish constitutional system: President Ahmet Necdet Sezer returned the Social Security and General Health Insurance Law to the parliament and then took it to the Constitutional Court, which decided on the cancellation of certain articles of the reform laws in favour of protecting the acquired rights of civil servants in 2006. A new study, titled ‘Social Security Reform: A New Approach Prior to Implementation’, was prepared in May 2007 by the Ministry of Labour and Social Security to provide a platform for discussion among political parties, social partners and civil society. The social security reform was enacted in the TGNA in April 2008 and was implemented in October 2008.

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The IMF and the World Bank have been important actors for constraining the government expenditure in order to sustain the budgetary discipline and had an impact on the social security reform packages (Yakut- Cakar, 2007: 116). Buğra and Keyder indicate that the IMF and, to a certain extent, the World Bank emphasize the budgetary discipline and fiscal constraints in preparing social security reform (Buğra and Keyder, 2006: 212). IMF12 stand-by agreements with Turkey have insisted on measures for reducing financial imbalances in the budget, especially by controlling the deficit arising from the social security system. Since coming to power in 2002, the JDP has continued Kemal Derviş’s13 economic programme based on the 2001 stand-by agreement (Hale and Özbudun, 2010: 102; Öniş and Şenses, 2007: 268). In the first letter of intent in 2003, the JDP government added social security reform into the economic programme-making part of the IMF conditionality (JDP Government, 2003). In the letter of intent dating back to 2005, the parliamentary approval of administrative unification reform was made a “structural benchmark”14 and parliamentary approval of the social security reform was made a “structural performance criterion”,15 accepted by the JDP government where social security reform was considered a way of improving public finances by controlling the social security deficit (JDP Government, 2005). The World Bank was active on social security reform, preparing the main guidelines of the reform project from 1999, supporting the reforms with the Programmatic Public Sector Development Policy Loan (PPDPL), and was very active in the Health Transition Project, providing financial assistance and guidelines. Accordingly, the World Bank used conditionality, making the release of funds in the scope of Health Transition Project conditional upon the introduction of reform measures regarding the health care component of the reform. The social security reform process occurred in a political and economic context where the EU membership had become a more salient factor in the political and economic reforms in Turkey. The JDP showed a strong commitment to EU membership and to implement necessary reforms to comply with membership criteria. The EU membership process also evolved from 1999–08, where the accession negotiations on specific chapters, including social policy and employment, started in 2005. The EU framed social security reform in Turkey through different institutional and legal instruments, such as Commission Progress Reports, Accession Partnership documents, Assessment of Pre-Accession Economic Programmes and screening reports. For

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instance, Progress Reports on Turkey’s accession emphasize in general three main issues regarding the social security system since 1999: the urgency of controlling the fiscal deficit by reform measures, administrative and management problems under different institutional frameworks and the non-universal character of social protection, health care and social assistance.16 The social security reform was referred to under two sections in the Progress Reports: in the section regarding economic criteria and in the social policy and employment chapter headings of the acquis communautaire. The Commission emphasized the reform measures for controlling the fiscal deficit of the social security system in the economic criteria chapter. The administrative and management problems related to different institutional structures and the non-universal coverage of the social security and health care system was referred to under the chapter headings of social policy and employment. The Directorate General for Employment, Social Affairs and Equal Opportunities was responsible for preparing the section on social policy and employment in the Progress Reports, where the economic criteria section was prepared by the Directorate- General for Economic and Financial Affairs. The Accession Partnerships prepared in 2001, 2003 and 2006 to assist the government to meet the accession criteria insisted on the social security system within the scope of economic criteria. The start of the accession negotiations in 2005 accelerated the involvement of the EU within the social policy domain in Turkey. The preparation of Joint Inclusion Memoranda (JIM) and the Joint Assessment Paper for Employment Priorities (JAP) by the Ministry of Labour and Social Security started in 2005 with the participation and the contribution of different state agencies, and social actors (Yakut- Cakar, 2007: 118). Buğra (2007: 47) emphasizes that the preparation of the JIM raised the awareness of Turkish bureaucracy towards different dimensions of poverty and the absence of formal mechanisms to tackle social exclusion. Although JIM and JAP were prepared through the cooperation of the EU and Ministry of Labour and Social Security, as well as the Turkish state bodies and agencies, these agreements were still not enacted in 2010 (Interview 2). The Progress Reports that were prepared by the EU Commission insist on social security reform more extensively starting in 2005 through the scrutiny process under the accession negotiations chapter on social policy and employment. The budgetary allocations assigned by the EU for Turkey’s National Programmes, including MEDA programme and

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later pre- accession assistance, also increased substantially from 2005 (Interview 4). The institutional evolution of Turkey–EU relations since 1999, considering different legal and financial resources provided by the EU for Turkey, indicates that the social security system has been more extensively under the scrutiny of the Commission since 2005, with the launch of the accession negotiations. This allowed the JDP government to insist more extensively on the EU membership conditions from 2003, while communicating the reform proposals to opposition political parties, social partners and to the public in general. Legal harmonization with the acquis and Directive had an influence on the social security reform proposals, especially on the administrative restructuring component of the reform. Interviews conducted at the DG for Employment, Social Affairs and Equal Opportunities, DG for Enlargement and DG for Economic and Financial Affairs indicate that the EU did not prioritize one goal over others pushing a single agenda regarding the social security reform. Dirk Verbeken, the Economic and Financial Desk Officer on Turkey at the DG for Economic and Financial Affairs, emphasized that priority was given to control of the financial balances of the social security system, emphasizing the economic criteria starting in 1999 in various EU documents (Interview 3). Julien Desmedt, International Relations Officer at Turkey Unit at the DG for Enlargement, emphasized that their emphasis was on the use of social dialogue mechanisms in the preparation of reform proposals and the necessary administrative restructuring of the system until the launch of accession negotiations (Interview 1). The officer at the DG for Employment, Social Affairs and Equal Opportunities responsible from the social policy and employment chapter (chapter 19) of accession negotiations with Turkey not only insisted that their emphasis was on the institutional restructuring, but also insisted on the development of a larger policy reform strategy considering the necessary preparation and enactment of JIM and JAP (Interview 2). The analysis of various EU documents and instruments, such as Progress Reports, Assessment Papers, Accession Partnership documents and screening reports, as well as interviews with key informants conducted at these DGs of the Commission, indicate that the EU has acted mainly as a reform supporter of social security reform. Accordingly, policies and rules promoted at the EU level for candidate countries are in contrast with the pre-reformed format of the social security system, which represents the “inegalitarian welfare regime” characteristics of Turkey. Three separate social security institutions – the

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ES, the SSK and the BK –established separate schemes for pensions and for provision of health care. Moreover, the total deficit of the social security institutions made “financial sustainability” a problem that the Commission has insisted upon. Accordingly the pre-reformed social security system represents characteristics that “misfit” to the EU standards and policies. The degree of discordance between EU standards and social security institutions’ characteristics is large when the high level of informal employment in Turkey is considered. The discordance provides national actors with the opportunity for positive usage of Europe. Graziano, Palier and Jacquot (introduction to this volume) indicate that a high degree of disparity between national policies and European standards can also lead to either ignorance of the EU or to negative usage.

Dimensions of policy change with the social security reform The reform of the social security system included elements of universalist policy orientation such as the administrative unification and health care reforms, as well as elements of “retrenchment” represented with the reform of the pension system. The changes in the pension system aim mainly to establish a single pension system where reform foresees ‘gradual increases in the retirement age, which will be kept at 58 for women and 60 for men until 2035’; which will be raised gradually to 65 years of age after 2036, with the increase in life expectancy (Aktug, 2010: 117; Yakut- Cakar, 2007: 121). The benefit calculation rule changed from different bases to 2.5 per cent accrual rate for the period until 2015 and 2.0 per cent starting from 2015, where the benefit indexation is still fixed to the Consumer Price Index rule. The administrative restructuring brought changes that were transformative to the inegalitarian corporatist characteristics. Accordingly, the separate schemes of the ES, the SSK and the BK were unified under one centralized institution, the Social Security Institution, under the jurisdiction of the Ministry of Labour and Social Security, responsible for the management of social security provisions. Moreover, the reform has introduced the state contribution to the pension system at 5 per cent, replacing the pre-reformed practice of making budgetary transfers to compensate for the deficits of the social security system (YakutCakar, 2007: 123). The reform regarding the health care system foresaw also an overall parametric and institutional change. Health care, in the pre-reformed

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format, was jointly provided by the Ministry of Health, social health security schemes, universities and the Ministry of Defence, as well as private agencies and institutions (Yakut- Cakar, 2007: 123). In the pre-reformed situation, health benefits were tied to employment status, where only the Green Card programme provided for low-income population access to doctors and to hospitals within the social security system. The reform package with the General Health Insurance system aimed to cover every citizen by providing basic health services, including those not formally employed, in order to assure universal access to health services on equal terms (Adar, 2007: 168). The reform aimed to introduce a single health insurance agency replacing the patchy institutional structure, where the minimum package of health services would be financed by contributions paid by all with earnings above the poverty line; where the poor will be granted means-tested access to the services, with their contribution paid by the state (Adar, 2007: 169). Moreover, the reform insisted that those under the age of 18 would be covered by the health insurance scheme without having to pay premiums. The original reform also had a separate component, with the draft proposal on Social Assistance and Non- Contributory Payments (SANCP), to establish non- contributory income maintenance mechanisms for those under threat of social exclusion where the Social Security Institution and the Ministry of Labour would be invested with the responsibility of conducting a rights-based policy of social inclusion (Buğra and Adar, 2008: 14). However, the social assistance component of the reform was not brought to the parliament by the JDP government in 2006. The usages of Europe approach articulated by Graziano, Jacquot and Palier (introduction to this volume) argues that it is important to evaluate change in terms of objectives, principles, financial instruments and procedures. Accordingly, the reform of the social security system composed of social security administration, pension and health care components represented a transformation in the various dimensions of the policy structure (objectives, principles, financial instruments and procedures) in light of the analysis of the policy reform content conducted above (see Table 11.4 in Appendix). The social security administration reform involved changes in the principles, financial instruments and procedures of the pre-reformed social security administration where the three institutions (SSK, ES, BK) and related separate schemes were unified under one centralized institution, the Social Security Institution, and the state agreed to finance part of the

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social security cost. The reform of pensions represented a policy change in terms of financial instruments and procedures as increases in the retirement age, changes in contribution period, benefit calculations and indexitation were introduced. The reform of health care introduced changes in the objectives, principles, financial instruments and procedures with the introduction of General Health Insurance, providing basic health services embracing all social groups, assuring universal access to health services on equal terms under a single health insurance agency; where the minimum package of health services was financed by contributions paid by all whose earnings positioned them above the poverty line and the poor were granted means-tested access to the services with their contribution paid by the state (see Table 11.4 in Appendix).

