The Role of International Organizations in Social Policy: Ideas, Actors and Impact

The Role of International Organizations in Social Policy The Role of International Organizations in Social Policy Ide...

Author: Rune Ervik | Nanna Kildal | Even Nilssen

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The Role of International Organizations in Social Policy

The Role of International Organizations in Social Policy Ideas, Actors and Impact

Edited by

Rune Ervik Nanna Kildal Even Nilssen Stein Rokkan Centre for Social Studies, University of Bergen, Norway

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Rune Ervik, Nanna Kildal, Even Nilssen 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009928602

ISBN 978 1 84720 976 4 Printed and bound by MPG Books Group, UK

Contents List of figures List of tables List of contributors Preface

vi vii viii ix

1. Introduction Rune Ervik, Nanna Kildal and Even Nilssen 2. Comparing social policy ideas within the EU and the OECD Nanna Kildal 3. Directly-deliberative polyarchy: a suitable democracy model for European social policy? Milena Büchs 4. Combating social exclusion in the European Union Even Nilssen 5. Policy making and application of law: free movement of persons and the European Court of Justice Aksel Hatland and Even Nilssen 6. EU and OECD advice and changes in German family policy: can reforms be attributed to participation in learning processes? Tord Skogedal Lindén 7. Policy actors, ideas and power: EU and OECD pension policy recommendations and national policies in Norway and the UK Rune Ervik 8. In search of a new approach to pension policy: the International Labour Office between internal tension and external pressure Remi Maier-Rigaud 9. Towards a European convergence in pension policy outputs? Evidence from the OMC on pensions Axel West Pedersen and Henning Finseraas 10. Global health policy: what role for international governmental organizations? Christof Schiller, Henni Hensen and Stein Kuhnle Index

1 20

49 72

94

111

138

165

190

212

247 v

Figures 7.1. 7.2. 8.1. 8.2. 9.1.

9.2.

9.3.

9.4. 9.5. 9.6. 9.7.

9.8. 9.9. 9A.1.

Reference to country/international organizations in the Norwegian Pension Commission report Reference to keywords in the 2004 UK Pension Commission report International Labour Organization and Office The new Social Security Department and competing ideas Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), representative worker Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), low-wage worker Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), broken career Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), representative worker Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), low-wage worker Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), broken career Gross replacement rates second pillar (2004) versus change in gross replacement rates second pillar (2004–2050), representative worker 205 Gross replacement rate, low-wage/gross replacement rate, representative worker (2004 versus 2050) Net replacement rate, low-wage/net replacement rate, representative worker (2004 versus 2050) Projected growth in old-age and early pension expenditure 2005–2050 versus change in gross replacement rate first pillar (2004–2050)

vi

151 158 168 171

199

200

201 202 203 203

206 207

211

Tables 2.1. 2.2. 4.1. 6.1. 7.1. 7.2. 9.1. 9.2. 9.3. 9.4. 10.1. 10.2. 10.3. 10.4. 10.5. 10.6.

Denmark: social policy recommendations Germany: social policy recommendations The ideational foundation of the EU Social Inclusion Strategy Main characteristics of old and new parental leave schemes OECD recommendations for the Norwegian pension system: OECD Economic Surveys 2005 and 2007 OECD recommendations for the UK pension system: OECD Economic Survey 2005 Gross replacement rates, first pillar Net replacement rates, first pillar Growth in second pillar (representative worker) Replacement rates, low-wage/replacement rates, representative worker (2004 versus 2050) Organizational capacity of the WHO Organizational capacity of UNICEF Organizational capacity of the World Bank Organizational capacity of the WTO Comparison of organizational capacities Comparison of health policy ideas and health care approach

vii

28 29 89 116 148 154 202 204 205 208 222 224 230 236 239 240

Contributors Milena Büchs, University of Southampton, UK Rune Ervik, Stein Rokkan Centre for Social Studies, University of Bergen, Norway. Henning Finseraas, NOVA, Norwegian Social Research, Oslo, Norway. Aksel Hatland, NOVA, Norwegian Social Research, Oslo, Norway. Henni Hensen, Hertie School of Governance, Berlin, Germany. Nanna Kildal, Stein Rokkan Centre for Social Studies, University of Bergen, Norway. Stein Kuhnle, Hertie School of Governance, Berlin, Germany. Remi Maier-Rigaud, Social Policy Department, University of Cologne, Germany. Even Nilssen, Stein Rokkan Centre for Social Studies, University of Bergen, Norway. Christof Schiller, Hertie School of Governance, Berlin, Germany. Tord Skogedal Lindén, Stein Rokkan Centre for Social Studies, University of Bergen, Norway. Axel West Pedersen, NOVA, Norwegian Social Research, Oslo, Norway.

viii

Preface The background of this book is a workshop, International Actors and National Welfare Policy, held in Bergen at the Stein Rokkan Centre for Social Studies in June 2007. The workshop was part of an ongoing research project financed by the Norwegian Research Council, Policy Discourses, International Actors and National Welfare Policy: Norway in Comparative Perspective, directed by senior researcher Nanna Kildal. The editors and three other authors are involved in this project. The aim of the project and the workshop is to gain insight into how welfare policy is shaped by the interplay of the national and the international levels, emphasizing the role of ideas, and the actors carrying these ideas. We would like to take the opportunity to thank all the participants in the workshop for their active and inspiring involvement in the discussions on the submitted papers, and for their original contributions to this volume. We would also like to thank the Stein Rokkan Centre for Social Studies at the University of Bergen, which has hosted our project. Rune Ervik, Nanna Kildal and Even Nilssen Bergen

ix

1.

Introduction Rune Ervik, Nanna Kildal and Even Nilssen

In the rapidly growing literature dealing with the impact of globalization and Europeanization on welfare states, the focus has been more on economic and technological forces than on ideational ones. This book addresses this topic by venturing into several kinds of welfare policy themes that have occurred on the political agenda, in the EU, the OECD, the ILO, the WHO, the World Bank and the WTO, but with a major focus on the EU and the OECD. The intention is to examine the content of ideas that the international actors are promoting through recommendations and decrees concerning various systems of social welfare and health policy. A second research topic is to ask if and how these policy ideas might influence national policies. How important are international actors in the shaping of national welfare policy, in which ways do actors on these levels interact and influence each other in different policy areas, and how do the national institutional arrangements of welfare states impact upon these policy processes? The chapters of this book deal variously with these main questions, but a common point of reference is the policy ideas of international and national actors. Currently, many different discourses on welfare policy are present at the national and international levels, where certain normative ideas contain an important part of the vocabulary, for example concepts like ‘dependency’, ‘individual responsibility’, ‘work incentives’, ‘freedom of choice’, ‘normalization’ and so on (Fraser and Gordon 1994; Kildal 2001, 2005; Nilssen 2000, 2006; Schmidtz and Goodin 1998; White 2003). Hence, international debates concerning social problems and welfare policies include normative concepts and discourses founded on various conceptions of the social world. The international literature on policy transfer has traditionally undercommunicated the importance of ideas and primarily concentrated on material forces and self-interests (Campbell 1998, 2002; Stone 2004). Nevertheless, several studies have demonstrated the impact of ideas and discourses on policy formation (Armingeon and Beyeler 2004; Béland 2005; Blyth 2002; Campbell and Pedersen 2001; Campbell 1998, 2002; Ervik and Kuhnle 1993; Hall 1992; Rueschemeyer and Skocpol 1996; 1

2

The role of international organizations in social policy

Schmidt 2000; Weir and Skocpol 1985). This book will add to the knowledge contained in these studies.

THE INTERNATIONALIZATION OF SOCIAL POLICY Ideas on social policy have travelled between countries since modern forms of workers’ protection legislation were initiated in the 1840s in Britain, followed by social insurance legislation in Germany in the 1880s. A host of conferences and congresses were arranged, and organizations established, to address the social questions or the worker questions of the day, where representatives from national authorities, various social scientists and knowledge bearing groups, and representatives from charity and church, met to discuss the new risk landscape created by industrialization and urbanization and to exchange ideas on specific institutional solutions (Kuhnle 1996; Nowotny 1991; Schweber 1996; Wittrock, Wagner and Wollmann 1991). Much of the history of social policy is also a record of learning between countries in addition to factors reflecting the specific national and local contexts of institutions, ideas and social forces (Kuhnle 1981). Many aspects of globalization and increased economic integration have reinforced the inter- and trans-national aspects of social policy. Increased flows of goods, services, capital and labour, other forms of migration and demographic changes, all have consequences for national social policies, and create common institutional challenges across different types of welfare states, increasing the interdependence between different national welfare systems. Ideas of social policy travel more easily now than 100 years ago and the degree of exposure to such ideas, and other cultural aspects, has vastly increased and has become one of the defining characteristics of globalization itself. In addition, the establishment of international organizations and other actors with a global or broad international reach in the aftermath of the two World Wars, has added a new dimension to questions of social policy. Whereas the International Labour Organization, right from its establishment in 1919, was concerned with labour issues and questions of social security, the key focus of the Bretton Woods institutions (World Bank, International Monetary Fund) was initially on macroeconomic questions and on the need to secure a stable system of currency as a prerequisite for international free trade, and to guarantee a relative autonomy for national macroeconomic policy (Deacon, Hulse and Stubbs 1997; Held et al. 1999). Over the past two to three decades, social policy has increasingly been addressed by these institutions in tandem with the growth of the welfare state, the expansion of

Introduction

3

the public sector, and its consequences for effective markets and economic growth. In a European context, this increasing attention towards social policy is evident both within the OECD and the EEC/EU. Since its foundation in 1961, the OECD has of course been engaged in furthering economic growth and economic cooperation, but social policy as an explicit field was not part of its original mandate. Today this has changed, not in terms of the stated goal of the organization, but in terms of an increased attention to, and resources directed towards, a whole range of social policy matters, from labour market policy and pensions to family policy. Clearly the OECD report, The welfare state in crisis (OECD 1981), was seminal in setting the mainly negative tone towards the welfare state, reflecting the general paradigmatic shift of economic ideas from Keynesian inspired thinking towards monetarism, supply-side economics and public choice theories; in short, the rise of neo-liberal thinking, both outside and inside the organization.1 It is fair to say that the OECD today has a more nuanced picture of the welfare state, but scepticism towards public sector solutions is still vivid. However, the OECD possesses no means for getting its advice directly on to national agendas. The organization makes use of a kind of ‘soft regulation’, which means that it has no option but to play what is called the ‘idea game’, using a practice of ‘naming and shaming’ (Marcussen 2002, 2004). Social policy has traditionally not been an area for supranational interference within the European Community. The national welfare state is a major source of legitimacy for national governments, and the EU has no direct legal or regulatory mandate to determine the social policy agendas of the member states. Following the establishment of the internal market and an increasing focus on European integration, social policy has nevertheless become a supranational topic. This has happened partly because of decisions made by the European Court of Justice, for example, case law concerning the coordination of social benefits within the union, and partly because of the establishment of soft law coordination of social policy through the Open Method of Coordination (OMC). The OMC is similar to the ‘soft regulation’ used by the OECD, and highlights a process of mutual learning by the use of measures such as open-ended guidelines and benchmarking (Trubek and Trubek 2005). Originating as a tool in the coordination of EU employment policy, the method has expanded to more and more areas of welfare policy (social exclusion, health, pensions and care). The OMC lacks any formal sanctions against member states which do not comply with the general objectives worked out at the Community level. Compared with the OECD, however, the EU possesses potentially more power, for instance through the European Court of Justice and the

4


Maastricht Treaty, in terms of fiscal discipline (see Leibfried 2005 and Chapter 5 in this volume). Because these international organizations are acting as producers and/ or mediators of social policy ideas in the search for solutions to conceived welfare problems, social policy processes themselves have become globalized. A new international and global agenda on social policy has been established. In this way, the social policy struggles of globalization take place at the international level as well as the national and local political levels (Deacon 2007; Deacon, Hulse and Stubbs 1997; Orenstein 2008; Yeates 2001). In this arena we find actors such as national governments, representatives of capital and labour, non-governmental organizations and international organizations. This trans-nationalization of social policy leads to a situation where: The social policy of a country or locality is no longer wholly shaped (if it ever was) by the politics of the national government. It is increasingly shaped . . . by the implicit and explicit social policies of numerous supranational agencies ranging from global institutions such as the World Bank and the International Monetary Fund through supranational bodies such as the OECD and the European Commission. (Deacon, Hulse and Stubbs 1997, p. 10)

Our main focus here is on one type of actor, namely international organizations. These are particularly interesting since they are given their mandate from member states; thus their legitimacy partly rests on the member states and their assumption that these international organizations provide more efficient means of solving problems of common interest across nations than if each state tackled the problems on its own. But the question of legitimacy is complicated by the fact that the power differentials of member states are reflected within some of these international organizations. This implies that international organizations (IO) could also be considered as a dependent variable in the question of ideational development, that is, that the ideas emanating from an IO result from interactions between member states and IOs, and some nations, for different reasons, may be more successful in terms of placing their own ideas on the policy agendas of IOs than others. Thus, also at the international level, Stein Rokkan’s famous dictum: ‘votes count, but resources decide’ (Rokkan 1978 [1966], p. 105) seems to be valid. In their classification of multilateral institutions, Bøås and McNeill (2004, pp. 210–213) find that Bretton Woods institutions such as the World Bank and the IMF are characterized by a high degree of donor control and power, whereas the ILO is typified by a low degree of such control and power. Combining a strong degree of donor control and power in terms of financial resources enables some states, notably the US, to exert a strong

Introduction

5

influence on the ideas and policies promoted by these institutions. Within the area of development policy, we can find examples of member states that are under a strong coercive pressure to introduce policy requirements as a condition for obtaining loans from these multilateral institutions. The examples in this book concern more symmetrical power relationships between these organizations and member states. The focus is on recommendations, in terms of policy ideas characterizing the context where these organizations have few means of directly coercing states to adopt their policy advice. Instead it is the power of these ideas, in terms of their knowledge and normative bases, which is ideally assumed to constitute their authority and legitimacy and convince the member states that a correct course of action would be to incorporate these ideas into more concrete policy measures.2 The general intention of this book is to grasp the kind of ideas that the international organizations are promoting through recommendations and decrees concerning various systems of social welfare and health issues. The underlying assumption is that these policy discourses influence policy makers in their handling of policy problems and solutions.