Usages of Europe and social security reform In the context of social security reforms in Turkey, two sets of actors were involved with different usages of Europe. The first set of actors was political, such as the JDP government and opposition political parties in the TGNA. The JDP government was the initiator of the social security reform, as the Ministry of Labour and Social Security and the Ministry of Health prepared the social security reform proposals. A preliminary analysis of parliamentary discussions in 2006 and in 2008 indicates that the opposition political parties17 rarely engaged in usages of Europe. The Republican People’s Party (Cumhuriyet Halk Partisi [CHP]) was the main opposition party in parliament from 2002 and was critical of the social security reform proposals, even refusing to attend parliamentary discussions of the social security reform proposal at the TGNA in 2006. Representatives of the JDP government made direct references to the EU membership process during the social security reform process. Accordingly, analysis of official documents, public speeches and parliamentary discussions will focus mainly on the JDP government actor that initiated the reform. The analysis will focus on the period from 2005, when the JDP government presented the social security reform proposal first to the public, to 2008 when the JDP government enacted the reform laws. JDP government and social security reform: EU and member states as a model and a point of reference for comparison In this section, the discursive analysis of the main figures of the JDP government and their strategies will be discussed during the social

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security reform process. The social security reform process was launched by the JDP government with the 2003 Action Plan, under the auspices of the Ministry of Labour and Social Security (58th Turkish Government, Emergency Action Plan). The Minister of Labour and Social Security in the JDP government in 2005, Murat Başesgioğlu, pledged that his ministry was ‘seeking a reform package that is in accordance with the European Social Model’ (Ileri, 2007). Başesgioğlu stated that: We do not want a social security reform imposed on us or ordered from us; we are seeking a stable and sustainable social security system in accordance with the European Social Model where the experiences of IMF and World Bank can be valuable assets in the reform process. However we would like to enact a reform that is appropriate for our domestic dynamics. (Ileri, 2007) In the parliamentary discussion of the social security reform proposal at the TGNA on 12 April 2006, he Minister of Labour and Social Security, Başesgioğlu,defended the reform, saying: Turkey, in comparison to European countries has managed to lower the societal tensions with its culture of solidarity and social assistance mechanisms. However these traditional mechanisms are not sufficient for tackling the current problems arising with economic and societal changes, we now need modern social security institutions. (TBMM, 87. Birlesim Tutanaklari, 2006a) In the same parliamentary discussion on the reform package, Başesgioğlu also addressed the public finances of the social security system, referring to the EU member countries and stating that: In 2005 three social security institutions; BK, SSK and EK, have spent 58.5 billion New Turkish Lira which is 12.1% of our GDP. This percentage is low if we compare it to European countries who spend 25% or 30% of their GDP to the social security ... We should not consider 12.1% a lot. Our problem is Turkey’s high debt stock that influences the macroeconomic stability. If we were not indebted that much, we would be willing to dedicate more resources to the social security system. (TBMM, 87. Birlesim Tutanaklari, 2006a)

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At the 89th Assembly of the TGNA, the JDP government responded to the criticisms of the opposition parties on the social security reform package. For instance, the above-mentioned Minister of Labour and Social Security, responding to the opposition parties’ criticisms on decreasing the monthly installment rates, stated that: We are changing the monthly installment rates which are around 3% in the in EK and SSK, the coefficients that are multiplied for yearly installments. This percentage in Turkey is the highest among European countries except Luxembourg. There is no other European country where this coefficient is as high as in Turkey. (TBMM, 89. Birlesim Tutanaklari, 2006b) The Minister also refers to the standards and norms in the EU, in response to criticisms regarding retirement age and contribution period at the 89th Assembly, stating that: Concerning 65 as age of retirement and 9,000 contribution days, the system does not foresee any increases in the retirement age until 2036. The retirement age will be 65 in 2048; this is the case in most of the European Union member states. We will increase the retirement age to the current norms of the EU in 2048–2050. (TBMM, 89. Birlesim Tutanaklari, 2006b) The reform package was enacted as of 14 April 2006. However the objections of the opposition party, People’s Republican Party, and the President, Ahmet Necdet Sezer, at the Constitutional Court resulted with the cancellation of some articles that regulated the harmonization procedures for civil servants, leading to the maintaining of privileges for this group over others. After the general election victory in 2007, the JDP government launched a new process of social security reform, emphasizing social dialogue with social partners, considering their objections to certain parameters of the reform proposal as well as the Constitutional Court decision. Discussion of the new social security reform package started in the Parliamentary Planning and Budget Commission in February 2008 and the new social reform package was brought to the Parliamentary Assembly as of 4 March 2008. In the discussion of the social security reform package at this Commission changes, as compared to the previous reform package, constituted the main issue. For instance, the changes made to the regulation pertaining to ‘the Procedures and

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Principles on the Pay Increase for Actual Period of Service’ were a main point of criticism of the 2006 social security reform package, as was one of the articles that the Constitutional Court had cancelled (TBMM Bütce ve Plan Komisyonu, 2008a). At the discussion in the Planning and Budget Commission on 4 March 2008, the new Minister of Labour and Social Security, Faruk Celik, stated, with regard to the pay increase for actual period of service, that: While we were preparing the regulation on the pay increase for an actual period of service for certain occupational groups, we were very attentive not to make any mistakes that could worsen the current situation in dialogue with our social partners. Accordingly we appointed the Deputy General Director of Insurance Affairs, Celal Özcan, to prepare a study on how the pay increase for an actual period of service has been regulated in the EU. (TBMM Bütce ve Plan Komisyonu, 2008a) Celal Özcan made a presentation following Celik’s speech in the Planning and Budget Commission, indicating: The pay increase for an actual period of service concerns professions where the occupation risks the person’s physical and mental health in the long term. Accordingly a person because of his/her occupation with higher health risks will have a lower life expectancy than people of other occupations ... After the Constitutional Court decision that cancelled the previous reform of the regulation, we looked at what the implementation is/was in the European Union concerning this regulation. We have made a scientific study for a fair and objective regulation for not leading to another cancellation. We have studied the MISSOC 2007 report that analyzes and compares the social security regulations in the EU countries ... We have adopted the EU norms and standards while considering the occupational risk for the regulation on the pay increase for an actual period of service. (TBMM Bütce ve Plan Komisyonu, 2008a) Faruk Celik also referred to the retirement age and contribution period regulations in the EU member states in order to support the reform proposal in the Planning and Budget Commission, stating that: The reform is necessary because of demographic changes as well. Even though we have a young population now, the population is

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getting older. In France, the percentage of those over 65 in the population was 7 in 1865. However, 115 years later it reached 14% of the population in France. The studies demonstrate that the percentage of population over 65 population will reach 7% in 2012 and will reach 14% in 2039 in Turkey ... The early retirement of 38–40 years is responsible for the worsening of the active–passive ratio; the active– passive ratio in Turkey shows that only 1.9 employees can finance one retired person. If we look at the EU member states, the retirement age is set as 65 in Italy, 66 in Ireland, 65 in Germany, 60 in France, 65 in Greece, 63 in Estonia. (TBMM Bütce ve Plan Komisyonu, 2008b) The JDP government also considered the relevant part of the acquis and EU Directives for the legal harmonization in the social security reform process. The Justice Minister and government spokesman, Cemil Çiçek, after the government meeting on 7 April 2008, stated that: ‘The social security reform proposal that is discussed in the Turkish Parliament is related for alignment with the EU acquis communautaire as well as our long-term economic programme’ (Secretariat General for EU Affairs, 2008). Çiçek also emphasized that the government would implement its undertakings and obligations towards the EU by introducing the reform laws indicated in the 2007–13 Turkish National Programme for alignment with the acquis communautaire. Accordingly the 2007– 13 Turkish National Programme, prepared under the auspices of the Secretariat General for EU Affairs and approved by the JDP government, indicates that Social Insurances and Universal Health Insurance Law and Law on Social Assistance and Non Contributory Payments are considered as beneficial legislation, to be enacted in the period from 2007–09 (Secretariat General for EU Affairs, 2007). Moreover the National Programme also points out which EU legislation is envisaged to be in compliance with the Social Insurances and Universal Health Insurance Law and Law on Social Assistance and Non Contributory Payments. Accordingly the Social Insurances and Universal Health Insurance Law and Law on Social Assistance and Non Contributory Payments were introduced in order to comply with Directive 79/7/EEC, which aims to implement the principle of equal treatment for men and women in matters of social security, with Directive 2006/54/EC, which aims to ensure the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation, and with the European Strategy for Social Inclusion (Secretariat General for EU Affairs, 2007). Accordingly, the JDP government used EU legal resources on equal treatment in the

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legal harmonization process, reflected in the administrative restructuring component of social security reform. Jacquot and Woll (2003) have distinguished three main types of the usages of Europe functionality as cognitive, strategic and legitimizing usage. The analysis of official documents, the discourse of the Ministers of Labour and Social Security and the speeches of the JDP government representatives at the parliamentary discussions indicate that the JDP government has engaged limited cognitive usage and extensive legitimizing usages of Europe as demonstrated above with the analysis of the JDP actors’ discourse in parliamentary discussions. The cognitive usage is more frequently made, especially in 2005 and 2006, as the JDP government representatives made direct references to the EU standards on social policies and EU member states policies, as well as to the necessity of introducing the reforms for membership. The analysis reveals also that in 2007 and in 2008 the JDP government made less frequent cognitive usage of the EU with the new Minister of Labour and Social Security, Faruk Celik, representing the reform attempts as measures to reach EU member states’ standards but especially emphasizing the domestic dynamics in the design of the reforms. The JDP government frequently made legitimizing usage in the parliamentary discussion of the reform laws, arguing that special measures of the reform laws should be introduced to prepare the country for EU membership and to satisfying the membership conditions of the EU. Usages of Europe by employer associations and union confederations In the context of social security reform in Turkey, business associations and union confederations are also involved in the social security reform process. The EU Commission insisted upon to use of social dialogue mechanisms in the areas of employment policy, social inclusion and social protection (Delegation of European Commission, 2006: 2). The JDP government claimed that it used social dialogue mechanisms from 2005 to prepare the social security reform proposals, especially the Economic and Social Council (Çalışma ve Sosyal Guvenlik Bakanlığı, 2008: 8). The Economic and Social Council met four times to discuss the social security reforms in 1999, March 2005, November 2005 and January 2008. However, the ESC, as an institution of social dialogue, was criticized by social partners and scholars because the Council was dominated by government representatives in its membership structure, limiting social partners’ involvement in the decisionmaking process without meeting regularly (Glynos et al., 2008: 5) The