IDEAS AND DISCOURSES IN SOCIAL POLICY Ideas are means to understand a multifaceted social world by applying certain concepts that help to reduce complexity. In addition, ideas may also provide a normative function by analysing the social world by invoking various concepts of justice. Both the cognitive and normative aspects of ideas enable individual and collective action, for instance by building and/or changing institutions. Policy ideas, as understood here, are specific in terms of containing both the normative and cognitive functions, as well as prescriptions for actions. The literature on ideas and discourses applies a variety of concepts to denote the role of ideas and how these interact with institutional structures (Pochet 2003; Radaelli and Schmidt 2004; Schmidt 2002; Taylor-Gooby 2005). Thus, Hall (1993) applies the concept of paradigms to represent an interpretative framework which involves ‘a framework of ideas and standards that specifies not only the goals of policy and the kind of instruments that can be used to attain them, but also the very nature of the problems they are meant to be addressing’ (p. 279). Schmidt and Radaelli (2004) define a policy discourse in terms of its content: ‘as a set of policy ideas and values, and in terms of its usage, as a process of interaction focused on policy formulation and communication’ (p. 184). These policy ideas, policy discourses, policy paradigms, or policy stories could be understood as a whole,

6


consisting of a description of reality, a specific framing of problems, and a provision of solutions wherein normative and factual assessments are interwoven (Béland 2005; Campbell 2002; Hall 1989, 1993; Ney 2000, 2003; Rein and Schön 1993). The policy ideas that different actors propagate influence political solutions, because they tell us how the social world is constructed, what is to be considered just and fair, why things go wrong, and what has to be done to correct what has been messed up, or is malfunctioning. In this way, the values, content and direction of policies are provided by such policy ideas. This ideational perspective stresses the non-reducible role of ideas and their relative independence from material self-interest and power. There is a need to differentiate between various aspects of ideas and to distinguish between levels of ideas. Elaborating on this will also serve to clarify the focus of this book, which concentrates more heavily on some ideational aspects than others. Following Radaelli and Schmidt (2004), a discourse is understood as containing two dimensions, the ideational and the interactive. These dimensions further contain two essential activities each. Within the ideational dimension there is, firstly, a cognitive activity, enabling actors to make sense of reality, involving knowledge, policy analysis and information about problems, actors and resources, and secondly, a normative activity that assesses and judges reality and thus belongs to the framework of norms and values (Radaelli and Schmidt 2004, p. 364).The interactive dimension consists of the coordinative activity taking place when policy actors try to construct an agreed-upon policy, and a communicative activity, wherein policy actors present the policy for public deliberation and legitimization (p. 365). In a 1998 article, John Campbell distinguishes between four main types of ideas, based on two dimensions. The first dimension differentiates between concepts and theories in the foreground of debate and underlying assumptions in the background of the policy debate. The other dimension distinguishes between a cognitive and a normative level. Combining these dimensions provides four main types of ideas. Paradigms are cognitive background assumptions delimiting the range of policy solutions considered to be useful for policy-making elites. Public sentiments are normative background assumptions constraining action by delimiting the range of alternatives that elites perceive as being acceptable and legitimate to the public. In the foreground of policy debates we find programmes which are cognitive concepts and theories that facilitate action among elites by detailing how particular policy problems are to be solved. Finally, frames are normative concepts that elites use to justify programmes to the public. Paradigms and public sentiments are second-order concepts, because they constitute the underlying ideas which the first order concepts, programmes and frames, rest upon (Campbell 1998, p. 385). In a later contribution,

Introduction

7

Campbell (2002) has made an adjustment to this differentiation of ideas, distinguishing between cognitive and normative background frameworks (paradigms and world views) on the one hand, and foreground programmatic ideas (cognitive) and frames (both cognitive and normative) on the other. Hence, in a policy discourse, a programmatic idea may relate both to normative and/or cognitive frameworks and be justified by both normative and cognitive arguments. To a varying degree, the chapters of this book distinguish between various types of ideas and activities inherent in policy discourses, but overall there is a stronger focus on background frameworks, programmatic ideas and frames, rather than on public sentiments. In terms of activities, this implies that the cognitive and normative activities are in the foreground of the analyses, whereas the coordinative and communicative activities mostly reside in the background. The reference to level of ideas is important and is also closely related to the categorization referred to above, that is, ideas may range from whole ideologies, world views and cultures, to detailed and specific conceptual tools and ideas on particular topics (Pierson 2004, pp. 38–40). Thus a paradigm, for instance in economics, may form the basis for several specific programmes within different policy sectors (Béland 2005, p. 8). The discourses analysed here will be placed at different levels of generality. Analysing the content of policy discourses and ideas on social policy is at the forefront of our interest, and constitutes a common theme across most of the chapters.

TRACING IDEATIONAL INFLUENCE Keeping in mind the internationalization of social policy, presented previously, a further complexity to the relationship between ideas and institutions is added when we ask how welfare policy is shaped by the interplay between the national and international levels. Exploring what consequences the discourses of international organizations have for national welfare systems, we assume that causality works both ways, that is, from the international to the national and vice versa, over the course of time. This points toward an interactional perspective, focusing on the actors at both levels, carrying the ideas that build the various aspects of the international social policy discourse. How important are international actors in the shaping of national welfare policy, and in which ways do actors on these levels interact and influence each other in different policy areas? And how do the national institutional arrangements of the welfare states impact upon these policy processes?

8


Three general perspectives on how to trace the effects of ideas on policies can be identified according to Yee (1996): co-variational analysis, the congruence procedure and process tracing. The first approach argues that the effect of ideas is demonstrated if these ideas correlate with changes of policies. But very often the relationships between ideas and policies are non-linear and highly contingent on other factors, and reveal disparities in time lags between ideational and policy change. In these situations a lack of co-variation does not prove the absence of a relationship (Beyeler 2004, p. 8). The second approach is less ambitious in terms of establishing decisive proof of influence when compared to the co-variational approach. Instead it aims at revealing indications of the possible influence of ideas on policies. This method compares the content of policy ideas, in our case the policy ideas of international organizations, with the substance of policy decisions, in order to establish whether there is congruence or not between ideas and policy. If congruence is established, this is indicative of possible influence. However, in this case, the contingency of other factors, for instance other international organizations with congruent ideas, also complicates the question of influence. As a way of addressing this snag, one OECD study (Armingeon and Beyeler 2004) tries to pinpoint instances where domestic actors explicitly refer to the OECD in national reform discourses. Process tracing is a third approach to studying the influence of ideas on policy, based on thorough analysis of the different steps and sequences of policy making, and pinpointing how specific actors carry certain ideas into the policy discourse, how they interact with each other and how institutions constrain and enable certain actors and ideas in this process. Specific actors may be epistemic communities, transnational actors, advocacy coalitions, policy communities and expert groups. Often what is addressed in policy ideas are various societal institutions and hence there is an important linkage between ideas and institutions. Through policy stories and discourses, existing institutions are scrutinized, criticized, delegitimized, defended and legitimated by actors engaged in political struggles on how the institutional landscape ought to be shaped in different sectors of society. One example of this perspective is Mark Blyth’s analysis (2002) of the changing economic ideas underlying the rise and fall of ‘embedded’ liberal institutions in Sweden and the US.3 Blyth’s analysis suggests important roles for ideas or discourses in situations where contemporary agents consider the specific event as unique and where the actors are unsure of what their interests are, and thereby also of the means to realize them (Blyth 2002, p. 9). In situations where agents’ interests are not fixed or given, economic ideas are crucial in influencing institutional change. Firstly, in periods of economic crisis, ideas facilitate reduction of

Introduction

9

uncertainty by providing interpretive frameworks which confer understanding of how the economy works. A similar point has been made by Goldstein and Keohane (1993), seeing ideas as roadmaps and hence as a means to reduce uncertainty. Secondly, the reduction of uncertainty following from the interpretive framework enables collective action and coalition building. Thirdly, agents use ideas as weapons in order to contest existing institutions. Ideas also function as institutional blueprints by providing alternative institutional solutions to the existing ones. Finally, when ideas have been solidified into institutions, these provide intersubjective understanding and conventions, and hence strengthen institutional stability (Blyth 2002, pp. 34–45). This book sheds light on several of the roles of ideas pointed out in Blyth’s account. In addition, the movement from embedded to disembedded liberalism is also central, in terms of creating a more general ideational background for our focus on social policy discourses. The economic ideas of disembedded liberalism have influenced the social policy discourses addressed in the chapters to follow. Previous research within the area of pensions has shown the importance of new paradigmatic ideas, based on a broader framework of economic thinking, in challenging existing Pay As You Go (PAYG) paradigms and institutions of pension provision, and also in terms of providing blueprints for new institutional solutions (Ervik 2005; Orenstein 2005). It could also be argued that many of the challenges of social policy, in terms of demographic transformations, the new social risks and economic globalization, represent situations of enhanced uncertainty and hence are states of affairs where ideational factors are decisive in different sequences of institutional change and interest formation. Institutional constraints or facilitations are identifiable at various levels in the book. In Chapters 6 and 7, national cases (Norway, the UK and Germany) are analysed, reflecting different constellations of institutions in terms of welfare state regimes, types of welfare state and models/variants of capitalism (Barth, Moene and Wallerstein 2003; Esping-Andersen 1990; Hall and Soskice 2001; Kuhnle and Alestalo 2000). The point here is that these institutions create stickiness and path dependencies that influence and frame the effects of, and receptiveness towards, new ideas (Campbell 2002, p. 31; Pierson 2004, p. 43). Being sites of knowledge and idea production, possessing resources and capacities, international organizations are themselves organizations that invite institutional perspectives and frameworks, as described above. In addition, and with relevance to the overall topic of this book, some of the most central dimensions on which regimes or types differ are also key terms in ongoing social policy discourses. Examples are the discourse on targeting, as evidenced within the debate on principles of selectivity

10


and universalism as the normative basis for the welfare state. Another instance is the discourse on the redistributive principle of social policy, ranging from advocates of social insurance schemes based on principles of strict reciprocity, to those favouring schemes based on redistributive social insurance logic. In this way discourses on targeting and redistribution directly engage with aspects of welfare regime classification and specific institutions of social policy. Finally, at the general level, these welfare regimes also enter into the ongoing discourse on the sustainability of the welfare state. The sustainability discourse concerns the social, moral and economic challenges of the welfare state, and whether these will undermine or severely dismantle the historical accomplishments of this state structure. As several chapters point out, this overarching discourse, especially in a version informed by a focus on the economic aspect of sustainability, strongly frames discourses in particular fields of social policy. Thus, the intrinsic legitimacy of social policy, in terms of securing social rights, is being partly subordinated to a discursive logic, where the legitimacy of social policy rests on its instrumentality in obtaining goals of economic growth and competitiveness. Analysing policy discourses thus implies addressing ideas, actors and institutions, and their interaction. In scrutinizing the various political discourses, the contributors to this volume study policy documents, and some have interviewed policy actors and experts, in order to elucidate the ideational content of policy discourses. Interviews with key actors and informants, both at the level of international organizations as well as at the national policy level, provide valuable knowledge of how policy makers at both levels think and act in relation to the specific welfare discourses selected. In addition, the interviews are helpful in charting the interaction and contact between actors from the two levels, as well as within each of the levels, and within national case studies. In this way they complement the systematic survey of documents in tracing possible processes of policy transfer not revealed in the written policy documents.

STRUCTURE OF THE BOOK The chapters of this book address different policy fields: social inclusion, labour markets, labour migration, health, pensions and family policy. These ambits of the welfare state are being given increasing political attention and they constitute areas where the interests and ideas of international organizations are increasingly being voiced in discourses on social policy. The first three contributions concentrate on the content of some of the core ideas in the field of social policy within the OECD (Chapter 2) and

Introduction

11

the EU (Chapters 2, 3 and 4). In Chapter 2 Nanna Kildal explores the normative content of the policy ideas furthered by the EU and the OECD in the areas of employment and social protection. After having analysed the two organizations’ policy guidelines and recommendations, general and country-specific, their policy ideas are compared and examined within a framework of justification and legitimacy. Three social policy discourses are brought to light: the discourses on ‘social rights’, ‘rights and duties’ and ‘make work pay’. Furthermore, as the EU and the OECD have had a long-standing cooperation in various policy areas, the chapter also directs attention to their collaborative efforts and working methods in these policy fields. A conclusion is that there are extensive similarities in ideas and working procedures between the EU and the OECD, and that the policy advice given is instrumental in character and mainly justified with pragmatic arguments. In Chapter 3, Milena Büchs starts from the assertion that social policy and democracy are mutually related and co-dependent. Western national welfare states institutionalize and stabilize this relationship in a particular way. However, the specific relationship between social policy and democracy is becoming porous through European integration. With the Open Method of Coordination (OMC), the European Union has adopted a new governance tool to both strengthen and establish a new relationship between democracy and social policy. The most significant approach to theorizing about this new relationship is directly-deliberative polyarchy. This chapter critically discusses the OMC and questions whether it can be legitimized by this directly-deliberative polyarchy model. It argues that whilst directly-deliberative polyarchy provides useful insights into current problems, it needs to be embedded more coherently into the principles and institutions of constitutional and representative democracy. In Chapter 4, Even Nilssen elaborates on the founding ideas and policy discourses of the EU Social Inclusion Strategy (SIS), as expressed through the Open Method of Coordination. Following Campbell’s differentiation of ideas (2002), Nilssen identifies three basic discourses containing different kinds of ideas. The most important programmatic ideas are expressed through a discourse on active social inclusion, which emphasizes that the best way to fight poverty and social exclusion is to incorporate people into the labour market. The secondary discourse – the discourse on targeting – states that this is most effectively achieved through a focus on target groups and an individualization of social policies. Although these discourses have important normative implications, they are expressed in a purely instrumental way. Nilssen claims that this has to be understood against the background that these programmatic ideas are framed through a discourse on the sustainability of the welfare state. This mainly economic

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discourse embraces problems such as globalization and the demographic changes within the member states (an ageing population), leading the SIS in a material-instrumental direction, where social policy is primarily understood as labour market policy. At the same time this ‘materialization’ of social policy is interpreted as the main reason for the relatively extensive support for the SIS among the member states. Chapter 5, written by Aksel Hatland and Even Nilssen, takes as a starting point one of the founding ideas of the EEC/EU – the free movement of workers – and elaborates on how this idea has been developed by the rulings of the European Court of Justice (ECJ). The ECJ has established the supremacy of European law over national law, and it has formulated general legal norms of great political and practical importance. The Court has contributed to extended rights for EU citizens to move freely between the member states of the union and to reside wherever they want. Hence, the ruling of the ECJ has also influenced the development of social rights within the EU (for example, through interpretations concerning the coordination of social benefits between member states). The chapter discusses how this strong political role can be explained. It emphasizes the often vague nature of community law, which gives the Court a strong interpretive power, the judicial style which stresses the purpose of a rule more than a literal interpretation and the multilingual character of community law, which also makes literal interpretations more ambiguous. The court has often been criticized by political actors for legal activism and interference with questions that are essentially political. But there are no examples of a member country refusing to accept the Court’s decision. Traditionally, international organizations have not focused on family policy. The EU does not even have a mandate for developing policy in this field. Still, in recent years organizations like the EU and the OECD have taken a greater interest in family policy issues, mainly due to their significance for economic issues and performance. Consequently they have expressed policy advice and commented on member states’ policies, mainly reconciliation policies such as parental leave and provision of child care. Tord Skogedal Lindén’s contribution (Chapter 6) connects two fields of comparative social policy research: the literature on ideas and learning, and family policy. It does so by considering theoretical perspectives that explain how actors change ideas, based on advice from international organizations. It relates these perspectives to the case of recent German family policy reforms. The potential influence of international organizations in the field of family policy has so far received insufficient attention. Lindén addresses this lack, based on interviews with national and international stakeholders, as well as a careful reading of EU, OECD

Introduction

13

and German governmental policy documents. He finds correspondence between EU/OECD policy advice and German reforms, and argues that the EU/OECD policy line may have enhanced and maintained family issues on the agenda. However, international organizations served more as mediators than as producers of ideas. Individual countries such as Sweden are more important than the EU/OECD in developing ideas. Thus, direct learning between countries is crucial for dissemination of family policy ideas and must be considered too. The three subsequent chapters (7–9) deal with various aspects of pension policy, an area where important changes have taken place in many countries, in terms of the provision of income security in old age and normative underpinnings of pension institutions. International organizations such as the ILO and the World Bank are actively promoting ideas and learning processes in pension policy. In a European context, both the OECD and the EU have been increasingly engaged in facilitating pension reforms to secure future sustainability and adequacy of pension provision in member countries. In Chapter 7, Rune Ervik explores the role played by the OECD and the EU in shaping the central ideas of national pension reforms in Norway and the UK, through an interactional and relational process with member states. In addition, important bilateral (and multilateral) exchanges of ideas between countries, taking place outside the realms of these international organizations, is also scrutinized. His focus is on specific key actors within the EU and the OECD, involved in explicit pension policy advice and recommendations. The chapter finds that the EU and especially the OECD could be seen as selective or biased ‘reform boosters’. They have a role as reform agenda framers influenced by a specific knowledge base and an interpretive framework strongly based on economics. However, rather than being a process where pension reform ideas are developed at the European or OECD level and then applied directly to the national level, they are the results of negotiation, debate and the exchange of views between these two levels. Finally, both for the UK and Norway, multiand bi-lateral contacts with neighbouring countries are identified to be of stronger importance than those with the international organizations, in terms of providing ideas and examples to learn from. In Remi Maier-Rigaud’s contribution (Chapter 8), the recent search for a new approach to pension policy by the International Labour Office is analysed. The Office (and more specifically the Social Security Department) is identified within the International Labour Organization as the main provider of ideas and expertise that go beyond pure social standard setting. Thus, the unitary actor assumption is displaced in order to take a closer look at the internal composition of this international