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ESC involves representatives of economic and social partner institutions along with government representatives and is chaired by the Prime Minister or a Cabinet Minister. The JDP government presented its social security reform proposal to the ESC meeting in November 2005. The Ministry of Labour and Social Security had received 179 recommendations through social partners, where 110 of them were reflected in the reform proposal in 2008 (Çalışma ve Sosyal Guvenlik Bakanlığı, 2008: 8). Out of 110 recommendations, 81 of them had been channelled through the ESC. The ESC met to discuss the social security reform proposal on January 2008, just before the government brought the reform laws to the Turkish Parliament. Although social partners expressed certain reservations concerning the reform in the ESC, the social security reform proposal was brought to the Turkish Parliament in March 2008 by the JDP government. The Labour platform, an umbrella organization of labour and civil servant unions, decided to protest about the reform efforts of the JDP government and launched a two-hour strike on 14 March 2008 to protest against the social security reform proposal that were discussed in the Parliamentary Assembly. Labour Platform, composed of the main union confederations of Turkey,18 accused the JDP government to impose to reform laws rather than looking for compromises. The JDP government negotiated with the Labour platform on certain articles of the reform proposal, such as 7,200 days contribution period instead of 9,000 days. The usage of Europe is analysed in the official documents and public discourse of the three main employer associations and three union confederations concerned with the social security reform. The Turkish Confederation of Employer Associations (TISK), the Turkish Industrialists’ and Businessmen’s Association19 (TÜSİAD), the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and MÜSİAD (the Association of Independent Industrialists and Businessmen) are the main employer organizations and associations in Turkey. TÜRK-İŞ, HAK-İŞ and DİSK constitute the main union confederations. These actors are also represented in the ESC. The analysis has concentrated on whether or not these employer organizations and union confederations made references to EU rules and standards and the EU membership process for Turkey, arguing for social security reform. Business associations acted in the pro-reform coalition and union confederations and civil servant unions were the main actors of the anti-reform coalition. Analysis of the discourse and official documents of the employer associations and union confederations regarding the social security

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reform reveals that social partner actors referred occasionally to the EU in order to argue on certain characteristics of the social security reform. TISK, TÜSİAD and TOBB were the main employer associations wherein references to EU membership process, arguing for the social security reform, were made. TÜSİAD was very active during the social security reform process, involved in the reform discussions on pensions (TÜSİAD, 2004) and the health care system (TÜSİAD, 2005), where references to the goal of EU membership and EU standards were made. TÜSİAD was involved with cognitive and legitimizing usage of Europe, arguing that the pre-reformed social security system was far from EU standards and norms. TÜRK-İŞ, HAK-İŞ and DISK are union confederations involved with the social security reform process. TÜRKİŞ and HAK-İŞ made more references to the EU membership process, the social security systems of EU member countries and to the EU rules and norms in terms of Directives and acquis communautaire (TÜRK-İŞ, 2006; HAK-İŞ, 2008). TÜRK-İŞ and HAK-İŞ were involved with cognitive and legitimizing usage, referring to the EU in order to argue that reforms would not introduce standards and rules like those in EU member countries. Accordingly, among the union confederations and employer associations, the pro-EU stance and involvement with the membership process can be related to the usage of Europe by employer organizations and union confederations. Table 11.5 summarizes the analysis of usages of Europe by employer organizations and union confederations (see Appendix).

Conclusion This research has focused on the cumbersome social security reform process since 2003 in order to reveal the extent of EU influence on this crucial national welfare reform. It demonstrates that reform attempts started in the late 1990s and that the World Bank and IMF have been important actors for pushing Turkish governments to introduce the reform package in order to control fiscal imbalances. The JDP government showed political commitment for an overhaul reform of the social security system from 2003, reflecting its liberal- conservative approach to social policies in the reform proposals while considering domestic and international constraints. The institutional evolution of Turkey–EU relations allowed the JDP government to insist more extensively on EU membership conditions since 2003, while communicating the reform proposals to opposition political parties, social partners and to the public in general. Legal harmonization with the acquis and directives had

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an influence on the social security reform proposals, especially on the administrative restructuring component of the reform. This chapter aimed to examine the validity of the three research hypotheses suggested by Graziano, Palier and Jacquot’s usage of Europe approach (introduction to this volume) in the country characterization, the dynamics of the national reform and the study of usages of Europe. Accordingly, the analysis of the social security reform process strengthens the hypothesis that ‘the more under scrutiny the countries are, the more probable it is for the European Union policies and institutions to be considered seriously and therefore be a fundamental motivation of and or point of reference’. The EU’s impact and emphasis evolved from 1999 to 2008 and the involvement of the EU on social policy issues increased with the launch of accession negotiations in 2005. The EU Commission’s emphasis moved from compliance with the political criteria, in the period from 1999 to 2004, to specific accession negotiations in 2005 for Turkey. The screening and negotiations process coincided with initiation of the reform process by the JDP government in 2005. The EU has been mainly a reform supporter, considering different components of the reform. The analysis is less conclusive on the second research hypothesis, which argues, that ‘the specific usages of the EU depend on the general relationship of each country with Europe’. According to Graziano, Jacquot and Palier (introduction to this volume), this relation depends on two elements: the elites’ attitudes towards Europe and public opinion with regard to Europe. Public opinion and elite attitudes gradually became less supportive of EU membership from 2004 to 2008 in Turkey. However, this research found cognitive and legitimizing usages of Europe, in particular, by political and social actors between 2005 and 2008. Accordingly, the less supportive pattern of elite attitude and public opinion towards EU membership can explain the JDP government’s emphasis on the domestic dynamics of the reforms while making more legitimizing usage of Europe in 2008 as compared to 2006. However, this research did not find a negative usage related to this decreasing pattern of elite and public support for EU membership. The pre-reformed social security system was considered in discordance with EU norms and standards on social protection. Accordingly, the misfit is high considering the EU norms and standards and practices that were prevalent in Turkey. The third research hypothesis argues that the nature of the usages of Europe made by political actors in the national reform process will vary from positive to negative, according to the fit/misfit argument. The analysis demonstrates that positive

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legitimizing usage of Europe was prevalent in Turkey, validating the fact that a misfit offers opportunities for national actors to use European resources. This research validates the sub-hypothesis on blame avoidance (Weaver, 1986); actors, such as the JDP government, have involved extensive usage of Europe when the social, economic and political costs associated with the reforms are high. Although the elite’s attitude and public opinion support for EU membership became less supportive from 2004–08, this has not translated into opposition or resistance to EU membership in Turkey but rather expresses a loss of enthusiasm on the part of political and societal actors. This study concludes that social security reform as a national welfare reform in Turkey has been shaped in the juncture of domestic, supranational and international processes, such as the JDP government’s reform agenda, where domestic actors such as business associations and union confederations have strategically positioned in the pro-reform or anti-reform coalitions, the economic restructuring under the guidelines of the World Bank and IMF and the political and economic changes related to the EU membership process. The EU membership process has provided various opportunities for the JDP government actor, allowing considerable legitimacy for reform attempts, providing resources that helped to shape the content of the reform process to a certain extent.

Appendix Interviews Interview 1 Julien Desmedt, Directorate General for Enlargement, Unit B3 – Turkey, European Commission, conducted on 16 March 2010. Interview 2 Jan Behrens, Directorate General for Employment, European Commission, conducted on 18 March 2010. Interview 3 Dirk Verbeken, Directorate General for Economic and Social Affairs, European Commission, conducted on 18 March 2010. Interview 4 Antonio Marquez Camacho, Directorate General for Employment, Social Affairs and Equal Opportunities, conducted on 18 March 2010. Interview 5 Nazli Hezar Tanrisever, Directorate of Social, Regional and Innovative Policies, Secretariat General for EU Affairs, conducted on 16 August 2010. Interview 6 Uğurtan Taşkiner, Jr, Expert, EU Affairs Department, Ministry of Labour and Social Security. Interview 7 Hülya Tekin, Expert, EU Affairs Department, Ministry of Labour and Social Security.

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Social Security Reform in Turkey 305 Table 11.1 Demographic, labour market, health expenditure and public expenditure statistics for Turkey*

Total population Ratio of population aged 65 and over to the total population Ratio of inactive population aged 65 and over to the total labour force Employment rates total (%) Employment rates: men (%) Employment rates: women (%) Public expenditure on health (% GDP) Total expenditure on health (% GDP) Public social expenditure (% GDP) Life expectancy at birth: total (%) Life expectancy at birth: men (%) Life expectancy at birth: women (%) Infant mortality (%)

2000

2004

2005

2006

2007

67,392.503

71,151.009

72,064.992

72,971.474

73,875

5.3770462

5.746818

15.58857935

5.8767994

5.9698

6.0439932

17.1144764

48.89

46.09

45.93

45.89

45.79

71.66

67.874

68.18

68.01

67.924

26

24

23.7

23.8

23.8

3.1

4.3

4.1

4.9

5.9

5.7

13.7

70.5

71.2

71.4

71.6

68.1

68.8

68.9

69.1

72.8

73.6

73.8

74

28.9

24.6

23.6

22.6

Source: *Data gathered from OECD Country Statistical Profiles, 2009: Turkey, available at http://stats. oecd.org/wbos/viewhtml.aspx?queryname=18172&querytype=view&lang=en

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Table 11.2 Age dependency ratio*

EU-15 EU-10 Turkey

2000

2050

24 19 9

52 50 28

Note: *Population aged 65 and over of population aged 15–64. Source: Verbeken (2007), p. 3.

Table 11.3 Share of informal employment in total non-agricultural employment

Turkey

1995–99

2000–7

30.9

33.2

Source: OECD (2009), p. 2.

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Social Security Reform in Turkey 307 Table 11.4 Information on policy area, policy change and main actors regarding the social security reform in 2006 and 2008

Key features/ policy area

Dimension of the policy Role Pro-reform Anti-reform structure played actors/ actors/ Year involved by Europe coalition coalition

Usage of Europe

Social Security Administration

2006, Principles, Reform AKP Union Cognitive 2008 financial supporter. government, confederations, usage of instruments especially especially civil Europe. and Ministry servant unions. procedures. of Labour Labour platform. and Social Security. Business associations (TISK, TÜSİAD and, to a limited extent, TOBB).

Pensions

2006, Financial Reform AKP Union Legitimizing 2008 instruments Supporter. government, confederations, usage of and especially especially Europe. procedures. Ministry civil servant of Labour unions. Labour and Social platform. Security. Business associations (TISK, TÜSİAD and, to a limited extent, TOBB).

Health care

2006, Objectives, Reform AKP Union Limited 2008 principles, Supporter. government, confederation cognitive financial especially and certain and instruments, Ministry professional legitimizing procedures. of Labour organizations. usage of and Social Europe. Security. Business associations (TISK, TÜSİAD and, to a limited extent, TOBB).

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308 Cem Utku Duyulmus Table 11.5 Characterization of the usages by the union confederation and employer associations Actors involved

Usage by the employer associations

Usages by the union confederations

Cognitive usage

TÜSİAD TÜRK-İŞ HAK-İŞ

Framing the reform as pensions and health care, aimed to reach European levels; all population should benefit from it. Argumentation using the EU member states’ policies and reforms as examples, models and references for the parameters of the reform.

EU’s standards, norms and recommendations constitute main references for shaping the debate on the EU. Argumentation using the EU member states’ policies and reforms as examples, models and references for the parameters of the reform.

Strategic usage

TÜSİAD TISK

Reference to EU None. recommendations, economic criteria and member states’ rules and standards in terms of employers’ participation in the social security system, labour costs, tax wedge and state contribution.