14


organization, and how it relates to changes in policy ideas. This perspective yields several findings: the restructuring of the Social Security Department in 2005 enabled the drafting of a new, possibly more coherent, approach to pension policy. It reduced the omnipresence of social insurance orthodoxy, traditionally endorsed by the Office. Instead, the role of universal social pensions has been strengthened in order to reach higher coverage rates, especially in developing countries. In addition, external factors have affected the pension policy of the Office on different levels. Since the global pension policy discourse is dominated by the World Bank, it has also left imprints on the new approach of the Office. The impact is most visible on the programmatic level, and concerning the framing of the policy recommendations. The paradigmatic foundation is less affected, although the economic underpinning of the Office’s position has resulted in a phase of disorientation which could lead to a paradigm shift. Therefore, internal tension and external pressures are identified as driving forces behind the search for a new approach to pension policy within and by the ILO’s secretariat. In Chapter 9, Axel West Pedersen and Henning Finseraas explore whether the pension reforms enacted by EU member countries over the last decade exhibit common trends and/or real convergence in the degree and pattern of income security offered to wage earners. The authors use data that have been generated by the OMC process on current and so-called prospective replacement rates for hypothetical cases of ‘typical workers’. They find a general downward trend in gross replacement rates offered by the respective national pension systems, but little sign of convergence in terms of relative differences between countries. For net replacement rates, including private occupational pensions, the downward trend is significantly smaller, and there is no evidence of convergence. However, when it comes to the structure of income protection, measured by the share taken up by private pensions, both a common growth trend and a strong tendency in the direction of convergence are identified. Finally, Pedersen and Finseraas find evidence of declining preferential treatment of low-wage earners, and some convergence towards an overall proportional pension system. In recent years, health issues have increasingly appeared on the agenda at the international level, due to the spread of a number of new infectious diseases. The need for strengthened international cooperation regarding health policy is generally acknowledged, and the growing number of international organizations has become more important in global health policy. In Chapter 10, Christof Schiller, Henni Hensen and Stein Kuhnle analyse global health policy discourses by studying the World Health

Introduction

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Organization (WHO), UNICEF, the World Trade Organization (WTO) and the World Bank. The aim is to map the organizational field of the global health debates over time, and to study how the main important health policy proposals have travelled between and within these organizations. The organizational capacity of each body is examined and compared in order to find out how a possible shift in health policy proposals has been reflected by a change in such capacities of the various organizations over time. One conclusion is that the ideational influence has shifted away from the WHO as the prime actor. Furthermore, the chapter indicates that the focus in the debate has shifted towards specific priority diseases, in contrast to the time of the Alma Ata declaration in 1978, when there was a focus on comprehensive health care approaches. The global health debate has become increasingly ‘technical’. The chapters presented above present a range of international organizations dealing with social and health policies. The contributors unfold and analyse their ideas and policy outcomes, stressing the internal struggles of these organizations, and thus advancing their demystification, spelling out clearly their heterogeneous character. All chapters stem from new research and provide insights into the ideas and interactions between international and national actors. Some of the contributions reflect recent interviews with key policy actors both in international organizations and at national level. The book describes a complex relationship between the international and national social policy makers, as well as between different international organizations operating in the fields of social and health policy. The book reveals a dynamic and reciprocal pattern of influence, rather than clear unidirectional causal relationships.

NOTES 1. ‘Neo-liberalism’ is a political orientation, originating in the 1960s, that blends liberal political views with an emphasis on economic growth. According to Webster’s Dictionary, ‘neo-liberalism’ describes a political-economic philosophy that rejects positive government intervention in the economy, focusing instead on achieving progress by encouraging free-market methods and less restricted operation of business. 2. Other forms of power are of course relevant in our context, and ideas are important also in contexts characterized by a high degree of more coercive means. In the first case, even within these more symmetrical relationships, there are differences between countries in terms of resources donated and influence obtained. Thus the US contributes about 25 per cent of the OECD budget and so has a more dominant position within the organization than smaller countries such as Norway. An additional point is that these organizations are not necessarily coherent actors, as there are important internal divisions and struggles taking place on policies. Different policy paradigms have been institutionalized to various degrees and so posit unequal abilities to influence within the organizations. As for the latter case, even here ideas are central in terms of justifying the need of reform

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programmes and institutional change. Thus the point is that ideas, institutions, interests and power are interlinked and mutually constitute each other. 3. ‘Embedded liberalism’ refers to a specific form of state, characterized by relatively closed capital markets, demand-side fiscal policies, a belief in an active state, and an understanding of the causes of unemployment as rooted in insufficient demand. ‘Disembedded liberalism’ designates a counter-movement away from Keynesian thinking and its institutional configuration towards ideas such as monetarism, supply-side economics and public choice, promoting a belief in a non-interventionist pro-market state, independent central banks and high capital mobility, and seeing unemployment as dependent on the market clearing price of labour (Blyth 2002).

REFERENCES Armingeon, Klaus and Michelle Beyeler (eds) (2004), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar. Barth, Erling, Karl O. Moene and Michael Wallerstein (eds) (2003), Likhet under press utfordringer for den skandinaviske fordelingsmodellen, Oslo: Gyldendal akademisk. Béland, Daniel (2005), ‘Ideas and social policy: an institutionalist perspective’, Social Policy and Administration, 39 (1), 1–18. Beyeler, Michelle (2004), ‘Introduction: a comparative study of the OECD and European welfare states’, in Armingeon, Klaus and Michelle Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar, pp. 1–12. Blyth, Mark (2002), Great Transformations, Economic Ideas and Institutional Change in the Twentieth Century, Cambridge: Cambridge University Press. Bøås Morten and Desmond McNeill (2004), ‘Ideas and institutions: who is framing what?’ in Morten Bøås and Desmond McNeill (eds),Global Institutions and Development, London and New York: Routledge, pp. 206–224. Campbell, John L. (1998), ‘Institutional analysis and the role of ideas in political economy’, Theory and Society, 27, 377–409. Campbell, John L. (2002), ‘Ideas, politics, and public policy’, Annual Review of Sociology, 28, 21–38. Campbell, John L. and Ove K. Pedersen (eds) (2001), The Rise of Neoliberalism and Institutional Analysis, Princeton, NJ: Princeton University Press. Deacon, Bob (2007), Global Social Policy and Governance, London: Sage Publications. Deacon, Bob, Michelle Hulse and Paul Stubbs (eds) (1997), Global Social Policy: International Organizations and the Future of Welfare, London: Sage Publications. Ervik, Rune (2005), ‘The battle of future pensions: global accounting tools, international organizations and pension reforms’, Global Social Policy, 5, 29–54. Ervik, Rune and Stein Kuhnle (eds) (1993), Kunnskap, risiko og sosialpolitikk: institusjonelle perspektiver på skandinavisk utvikling, Bergen: Alma Mater. Esping-Andersen, Gösta (1990), The Three Worlds of Welfare Capitalism, Cambridge: Polity Press. Fraser, Nancy and Linda Gordon (1994), ‘A genealogy of dependency: tracing a keyword of the U.S. welfare state’, Signs, 19 (2), 309–336. Goldstein, Judith and Keohane, Robert O. (eds) (1993), Ideas and Foreign Policy, Ithaca, NY: Cornell University Press.

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Hall, Peter A. (1989), ‘Introduction’, in Peter A. Hall (ed.), The Political Power of Economic Ideas: Keynesianism across Nations, Princeton, NJ: Princeton University Press, pp. 3–26. Hall, Peter A. (1992), ‘The movement from Keynesianism to monetarism: institutional analysis and British economic policy in the 1970s’, in Sven Steinmo, Kathleen Thelen and Frank Longstreth (eds), Structuring Politics: Historical Institutionalism in Comparative Analysis, Cambridge: Cambridge University Press, pp. 90–113. Hall, Peter A. (1993), ‘Policy paradigms, social learning, and the state: the case of economic policymaking in Britain’, Comparative Politics, 25, 275–296. Hall, Peter A. and David Soskice (eds) (2001) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford: Oxford University Press. Held, David, Anthony McGrew, David Goldblatt and Jonathon Perraton (1999), Global Transformations: Politics, Economics and Culture, Cambridge: Polity Press. Kildal, Nanna (2001), Workfare Tendencies in Scandinavian Welfare Politics, Geneva: International Labour Office. Kildal, Nanna (2005), ‘Changing normative foundations of Nordic welfare state institutions?’ In Nina Möntmann (ed.), Art and its Institutions: Current Conflicts, Critique, and Collaborations, London: Black Dog Publishing, pp. 18–26. Kuhnle, Stein (1981) ‘The growth of social insurance programs in Scandinavia: outside influence and internal forces’, in Peter Flora and Arnold J. Heidenheimer (eds), The Development of Welfare States in Europe and America, New Brunswick, NJ: Transaction Books, pp. 125–150. Kuhnle, Stein (1996) ‘International modelling, states and statistics: Scandinavian social security solutions in the 1890s’, in Dietrich Rueschemeyer and Theda Skocpol (eds), States, Social Knowledge, and the Origins of Modern Social Policies, Princeton, NJ: Princeton University Press, pp. 233–263. Kuhnle Stein and Matti Alestalo (2000), ‘Introduction: growth, adjustments and survival of European welfare states’, in Stein Kuhnle (ed.), Survival of the European Welfare State, London and New York: Routledge, pp. 3–18. Leibfried, Stephan (2005), ‘Social policy: left to the judges and the markets?’ In Helen Wallace, William Wallace and Mark A. Pollack (eds), Policy-Making in the European Union, Oxford: Oxford University Press, pp. 243–278. Marcussen, Martin (2002), OECD og idéspillet: Game over? Copanhagen: Hanz Reitzels Forlag. Marcussen, Martin (2004), ‘Multilateral surveillance and the OECD: playing the idea game’, in Klaus Armingeon and Michelle Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar, pp. 13–31. Ney, Steven (2000), Inception Report PEN-REF Project (Deliverable D1), Vienna: ICCR. Ney, Steven (2003), ‘The rediscovery of politics: democracy and structural pension reform in continental Europe’, in Robert Holzmann, Mitchell Orenstein and Marek Rutkowski (eds), Pension Reform in Europe: Process and Progress, Washington, DC: World Bank, pp. 79–110. Nilssen, Even (2000), ‘Alternative skoler og normaliseringsideologiens grenser’, in Jan Froestad, Per Solvang and Mårten Söder (eds), Funksjonshemmede, politikk og samfunn, Oslo: Gyldendals akademiske forlag, pp. 227–249.

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Nilssen, Even (2006), The EU Fight against Poverty and Social Exclusion: Activation, Targeting and the Sustainability of the Welfare State, Stein Rokkan Centre for Social Studies, Working Paper 8-2006, Bergen: Stein Rokkan Centre for Social Studies. Nowotny, Helga (1991), ‘Knowledge for certainty: poverty, welfare institutions and the institutionalization of social science’, in Peter Wagner, Björn Wittrock and Richard Whitley (eds) Discourses on Society: The Shaping of the Social Science Disciplines, Dordrecht: Kluwer Academic Publishers, pp. 23–41. OECD (1981), The Welfare State in Crisis: An Account of the Conference on Social Policies in the 1980s, OECD, Paris, 20–23 October 1981 [i.e. 1980]. Paris: OECD. Orenstein, Mitchell A. (2005), ‘The new pension reform as global policy’, Global Social Policy, 5, 175–202. Orenstein, Mitchell A. (2008), Privatizing Pensions: The Transnational Campaign for Social Security Reform, Princeton, NJ: Princeton University Press. Pierson, Paul (2004), Politics in Time: History, Institutions, and Social Analysis, Princeton, NJ: Princeton University Press. Pochet, Phillipe (2003), ‘Pensions: The European debate’, in Gordon L. Clark and Noel Whiteside (eds), Pension Security in the 21st Century: Redrawing the Public-Private Debate, Oxford: Oxford University Press, pp. 44–63. Radaelli, Claudio M. and Vivien A. Schmidt (2004), ‘Conclusion’, West European Politics, 27, 364–379. Rein, Martin and Donald Schön (1993), ‘Reframing policy discourse’, in Frank Fischer and John Forester (eds), The Argumentative Turn in Policy Analysis and Planning, Durham, NC: Duke University Press, pp. 145–166. Rokkan, Stein (1978 [1966]) ‘Norway: numerical democracy and corporate pluralism’, in Robert. A. Dahl (ed.), Political Oppositions in Western Democracies, New Haven, CT and London: Yale University Press, pp. 70–115. Rueschemeyer, Dietrich and Theda Skocpol (eds) (1996), States, Social Knowledge and the Origins of Modern Social Policies, Princeton, NJ: Princeton University Press. Schmidt, Vivien (2000), ‘Values and discourse in the politics of adjustment’, in Fritz W. Scharpf and Vivien A. Schmidt (eds), Welfare and Work in the Open Economy, Vol. 1: From Vulnerability to Competitiveness, Oxford: Oxford University Press, pp. 229–309. Schmidt, Vivien A. (2002), The Futures of European Capitalism, Oxford: Oxford University Press. Schmidt, Vivien A. and Claudio M. Radaelli (2004), ‘Policy change and discourse in Europe: conceptual and methodological issues’, West European Politics, 27, 183–210. Schmidtz, David and Robert E. Goodin (1998), Social Welfare and Individual Responsibility, Cambridge: Cambridge University Press. Schweber, Libby (1996), ‘Progressive reformers, unemployment, and the transformation of social inquiry in Britain and the United States, 1880s–1920s’, in Dietrich Rueschemeyer and Theda Skocpol (eds), States, Social Knowledge, and the Origins of Modern Social Policies, Princeton, NJ: Princeton University Press, pp. 163–200. Stone, Diane (2004), ‘Transfer agents and global networks in the “transnationalization” of policy’, Journal of European Public Policy, 11, 545–566. Taylor-Gooby, Peter (ed.) (2005), Ideas and Welfare State Reform in Western Europe, Basingstoke: Palgrave Macmillan.

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Trubek, David M. and Louise G. Trubek (2005), ‘Hard and soft law in the construction of social Europe: the role of the Open Method of Co-ordination’, European Law Journal, 11 (3), 343–364. Weir, Margaret and Theda Skocpol (1985), ‘State structures and the possibilities for “Keynesian responses” to the Great Depression in Sweden, Britain and the United States’, in Peter B. Evans, Dietrich Rueschemeyer and Theda Skocpol (eds), Bringing the State Back in, Cambridge: Cambridge University Press, pp. 107–163. White, Stuart (2003), The Civic Minimum: On the Rights and Obligations of Economic Citizenship, Oxford: Oxford University Press. Wittrock, Björn, Peter Wagner and Hellmut Wollmann (1991), ‘Social science and the modern state: policy knowledge and political institutions in Western Europe and the United States’, in Peter Wagner, Carol H. Weiss, Björn Wittrock and Hellmut Wollmann (eds), Social Sciences and Modern States: National Experiences and Theoretical Crossroads, Cambridge: Cambridge University Press, pp. 28–85. Yeates, Nicola (2001), Globalization and Social Policy, London: Sage. Yee, Albert S. (1996), ‘The causal effect of ideas on policies’, International Organization, 50, 69–108.

2.