Legitimizing TÜSİAD usage TISK TÜRK-İŞ

Reform is necessary to become a member in long term.

Emphasis on considering EU norms on social policies in designing the reforms, as the aim is to become full member.

Notes 1. The pensions and health care component of the reform is a result of a complex process where domestic dynamics have great salience. Tugba Agartan (2008) argues that the health care reform has been shaped by the struggles among various political and societal actors, where the power distribution among actors and the impact of political institutions have been determinant on the formulation and implementation of policy decisions. Agartan argues that the AKP government has been a decisive actor in this reform while constrained and pressured by unions and other professional associations. Agartan considers the international dimension of policymaking, the influence of World Bank, IMF and the EU, increased pace of international communication of policy ideas as well as the rising importance international trade and investment.

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Social Security Reform in Turkey 309 2. See full interview details at the end of the chapter for a complete list of key informants. 3. Esping-Andersen’s welfare regime approach is the most known and accepted typology of welfare regimes for advanced industrial countries. See EspingAndersen (1990). 4. For Southern European welfare regime, see Ferrera (1996, 2005) and Gough (1996). 5. The Worker’s Insurance Institution, relabelled as the Social Insurance Institution in 1965 (SSK), was established in 1945 and aimed to protect private sector employees and blue collar public workers in manufacturing and service sectors co-funded by employer and employee contributions. The Retirement Chest (ES) was introduced in 1949 for active and retired civil servants. The 1961 Constitution characterized the social aspect of the state, institutionalizing access to education, health and employment as constitutional rights for citizens. The Bag-Kur (BK), founded in 1971, provides coverage of pensions and health insurance for the self- employed and agricultural workers in the social security system. 6. Only around a quarter (23.5 per cent) of the working-age population (defined as those aged 15–64) are contributing to a social security institution, while approximately half are not participating in the labour market, and the remainder are working in the informal sector (OECD, 2006). 7. PAYG is mainly characterized as an obligatory transfer of income from the employed labour force to the elderly portion of the population, where the defined benefit plans assign actual risk to the state and are conditional on a worker’s earnings history. 8. The EU’s membership conditions, known as the Copenhagen criteria, have been set as follows: ‘to join the EU, a new Member State must meet three criteria: political: stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; economic: existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union; acceptance of the Community acquis: ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union’. 9. The Democratic Left Party (Demokratik Sol Parti [DSP]), Motherland Party (Anavatan Partisi [ANAP]) and the Nationalist Action Party (Milliyetci Hareket Partisi [MHP]) were the coalition governmentís partners. 10. The JDP won the 2002 parliamentary election with 34.3 per cent of votes, reflected by its two-thirds of the 550 parliamentary seats. In the general election held in 2007, the JDP obtained 46.58 per cent of the votes and 341 seats in parliament (Hale and Özbudun, 2010: 40) 11. Turk-İş, Hak-İş, DİSK; KESK, Memur- Sen, Independent Confederation of Public Employees Unions [BASK]), Turkish Medical Association, Turkish Pharmacists’ Association, Turkish Dental Association, Turkish Veterinary Medical Association, Association of Retired Turkish Workers, Association of All Retired Workers, Association of Bağ-Kur Retirees, Turkish Union of Engineers and Architects (TMMOB), Turkish Bar Association, The Union of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB).

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12. Turkey’s close relation with the IMF was laid out in the Stand-by Arrangements and Letter of Intents introduced in Turkey in the 1990s. 13. Following the financial crisis in 2001, Kemal Derviş, the World Bank’s vice president for poverty reduction and economic management, was appointed as new Minister for the Treasury and Economic Affairs. Kemal Derviş introduced the economic reform programme in 2001 that included major structural reforms and a new stand-by agreement with the IMF. 14. Structural benchmarks are measures that are critical to achieve IMF programme goals and are intended as clear criteria to assess progress in structural reforms in the context of a programme review. 15. Structural performance criteria are binding conditions as structural reforms that need to be met during the implementation of the programme, where the subsequent installments of IMF finance will be released. 16. European Commission, Regular Reports from 1999 to 2009, available at http:// ec.europa.eu/enlargement/candidate- countries/turkey/key_documents_en.htm, accessed 25 November 2008). 17. The Motherland Party (ANAP), Nationalist Action Party (MHP), the Democratic Society Party (DTP) were the political parties that participated in the TGNA assembly discussions in 2006. 18. Such as the Confederation of Turkish Trade Unions (Turkiye İşçi Sendikaları Konfederasyonu, TÜRK-İŞ), the Confederation of Turkish Real Trade Unions (Türkiye Hak İşçi Sendikaları Konfederasyounu, HAK-İŞ), the Confederation of Progressive Trade Unions of Turkey (Türkiye Devrimci İşçi Senikaları Konfederasyonu, DİSK). 19. Turkish Industrialists’ and Businessmen’s Association, is a non-governmental voluntary association composed of owners and managers of individual firms, groups of companies and holding companies operating in the Turkish manufacturing and service sectors.

Bibliography Adar, S. (2007), ‘Turkey: Reform in Social Security’, Journal of European Social Policy, vol. 17 (2), pp. 167–8. Agartan, T. I. (2008), ‘Turkish Health System in Transition: Historical Background and Reform Experience’, unpublished PhD thesis, State University of New York at Binghamton. Aktug, R. E. (2010), ‘Public Pensions in Turkey: Reforming the System to Achieve Fiscal Balance’, Perspectives on Business and Economics, vol. 28, pp. 111–25. Avcı, G. (2003), ‘Turkey’s Slow EU Candidacy: Insurmountable Hurdles to Membership or Simple Euro-skepticism,’ in Ali Carkoglu and Barry Rubin (eds.) Turkey and the European Union: Domestic Politics, Economic Integration and International Dynamics, (London: Frank Cass), pp. 149–70. Brook, A.-M., and E. Whitehouse (2006), ‘The Turkish Pension System: Further Reforms to Help Solve the Informality Problem’, OECD Social, Employment and Migration Working Papers, No. 44, available at http://www.oecd.org/dataoecd/4/37/37818128.pdf, accessed 27 November 2008.

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Social Security Reform in Turkey 311 Buğra, A. (2007), ‘Poverty and Citizenship: An Overview of the Social-Policy Environment in Republican Turkey’, International Journal of Middle East Studies, vol. 39, pp. 27–46. Buğra, A., and A. Adar (2007), ‘An Analysis of Social Protection Expenditures in Turkey in A Comparative Perspective’, Social Policy Watch, Social Policy Forum. Buğra, A., and A. Adar (2008), ‘Social Policy Change in Countries without Mature Welfare States: The Case of Turkey’, New Perspectives on Turkey, vol. 38, available at http://www.aueb.gr/deos/seminars/Bugra29-3- 07.doc, accessed 25 November 2008. Buğra, A., and Ç. Keyder (2006), ‘The Turkish Welfare Regime in Transformation’, Journal of European Social Policy, vol. 16 (3), pp. 211–28. Buğra, A., and B. Yakut- Cakar (2010), ‘Structural Change, the Social Policy Environment and Female Employment in Turkey’, Development and Change, vol. 41 (3), pp. 517–38. Carkoglu, A. (2003), Who Wants Full Membership? Characteristics of Turkish Public Support for EU membership in Turkey and EU, EBSCO, p. 173, available at https:// research.sabanciuniv.edu/290/1/stvkaf01974.pdf Delegation of the EU Commission (2008), Standard Eurobarometer 69, Public Opinion in the European Union, National Report: Executive summary: Turkey, European Commission. Deacon, B. (2000), ‘Eastern European Welfare States: The Impact of the Politics of Globalization’, Journal of European Social Policy, vol. 10 (2), pp. 146–61. Dogan, E. (2005), ‘The Historical and Discoursive Roots of the Justice and Development Party’s EU Stance’, Turkish Studies, vol. 6 (3), pp. 421–37. Eder, M. (2010), ‘Retreating State? Political Economy of Welfare Regime Change in Turkey’, Middle East Law and Governance, vol. 2, pp. 152–84. Elveren, A. Y. (2008), ‘Social Security Reform in Turkey: A Critical Perspective’, Review of Radical Political Economics, vol. 40 (2), pp. 212–32. Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism (Cambridge: Polity Press). Ferge, Z. (2002), ‘European Integration and the Reform of Social Security in the Accession Countries’, European Journal of Social Quality, vol. 3, pp. 9–26. Ferrera, M. (1996), ‘The “Southern Model” of Welfare in Social Europe’, Journal of European Social Policy, vol. 6 (1), pp. 17–37. Ferrera, M. (ed.) (2005), Welfare State Reform in Southern Europe (London: Routledge). Glynos, G., M. Kaeding and A. I. Aybars (2008), Social Dialogue and its Contribution to Social Cohesion in Turkey, briefing paper prepared for the European Parliament’s Committee on Foreign Affairs, 18 February 2008, pp. 2–5, available at http://www.europarl.europa.eu/activities/committees/studies. do?language=EN, accessed 25 November 2008. Gough, I. (1996), ‘Social Assistance in Southern Europe’, South European Society & Politics, vol. 1 (1), pp. 1–23. Graziano, P., S. Jacquot and B. Palier (2011), ‘The Usages of Europe in National Employment-friendly Welfare State Reforms’, in P. Graziano, S. Jacquot, B. Palier (eds), The EU and the Domestic Politics of Welfare State Reforms: Europa, Europae (Basingstoke and New York: Palgrave Macmillan).

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Social Security Reform in Turkey 313 Verbeken, D. (2007), ‘The Pension Reform Challenge in Turkey’, ECFIN Country Focus, vol. 4 (3), Directorate- General for Economic and Financial Affairs for the European Commission. Weaver, K. (1986), ‘The Politics of Blame Avoidance’, Journal of Public Policy, vol. 6 (4), pp. 371–98. Yakut- Cakar, B. (2007), ‘Turkey’, in B. Deacon, P. Stubbs (eds), Social policy and International Interventions in South East Europe (Cheltenham: Edward Elgar), pp. 103–29. Yildirim, E., H. Naç and H. Ozler (2007), ‘A Sociological Representation of the Justice and Development Party: Is it a Political Design or a Political Becoming?’, Turkish Studies, vol. 8 (1), pp. 5–24.