Comparing social policy ideas within the EU and the OECD Nanna Kildal

INTRODUCTION This chapter is part of a broader project that asks how national social policy is shaped by the interplay between international and national levels; the first level is represented by the EU and the OECD, the second by European welfare states: Germany, Norway and Denmark. The present study explores the normative content of the policy ideas furthered by the EU and the OECD in the areas of employment and social protection, by analysing their respective policy guidelines and recommendations.1 These are compared and examined within a framework of justification and legitimacy, which is a condition for obtaining authority (Weber [1919] 2004). Three social policy discourses are brought to light; the discourses on ‘rights’, ‘rights and duties’ and ‘make work pay’. Furthermore, as the EU and the OECD have had a long-standing co-operation in various policy areas, the chapter examines their collaborative efforts in these policy fields. The reasons for choosing the EU and the OECD for this comparative study of social policy ideas may not be obvious. Yet these organizations share some important features. Firstly, they were established in the same period, in 1957 and 1961 respectively, both as organizations for economic co-operation and development, and both have increasingly and almost simultaneously directed attention to social policy issues during the last thirty years. More importantly though, neither of them possesses the competence for getting their respective analyses and recommendations directly on to national agendas as regards the social policy areas; their functions are limited to moral pressures. This means that they both have no option but to play what is called the ‘idea game’ (Marcussen 2004). Ideas may have profound effects on the development of social life, and it is obvious that one of the most important tasks of every social science is to arrive at a rational understanding of the ‘ideas’ for which men struggle, and to ‘judge’ them critically (Weber [1904]1969, pp. 53f.). This is the main aim of the current study. 20

Comparing social policy ideas within the EU and the OECD

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IDEAS, DISCOURSES AND LEGITIMACY Various types of ideas include policy prescriptions, principles, conceptual models, norms, world views, cause–effect beliefs and so on, which may be cognitive or normative in character (Campbell 2002). As cognitive ideas are descriptions of how things work, being about cause-and-effect and means–end relationships, they depend on empirical observations, while normative ideas define what is right or wrong, just or unjust.2 Cognitive ideas are often perceived to be furthered by ‘epistemic communities’, networks of experts in policy making that develop within and around international organizations, where the experts share the same norms and causal beliefs (Stone 2004). Actually, these ideas often derive authority from the fact that they are espoused by these communities or by other relevant elites (Tannenwald 2005). That cause-and-effect ideas may have significant normative implications for society will be demonstrated later in this chapter. Ideas are the central elements of policy discourses. Although the definitions of ‘discourse’ are manifold, a common denominator is the notion that language is constitutive of social reality. This does not imply the ontological position that reality as such is socially constructed, but simply that discourses represent specific interpretations of reality. In the project, we use the concept in line with Encyclopædia Britannica as “an extended expression of thought on a subject”, or more precisely as “coherent systems of ideas that link normative judgements about policy goals to practical accounts of the policies likely to reach them” (Taylor-Gooby and Daguerre 2004, p. 14). This definition not only provides an adequate analytical tool for this study, but also illustrates the prevalent fusion of cognitive and normative ideas. Basic institutions and normative orientations naturally differ between welfare states, and thus discourses vary too; they express different national institutional options and moral logics. Yet, there are some shared and frequent themes in current welfare discourses that transcend national borders. For instance, a salient social policy discourse that became widespread across the Western world during the 1990s concerns the balancing of citizens’ rights and duties, welfare and work, well captured in Giddens’ slogan No rights without responsibilities (Giddens 1998, p. 65). Since the millennium this has to some extent been succeeded by the catchphrase Make work pay. This discursive change will be discussed below. Discourses give insights into causes and reasons for welfare reforms that generally have consequences for the citizens. The legitimacy of the policy recommendations advanced by the OECD and the EU is therefore one of this chapter’s concerns. Justification and legitimacy are vital to the stability of democratic social

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institutions. Political decisions and arrangements can no longer be justified with reference solely to tradition or impersonal market relations; they have to be supported by ‘good reasons’ based on common principles and ideals (Rawls 1996, p. 137). Thus, the question of legitimacy presumes that citizens are reasonable and rational, free and equal. Basically there are three forms of argument that may be used in justifying a policy decision: pragmatic, ethical and moral (Habermas 1993, p. 2). As the ethical and moral approaches concern the normative questions of ‘the good’ and of ‘social justice’, we may limit the justifying reasons to two – pragmatic and normative – which may be considered respectively ‘output’ and ‘input’ oriented justifications of a decision in accordance with Scharpf’s dual conceptualization of legitimacy (1999). While pragmatic justifications are purposive and always have reference to the results, the ‘output’ – normative validations are based on some more or less universal moral or ethical standards.

POLICIES CONCERNING EMPLOYMENT AND SOCIAL PROTECTION Both the OECD and the EU grew out of the war experience. The OECD evolved from the Organization for European Economic Co-operation (OEEC), which was set up in 1948 to co-ordinate the Marshall Plan. In 1961 the OECD was established with the aim of assisting governments in achieving sustainable economic growth, employment and rising standards of living. The European Economic Community (EEC), founded through the Treaty of Rome in 1957, grew out of the Coal and Steel Community (ECSC) of 1951, with the aim of ending the frequent wars between neighbouring nations. Peace should be secured through trade and economic development by pooling the member states’ resources under supranational authority.3 Nevertheless, both have expanded their focus over the years, from economic to social policies. The Treaty of Rome contained only a few provisions on social and labour market policies with the aim of protecting the workforce. In the 1970s it was realized that setting common goals for member states in macro-economic policies would be useless and ineffective unless accompanied by some co-ordination of social policies (Leibfried 2005, p. 248). Concurrently the OECD recognized that a wide spectrum of policy areas, especially social policies, was closely linked to economic policies. In an influential publication from 1981, The Welfare State in Crisis, the OECD’s experts emphasized the strong negative correlation that exists between levels of social benefits and economic growth, and the significant trade-off


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that is present between equality and economic efficiency. Since then both organizations have gradually widened their sphere of interest to contain social policy issues. Content analyses of the summarizing chapters of the OECD Economic Surveys4 in the period from 1970 to 2000 in 14 European countries have revealed, for example, that while social policies, excluding labour market policies, were hardly mentioned in the 1970s and early 1980s, social policy issues regarding health, education, old age and the social security system were entering the surveys in the late 1980s and 1990s (Armingeon and Beyeler 2004). The OECD Employment Outlook series started in 1983 in order to give annual assessments of labour market developments and prospects. At this time the OECD member countries were characterized by a coincidental increase in employment and unemployment, with record levels of longterm unemployment in some countries (Sorrentino 1991). In response to the high and increasing unemployment problem, the OECD in 1992 commissioned a study to examine the factors underlying the weakening of labour market performance in the OECD countries. The resulting diagnosis was presented in the report The OECD Jobs Study: Facts, Analysis, Strategies (1994), together with a wide-ranging set of policy recommendations that were designed to improve the capability of economies to adapt to change. The diagnosis, not unlike the one from 1981, states that “Policies and systems have made economies rigid, and stalled the ability and even willingness to adapt” to (. . .) “a world of new technologies, globalisation and intense national and international competition” (1994, p. 4). Also within the Union it became obvious during the 1980s that the traditional regulatory tools did not work very well as regards the labour market. Thus Jacques Delors, President of the Commission from 1985 until 1994, made great efforts to put social policy and the idea of a ‘European Social Model’ into the centre of EU policy making: in 1989 the EU presented the report Employment in Europe, that has been produced annually since then, and in 1993 a White Paper on Growth, Competitiveness and Employment (CEC 1993). The interpretation of the European unemployment problems was quite similar to The OECD Jobs Study: unemployment was mainly understood as caused by too high levels of social expenditure, too comprehensive social protection systems and lack of labour market flexibility. As nothing changed during the 1990s, the Union strongly needed a policy tool that could carry out the co-ordinated European approach to employment that Delors had initiated in the White Paper. In 1997 a separate Employment Chapter (Title VIII) was included in The Treaty of Amsterdam (signed 1997), and the European Employment Strategy (EES) was developed, which undertakes the co-ordination of member states’ employment policies in the form of Employment Guidelines and National

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Action Plans (NAPs). The Union developed the EES into what is known as The Open Method of Coordination (OMC) or the ‘Lisbon method’, the aim of which is to release the social dimension in the EU from the constraints of ‘hard law’ and make the necessary link between the social and economic aspects of European integration (Borrás and Jacobsson 2004, p. 186). By the use of open-ended guidelines, monitoring and benchmarking instead of rules, a new form of EU governance was introduced (Article 128), instituting a framework for a country surveillance procedure in order to improve convergence towards the main EU goals. Central to the new employment strategy, as it is to the OECD (Torres 2006), is the idea that employment and social policies are closely linked. As the Commission repeatedly put it after the Amsterdam Council, “the successful implementation of an employment strategy requires, at national as well as European level, a parallel and complementary process on the modernization of social protection” (CEC 1999, p. 10, my italics). The Council had already adopted a Recommendation in 1992 that established a ‘convergence strategy’ regarding the member states’ objectives and policies in the area of social protection (ibid., p. 5). The objectives should be commonly held and act as guiding principles in its development, although the organization and financing of the various systems should be exclusively under the authority of the member states. In the three documents: The Future of Social Protection: A framework for a European debate (CEC 1995), Modernizing and Improving Social Protection in the European Union (CEC 1997) and A Concerted Strategy for Modernizing Social Protection (CEC 1999), a general understanding is that, far from being an economic burden, social protection systems can act as a ‘productive factor’ which may help European economies to perform better. They could and should be more ‘employment-friendly’ and more efficient. The normative message is clear: ‘“Modernizing’ social protection means to make best use of its potential as a productive factor” (CEC 1999, p. 7), which implies ‘a strong focus on the incentive structures of these systems’ (ibid., p. 9, my italics).

EMPLOYMENT AND SOCIAL PROTECTION GUIDELINES General Guidelines The OECD Jobs Study presented nine recommendations for macroeconomic and structural policy reform designed to reduce unemployment (see Appendix 2.1).5 Together, these broad recommendations from 1994,


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backed up by almost 70 detailed policy statements of advice, constitute the so-called OECD Jobs Strategy. The recommendations regarding employment and social protection were repeated over and over again in the following years. They may easily be summed up by three catchwords: flexibility, activation and reform of benefit systems. Among the recommendations that were essentially formulated to accommodate higher labour supply, the advice to relax employment protection legislation became especially controversial (Appendix 2.1, no. 6). The alleged impact of employment protection on labour market performance has also received much attention from researchers, who in general have found that the link between protection legislation and the unemployment rate is uncertain and highly dependent on national contexts. Nevertheless, according to the OECD there is evidence that too strict legislation will hamper labour mobility, reduce the dynamics of the economy and restrain job creation (Swaim 2006, p. 6) In the OECD Restated Jobs Strategy of 2006, based on a 10-year assessment of the original recommendations, population ageing and globalization were pointed out as the main new challenges that have emerged since 1994 (OECD 2006a; DELSA 2006). As it was perceived that these challenges would make the labour force shrink dramatically in coming years, new policies to boost employment and keep welfare systems afloat were needed. As a result, the Restated Jobs Strategy broadened the policy focus by giving more weight to the promotion of labour market participation and by taking a comprehensive approach to benefit programmes, including long-term sickness and disability schemes. The Strategy builds upon four pillars which are considered to be vital for the labour market performance of OECD countries. The countries should: 1. 2. 3. 4.

set appropriate macro-economic policy; remove impediments to labour market participation as well as job search; tackle labour- and product-market obstacles to labour demand; and facilitate the development of labour-force skills and competencies.

Even though all countries need to ensure that each one is solid, the OECD realizes that there is no single successful approach to labour market participation (OECD 2006b, p. 20). The Restated Strategy is all about promoting work incentives, either through cutting benefit levels and duration of benefits, or through welldesigned, effective activation policies. These have proved successful in the counterbalancing of work disincentive effects, according to the Head of the DELSA (Torres 2006). 6 He repeatedly states that the Jobs Strategy is

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not the enemy of social protection, which is one of the myths that has been acting as an obstacle to the labour market reform process. Even though work incentives may be strengthened by the reduction of benefit levels, new evidence suggests that innovative reforms like activation and tax– benefit remodelling can also improve re-employment chances for those out of work (Torres 2006, p. 16). These create labour market dynamism, as well as provide workers with adequate protection (ibid., p. 6); a policy commonly called ‘flexicurity’.7 The discursive development in the EU concerning problem formulation and policy recommendations has not been very different from that of the OECD. The first set of annual Employment Guidelines (1998) introduced four overarching goals (Appendix 2.2): 1. 2. 3. 4.

Improving employability; Developing entrepreneurship; Encouraging adaptability of businesses and their employees; Strengthening the policies for equal opportunities.

During the following years, the guidelines dealt directly or indirectly with the social protection systems. The first overarching goal, ‘improving employability’, is translated into, among others, a guideline that commits the member states to increase significantly the number of persons benefiting from ‘active measures’. Other guidelines commit the states to refocus their benefit and tax systems and provide incentives for unemployed or inactive people to seek and take up work, and to provide measures to enhance their employability, very similar to the original OECD Jobs Strategy as well as to the Restated one. Other guidelines match the OECD guidelines as well, for example that overhead costs and administrative burdens for businesses should be considerably reduced, and that any obstacles which may exist regarding self-employment within tax and social security regimes should be removed. From 1999 onwards, the guidelines have also included the elderly, by urging that all labour market policies, including social protection, should encourage older workers to participate actively in working life. In 2000 The Lisbon Summit agreed upon a new 10-year strategic goal: “to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion” (European Council 2000, p. 2). This required a new overall strategy where “modernizing the European social model, investing in people and combating social exclusion” became one of the three overarching pillars (ibid., pp. 6–9). The Council also set up a Social Protection Committee (SPC) to promote co-operation between the member


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states and the Commission on social protection policies.8 The Commission formulated four key objectives that the committee should pursue: 1. 2. 3. 4.

To make work pay and provide secure income; To make pensions safe and pension systems sustainable; To promote social inclusion; To ensure high quality and sustainable health care.

In 2002, the Barcelona Council stated that the EES needed to simplify and streamline the process of economic policy, and in 2003, a European Employment Taskforce was established by the Commission. This concluded that the Lisbon Strategy 2010 target of a 70 per cent overall employment rate would be missed without further action, and recommended that the Lisbon targets should be narrowed down to ‘job creation’ and ‘economic growth’ (Kok 2003). At the spring Council in 2005, the relaunched Lisbon strategy, Strategy for Growth and Jobs,9 established new governance structures with a clear division of responsibility between the Council and the national level. As part of this, all member states drew up three-year national reform programmes on the basis of the Employment Guidelines that from now on were issued for a three-year cycle. The three new overarching goals for the EES were still not very different from the goals from 1998: 1. 2. 3.

Full employment; Improving quality and productivity at work; Strengthening social cohesion and inclusion.

A main aim of the relaunched Lisbon Strategy was to integrate employment policies with macro- and micro-economic policies, and the new Guidelines (2005–2008) consisted of an integrated package of employment and economic policy guidelines (Appendix 2.2). Guideline 21 is one of the first formulations of the ‘flexicurity’ policy that later became one of the EU’s main policy models for solving Europe’s unemployment problems, based as it is on the assumption that employment flexibility and social security are mutually supportive. As mentioned above, the OECD has also recently embraced this idea of ‘flexicurity’ as a possible way between deregulation and overprotection. In the next section, the policy recommendations to the three countries, Denmark, Germany and Norway, will be described briefly as an illustration of the similarity of the policy ideas spread by the EU and the OECD, and the similarity between the general guidelines and specific country recommendations.

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Country Recommendations Denmark, Germany and Norway The EU’s country-specific recommendations were introduced in 2000. Each year since, Denmark has been praised for its labour market performance. Nonetheless, the country is perceived to have some current or emerging challenges, and recommendations were repeatedly addressed to Denmark in the years 2001 to 2004, that it should reduce the overall fiscal pressure on labour in order to make work pay, and increase incentives to take up or remain in employment – including the removal of incentives for early retirement.10 This recommendation to reduce taxes and benefit programmes is the same as the guidelines given to all member states since 1998 (see Appendix 2.2), and it was repeated annually to Denmark until 2005, when the Council renewed the Lisbon Strategy by introducing the Integrated Guidelines for Growth and Jobs.11 Several of these guidelines for 2005–2008 also stress the importance of reforming the tax and benefit systems, which the EU sees as a key priority to promote higher growth potential – very similar to the OECD (Appendix 2.1). In 2007 the Commission’s assessment of Denmark’s National Reform Programme for Growth and Jobs concluded that Denmark had been making very good progress in implementing its National Reform Programme over the 2005–2007 period. Denmark nevertheless still has some challenges regarding social policies.12 In the OECD’s Economic Survey of Denmark (2008), the positive comments and recommendations, are along the same line (see Table 2.1).13 The evaluations of Germany’s employment policies are not as favourable as those of Denmark’s. In 2000, the EU wanted Germany to examine disincentives within the tax and benefit system which might discourage labour market participation of all groups, especially older workers; to bring down the fiscal pressure on labour by reducing taxes and social Table 2.1

Denmark: social policy recommendations

The EU 2007 ● ● ● ● ●

Improve the employment of older workers and immigrants Better match of unemployed with vacancies Improve incentives to work Speed up education reform Encourage immigration

The OECD 2008 ●

● ● ●

Help marginal groups, like older workers and immigrants, to get a foothold in the labour market Benefit reforms and activation Improve labour supply and skill acquisition through tax reforms Capital taxation needs attention


Table 2.2

Germany: social policy recommendations

The EU 2007 ● ● ● ●

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Integrate the low-skilled into the labour market through: Better access to qualifications Comprehensive tax and benefit reforms More efficient employment services

The OECD 2008 ● ● ● ● ●

Lower the disincentives for second earners to work longer Increase the supply of child care Lower the strict employment protection Avoid too high minimum wages Phase out early retirement options

security contributions; and to reduce the burden for setting up new undertakings in the service sector.14 The OECD Economic Survey 2001 also identified structural reforms in product and labour markets in order to generate jobs and thereby strengthen future growth prospects.15 It recommended that Germany should exercise strict spending control and increase the flexibility of labour markets. Labour taxation should be reduced further in order to increase work incentives and labour demand. In 2007, the Commission’s assessment of Germany’s National Reform Programme for Growth and Jobs expressed satisfaction with the country’s progress, and it was commented that there had been some policy response to the recommendations of the Council.16 The OECD’s assessment of Germany’s development in recent years has likewise been quite positive.17 Table 2.2 shows the organizations’ respective recommendations, which are not alike, but still express similar policy ideas. Norway is not a member state of the EU and accordingly does not receive country-specific policy recommendations. Yet the recommendations Norway is offered from the OECD may advance the understanding of the OECD’s ideational stand. In the aforementioned study of the OECD’s social policy recommendations to Norway and 13 other European countries in the period 1970–2000, the interesting result was that while the consistency in the recommendations given to these welfare states was undeniable, their effectiveness was rather low; direct consequences of the OECD recommendations on national welfare reforms are hard to discern (Armingeon 2004). Concerning consistency, the annual reports from 1977, when the OECD grew more concerned about the Norwegian management of the economy, to 2000, frequently expressed scepticism regarding Norway’s employment and income policies (Kildal and Kuhnle 2004, p. 61). Since 1998 the OECD has been rather concerned about the pension schemes, which are still one of its main issues. And although the assessments from 2000–2008 are quite positive on the performance of

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the Norwegian economy, the OECD recommends further efforts to reform disability and sickness leave schemes, and it warns against a development where immigration is used as a remedy for disincentives to labour market participation.18 The OECD is also is concerned that Norway is not making the best use of its education expenditure. In sum, this brief overview of social policy recommendations within the EU and the OECD demonstrates a striking similarity and consistency in their respective social policy ideas. Furthermore, these ideas tend to deal with urgent macro-economic issues rather than the urgent needs of people.

COMPARING THE EU AND THE OECD The increasing number of international and intergovernmental organizations that have emerged since World War II has resulted in disagreements and competition within and between them. A study of pension systems advocated by the World Bank and the ILO illustrates this: whereas the ILO argues that pension schemes should provide universal coverage on the basis of social rights, the Bank strongly advocates a principle of actuarial fairness (Ervik 2003). Also, the EU and the OECD are often pictured as two quite different organizations. Studies comparing policy ideas of the EU and the OECD however, display varying results. A study carried out by Noaksson and Jacobsson asserts that even though both the EU and the OECD “have access to the same facts and figures”, their respective analyses occasionally result in very different employment recommendations (2003, p. 10). The main reason for this seems to be that the OECD recommendations are ‘decontextualized’, that is, they are “addressed to other actors ‘from a distance’”, while the EU strategy is more ‘contextualized’, “negotiated among a wide range of stake-holders” (ibid., p. 10). Whereas the EU is a political organization characterized by a pragmatic use of knowledge, the OECD is an expert organization; a ‘truth seeker’ and ‘truth teller’ with a more dogmatic relationship to knowledge: “while the EU attempts to adapt knowledge to fit reality, the OECD attempts to adapt reality to fit existing knowledge” (ibid.). These organizations can therefore be considered as competitors in the production of ideas in the labour market field: “The European Member States cannot at the same time follow the advices of both” (ibid., p. 69). These characterizations of the relationship between the EU and the OECD might reflect a common opinion. Yet they are weakly substantiated in the report, which rather tends to emphasize the increasing co-operation between the two organizations (ibid., pp. 52–55), and conflicts of interest within them (ibid., pp. 15, 30, 51, 64).


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One argument in support of the picture of competition between the two international actors is that the EU, contrary to the OECD, recommends preventive and active policies and revisions of benefits systems when discussing labour market problems (ibid., p. 37). A similar argument is furthered in a comparative study of the OECD Jobs Study and the European Employment Strategy (Casey 2004); while the EU considers the national welfare states as potentially productive, the OECD tends to regard them as impediments. However, the OECD thinking seems to have changed. As mentioned above, the Head of DELSA repeatedly states that the OECD Jobs Strategy is not the enemy of social protection (Torres 2006, p. 16). And according to the OECD’s homepage: “Well-designed social protection is not a cumbersome inheritance from the past, but an asset that is critical for sustaining social development”.19 The two actors’ perceptions of current labour market problems are obviously not strikingly different; both tend to view social security systems as ‘productive factors’. This means that the welfare of the citizens is not a prime concern for either of them; it is only a concern as long as it serves the ultimate EU and OECD goals of economic growth. Studies carried out by Casey (2004) and Dostal (2004) produce somewhat different conclusions from those of Noaksson and Jacobsson, as both researchers find close similarities between the two organizations’ policy ideas. Dostal even states that the OECD frequently acts as the ‘first mover’ regarding the definition of policy problems. He studied the way the OECD Directorate for Education, Employment, Labour and Social Affairs (DEELSA)20 influenced the EU’s welfare and labour market reform agenda from 1994 to 2001 (2004, p. 451), and he found more similarities than dissimilarities between Delors’ White Book on Growth, Competitiveness and Employment from 1993 (CEC 1993) and The OECD Jobs Study (1994). The two strategies provided each other with additional legitimacy and set the agenda for welfare market reforms in these and the following years (Dostal 2004, pp. 440–441). Furthermore, the ten guidelines put forward in The OECD Jobs Study (1994) share many features with the four pillars of the EES from 1998 (see Appendix 2.2), like reduction of taxes, restructuring of benefit systems and so on. Only the fourth pillar on equal opportunities and the closing of the gender gap in the labour market is not expressed explicitly in the Jobs Study (Dostal 2004, p. 452). The gender issue has however also entered the OECD agenda. What separates the OECD and the EU regarding social and labour market policies is not their policy recommendations, according to Dostal, but rather the EU’s “lack of a single institutional discourse”, of a unifying ideological platform like the neo-classical one that the OECD’s recommendations is based on (ibid.). The EU deliberations are based rather

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on interest group representation and pluralism. However, this difference between the two policy actors is not significant. In interviews with six OECD and seven EU high-level bureaucrats and experts in February/ March 2007, it appeared that the earlier quite consistent OECD discourse had been loosened up a bit, and that its thinking had become “more social”. As one of the experts expressed it: I came exactly fifteen years ago . . . the whole world in the 90’s was very Reaganesque and these ideas in structural policies, the supply side was to be king, and governments did a lot of reform and I think now there is a slight, you know, recalibration with this political economy . . . social aspects. Not just in the OECD, but we reflect what’s going on in the member governments. There’s a little of a softer approach. (OECD Interview No. 6, 2007)

The interviews revealed that the communication between the two organizations was good, which could be attributed to “more social thinking” within the OECD, but also to a common ideological basis for the thinking in both organizations. After all, the two organizations have had a long-standing co-operation on various policy areas. In 1982 The OECD Local Economic and Employment Development Programme (LEED) was created to stimulate employment at the local level through the implementation of active employment policies favouring self-employment and enterprise creation. The programme has many members, one of the more prominent being the European Commission. Our interviews confirm the close co-operation between the EU and the OECD. The OECD work, for example with micro-modelling, is much more sophisticated than the EU can do, and so it supports the work of the OECD financially. The two organizations also jointly develop indicators, for example, for pensions and for ‘make work pay’ policies. “This is very technical work” (EU Interview No. 5, 2007) which the OECD is thought to be better at than the EU. Obviously, indicators are not neutral instruments – they represent interpretations of policy goals and thresholds that may be expressions of various normative ideas. Thus the jointly defined indicators may be said to be expressions of common policy ideas in the two organizations: Very frequently the OECD is called up to present its findings and we build upon that referring to those findings. But we feel that they are OECD work so they should also apply in Australia, New Zealand, Japan, USA that in our view are very different social settings. So we do not want to be compelled by these OECD analyses; we insist to translate this into the, in our view, more typically European social model. But we want to build on the strength of the OECD, not to be put in a situation of competition with the OECD. That we cannot do, even if we have, of course, our own expertise, on social issues based on the work of the EUROSTAT and a lot of investment in social indicators. (EU Interview No. 1, 2007)


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The interview illustrates that the relation between the EU and the OECD in the area of social policy may rather be characterized as co-operative than competitive, even if their respective characters and functions are different. The relations to their respective member states are also becoming gradually more similar. The kind of multilateral surveillance carried out by both of them is very similar: they both rely on soft law and their recommendations are all based on extensive contacts with the member states and on peer reviews. The following description of the OECD working procedure when making the Economic Surveys thus seems to be a long distance from the description of a remote expert organization: We need to gather a lot of facts, so we go to the country, but we also discuss the budget and that kind of thing, although in a very technical type of way. That usually, let’s see, it’s usually maybe half a year before the final report is done. And before that we send a questionnaire, detailed questionnaire . . . and our contact point in the government is the ministry of finance . . . along with the questionnaire we send a list of institutions or people . . . some times . . . we like to see also people outside government, because, you know . . . you want more objective opinions sometimes, because government has its policy line, . . . but the government helps us find those people as well, it’s very cooperative. (OECD Interview No. 6, 2007)

The OECD surveillance is thus a two-tiered process consisting of a preparatory and a discussion phase (Schäfer 2006, p. 73), which must ultimately end up in a consensus between the OECD and the examined country regarding problem definition and recommendations (OECD Interview No. 3, 2007). Summarizing the comparison between the social policy ideas promoted by the EU and the OECD, and their respective characteristics and working methods in the social policy field, the conclusion is that far from competing with each other, the EU and the OECD are playing the idea game with similar cards. Even if the nuances matter in the social policy fields, there is a lot of convergence to be seen when looking at the OECD and the EU from a distance. This convergence was clearly expressed by a member of one of the DG Employment, Social Affairs and Equal Opportunity units, who had earlier been working within the OECD. He described the good co-operation the two organizations have on pension statistics and pension analysis, and also recently on health issues. In the employment field, they had also always had good co-operation: We go to their meetings, we invite them and if you look at the seminars we organise we will usually have an OECD speaker. But we also do direct cooperation together, for example pension statistics and pension indicators. (EU Interview No. 2, 2007)

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According to him, the two organizations are not recommending different things – they recommend very much the same – even if the EU is more specific and has a clearer set of objectives. The OECD framework is broader. But in spite of some slight differences, the recommendations are the same: ‘Both organizations recommend us to work longer, to look after our personal savings, to look at adequacy’ (ibid.). This comparison between the EU and the OECD regarding more general social policy ideas and working methods also contributes to the picture of the two organizations as, although different, also quite related. And the difference seems to decrease. In the next section, I will critically analyse three kinds of discourse that the EU and the OECD ideas are part of, and subsequently I will discuss the justification of them – the input and the output legitimacy.

THREE SOCIAL POLICY DISCOURSES ‘Making work pay’ (MWP) has been a key message in OECD employment strategies since the 1980s and it soon became a key priority for the EU’s Social Protection Committee after its establishment in 2000. In 2003 ‘making work pay’ became one of the ten guidelines of the European Employment Strategy. MWP policies cover a series of reforms which aim is to make work pay more than not working. Generally this implies a mixture of social protection and employment policies, like stricter eligibility criteria, tax reforms, lowering of benefit levels and the use of activation programmes – the key ideas being incentives and activation. The often-repeated request to ‘modernize the incentives structures’ of the social protection systems and to implement ‘active social policies’, emphasizes the urge to change the focus from insuring individuals and protecting them against various social risks, towards investing in their capabilities and making use of them to the best of their potential at every stage of the life course (OECD 2005, p. 3). The ideas of incentives, activation and making work pay also relate to a normative and cognitive framework that may be labelled ‘the sustainability discourse’. Generally, this discourse addresses questions about the social and economic challenges of the welfare state as such, and whether these will undermine or cause the dismantling of the historical accomplishments of this state structure (see Chapters 4 and 7). Both the EU’s and the OECD’s social policy recommendations, being fairly consistent over the last ten years, express supply-oriented ideas that originated in the late 1970s. At that time, policy recommendations incompatible with supply-side recipes vanished from the OECD’s country


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surveys. And even if it is questionable whether the OECD still has “a coherent ideational strategy” (Armingeon and Beyeler 2004, p. 228), it is fairly clear that both the EU and the OECD are promoting ideas that belong to a neo-liberal tradition. The stress on work incentives, deregulation of employment protection, reduction of taxes and public expenses, the removal of obstacles to business activities and reduction of public employment, are all central policy pillars of the EES and of the OECD Jobs Strategy as of the neo-liberal ideology. Their policy thinking is strongly market-oriented.21 The MWP discourse has been dominating the social policy debates and reforms on both international and national levels for the last ten years, although the policy message is much older. Even if the core of the discourse is of an economic nature, it is closely related to the moral discourse on ‘rights and duties’ which dominated the social policy agenda in Europe (and the US) during the 1990s. This was in turn a successor of a discourse that had been alive since the development of the welfare states after World War II, about ‘social rights’. Thus, during the last 25 years the influential social policy discourses in Europe have passed through important normative transformations, from citizenship-based social rights to contribution-based entitlements and ultimately to incentive-based social benefits. Although the discourse of social rights has many facets, a central understanding is that the normative goal and policy tool is the securing of adequate living standards for all citizens through equal opportunities and the equal treatment of them. During the 1980s this discourse came under attack for the policies’ alleged demoralizing, counterproductive effects. Rather than improving the citizens’ prospects for a better life, it was claimed that ‘social right’-based welfare policies reduced the clients’ well-being through passivity, dependency and social marginalization, but first and foremost, through disincentives to work. Thus, the ‘social rights discourse’ was subsequently replaced by the moral discourse on ‘rights and duties’, which highlights the citizens’ personal responsibility for their own welfare. This discourse shares certain social policy ideas with the MWP discourse, like activation and sanctions for not fulfilling the citizen’s duties, the last being an indirect, negative incentive to work. Yet incentives do not yet play a main role in the discourse; they are still part of a broader moral package where duties and social rights are the important ingredients. Today the moral concepts of rights and duties have been pushed into the background and replaced by the concept of incentives. The movement indicates a shift in the discourse from a morally coloured definition of, and solution to, current welfare state problems, to a more calculated, selfinterested description and answer that lack any kind of moral sensibility. The fact that morality has become a weaker argument at the expense of the significance given to personal economic gain does not imply, however, that

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the recommended policies are exclusively based on cognitive ideas, lacking values and normative substance. The normative message is just not put on the public agenda. This may be illustrated briefly by the transformation of the idea of justice. While the ‘social rights’ discourse expresses a resourcebased egalitarian notion of justice, including ideas of redistribution, equal opportunities and equal respect, a ‘rights and duty’ discourse argues explicitly for justice as reciprocity. In this idea of justice, the moral correlation between contributions and benefits is essential: “The needy should receive aid, but only in return for some contribution to the society” (Mead 1997, p. 221). The rhetoric surrounding ‘equal opportunity’ has become less powerful than the one around ‘the duty to work’; needy citizens whose contributory duties have not been fulfilled may be denied public assistance to survive.22 In the last discourse the moral message about rights and duties has been toned down; the MWP policies rather guide the citizens in the direction of economic calculations. The idea of reciprocity is still strong, yet it is more explicitly influenced by utilitarian thinking that defines morality in terms of maximum possible welfare of a society as a whole. A main problem with utilitarianism as a theory of justice is that it allows the rights of some people to be sacrificed for the greater benefit of others; it is only concerned about distribution to the extent that this contributes to some suitable conception of utility across the community. Thus, a utilitarian theory of justice might award too much compensation to the ‘wrong’ people and too little to the ‘right’ ones (Dworkin 2000, pp. 328f.). This brief normative analysis reveals how different normative ideas are embedded in the various social policy discourses and reforms, and thus the importance of laying bare the governing ideas and principles in a political community. These should be known and available for public consideration and examination, defence or rejection (Bertram 1997; Waldron 1993, p. 61). Transparency is crucial for the legitimacy of any political system.