Internet sources 58th Turkish Government (Turkiye 58. Hukumeti), Emergency Action Plan (Acil Eylem Plani), available at www.dpt.gov.tr/DocObjects/Download/2224/aep. pdf, accessed 15 November 2009. Justice and Development Party, AK Party Programme, 2001, available at http:// eng.akparti.org.tr/english/partyprogramme.html#5.5, accessed 25 November 2009. Justice and Development Party Government (2003), Turkey – Letter of Intent, April, available at http://www.imf.org/external/np/loi/2003/tur/01/index.htm, accessed 25 November 2009. Justice and Development Party Government (2005), Turkey – Letter of Intent, April, available at http://www.imf.org/external/np/loi/2005/tur/042605.pdf Çalışma ve Sosyal Guvenlik Bakanlığı (2008), Sosyal Güvenlik Reformu, Ankara, available at http://www.akparti.org.tr/tbmm/tbmmgrup/sosyal%20güvenlik%20reformu.pdf, accessed on November 25, 2008. Çalışma ve Sosyal Guvenlik Bakanlığı (2008), Sosyal Güvenlik Reformu, March, p. 8, available at http://www.csgb.gov.tr/images/articles/editor/kitap_film(1).pdf, accessed 25 November 2008. DISK (Confederation of Progress Trade Unions) (2008), Sosyal Sigortalar ve Genel Saglik Sigortasi Yasasi Degisik Bicimiyle de Calisanlarin ve Halkin Saglik ve Sosyal Guvenlik Hakkini Karsilamiyor, available at http://www.disk.org.tr/ default.asp?Page=Content&ContentId=427, accessed 28 November 2008.HAKİŞ (Confederation of Real Trade Unions) (2008), Ekonomik ve Sosyal Konsey Toplandi, 3 January, available at http://www.hakis.org.tr/arsiv/esk/esk-2008_ uslu.htm, accessed 28 November 2008. Secretariat General for EU Affairs (2003), National Programme for the Adoption of the Acquis (NPAA), available at http://www.abgs.gov.tr/index.php?p=196&l=2, accessed 25 November 2008. Secretariat General for EU Affairs (2007), Turkey’s Programme for Alignment with the Acquis (2007–2013): Social Policy, available at http://www.abgs.gov.tr/ index.php?p=6&l=2, accessed 15 November 2008. Secretariat General for EU Affairs (2008), ‘Hükümet Sözcüsü Çiçek – Bakanlar Kurulu Toplantısi’, 4 July, available at http://www.abgs.gov.tr/index. php?p=41586&l=1, accessed 15 November 2008.

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EU sources Delegation of European Commission to Turkey (2006), ‘Screening Report Turkey: Chapter 19 – Social Policy and Employment’, 4 September, p. 2, available at http://www.avrupa.info.tr/AB_ve_Turkiye/Muzakereler,Muzakereler_19.html, accessed 15 November 2008. Directorate- General for Economic and Financial Affairs (2008), 2007 Pre- accession Economic Programmes of Candidate Countries: EU Commission Assessment, Occasional Papers 39, July, available at http://ec.europa.eu/economy_finance/publications/publication_summary12862_en.htm, accessed 25 November 2008. European Commission (2003), Regular Report on Turkey’s Progress towards Accession, p. 65, available at http://ec.europa.eu/enlargement/candidate- countries/ turkey/key_documents_en.htm, accessed 25 November 2008. European Commission (2004), Regular Report on Turkey’s Progress towards Accession, p. 113, available at http://ec.europa.eu/enlargement/candidate- countries/turkey/ key_documents_en.htm, accessed 25 November 2008. European Commission (2005), Regular Report on Turkey’s Progress towards Accession, p. 96, available at http://ec.europa.eu/enlargement/candidate- countries/ turkey/key_documents_en.htm, accessed 25 November 2008. European Commission (2006), Regular Report on Turkey’s Progress towards Accession, p. 53, available at http://www.avrupa.info.tr/AB_ve_Turkiye/Muzakereler,Regular_ Reports.html, accessed 25 November 2008. European Commission (2007), Regular Report on Turkey’s Progress towards Accession, pp. 53–4, available at http://www.avrupa.info.tr/AB_ve_Turkiye/ Muzakereler,Regular_Reports.html, accessed 25 November 2008. European Commission (2008), Regular Report on Turkey’s Progress towards Accession, p. 62, available at http://www.avrupa.info.tr/AB_ve_Turkiye/Muzakereler,Regular_ Reports.html, accessed 25 November 2008.

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Conclusion: Europa, Europae: The Many Faces of Social Europe Paolo R. Graziano, Sophie Jacquot and Bruno Palier

Different welfare states, different adaptation to the EU The chapters presented in this volume have tried to answer to some overarching, basic research questions. How does Europe matter in domestic welfare state reforms? What is the degree of change in the recent evolution of domestic welfare state policies? Which European resources have been used by domestic institutional and social actors in order to support domestic reform processes? Which actors have been using Europe and how? The main finding is that European resources have been crucial in several domestic welfare state reforms. All the countries analysed have gone through some changes and in all the reform processes Europe has been somehow part of the picture. However, what comparative research shows is that there are many different pictures in the photo album of Europeanization of welfare state reforms. European resources are translated and mediated differently in each country according to the domestic institutional and historical context and to the interests of the actors that have been able to use them. Hence, what emerges is an image of diversity. Social Europe displays many faces and the impact of the European Union on welfare systems has to be considered in the plural form: “Europa, Europae”. These results confirm what we know from the Europeanization literature. Europeanization does not necessarily equal convergence but absence of convergence does not equal absence of change and absence of influence from Europe (i.e. Featherstone and Radaelli, 2003). However, the chapters in this book shed some light on the diversity of the mechanisms of influence of Europe. In the following paragraphs we will discuss more in detail the findings in connection to the welfare state “regimes” or models. 316

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Continental countries: France, Germany and the Netherlands In these welfare states, Europe has played a significant role and European resources have been used in a varied and significant way (primarily cognitive and strategic). Nevertheless, all the countries (analysed by Hélène Caune, Sophie Jacquot and Bruno Palier, by Patrizia Aurich and Anne Schüttpellz, and by Willibrord de Graaf and Rik van Berkel) show that continental welfare states’ governmental actors have been trying to “upload” their own policy model to Brussels as much as using Brussels home. Put differently, if in these cases strategic and legitimating usages of Europe have been detected at the national level, the French, German and Dutch governments (and, to a lesser extent, social actors) have also tried to shape the EU welfare policy agenda in order to “boast” the domestic policy model. This finding is particularly relevant since it challenges the “goodness of fit” hypothesis: all the continental countries analysed are characterized by a significant degree of policy misfit but this feature did not produce relevant policy changes. Limited policy changes have been registered in all the countries, but in all cases EU pressures were heavily filtered by the domestic governments which – especially in the French case – have been always very keen to downplay the role of Europe as a factor of influence. In the case of Germany, European policies were “uploaded” rather than significant sources for new domestic policies. This is also in the case in the Netherlands; the evolution of Dutch employment policy (and also in the case of pension policy) has mainly been “homegrown”. Furthermore, all the countries analysed provide sound evidence of “uploading” capacities and specific political strategies. The main goal of continental actors has been to participate actively at EU level in order to shape the EU policy agenda and at the same time use European cognitive, legal and financial resources in order to further pursue domestically shaped policy agendas. Finally, the overall (elite and public opinion) support of the EU has been ambiguous, clearly inclining towards a shared perception that the countries were “policy-shapers” rather than “policy-takers”. In sum, the limited policy changes registered in the cases of France, Germany and the Netherlands are strongly connected to the government capacity to use Europe (even implicitly) in order to further support the domestic welfare state model and the policy changes domestically determined. Southern European countries: Greece, Italy and Portugal Clearly, the most significant policy change occurred in the Southern European countries, especially in Greece and Italy, which exhibited a

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318 Paolo R. Graziano, Sophie Jacquot and Bruno Palier

strong policy misfit with respect to the EU in several social policy areas – not only employment. The changes witnessed in Southern Europe (presented by Dimitri Sotiropoulos, by Paolo R. Graziano and Matteo Jessoula, and by Sotirios Zartaloudis) are much more connected to European pressures since a) the EMU accession was crucial in the 1990s and meant the Southern countries were scrutinized more than others; b) the overall elite and public opinion support (although declining in recent years) was particularly high during the 1990s and provided further legitimation to the reforms which occurred from the mid-1990s onwards; c) the overall degree of policy misfit was rather high and therefore triggered more pressures for change than in other European countries. Several European resources were used (cognitive, legal, financial, political) in order to “avoid blame” connected to unpopular social policy reforms and – at the same time – exploit as much as possible the opportunities the EU offered, especially with respect to the financial resources made available by the EU institutions. With the partial exception of Portugal in the employment policy field, the three countries were less capable than the previous EU member states to “upload” their preferences in order to reduce the pressures percolating from the EU level. To be sure, the potential role of Europe in triggering changes at the domestic level needs to be further discussed, since all the contributions show how the role of Europe as a source for policy change has been limited to a short period of time (i.e. when the EMU “scrutiny” powers of the EU were at their peak). But if we take a broader perspective, it emerges that also in the Southern countries Europe has been heavily filtered by domestic political arena. The changes registered in the various countries are always connected to the presence of key decision-making domestic actors who have used Europe as an opportunity to further support (domestically) their own political agenda, although this could only be done while elite and public opinion support for the EU was fairly high. Unlike other EU countries, though – except for employment policy in Portugal – Southern European countries, until very recently, have not been in a position to “boast” about their models since the policy misfit with the EU was too wide. Central/Eastern countries: Czech Republic In Central/Eastern Europe, analysed by Tomáš Sirovátka, the role of Europe in setting the policy agenda at the domestic level resembles the role played in Southern European countries. This does not imply that EU was the main driving force behind the reform processes which occurred in the Czech republic, but surely it confirms the overall

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research hypothesis that high policy misfit leads to high pressures for change at the domestic level. More specifically, in the case of the Czech Republic, of crucial relevance were the financial and the cognitive resources which gave birth to both strategic and cognitive usages of Europe. Also political resources were partially relevant, and this led to legitimating usage (although on a less significant scale). Furthermore, the Czech case confirms the relevance of the “membership” hypothesis – i.e. the more under scrutiny a country is, the greater the usage of Europe and greater policy change is probable. What also emerges in the Czech case is the relevance of the elite and public opinion (to a lesser extent) support in explaining the usage of Europe. Put differently, the “new” EU member states are much more similar to Southern European countries in their relationship with Europe, and similar features (high misfit, high but recently declining support towards the EU, membership concerns) characterize all the studied countries in Central/Eastern and Southern Europe.1 Scandinavian countries: Sweden The Swedish case presented by Åsa Casula Vifell illustrates clearly that, even in cases of limited policy misfit and very limited policy change triggered (also) by the EES, Europe has become a constant point of reference and has reshaped the political capacities of domestic actors in formulating welfare state policies. More specifically, the general (elite) relationship with Europe has provided strong explanatory potential in order to understand the recent evolution of Swedish welfare state policies. Despite the limited reference to the EU, domestic decision-making in Sweden has used Europe cognitively but in a very selective way in order to maintain the ‘importance of showing that formal decisionmaking remains at the national level’ (Casula Vifell, p. 248). Put differently, Europe has been used selectively in order to further support Swedish policy structure both in the national and international (EU) political arenas. Change (involving mainly the procedural dimension) in employment policy were implicitly driven by EU ideas, although – due to the limited support of the EU both at the elite and public opinion level – such changes were not adopted by making positive and constant reference to the EU. The changes were particularly limited since policy misfit was very low and the Swedish government was particularly active in shaping the EES agenda at the EU level. Åsa Casula Vifell indeed shows that, if the EU is not a legitimating reference at the national level, it remains important for Swedish officials to be committed and legitimate actors at the EU level, and to show compliance with EU rules.