LEGITIMACY There are two aspects of legitimacy – the inputs and outputs of public policies. Input-oriented legitimacy is based on the citizens as the only legitimate source of power – ‘government of the people’ – while legitimacy on the output side – ‘government for the people’– meets the criterion of efficiency in solving the citizens’ problems and reaching their goals (Scharpf 1999). International organizations are generally described as lacking input legitimacy, while the outputs may advance the legitimacy of their actions. For instance, the EU often meets complaints about ‘democratic deficit’, and concerns are often expressed regarding the EU’s lack of a collective


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identity, solidarity and culturally based civic trust, which Scharpf regards as preconditions for achieving a legitimate government of the people. However, in the EU and the OECD, both input and output legitimacy seem to be lacking in the policy areas of employment and social protection; studies confirm that it is highly questionable whether these policy actors have the capacity for effective problem solving in areas dominated by ‘soft law’. Researchers have concluded that although the European Employment Strategy and the Open Method of Coordination have proved useful in helping to define common concepts, aims and indicators, there is to date no convincing empirical base for evaluating the policies’ effectiveness in terms of results (Jacobsson and Schmid 2002, p. 89; Zeitlin 2005, p. 449). A lack of documented effects of the OECD recommendations is also a conclusion in the previously mentioned comparative study of 14 European countries (Armingeon and Beyeler 2004). Also, Scharpf’s requirement for input-oriented legitimacy – a ‘collective identity’ based on cultural homogeneity – makes it almost impossible to achieve legitimacy for the proposals put forward by international organizations. There are however reasons to ask whether cultural homogeneity is a necessary precondition for civic trust and solidaristic policies. There are other ways to establish collective identities; for instance a constitution may constitute a basis for collective identity beyond cultural similarity and the nation state (Habermas 2001). Solidarity may be rooted in a legalpolitical community – consider the strong constitutional patriotism in South Africa. According to Risse (2006), deliberative democracy, based on arguing and persuasion, constitutes a significant means of increasing the democratic legitimacy of a political community, particularly in situations where democratic representation is not an option. This is in line with the ideas of Weber ([1919] 2004), as well as Bertram (1997) and Waldron (1993): the legitimacy of political decisions, institutions or systems depends on the basic governing ideas being available for a rational understanding, consideration and evaluation. This understanding is essential for the question raised in this chapter, specifically how ideas and discourses expressed in policy proposals put forward by the EU and the OECD may justify social policy reforms in a way that make them acceptable for the citizens in their member states. And a main result regarding the input justifications is that these are, first and foremost, pragmatic, instrumental and outputoriented, referring to efficiency and economic growth as the main reasons for reforms in the areas of employment and social protection policies. Thus, the normative messages in the OECD’s and the EU’s social policy initiatives regarding reforms and goals, represent a striking contrast to the normative ideas expressed in the justifications of national social policies in Europe. As pointed out, the OECD and the EU recommendations

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express a very clear normative message, in contrast to the national welfare institutions that express a mixture of partly conflicting reasons for welfare. Furthermore, even though national welfare policies are justified by a mixture of pragmatic and normative arguments, strong normative ideas like equality, solidarity, social justice and human dignity are generally important parts of that mix. Historically, these ideas have played an important role in working against the humiliation, stigmatization and loss of dignity that was attached to the old poor relief system (Beveridge 1942; Kildal and Kuhnle 2005, p. 23). Today it is a matter of dispute whether equality still belongs to the normative basis of these states; ‘growth and efficiency’ seems gradually to have brought forth a normative turn in the Nordic countries (Hort 2005, p. 163). If that proves to be true, the national and the international goals of welfare policy might be described as ‘converging’ and moving far away from normative ideas concerning solidarity and social justice. The welfare of the people seems to be secondary to the well-being of the economy, at least in the EU and the OECD. Distributional questions tend to be important to the degree that redistribution furthers economic growth. Obviously, welfare systems are heavy financial burdens, for the state, for the industry and for the citizens. On the other hand, welfare systems undeniably contribute to the performance of the economy, for example, by cultivating and bringing out the population’s productive potential through various institutional arrangements. But to justify social policies primarily by economic goals is highly questionable. Today, there is an increased level of expectation of democratic polities among the citizens; this makes reference to basic governing principles critical, especially justice (Kohli 2006). In order to get support for the policies and goals prescribed in their economic discourse, appeals to social values are thus essential, either to traditional welfare state values, or to the ‘higher values’ of the collective good (Schmidt 2002). To justify a retrenchment policy in order to strengthen the economy in such a way that we may again build up a welfare system (CEC 1999, p. 8), is not very convincing for citizens who are concerned with moral questions. The justifications need to transcend the demands from the economy in order to be accepted.

SUMMARY The aim of this chapter has been twofold: partly to explore the normative content of the policy ideas furthered by the EU and the OECD through their guidelines and recommendations in the policy areas of employment and social protection; and partly to study the relationship between the two international policy actors, their co-operative efforts and their respective working methods in the same fields of policy.


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The social policy proposals promoted by the EU and the OECD have been quite consistent and closely related during the last 10–15 years. Furthermore, they are evidently results of rather pragmatic utility considerations (see also Chapter 4 of this book). Additionally, the policy recommendations and guidelines, as well as the discourses that surround them, are filled with implicit norms and values. For instance, both organizations are important actors in the ‘making work pay’ discourse with its key cognitive ideas of incentives and activation, the aim of which is to contribute to the increase of labour market participation and ultimately economic growth. Yet they have important normative implications that may finally reduce the input legitimacy of the recommendations. The two organizations’ declarations, that economic, employment and social policies can and should reinforce each other, is obviously not yet transformed to a real policy, their relationship still being more of a hierarchical kind. Given the competition that is said to prevail between the increasing numbers of international organizations, not least between the EU and the OECD, an important outcome of this study is the similarities that have been found. As the promoted ideas are closely related, the formulations of their recommendations and guidelines tend also to be quite alike. This also applies to their respective working methods. They both rely on soft law and their recommendations are results of, i.e., peer reviews and frequent contacts with the respective member states. They attend each other’s seminars and meetings and jointly elaborate policy measures and indicators. This analysis thus supports studies that have found broad similarities in ideas and working procedures between the EU and the OECD. The generally accepted picture of the OECD as an expert organization versus the portrait of the EU as a political one is also somewhat blurred in this study. Although these labels may to some extent be correct, both organizations appear to be a mix of politics and expertise. After all, ideas and knowledge are always impregnated with some kind of values.

NOTES 1. 2. 3. 4.

A guideline is a term that generally refers to broad advice, while recommendations refer to advice given to each member state. However, the organizations do not use the concepts consistently. Rueschemeyer (2006) includes people’s preferences as a third category of ideas in addition to normative and cognitive ones. This category is however not relevant for this study of policy recommendations. Today the EU comprises 27 member states in Europe, while the OECD consists of 30 member states all over the world. Economic Surveys are published for each OECD country every 1½–2 years. They

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5. 6. 7. 8. 9. 10. 11. 12.

13. 14. 15. 16.

17. 18. 19. 20.

21. 22.

The role of international organizations in social policy analyse what the OECD considers to be the main economic challenges faced by the country and present some policy recommendations to meet them. In 1995 a tenth policy area was added regarding product market competition. DELSA is the Directorate for Employment, Labour and Social Affairs. ‘Flexicurity’ is a policy that “facilitates hiring and firing decisions while also providing efficient re-employment services and income support to job losers” (ibid.). The Committee was established in order to facilitate closer co-operation among the member states on the modernization of social protection systems within the EU, under a mandate given to it by the Council. Jobs and Growth, and Growth and Jobs are used interchangeably within the EU. http://ec.europa.eu/employment_social/employment_strategy/recomm_en.htm, accessed 17 March 2008 http://ec.europa.eu/employment_social/employment_strategy/recomm_en.htm, accessed 17 March 2008 http://ec.europa.eu/growthandjobs/pdf/european-dimension-200712-annual-progressreport/200712-annual-progress-report-DA_en.pdf, accessed 7 October 2008. http://europa.eu/rapid/pressReleasesAction.do?reference5MEMO/07/569&format5H TML&aged50&language5EN&guiLanguage5en, accessed 7 October 2008. http://www.oecd.org/document/27/0,3343,en_2649_33733_40069339_1_1_1_1,00.html, accessed 6 October 2008. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri5OJ:L:2000:052:0032:0040:E N:PDF, accessed 7 October 2008. http://puck.sourceoecd.org/vl52838017/cl515/nw51/rpsv/cw/vhosts/oecdjournals/03766438/v2001n9/contp1-1.htm http://ec.europa.eu/growthandjobs/pdf/european-dimension-200712-annual-progressreport/200712-annual-progress-report-DE_en.pdf, accessed 7 October 2008. http:// europa.eu/rapid/pressReleasesAction.do?reference5MEMO/07/569&format5HTML &aged50&language5EN&guiLanguage5en, accessed 7 October 2008. http://www.oecd.org/document/8/0,3343,en_2649_34111_40352840_1_1_1_1,00.html, accessed 7 October 2008. http://tinyurl.com/6paa40, accessed 12 December 2008. http://www.oecd.org/document/17/0,2340,en_2649_37419_35515857_1_1_1_37419,00. html, accessed 17 March 2008. DEELSA lost its education section in 2002 and was transformed into DELSA. That there are some policy conflicts between the DELSA and the Economics Department (the ‘soft’ and the ‘hard’ departments) of the OECD, as between the DG Employment and DG Ecofin within the EU Commission, is a fact that is interesting in a study of the origin of ‘travelling ideas’. For this study, it is not important which department within the respective organizations has ‘ownership’ of the policy recommendations. One of the interviewed OECD experts was asked if at any time they had recommended any country to increase public employment, and the answer was “normally, no (laughter) . . . we . . . I can’t think of any country . . . No, no sorry.” (OECD Interview No. 6, 2007). Obviously some citizens will always have legitimate exemption from the contributive duty. The question is where the boundary is drawn.

REFERENCES Armingeon, K. (2004), ‘OECD and national welfare state development’, in K. Armingeon and M. Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar, pp. 226–241. Armingeon, K. and Beyeler, M. (eds) (2004), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar.


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Bertram, C. (1997), ‘Political justification, theoretical complexity, and democratic community’, Ethics 107 (4), 563–583. Beveridge, W.H. (1942), Social Insurance and Allied Services, Cmd 6404, London: HMSO. Borrás, S. and Jacobsson, K. (2004), ‘The open method of co-ordination and the new governance patterns in the EU’, Journal of European Public Policy 11 (2), 185–208. Campbell, J.L. (2002), ‘Ideas, politics, and public policy’, Annual Review of Sociology 28 (2002), 21–38. Casey, B.H. (2004), ‘The OECD Jobs Strategy and the European Employment Strategy: two views of the labour market and the welfare state’, European Journal of Industrial Relations, 10 (3), 351–329. CEC (1993), Communication from the Commission ‘White Paper on Growth, Competitiveness, and Employment: The Challenges and Ways Forward into the 21st Century (the Delors White Paper), COM (93) 700 final, 5 December 1993, http://aei.pitt.edu/1139/, accessed 14 March 2008. CEC (1995), Communication from the Commission ‘The Future of Social Protection: A Framework for a European Debate’, COM (95) 466 final, 31 October 1995, http://aei.pitt.edu/5000/, accessed 14 March 2008. CEC (1997), Communication from the Commission ‘Modernising and Improving Social Protection in the European Union’, COM (97) 102 final, 12 March 1997, http://aei.pitt.edu/4734/, accessed 14 March 2008. CEC (1999), Communication from the Commission, ‘A Concerted Strategy for Modernising Social Protection’, COM (99) 347 final, 14 July 1999, http://aei.pitt. edu/3562/, accessed 14 March 2008. DELSA (2006), ‘Jobs and incomes: the restated OECD Jobs Strategy’, Newsletter, 3. Dostal, J.M. (2004), ‘Campaigning on expertise: how the OECD framed EU welfare and labour market policies – and why success could trigger failure’, Journal of European Public Policy 11 (3), 440–460. Dworkin, R.M. (2000), Sovereign Virtue: The Theory and Practice of Equality, Cambridge, MA: Harvard University Press. Employment Guidelines (1998), The 1998 Employment Guidelines, Council Resolution of 15 December 1997, http://ec.europa.eu/employment_social/ employment_strategy/98_guidelines_en.htm. Ervik, R. (2003), Global Normative Standards and National Solutions for Pension Provision: The World Bank, ILO, Norway and South Africa in Comparative Perspective, Stein Rokkan Centre for Social Studies, Working Paper 8, 2003, Bergen: Stein Rokkan Centre for Social Studies. European Council (2000), Lisbon European Council: Presidency Conclusions, 23–24 March 2000, http://www.europarl.europa.eu/summits/lis1_en.htm, accessed 14 March 2008. Giddens, A. (1998), The Third Way, Cambridge: Polity Press. Habermas, J. (1993), ‘On the pragmatic, the ethical, and the moral employment of practical reason’, in J. Habermas, Justification and Application, Cambridge, MA: The MIT Press. Habermas, J. (2001), The Postnational Constellation, Cambridge: Polity Press. Hort, S. (2005), ‘After equality? Normative innovations from Lindbeck to Svegfors – towards a dynamic conservatism?’ In N. Kildal and S. Kuhnle (eds), Normative Foundations of the Welfare State: The Nordic Experience, London: Routledge, pp. 149–168.