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In sum, the only usage witnessed in Sweden is a cognitive one and the overall employment policy change induced by the EU was limited. Anglo-Saxon countries: United Kingdom The UK employment policy case presented by Jonathan Hopkin and Christa van Wijnbergen is particularly interesting as a case of a difficult relationship with Europe, limited policy misfit, very limited procedural change and limited strategic usage of EU resources under the form of neglect. As stated by the authors in the conclusion of the UK chapter ‘Europe remains the “elephant in the room” in British politics, a problem rather than a resource, and one which will not go away’ (Hopkin and van Wijnbergen, p. 276). Put differently, unlike other welfare state models (especially the Southern and continental ones), in the UK case Europe was mainly a target rather than a source of influence (with the partial exception of the working time Directive). This does not entail that employment policy is “another case of fog over the channel” since the Blair government was extremely keen in setting a new (UK- designed) bridge over the channel and all the way to Brussels in order to set the EU employment policy agenda in order to avoid further unwanted costs of taking part in the EU. In the case of the UK, the strategic usage of Europe exhibits the traits of neglect, since the overall support of the elite and the population for the EU and the policy misfit has been traditionally limited. But also in the case of neglect, this case shows that European resources are often used by domestic actors in order to further support their domestic strategies and further legitimize their policy preferences by using the EU as a new political arena. Candidate countries: Turkey The Turkish case illustrated by Cem Utku Duyulmus shows how longterm EU pressure – connected to the accession negotiations – may only partially lead to policy changes and usages of EU resources. The main resources used by Turkish key decision-making actors are cognitive and financial, although on some occasions (for example, in the case of pension policy) political resources were also used in a legitimating way. The case of Turkey is also a case of high misfit with respect to the EU policy structures, although the pressures connected to the accession negotiations have been linked to other pressures deriving from other international organizations such as the International Monetary Fund and the World Bank. In the words of Duyulmus : ‘The EU membership process has provided various opportunities for the JDP government actor, allowing considerable legitimacy for reform attempts, providing

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Conclusion 321 Table C.1 The main research findings Policy change Scandinavian countries Anglo- Saxon countries Continental countries

Resources

Usages

Very limited (procedural). Cognitive.

Cognitive.

Very limited (procedural). Legal.

Strategic.

Limited (procedural and objective-related).

Cognitive. Strategic.

Southern European Radical. countries

Central/Eastern countries

Radical.

Candidate countries

Limited.

Cognitive. Legal. Financial. Cognitive. Legal. Financial. Political. Cognitive. Legal. Financial. Political. Cognitive. Financial. Political.

Cognitive. Strategic. Legitimating. Cognitive. Strategic. (Legitimating.) Cognitive. Strategic. (Legitimating.)

resources that helped to shape the content of the reform process to a certain extent’ (page 304). European institutions were international players of the game, among several others, and therefore, in the Turkish case, the availability of exogenous opportunities went beyond those in Europe. What does not clearly emerge from the Turkish case is that declining support for Europe is strongly connected to a declining usage of Europe. More specifically, although, since 2004, in Turkey there has been declining elite and public opinion support for Europe, the usages of Europe have not been significantly reduced and the public reference to Europe has not become negative. Table 12.1 summarizes the main findings of the empirical research carried out by the various contributions to this volume.

Research hypotheses discussion What can we conclude with respect to the research hypotheses formulated in the introduction of this volume? a) EU membership – RH1: all the relevant cases confirm the hypothesis – also discussed elsewhere in the literature (Grabbe, 2001) – that the more “under scrutiny” by the EU the countries are (for example,

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322 Paolo R. Graziano, Sophie Jacquot and Bruno Palier

because they are accessing countries), the more probable it is for the European Union policies and institutions to be considered seriously and therefore be a fundamental motivation of and/or point of reference for the political behaviour of national actors. In cases of high “scrutiny”, domestic actors have often made constant – although not always “positive” – reference to Europe and used Europe more than in cases of lower “scrutiny”. Furthermore, in cases of greater “scrutiny” by the EU, we detect greater domestic social policy changes connected to EU prescriptions. The case of Southern European and Central/Eastern countries fully prove the hypothesis, since when the pressures were connected to further membership opportunities (i.e. entrance into the EMU – between late 1990s and early 2000s), the reference to and usages of Europe were much more varied and significant than in other historical periods. Also, in the case of Turkey, when the scrutiny was high (and opportunities of letting Turkey into the EU were high too), Europe was a constant point of reference and used in various ways. By contrast, this hypothesis does not lead us to consider that the less “under scrutiny” member states tend to display less usage of Europe. Rather, socialized to the status of being a member state, they are more able to play with European resources and constraints, especially by developing what we can call “negative” usages of Europe – i.e. using Europe for blame-avoidance and multi-level strategies or for supporting and uploading national welfare state models and domestically determined reforms. b) Relationship to Europe – RH2: all the cases confirm that this hypothesis is relevant, although further qualifications are needed. There has often been a mismatch between elite and public opinion support for Europe. This led to some problems in testing the hypothesis since in many empirical cases the mismatch could not lead to solid findings. The empirical cases show clearly that elite opinion is what counts the most and – in line with previous research on Europeanization (Green Cowles et al., 2001; Heidenreich and Zeitlin, 2009) – in cases of limited elite support policy change was often limited and domestically shaped, and the resources used were primarily limited to the financial and cognitive ones. The continental cases and the British case show how relevant this hypothesis specification is since, in the four countries studied (France, Germany, the Netherlands and the United Kingdom), domestic actors used Europe but tried to make limited reference to it by

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Conclusion 323

“denying” or “neglecting” its role in setting the domestic policy reform agenda. Public opinion support is much less relevant than expected. Although we have found some cases of convergence between elite and public opinion support, most of the cases show that what really counts in explaining both the multiple usages of Europe and EU-induced policy change is elite support. c) Policy fit/misfit – RH3: this is one of the most discussed hypotheses in the literature (Boerzel and Risse, 2003; Falkner et al., 2005; Graziano, 2007; Thoskov, 2007; Falkner and Treib, 2008; Thompson, 2009) and our findings support its relevance, especially with respect to the intensity of the pressures which are more intense when the misfit is high. In cases of high policy misfit, the probability of significant policy changes is particularly high and Europe will be used in multiple ways by the key domestic actors. Our research, though, qualifies the misfit hypothesis since in cases of similar misfit (for example, Italy and France) the pressures for change gave birth to different usages of Europe and different intensities of policy change (see also Graziano, 2011). Our empirical findings show that other variables have to be taken into account. European pressures are mediated and it is important to consider if domestic actors have room for manoeuvre and are in a position to play with these pressures or not, considering the membership situation of the country (see RH1) and the different relationship of the key domestic decision-makers with the EU (see RH2). This should be taken into account by future research devoted to Europeanization and policy change, also beyond the welfare cases analysed in this volume. This volume has shed new light on the mechanisms through which Europe matters in domestic social policy reforms. It also provides new insights on the different usages of Europe (Jacquot and Woll, 2003; Woll and Jacquot, 2010) by showing that European resources may be used differently by domestic actors in accordance with their specific domestic political preferences and overall strategies. Put differently, the contributions confirm that Europe exercises differentiated forms of pressure which lead to domestic policy change, whose intensity depends on the nature of the link with the EU (for example, “new” vs “old” members), on the elite support of the European Union and on the presence of specific “traditional” policy structure and its fit/misfit with respect to the EU. Within this process, the role of creative actors is a key variable to understand the channels and mechanisms of the influence of Europe.

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Note 1. This view is also confirmed by the Spanish and Hungarian case that we have studied in the other publication coming out of this research project; see our special issue of European Journal of Social Security, vol. 13 (1), March 2011, entitled ‘Letting Europe In: The Domestic Usages of Europe in Reconciliation Policies’.

References Boerzel, T. A., and T. Risse (2003), ‘Conceptualizing the Domestic Impact of Europe’, in C. Radaelli, K. Featherstone (eds), The Politics of Europeanization (Oxford: Oxford University Press), pp. 57–80. Falkner, G., and O. Treib (2008), ‘Three Worlds of Compliance or Four? The EU15 Compared to New Member States’, Journal of Common Market Studies, vol. 46 (2), pp. 293–313. Falkner, G., O. Treib, M. Hartlapp and S. Leiber (2005), Complying with Europe: EU Harmonization and Soft Law in the Member States (Cambridge, Cambridge University Press). Featherstone, K., and C. Radaelli (eds) (2003), The Politics of Europeanization (Oxford: Oxford University Press). Grabbe, H. (2001), ‘How Does Europeanization Affect CEE Governance? Conditionality, Diffusion and Diversity’, Journal of European Public Policy, vol. 8 (6), pp. 1013–31. Graziano, P. (2007), ‘Adapting to the European Employment Strategy? Continuity and Change in Recent Italian Employment Policy’, International Journal of Comparative Labour Law and Industrial Relations, vol. 23 (4), pp. 543–65. Graziano, P. R. (2011), ‘Europeanization and Domestic Employment Policy Change: Conceptual and Methodological Background’, Governance, vol. 24 (3): 581–603. Green Cowles, M., J. Caporaso and T. Risse (eds) (2001), Transforming Europe: Europeanization and Domestic Change (Ithaca: Cornell University Press). Heidenreich, M., and J. Zeitlin (eds.) (2009), Changing European Employment and Welfare Regimes: The Influence of the Open Method of Coordination on National Reforms (London: Routledge). Jacquot, S., and C. Woll (2003), ‘Usage of European Integration: Europeanisation from a Sociological Perspective’, European Integration online Papers (EIoP) 7(12), available at http://eiop.or.at/eiop/texte/2003- 012a.htm Thomson, R. (2009), ‘Same Effects in Different Worlds: The Transposition of EU Directives’, Journal of European Public Policy, vol. 16 (1), pp. 1–18. Toshkov, D. (2007), ‘In Search of the Worlds of Compliance: Culture and Transposition Performance in the European Union’, Journal of European Public Policy, vol. 14 (6), pp. 933–54. Woll, C., and S. Jacquot (2010), ‘Using Europe: Strategic Action in Multi-Level Politics’, Comparative European Politics, vol. 8 (1), pp. 110–42. Zeitlin, J., and P. Pochet (eds.) (2005), The Open Method of Coordination in Action: The European Employment Strategy and Social Inclusion Strategies (Brussels: PIEPeter Lang).

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Index action programmes, 23, 25, 40 activation, concept of, 96 activation policies, 55–56, 103–105, 111, 115–116, 158–159, 224, 100–112 Active Labour Market Policies (ALMPs), 153, 182–183, 191–192, 208, 210–211, 212 allocation unique degressive (AUD), 56 Amsterdam Treaty, 20, 29, 32–34, 60, 63, 81, 84, 110, 129, 140, 264 anti-discrimination policies, 12, 40–41, 50, 58–60, 62, 64–66 anti-poverty measures, 163–164, 183, 220–221, 244, 266–267 appropriation, 14 atypical employment, 79 autonomous agreements, 32 Balladur reform, 57 benchmarking, 110, 159, 245 Bismarkian welfare state, 152, 203–204 Blair, Tony, 257–260, 267–269, 272–274 blame avoidance strategy, 9, 53, 68, 135–136, 156, 210, 248, 304, 322 boasting strategy, 49 breadwinner model, 50, 79, 99, 148 Broad Economic Policy Guidelines, 29, 33–34, 36–37 Brown, Gordon, 261, 265, 269, 273–274 budgetary considerations, 225 budgetary policy, 27 Bush administration, 272–273 Cameron, David, 257 Catholic social philosophy, 79 Celik, Faruk, 298–299 Central Europe, 283–284 civil servants, 242, 244–245, 249n1 Clinton administration, 261, 267

cognitive resources, 10, 19, 25, 30, 40–43, 68, 138, 190, 194 cognitive usages, 14, 15, 74, 85–86, 208, 214, 244–245, 300 Commissie Bakker, 112 Committee of Permanent Representatives to the European Council of Ministers (COREPER), 63, 236 Common Agricultural Policy (CAP), 125 Common Market, 20, 21–26 construction of, 21 French support for, 52 public opinion on EU membership in, 202–203 as tool to foster social progress, 21–23, 26 competition, 44 compliance, 3, 15, 51, 75–76, 78, 89, 99, 123, 149, 172, 177–178, 201, 204–208, 215–216, 222–225, 258, 270, 271, 299, 303, 319 conciliation policies, 12 conservative-corporatist model, 22, 23, 28, 50–51, 55, 79 Constitutional Treaty, 53–54 constraining consensus, 28 continental welfare states, 2, 22 convergence, 2, 28–29, 136, 181, 187, 205, 208, 215, 260, 316, 323 cooperation, 44 co-opetition, 37, 44 Copenhagen criteria, 285–286, 309n8 Council Directive 2000/43/EC, 58–59 currency, single, 26, 27 Czech Republic, 15, 201–226, 318–319 attitudes toward EU in, 223 compliance with EU in, 204–206, 222–223 employment policies, 206–214 EU accession by, 215–216 325

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326 Index Czech Republic – continued misfit between EU policies and, 201–202, 224 post-accession, 216–218 relationship between Europe and, 202–215 social assistance policy, 211–212 social inclusion policy, 214–218, 220–221 unemployment policies, 211–212 usages of Europe in, 218–226 welfare state in, 203–204 dead letters, 149, 172, 177–178, 205, 210, 224, 225, more???/ rather: see world of dead letters decoupling, 52–53, 242–243 deficit spending, 27 Delors White Paper, 28 demographic changes, 2 Denmark, 22 Dini reform, 161 Directorate-General for Economic and Financial Affairs, 33 Directorate-General for Employment and Social Affairs, 28, 34 disability, 60–63, 66–67, 102 discrimination, 50, 58–60 discursive transformation, 206 disengagement, 14 diversity policies, 50 domestic policies. see national policies downloading strategy, 63, 65, 97, 115, 267, 271 early retirement, 81, 86, 108–109, 113, more/?? Eastern Europe, 136, 283–284 Economic and Monetary Union (EMU), 49, 139, 210, 218–219, 223, 231, 262, 270, 318, 322 Economic and Social Agreement (AES), 179–180 Economic and Social Committee (EOK), 138 Economic and Social Council (ESC), 98, 300–301 economic integration, 26–28

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economic policies, 20, 26–28, 29 Economic Policy Committee (EPC), 33 economically-oriented actors, 33, 34, 46n4 employer associations, 300–302, 307 employment policies, 12, 20, 24–25, 28–29, 31–32, 41–42 in Czech Republic, 206–214 in France, 54–58, 62–63 in Germany, 75, 79–89 in Greece, 123, 126–130 in Italy, 154–155, 157–160, 165–166 in Netherlands, 100–103, 105–107, 111–114 in Portugal, 186–192 in Sweden, 233–241 in UK, 259–266 Employment Promotion Act, 82 employment protection, 105–107, 111–112, 116, 190–191 employment security, 112 employment-friendly welfare reforms, 5, 6, 11, 12, 73, 74. see also welfare state reforms call for, 28–29 in Germany, 80–85 in Greece, 121–145 in Italy, 152–172 Lisbon strategy and, 35–37, 44 in Portugal, 175–196 in UK, 261–266, 271–276 usages of Europe in, 13–16 equal pay, 24, 31, 39 equal treatment, 24, 31, 39, 133–134 Essen European Council on Employment, 28, 101 EU Directives, 78, 123, 129, 177, 183, 189–190, 196, 205, 258, 271 EU membership, 8, 75, 321–322 EU policies compliance with, 3, 15, 51, 75–76, 78, 89, 99, 123, 149, 172, 177–178, 201, 204–208, 215–216, 222–225, 258, 270, 271, 299, 303, 319 evolution of, 19–46 implementation of, 3–4, 137–138, 271 interaction between national policies and, 5–16, 61–67, 259–266, 316–323

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Index 327 EU policies – continued labour market, 89 misfit between national policies and, 76, 78, 96–97, 117, 121, 149, 157, 201–202, 224, 248, 275–276, 323 EU resources, 9–12, 316 1957–1980s, 24–25 1980s–1990s, 30–32 evolution of, 19–46 France and, 68–69 since 1990s, 38–43 types of, 10, 19 usages of, by national actors, 5–7 EU roles, 9–12 Europe relationship to, of countries, 8–9 usages of. see ‘usages of Europe’ Europe 2020, 37 European Center for the Development of Vocational Training (Cedefop), 23 European Commission, 106, 191 European Economic Community (EEC), 19–20, 22–23, 97, 150, 182, 256, 2697 European Employment Initiatives, 28 European Employment Strategy (EES), 34 Czech Republic and, 201, 207–208, 210, 212 Germany and, 81, 86–87, 89, 90 Greece and, 123 Italy and, 159 Netherlands and, 104–107, 110 reform of, 236–237, 249n1 Sweden and, 230, 233–241, 244–247 UK and, 259–260, 261–264, 266, 270, 272, 275 European Foundation for the Improvement of Living and Working Conditions (Eurofound), 23 European institutions involvement of, in social policies, 33 roles of, 11–12 European integration, 1

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economic policies and, 26–28 France’s role in, 51–52 French support for, 53–54 Greek support for, 138 Italy and, 157 national social policies and, 6–16 process, 159 public opinion on, 98–99, more??/ UK opposition to, 255–257 welfare policies and, 37 European Monetary System (EMS), 155, 265–266 European Monetary Union (EMU), 180–181, 187, 189, 194–195 European Social Fund, 22, 23 European Social Model (ESM), 34, 88, 121, 123, 152, 176, 190–192, 215, 259, 273, 281, 296 European Structural Funds (ESF), 20, 206, 214, 224–225 European Union (EU) adaptations to, 316–323 British policy entrepreneurship in, 271–274 Czech Republic and, 201–226, 318–319 enlargement of, 97–98 France and, 48–70, 317 Germany and, 73–91, 317 Greece and, 121–145, 317–318 Italy and, 148–172, 317–318 membership conditions, 285–286, 309n8 multilevel governance of, 89 Netherlands and, 96–117, 317 Portugal and, 175–196, 317–318 public opinion on, 116, 125, 150–151, 176–177, 202–203, 255–256, 270 Sweden and, 230–250, 319–320 Turkey and, 280–310, 320–321 UK and, 254–277, 320 welfare state reforms and, 1–5 Europeanization, 4–8, 35, 48, 63, 77, 97, 102, 141–142, 188, 223, 233, 242, 249, 255, 271, 273, 280, 316 exchange rate policy, 27 expert committees, 138

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328

Index

Federal Labour Union (FNV), 111 financial resources, 10, 19, 24–25, 31–32, 39, 40, 41, 43, 194 fit/misfit, between national and EU policies, 76, 78, 96–97, 115–117, 149, 157, 201–202, 224, 248 flexibility agenda, 274–275 Flexibility and Security Act, 106 flexicurity, 84, 105–107, 111–113, 115, 190–192 France, 15, 48–70, 317 anti-discrimination policies, 58–60, 62, 64–66 disability policies, 60–61, 62, 66–67 employment policies, 54–58, 62 pension reform, 56–58, 62, 63 relationship between Europe and, 50–54 social protections in, 22 usages of Europe in, 61–69 welfare system, 49–70 free movement principle, 22–24, 30, 38 French Republican model, 50 full employment, 28, 29 gender equality, 133–134 Germany, 15, 73–91, 317 employment policies, 75, 79–89 EU influence on, 74 EU membership, 75 health care reform, 73 labour market policy, 89–90 pension reform, 73 relationship between Europe and, 75–78 retirement policies, 81, 83, 86 unemployment policies, 73, 83–84 usages of Europe in, 85–91 welfare state reforms, 73–85 global financial crisis, 37 globalization, 2, 116, 267–268 “goodness of fit” hypothesis, 68, 257–258, 317 goods, free movement of, 20 Greece, 15, 23, 121–145, 317–318 attitudes toward EU in, 125 employment policies, 123, 126–130 labour market policy, 126–127

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misfit between EU social model and welfare state in, 123–125 pension policy, 130–133 politics in, 142–143 social inclusion policy, 133–135 social protection policies, 123–125 usages of Europe in, 135–143 welfare policies in, 121–145 Greek Labour Force Organization (OAED), 127 Growth and Stability Pact, 34 Guaranteed Minimum Income (GMI), 183–184, 192–193 Guaranteed Youth Employment Act, 103, 104 HALDE (Haute autorité de lutte contre les discriminations et pour l’égalité), 58–60, 64–66 Hartz laws, 75, 80–81, 84–88 health and safety policies, 23, 24, 26, 30, 38 health care reform in Germany, 73 in Sweden, 234 in Turkey, 308n1 historical institutionalism, 76 historicizing, 89–91 ideational convergence, 205 inflation, 27 institutional learning, 205–206 institutional resources, 10, 19, 24–25, 30–32, 39, 41 instrumental eclecticism, 214, 224 Integrated Mediterranean Programmes (IMPs), 123 International Monetary Fund (IMF), 283–284, 290, 310n12 Ireland, 22 Italy, 15, 148–172, 317–318 activation policies, 158–159 employment policies, 154–155, 157–160, 165–166 pension policy, 155–156, 160–162, 166–168 public support for EU in, 150–151 relationship between Europe and, 150–152

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Index 329 Italy – continued social assistance policy, 156–157, 162–164, 168 usages of Europe in, 168–172 welfare state in, 148–172

Lisbon strategy, 35–37, 44, 101, 105, 106–107, 111, 115, 140, 177, 250n4 Lisbon treaty, 54 Local Action Plans (LAPs), 243–244

job security, 112 Job-AQTIV law, 75, 80–83, 85, 87 jobs programs, 103–104 Jobseekers’ Employment Act, 104 joining-the-club effect, 8, 149, 176, 195, 201, 205, 223–224 Joint Assessment Paper for Employment Priorities (JAP), 291 Joint Inclusion Memoranda (JIM), 291 Joint Memorandum on Social Inclusion, 216