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Jacobsson, Kerstin and Schmid, Herman (2002), ‘Real integration or just formal adaptation? On the implementation of the National Action Plans for Employment’, in C. De la Porte and P. Pochet (eds), Building Social Europe Through the Open Method of Co-ordination, Brussels: P. I. E. Peter Lang, pp. 69–97. Kildal, N and Kuhnle, S. (2004), ‘Norway: an amenable member of the OECD’, in C. Armingeon and M. Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar, pp. 60–74. Kildal, N. and Kuhnle, S. (2005), ‘The Nordic welfare model and the idea of universalism’, in N. Kildal and S. Kuhnle (eds), Normative Foundations of the Welfare State: The Nordic Experience, London: Routledge, pp.13–33. Kohli, M. (2006) ‘Aging and justice’, in R.H. Binstock and L.K. George (eds), Handbook of Aging and the Social Sciences, Sixth Edition, San Diego, CA, and London, UK: Academic Press, pp. 456–478. Kok, W. (2003), Jobs, Jobs, Jobs: Creating More Employment in Europe, Report of the Employment Taskforce, http://ec.europa.eu/employment_social/employment_strategy/pdf/etf_en.pdf, accessed 12 March 2008. Leibfried, S. (2005), ‘Social policy’, in H. Wallace, W. Wallace and M.A. Pollack (eds) Policy-Making in the European Union, Oxford: Oxford University Press. Marcussen, M. (2004), ‘Multilateral surveillance and the OECD: playing the idea game’, in K. Armingeon and M. Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, US: Edward Elgar. Mead, L. (1997), ‘Citizenship and social policy: T.H. Marshall and poverty’, Social Philosophy and Policy 14 (2), 197–230. Noaksson, N. and Jacobsson, K. (2003), The Production of Ideas and Expert Knowledge in OECD: The OECD Jobs Study in Contrast with the EU Employment Strategy, Score Rapportserie 2003:7, Stockholm: Stockholm University, http:// www.score.su.se/pdfs/2003-7.pdf, accessed 19 March 2008. OECD (1981), The Welfare State in Crisis: An Account of the Conference on Social Policies in the 1980s, OECD, Paris, 20–23 October 1981 [i.e. 1980]. Paris: OECD. OECD (1994), The OECD Jobs Study: Facts, Analysis, Strategies, Paris: OECD. OECD (2000–2008), OECD Economic Surveys: Denmark, Paris: OECD. OECD (2001–2006), OECD Economic Surveys: Germany, Paris: OECD. OECD (2001–2007), OECD Economic Surveys: Norway, Paris: OECD. OECD (2005) Extending Opportunities: How Active Social Policy can Benefit Us All, Paris: OECD. OECD (2006a) OECD Employment Outlook: Boosting Jobs and Incomes, Paris: OECD. OECD (2006b) Boosting Jobs and Incomes: Policy Lessons from Reassessing the Jobs Strategy, Paris: OECD. Rawls, J. (1996), Political Liberalism, New York: Columbia University Press. Risse, T. (2006), ‘Transnational governance and legitimacy’, in A. Benz and I. Papadopoulos (eds), Governance and Democracy: Comparing National, European and International Experiences, London: Routledge. Rueschemeyer, D. (2006), ‘Why and how ideas matter’, in R. Goodin and C. Tilly (eds) The Oxford Textbook of Contextual Political Analysis, Oxford: Oxford University Press. Schäfer, A. (2006), ‘A new form of governance? Comparing the open method of


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coordination to multilateral surveillance by the IMF and the OECD’, Journal of European Public Policy 13 (1), 70–88. Scharpf, F. (1999), Governing in Europe: Effective and Democratic? Oxford: Oxford University Press. Schmidt, V.A. (2002), ‘Does discourse matter in the politics of welfare state adjustment?’ Comparative Political Studies 35 (2), 168–193. Schmidtz, D. and R. Goodin (1998), Social Welfare and Individual Responsibility, Cambridge: Cambridge University Press. Sorrentino, C. (1991), ‘OECD Employment Outlook: July 1991’, Book review, Monthly Labor Review 114 (9), http://findarticles.com/p/articles/mi_m1153/ is_n9_v114/ai_11358732, accessed 17 March 2008. Stone, D. (2004), ‘Transfer agents and global networks in the “transnationalization” of policy’, Journal of European Public Policy 11 (3), 545–566. Swaim, P. (2006), Reassessing the OECD Jobs Strategy: What Have We Learnt? Paris: OECD Directorate for Employment, Labour and Social Affairs, http:// dev2.theworkfoundation.com/Assets/PDFs/Paul_Swaim_050706.pdf, accessed 17 March 2008. Tannenwald, N. (2005), ‘Ideas and explanation: advancing the theoretical agenda’, Journal of Cold War Studies 7 (2), 13–42. Taylor-Gooby, P. and Daguerre, A. (2004), ‘The new context of welfare: state of the art paper for the FPV project: welfare reform and the management of societal change’, in European Commission, EU Research on Social Sciences and the Management of Societal Change, Luxembourg: Office for Official Publications of the European Communities, pp. 5–29, ftp://ftp.cordis.europa.eu/pub/citizens/ docs/eur20789_screen_en.pdf, accessed 17 March 2008. Torres, R (2006), Labour Market Reforms: Lessons from OECD Countries, http:// tinyurl.com/5lpnhk, accessed 12 December 2008. Waldron, J. (1993), Liberal Rights, Cambridge: Cambridge University Press. Weber, M ([1904] 1969), ‘Objectivity in social science and social policy’, in M. Weber The Methodology of the Social Sciences, New York: The Free Press. Weber, M. ([1919] 2004), ‘Politics as a vocation’, in D.S. Owen and T.B. Strong (eds) The Vocation Lectures, Indianapolis, IN: Hackett Publishing. Zeitlin, J. (2005) ‘The Open Method of Co-ordination in action’, in J. Zeitlin, P. Pochet and L. Magnusson (eds), The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies, Brussels: Peter Lang, pp. 447–503.

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APPENDIX 2.1

THE OECD

OECD Jobs Study 1994 1. 2. 3. 4. 5. 6. 7.

Set appropriate macro-economic policy Enhance the creation and diffusion of technological know-how Increase working-time flexibility Nurture an entrepreneurial climate Increase wage and labour cost flexibility Reform employment security provisions Strengthen the emphasis on active labour market policies and reinforce their effectiveness 8. Improve labour force skills and competences through wide-ranging changes in education and training systems 9. Reform unemployment and related benefit systems – and their interactions with the tax system 10. Enhance product market competition so as to reduce monopolistic tendencies and weaken insider–outsider mechanisms while also contributing to a more innovative and dynamic economy. These recommendations represent the OECD Jobs Strategy. OECD Recommendations to Denmark The essential OECD recommendations to Denmark 2000–2008 regarding employment and social protection policies: 1. Change the relevant work incentives 2. Reduce time for studying by tightening the provisions of grants and loans, increasing the speed of human capital formation 3. Tighten eligibility criteria for unemployment benefit 4. Abolish the early retirement scheme 5. Apply activation measures to all workers right up to retirement age 6. Improve educational attainment and language skills among immigrants by introductory programmes and increased emphasis on activation 7. Tax cuts. OECD Recommendations to Germany The essential OECD recommendations to Germany 2001–2006 regarding employment and social protection policies:


1. 2. 3. 4. 5. 6. 7. 8.

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Comprehensive labour market reform needed Public sector services need to be priced more closely to the market Expenditure cuts in public spending Quick implementation of some measures proposed by the Harz Kommission Hurdles to labour force participation of older employees and females need to be further reduced A tax reform reducing the welfare costs of taxation Remove fiscal distortion Improve incentives to supply and demand labour.

OECD Recommendations to Norway The essential OECD recommendations to Norway 2000–2007 regarding employment and social protection policies: 1. Increase outsourcing of auxiliary services 2. Measures are needed to contain the inflow into the sick leave and disability pension schemes in order to avoid a drop in labour force participation 3. The AFT scheme should be abolished and replaced by a system of flexible retirement where benefits should be actuarially adjusted 4. Further efforts (other than a temporary disability benefit) should be made to reduce attractiveness of the disability schemes and to counter abuses facilitated by complaisant doctors and weak controls. Moreover, independent audits of disability claims should be instituted 5. Reforms within the current public old-age pension system should be on the agenda 6. It is crucial that concrete measures are taken soon to attain improvement of public sector efficiency. More competition between public and private sector providers is required 7. The private sector should play a larger role in the provision of public services and user charges should be introduced or raised to reduce excessive demand 8. It is very important that the authorities pursue a reform that strengthens work incentives and thus helps to ensure the sustainability of the scheme. Consideration should be given to a more direct and transparent linkage between actual contributions and actual benefits for those between the pension floor and ceiling whatever their age at retirement

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9. Activation programmes should be aimed at speeding up the return of long-term sickness recipients to work. In addition, in order to curb possible abuse, controls and sanctions to achieve active participation in job search should be enforced.


APPENDIX 2.2

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THE EU

The European Council in Essen, December 1994, agreed on five key objectives to be pursued by the member states (The Essen Strategy): 1. The development of human resources through vocational training 2. The promotion of productive investments through moderate wages policies 3. Improvement of the efficiency of labour market institutions 4. Identification of new sources of jobs through local initiatives 5. Promotion of access to the world of work for some specific target groups such as young people, long-term unemployed people and women. The 1998 Employment Guidelines (Council Resolution of 15 December 1997) Goal I. Improving employability 1. Tackling youth unemployment and preventing long-term unemployment 2. Transition from passive measures to active measures; ensure that benefit and training systems actively support employability 3. Encouraging a partnership approach 4. Easing the transition from school to work. Goal II. Developing entrepreneurship 1. Making it easier to start up and run businesses 2. Exploiting the opportunities for job creation 3. Making the taxation system more employment friendly. Goal III. Encouraging adaptability in business and their employees 1. Modernizing work organization 2. Support adaptability in enterprises. Goal IV. Strengthening the policies for equal opportunities 1. 2. 3. 4.

Tackling gender gaps Reconciling work and family life Facilitating return to work Promoting the integration of people with disabilities into working life.

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Employment guidelines 2004 (Council Decisions of 22 July 2003 and 4 October 2004) 1. Active and preventive measures for the unemployed and inactive 2. Job creation and entrepreneurship 3. Address change and promote adaptability and mobility in the labour market 4. Promote development of human capital and lifelong learning 5. Increase labour supply and promote active ageing 6. Gender equality 7. Promote the integration of, and combat the discrimination against, people at a disadvantage in the labour market 8. Make work pay through incentives to enhance work attractiveness 9. Transform undeclared work into regular employment 10. Address regional employment. Employment Guidelines 2005–2008 (Council Decision of 12 July 2005) Integrated with the macro-economic and micro-economic guidelines, the Employment Committee and the Social Protection Committee have formulated a joint opinion on the Integrated Guidelines for Growth and Jobs: Nos 17–24: 17. Implement employment policies aiming at achieving full employment, improving quality and productivity at work, and strengthening social and territorial cohesion 18. Promote a lifecycle approach to work 19. Ensure inclusive labour markets, enhance work attractiveness and make work pay for job seekers, including disadvantaged people and the inactive, through “continual review of the incentives and disincentives resulting from the tax and benefit systems”, among other strategies 20. Improve matching of labour market needs 21. Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners 22. Ensure employment-friendly labour cost developments and wagesetting mechanisms 23. Expand and improve investment in human capital 24. Adapt education and training systems in response to new competence requirements.

3.

Directly-deliberative polyarchy: a suitable democracy model for European social policy? Milena Büchs

INTRODUCTION Directly-deliberative polyarchy is a new model of decentralized democracy and social policy recently applied to legitimize the Open Method of Coordination (Gerstenberg and Sabel 2002; Eberlein and Kerwer 2004). To be able to discuss the appropriateness of directly-deliberative polyarchy for legitimizing the Open Method of Coordination, it is crucial to reflect on the relationship between democracy and social policy more generally. The introduction discusses this relationship and claims that social policy and democracy are related to each other in a circular way: social policy can provide output legitimacy whilst at the same time it needs to be based on input legitimacy.1 It is very difficult to institutionalize this particular relationship at the European level, and each governance model of EU social policy must therefore be scrutinized regarding its effects on the relationship between social policy and democracy. This chapter examines this question in relation to the Open Method of Coordination. In modern welfare states, social policy and democracy are mutually co-dependent. In comparison to other policy areas, social policy requires a particularly solid legitimacy basis. On the other hand, social policy is a precondition and stabilizer of mass democracy. This chapter argues that the special relationship between social policy and democratic legitimacy has been put under pressure by European integration and that a new relationship between these two spheres must be established within the multilevel governance system of the European Union. One underlying assumption of this chapter is that redistributive social policies are still in demand within European societies. For example, it has been argued that a strong political tradition still exists in continental Europe, promoting a ‘social democratic welfare state’ based on ‘Christian social doctrines’, the workers’ movement and social liberalism (Habermas 49

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2001, p. 10). The argument that European citizens still support the welfare state is also supported by empirical studies conducted by Wincott (2006, pp. 749f.) and Taylor-Gooby (2004).2 In addition, it is likely that demand for redistributive social policy will increase in the next couple of decades due to a range of economic and social changes. These include the phenomenon of ‘jobless growth’, as increasingly divided labour markets create social inequalities, firstly between the employed and the workless and secondly between those with well-paid full-time jobs and those in precarious low-wage employment (the ‘working poor’). Furthermore, the ageing of European societies generates higher demand for social security and health care in old age. If the assumption that European electorates still support redistributive social policies and expect governments to provide solutions to these current social problems is correct, a range of democracy-related issues arise within the present state of European social policy.3 The relationship between social policy and democracy can be perceived to be cyclical, firstly because social policy-making procedures must conform to certain democratic standards if the output is to be accepted as legitimate, and secondly due to the crucial role of social policy within the establishment of mass democracy and its importance for the maintenance of functioning democratic systems. It has been argued by authors such as Scharpf (1997, p. 20; 1999, pp. 22f.), Majone (1998, p. 28) and Habermas ( [1998] 2001), that social policies must be adopted in processes of ‘democratic will-formation’ (Habermas) or ‘input-legitimacy’ (Scharpf) since social policy potentially involves redistribution and touches upon fundamental normative orientations within society, and is therefore likely to be highly controversial. In other words, the controversial nature of redistributive social policy requires politicization, public debate and democratic decision making. Such policies cannot be delegated to expert networks or independent or unaccountable bodies. However, many authors (for example, Majone 1996, p. 133; Scharpf 1999, pp. 8f.; Bellamy 2006, p. 742) believe that if majoritarian institutions (such as parliaments) decide upon redistributive policies, a sense of common political identity (or a ‘European demos’) is required by those affected, as the defeated minority will accept the majority’s decision only if it is felt that fellow citizens can be trusted. This argument has consequences for the prospects of adopting redistributive policies at the EU level. For example, Majone claims that EU institutions can only legitimately adopt regulatory policies, such as ‘market-making’ provisions promoting a single market or ‘negative integration’ with no redistribution entailed. In his view, these regulatory EU policies must be detached from democratic processes to be trustworthy and effective (Majone 1998, p.