Maastricht Treaty, 20, 26, 27, 28, 32–33, 51, 53, 257, 269 macro-economic policy, 28 Major, John, 257 making-work-pay measures, 210–211, 224, 265–266 male breadwinner model, 50, 79, 99, 148 market-correcting interests, 205 market-making interests, 205 Melkert Jobs, 103–104 membership hypothesis, 68 mini-jobs, 84 Minimum Insertion Income (MII), 163 misfit hypothesis, 76, 78, 96–97, 117, 121, 149, 157, 201–202, 224, 248, 275–276, 323 mobility, 32, 43 monetarism, 27 Monetary Union, 27 mutual learning, 205–206

Keynesian welfare state, 26 knowledge transfer, 208 knowledge-based society, 84 Kok Report, 36, 110–111 Labour Foundation, 98, 105–107 labour laws, 26 Labour Market Board, 243 labour market policy, 28 EU, 89 in France, 54–55 in Germany, 80–85, 89–90 in Greece, 126–127 in Netherlands, 100–103 in Portugal, 179–182, 186–192 in UK, 259–264 labour markets, 33, 37 changes in, 2 flexicurity and, 105–107 labour participation, 100–101 Labour Promotion Law, 75, 82, 83 labour shedding, 79, 81 legal resources, 10, 19, 24–25, 30–32, 38–40, 43, 68, 194 legitimating usages, 14, 300 leverage effect, 13, 217, 223, 225 liberal welfare regimes, 2, 22, 207, 234, 257 Lisbon Methodology Working Group (LIME), 36

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National Action Plan on Employment (NAPE), 222, 224 National Action Plan on Social Inclusion (NAP-INLC), 216–217, 222 National Action Plans (NAPs), 36, 102, 104, 139, 208, 244, 245 national actors, usages of Europe and, 13–15 national policies development of, 4 evolution of, 12–13 interaction between EU policies and, 5–16, 61–67, 316–323 misfit between EU policies and, 76, 78, 96–97, 117, 121, 149, 157, 201–202, 224, 248, 275–276, 323 relationship between EU integration and, 3

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330

Index

National Reform Programmes (NRPs), 104 national reforms, 13. see also welfare state reforms national sovereignty, 20, 27, 35 negative integration, 26, 27 neglect, 177–178 Netherlands, 15, 96–117, 317 activation policies, 103–105, 111, 115–116 development of welfare state in, 100–103 disability policies, 102 employment policies, 100–103, 105–107, 111–114 as European welfare state, 97–100 labour market policy, 100–103 pension reform, 108–109, 113–114 political reforms, 114 retirement policies, 108–109, 113 unemployment policies, 102, 103–105 usages of Europe in, 109–114 New Deal for Disabled People (NDDP), 263 New Deal for Lone Parents (NDLP), 263 New Deal for Young People (NYYP), 263 New Labour, 269–271, 272, 273–274, more??? non-binding policies, 20, 138 non-state actors, 243–244 Nordic welfare states, 2 normative resources, 10, 68, 190 notional defined contribution (NDC), 161 older workers early retirement, 81, 86, 108–109, 113 employment policies and, 12 part-time retirement, 83 Open Method of Coordination (OMC), 3–4, 33, 63, 81, 89, 104, 110, 201, 225–226 adoption of, 35 goals of, 35 participation in, 271–272

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organizational resources, 137 Ozcan, Celal, 298 parental leave, 78 part-time retirement, 83 part-time work, 106 Party for Freedom (PVV), 109 pension age, 108–109, 113–114, 116 pension reform in France, 56–58, 62, 63 in Germany, 73 in Greece, 130–133 in Italy, 155–156, 160–162, 166–168 in Netherlands, 108–109, 113–114 in Portugal, 184–186, 187, 189, 193–194 in Turkey, 280–281, 293–295, 308n1 pensions, 23, 34, 108–109 permissive consensus, 27–28, 52–53, 176 polder, 99 policy compliance, 149–150 policy structures, 6, 9 political parties, 98–99, 111–112, 142 political resources, 10, 19, 39, 42, 194 Portugal, 15, 23, 35, 175–196, 317–318 compliance record of, 177–178 economy of, 178–179 employment policies, 186–192 employment-friendly welfare reforms in, 179–196 labour market policy, 179–182, 186–192 pension reform, 184–186, 187, 189, 193–194 public support for EU in, 176–177 relationship between Europe and, 175–178 social inclusion in, 183–184, 189, 192–193 usages of Europe in, 186–196 vocational training in, 182–183, 192 welfare regime in, 178 pre-pensions, 113 Programmatic Public Sector Development Policy Loan (PPDPL), 290

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Index 331 progressive agenda, 266–269 proportionality principle, 28 protest avoidance strategy, 214 Public Employment Services (PES), 102 public reform debates, 88–89 Race Directive, 58–59, 64–67 race to the bottom, 45 re-appropriation, 14 reflation policy, 27 reintegration, 105 retirement policies, 81, 83, 86, 108–109, 113 retrenchment, 1, 20, 26, 27, 65, 69, 80, 100, 149, 156, 160–162, 167, 280, 293 Santer Commission, 34–35 Schumpeterarian workfare state, 27 selective amplifier role, 214 self-confident historicizing, 89–91 self-employed, 129, 130 Single Act, 23 Single Market, 20, 26, 27, 33 skills, 32, 37, 84 Social Action Programme, 23, 25 social activation, 96 Social Assistance and NonContributory Payments (SANCP), 294 social assistance policy in Czech Republic, 211–212 in Italy, 156–157, 162–164, 168 social burdens, 28 social charges, 55 social democratic systems, 22 social dumping, 23 social Europe, 19–45, 79, 99, 316–323 social inclusion, 43 in Czech Republic, 201, 214–218, 220–221 in Greece, 133–135 in Portugal, 183–184, 189, 192–193 social insurance, 22 Social Insurance Institution (SSK), 284, 287, 293, 294, 296, 297, 309n5 social justice, 35

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Social Liberal Party (D66), 112 social policies in Czech Republic, 201–226 development of national, 4 economic policies and, 20 European, 44–45, 78, 121, 157, 164–168, 206, 223–226 evolution of EU, 19–46 in France, 48–70 in Germany, 73–85 in Greece, 121–145 impact of EU policies on, 3, 5–16 in Italy, 148–172 in Netherlands, 96–117 in Turkey, 280–310 in UK, 254–277 social progress, 21–23, 26 social protection policies, 4, 22, 28–29, 33, 34, 53–54, 123–125 social rights, 74 Social Security Funds’ Solidarity Account (LAFKA), 130, 131 social security reform dimensions of policy change, 293–295 domestic and international dynamics, 287–293 EU and, 295–302 in Turkey, 280–310 social security systems, 22, 38–39 in Turkey, 282–287 social sovereignty, 21, 23, 45 social tourism, 22 Socialist Party (PS), 108, 109 socially-oriented actors, 33, 46n4 Southern European welfare regimes, 178, 282–284 sovereignty national, 27, 35 social, 21, 23, 45 Spain, 23 Stability Pact, 137 standard work arrangement, 79 Strategic Social Pact, 180–181 strategic usages, 14, 15, 300 Structural Funds, 20, 206, 214, 224–225

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332

Index

Structure Administrative Organization Work and Income (SUWI) Act, 102, 105 sub-national actors, 243–244 subsidiarity principle, 3, 28, 110 Sweden, 15, 230–250, 319–320 European Employment Strategy and, 233–241 relationship between Europe and, 231–233 as rule follower, 240–241 uploading strategy, 237–240 usages of Europe in, 242–249 welfare state reforms, 233–241 tax credits, 264–265, 272 Thatcher, Margaret, 254, 256 “Third Way” doctrine, 261, 266–269 trade unions, 23, 108, 109, 112, 127, 191, 234, 256, 300–302, 307 Treaty of Amsterdam. see Amsterdam Treaty Treaty of European Communities, 129 Treaty of Rome, 21–22 Turkey, 15, 98, 280–310, 320–321 accession negotiations, 285–287 health care reform, 308n1 pension reform, 280–281, 293–295, 308n1 relationship between Europe and, 285–287, 292 social security reform in, 280–310 social security system in, 282–287 usages of Europe in, 281–282, 295–302 welfare regime in, 282–284 two-level game, 13 unemployment benefits, 23, 234 in Czech Republic, 211–212 in France, 55–56 in Germany, 73, 82, 83–84 in Netherlands, 102, 103–105 in UK, 263–265 unemployment rates, in Portugal, 178–179 union confederations. see trade unions

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United Kingdom (UK), 15, 22, 33, 254–277, 320 attitudes toward EU in, 254–259, 270 compliance with EU in, 258 employment policies, 259–266 labour market policy, 259–264 misfit between EU policies and, 275–276 politics in, 257–259 unemployment policies, 263–265 usages of Europe in, 266–276 welfare reforms in, 259–277 United States, 261, 267, 272–273 uploading policies, 9, 63, 97, 110, 115, 231, 237–240, 317, 322 ‘usages of Europe’, 5–16, 19, 77, 300 characteristics of, 14–15 in Czech Republic, 218–226 in France, 61–69 France and, 49 in Germany, 85–91 in Greece, 135–143 in Italy, 168–172 in national employment-friendly welfare reforms, 13–16 in Netherlands, 109–114 in Portugal, 186–196 in Sweden, 242–249 in Turkey, 281–282, 295–302 in UK, 266–276 vocational training, 28, 84, 126, 127, 182–183, 192 welfare regimes, 22 adaptation of, to EU integration, 26–28 Bismarkian, 152, 203–204 conservative-corporatist, 22, 23, 28, 50–51, 55, 79 continental, 2, 22 diversity of, 22–23 liberal, 2, 22, 207, 234, 257 Southern European, 178, 282–284 in Turkey, 282–284 welfare state crisis, causes of, 2 welfare state model, 10

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Index 333 welfare state reforms, 316–323. see also employment-friendly welfare reforms during 1990s, 27–28 competing definitions of, 34–35 coordination and competition of, 29–45 in Czech Republic, 201–226 EU and, 1–16 in France, 48–70 in Germany, 73–85 in Greece, 121–145 in Italy, 148–172 key features of, 12 in Netherlands, 96–117, 100–109 in Portugal, 175–196 in Sweden, 230–250 in Turkey, 280–310 in UK, 254–277

9780230_296435_15_ind.indd 333

“welfare to work” agenda, 168, 254–255, 261–266, 269–271, 274–275 welfare without work strategy, 80 Westminster model, 258 women employment policies and, 12 labour market participation by, 99–100, 125 work first approach, 101 work incentives, 210–211 working conditions, regulations on, 22–23 Working Families’ Tax Credit (WFTC), 265 World Bank, 283–284, 290 “world of dead letters,” 172, 177–178, 205, 210, 224, 225 “worlds of compliance,” 3, 15, 51, 75–76, 78, 99, 149, 172, 177–178, 223, 225

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9780230_296435_15_ind.indd 334

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