Directly-deliberative polyarchy

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17). Scharpf similarly argues that EU governance mechanisms must rely predominantly upon output legitimacy since procedures based on input legitimacy are not feasible at the EU level (Scharpf 1999, pp. 9, 22f.). The logical consequence of Scharpf’s and Majone’s perspective is that the EU cannot legitimately engage with redistributive social policy in its current form, and therefore social policy must be provided by the member states. One must note that this ‘European demos’ view has been criticized by the ‘rights-based’ view (Bellamy 2006), equally promoted by authors such as Habermas (2001; [1998] 2001) and Fossum and Menéndez (2005, pp. 13f.). They maintain that European citizenship inclusive of social rights and a European constitution should not only be perceived as deriving from, and therefore requiring some form of ‘European demos’, but that a common political identity can also be generated by democratic procedures of constitution making. Furthermore, Habermas emphasizes that a ‘European identity’ cannot be conceptualized as a ‘community of fate shaped by common descent, language and history’ (2001, p. 15), but as a voluntaristic citizenry based upon the mutual acceptance of difference and need for European-wide solidarity, which would complement existing national identities (see also Offe and Preuss 2006). Whilst the theory behind these arguments is highly appealing, it can be regarded as a justification for European constitution building that might become relevant in the long run but is not yet accepted as a legitimation for redistributive EU policies. In fact, the relevance of national and sub-national identities and scepticism regarding European integration appear to be increasing, as reflected by the demise of the Constitutional Treaty in France and the Netherlands in 2005. A different strand of thought takes into account the role of social policy for the functioning of democracy and for the formation of nation states, national identities and mass democracy (Rokkan 1999, pp. 131f., 265; Moreno and McEwen 2005, pp. 5ff.; Wincott 2006, pp. 750f.). This can be applied to the formation of European identity and democracy in a prospective sense (Habermas 2001; [1998] 2001). Certain social provisions can be regarded as a precondition for the functioning of mass democracy. For example, the availability of universal education delivered by a public school system is required for citizens to participate in democracy and make informed decisions within that role. Social policy also provides social security and a safety net for those who could not otherwise cope, thus potentially reducing social inequalities and conflict. The containment and institutionalization of social conflict can be regarded as contributing to social and political stability, thus facilitating democracy.4 Furthermore, claims that redistributive social policy requires a common political identity can be reversed by arguing that social policy contributes

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to the development of a common political identity. This argument is also used in the debate regarding welfare state development, in which some authors state that, in some cases, welfare state development created or supported the development of national identity (Rokkan 1999, pp. 131f., 265; Moreno and McEwen 2005, pp. 5ff.). Similarly, as discussed above, it has been argued by Habermas (2001; [1998] 2001) that social rights embedded in a European constitution could contribute to the development of a European political identity. Finally, social policy can provide output legitimacy for a political system if it successfully addresses social problems and thus legitimizes the current political system and government.5 If these assumptions are accepted, it becomes obvious that European integration creates problems for the relationship between social policy and democratic legitimacy. This is because on the one hand, European integration limits member states’ capacity to design their own social policy, regarded by Scharpf as a reduction of national governments’ potential to generate output legitimacy (Scharpf 1999, p. 83) and by Held (1995, pp. 16f.) and Habermas (2001; [1998] 2001) as a threat to national democracy. On the other hand, as the EU becomes increasingly involved in social policy, a unique multi-level governance system of social policy is emerging. However, authors such as Scharpf (1999), Majone (1996, 1998), Bellamy (2006) and Weiler (2002) maintain that it is virtually impossible to establish democratically legitimate redistributive EU social policy or refuse this option for political reasons. One aim of introducing the Open Method of Coordination was to reconstitute a healthy balance between democracy and social policy at the EU level. It is therefore important to evaluate whether the Open Method of Coordination can ‘deliver’ this goal (see below). This chapter continues by briefly illustrating the argument that European integration limits national democracy, via discussing the possible impacts of ‘negative integration’ on the welfare state. It then presents the Open Method of Coordination (OMC) and its aim to help cope with some problematic side-effects of ‘negative integration’ by strengthening EU social policy and legitimacy. The OMC operates without binding polices but is rather based on ‘soft law’, evaluation, peer review and policy networks. Its specific form of governance raises novel questions regarding democratic legitimacy. In this context, a fundamentally new model of democracy, directly-deliberative polyarchy, has become prominent in theorizing and justifying coordinated EU social policy. Within directly-deliberative polyarchy, decision making and implementation are devolved to local units which consist of all ‘stakeholders’ affected by the policies. In return for their autonomy, local units must provide information on experiences and performance to the central administration, which pools and diffuses


53

this information to other local units. This chapter will examine whether directly-deliberative polyarchy is an appropriate democracy model to legitimize the Open Method of Coordination. Therefore this model will be discussed in detail along with a number of options which aim to maintain positive elements of directly-deliberative polyarchy in the OMC whilst strengthening institutions of representative democracy and the OMC’s transparency, accountability and democratic legitimacy.

THE OPEN METHOD OF COORDINATION Since the early 1990s, the European Union has developed a new governance method to coordinate member state labour market and social policy. This method was formally adopted in 1997 through the European Employment Strategy, which was then integrated into the newly defined Open Method of Coordination (OMC) at the Lisbon European Council in 2000. The adoption of the OMC can be understood only in the context of implications of European integration and the formation of a single market for national democracy and European welfare states. ‘Negative integration’ is achieved by market-creating measures that focus on removing barriers to free trade or undistorted competition. Examples of ‘negative integration’ measures are the abolition of tariffs and quantitative limits as well as competition law. The standard legitimation for ‘negative integration’ is that all member states have voluntarily, that is based on democratically legitimate decisions, transferred their sovereignty in affected policy fields to the EU (Weiler 2002; Follesdal 2006, p. 445). Authors such as Scharpf (1999), Habermas ([1998] 2001), Offe and Preuss (2006) and Wincott (2006) assume that ‘negative integration’ law limits member state governments’ abilities to design their welfare states, with potentially detrimental effects for social standards and national democracy. For example, whilst it is likely that product standards can be maintained in a common market, standards related to the production process, which increase the costs of the product but do not improve its quality, are likely to come under pressure through free trade in a single market (Scharpf 1999, pp. 96ff.). Examples of production process standards being under pressure through EU integration include social security related non-wage labour costs, employment security and workplace health and safety. In addition, monetary union entails the requirement for all member states to meet certain budget criteria, for example not to exceed an annual additional state deficit of three per cent and an overall public debt of sixty per cent of GDP. Consequently, governments that are members of the

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Euro-zone are restricted regarding the size of public deficits, and therefore state expenditure, potentially creating a need to find ways of cutting expenditure against a backdrop of ageing societies and relatively high unemployment rates. Habermas (2001; [1998] 2001), Offe and Preuss (2006), Streeck (1996) and Scharpf (1999) also maintain that the restriction of policy options available at the member state level limits democratic autonomy. National governments’ ability to respond to electoral demands is reduced, as it must be assumed that electorates expect solid social policy provisions as ageing societies increase requirements for social security and health in old age as well as an increase of labour supply, assuming that retirement ages are raised and early retirement is decreasing, which potentially produces higher unemployment, larger groups of ‘working poor’ and consequently more extensive social inequalities. European integration therefore produces a need to compensate for the loss of democratic autonomy and the ability to design effective social policies. The difficulty that exists is that this cannot be achieved by establishing a European ‘super’ welfare state based upon institutions of representative and liberal democracy as they exist at the national level. Firstly, the national political and welfare systems are historically grown and European citizens would clearly dismiss the prospect of these systems being replaced by a European ‘super state’. In addition, although heavily disputed, it has been argued that a fully-fledged European welfare state cannot be established due to the non-existence of a European ‘demos’ required to create institutions at the EU level which could facilitate inputlegitimate majoritarian social policy making (Majone 1996; Scharpf 1999). Without a common political identity and fully-fledged institutions of majoritarian democracy, redistributive social policies need to be adopted by unanimity in the Council and Parliament. Given the huge variety of interests and positions towards European social policy within an EU of 27 member states, virtually no consensus could be reached about these issues at the EU level if unanimity were required. The Open Method of Coordination (OMC) was designed as a compromise solution in response to the dilemma that whilst European measures are required to safeguard European welfare states and democracy, this cannot be done by establishing a European super welfare state. On the one hand the OMC strengthens social policy coordination at the EU level; on the other it remains informal, leaving member states’ social policy authorities formally intact. This construction is intended to facilitate mutual learning and bottom-up policy innovation through the regular exchange of ideas, peer review and ‘naming and shaming’ (Jacobsson 2004; Trubek and Trubek 2005; Zeitlin 2005; Kröger 2006).


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Within the OMC, the EU has the role of setting non-binding objectives, quantitative indicators and targets, guidelines and recommendations, whilst member states are obliged to regularly develop plans and reports regarding the ways in which these objectives will be implemented. Subsequently, the EU Commission and Council evaluate and compare member state practices. The EU presented the OMC as legitimate, since it subscribes to the principle of subsidiarity, and as a means of improving European democratic governance, for example through the involvement of key stakeholders at the European, national and sub-national levels (European Council 1997: para. 13f., 18). However, a number of problems related to transparency, accountability and legitimacy can be identified within the OMC (see for example, Joerges and Rödl 2004; Büchs 2007). Accountability and transparency are key criteria for assessing the democratic quality of political systems or policy procedures. In an ideal world, parliamentary democracies are based on the principle that the government (agent) is accountable to the parliament (principal), that is, the parliament has the right to scrutinize the government and to monitor whether it correctly implements all legislation. In extraordinary crisis situations the parliament also has the right to dismiss the government. In addition, the government is indirectly accountable to the electorate through the publicity of government activities. The electorate holds the government accountable through elections since it has the power to vote for a new government if it is dissatisfied with the current one. Transparency is the precondition for accountability. If its activities and decisions are opaque, government cannot be held accountable by the parliament and electorate. In short, accountability and transparency are crucial mechanisms to control and limit government, a key characteristic of democratic government (Manin et al. 1999, p. 16). Regarding the participation of stakeholders, empirical studies have demonstrated that the participation of social partners, non-governmental organizations (NGOs) and regional and local authorities in OMC processes has increased (for example, Zeitlin 2005; Friedrich 2006). However, no guidelines exist at the EU level concerning which actors should be consulted in the development of OMC objectives and who should participate in the development of National Reform Programmes. This is because different traditions of stakeholder involvement exist within different member states, so the EU wished to leave decisions regarding involvement with the member states. Stakeholders are therefore involved to different degrees in producing national reports. The EU Commission and Council then use these reports to issue country-specific recommendations. However, these procedural differences in producing national reports potentially create difficulties for the acceptance and legitimacy of the country-specific

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recommendations because a country with well-established traditions of social partner or NGO involvement might not be willing to be compared to another country whose report has been produced without any proper stakeholder involvement (and vice versa). Even more problematic is the fact that no guidelines exist regarding the rights and responsibilities of stakeholders participating in OMC processes. Therefore the type of involvement naturally varies between member states, and it remains unclear to electorates whether stakeholders were involved as advisers or whether they drafted parts of the National Reform Programmes independently. In other words, the degree of influence different stakeholders have within OMC processes remains opaque; it is also unclear whether this influence is equally distributed between different stakeholders and whether their role can be regarded as legitimate. An additional problem in relation to participation is that parliaments at all levels are only marginally involved in OMC processes. The EU Parliament has the right of information in the European Employment Strategy but not in other social policy areas covered by the OMC. National parliaments do not participate in the development of national reform programmes and are normally only informed after the programme has been adopted (Zeitlin 2005; Büchs 2007). Moreover, the overall construction of the Open Method of Coordination poses considerable problems in terms of transparency, accountability and democratic legitimacy. Firstly, the OMC processes are complex and the general public is not well-informed about these processes or about the roles different institutions and actors play at the EU and member state levels in OMC policy making (the majority of EU citizens are not even aware that the OMC or Lisbon strategy exist (European Commission 2006: fn 14). One example of the opaqueness of OMC processes is evident in the important role played by the Employment and Social Protection Committees. Both Committees are crucial in developing quantitative indicators and discussing proposals for guidelines and objectives, with each consisting of two member state representatives and a member of the European Commission. The Committees may consult experts, interest groups and voluntary organizations. However, no clear rules exist to govern these consultations, meeting minutes are not publicly available and the Committees’ influence upon the development of the European Employment Strategy and OMC objectives remains unclear. A further example is apparent within the roles that different member state governments play in negotiations regarding the OMC. As the minutes of Council discussions are not publicly available, the positions and arguments presented by government representatives are not transparent. Therefore national citizens cannot discover the role their government,


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and other member state governments, played in OMC decisions. This weakens the accountability of national governments to their parliaments and electorates. Sabel and Zeitlin (2007) argue that even if the OMC does not stand up to traditional criteria of principal-agent accountability, it does provide for ‘dynamic accountability’ through peer review. This concept is based on the notion that in situations where ‘actors . . . learn what problem they are solving, and what solution they are seeking, through the very process of problem solving’ (ibid., p. 37), accountability is not about compliance by the agent to the rules set by the principal but about mutual and deliberative control between actors in networks. In this model, rules are no longer set by a centre or principal (such as the EU) but by a network of actors, in the case of the OMC, the EU Commission, the Council (national governments) and a variety of stakeholders at the European and national levels. The implementation of the rules set by actors responsible for the implementation is monitored through peer review, that is by other members of this network. This leads to the identification of the policy approaches that do or do not work, and in turn to the formulation of new objectives. The problem with this model is that national parliaments play only a marginal role in this dynamic accountability; they are no longer principals to whom governments are accountable, but they implement the agendas and objectives adopted by the network of the Commission, national governments and ‘stakeholders’. Another problem is that negotiations regarding OMC objectives and National Reform Programmes are barely discussed in the media, so European electorates are largely unaware of these processes. This lack of publicity also brings into question the effectiveness of peer review within these European networks. If a particular government is ‘named and shamed’ by network members, is this effective if it does not threaten the government’s reputation before its national electorate? Finally, the OMC’s democratic legitimacy can be discussed more generally. One can argue that there is no legitimacy issue regarding the OMC because none of the guidelines, objectives, indicators and recommendations are legally binding. If member state governments decide to change their policies in the light of these objectives, it is their voluntary decision based upon a change of law adopted by national parliaments. This general assumption would be true if the link between domestic policy making and the OMC were more transparent and explicit to national electorates. However, OMC objectives and potential national implementation plans are currently decided without parliamentary participation and without public discussion. If domestic policy reforms are open to OMC influence, national policy agendas are no longer primarily defined in public arenas

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by national parliaments, but in relatively exclusive forums at the EU level. In addition, due to the opaqueness of OMC policy-making processes, member states can use the OMC in order to pressure for unpopular policy change without any transparency of a government’s role in OMC negotiations to its electorate (Büchs 2008).6 Furthermore, the non-binding objectives of the European Employment Strategy (EES) have become more closely linked to the European Social Fund (ESF) in the new structural fund period 2007–2013. The European Social Fund regulations require that the projects it supports are consistent with and support the objectives of the European Employment Strategy as well as the OMC in social inclusion. It also requires that indicators in Operational Programmes reflect the EES indicators, and that ESF evaluations scrutinize whether projects supported the implementation of the EES.7 Consequently, the European Employment Strategy gains a considerable influence over the implementation of EU redistributive policies, although the objectives of the European Employment Strategy have not been adopted in the normal EU decision-making processes (that is, without co-decision by the European Parliament) and are not legally binding. This is possibly the most problematic OMC issue in terms of democratic legitimacy, as via the link to the structural funds, the nondemocratically decided EES gains influence on the implementation of one of the key areas of EU expenditure policy. This would pose no problem if the majority of EU citizens agreed to EES objectives and its overall orientation. However, it is unclear whether general support for EES objectives would be found amongst EU citizens. Even if it were, one can argue that the trustworthiness of the EES objectives is limited because it is not democratically controlled. This in turn affects the legitimacy of national policies, which are to some degree directly influenced by the EES.

DIRECTLY-DELIBERATIVE POLYARCHY Soon after the introduction of the Open Method of Coordination (OMC), the concept of directly-deliberative polyarchy began to be applied within the literature to theorize the OMC’s legitimacy as well as a new democracy model for the EU more generally (Gerstenberg and Sabel 2002; Eberlein and Kerwer 2004).8 The model of directly-deliberative polyarchy was initially developed in more detail by the American scholars Cohen, Dorf and Sabel in the late 1990s and was presented as an alternative to constitutional and representative democracy (Cohen and Sabel 1997; Dorf and Sabel 1998; Gerstenberg and Sabel 2002, p. 294). Its basic argument is that representative and


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constitutional democracy is no longer a desirable and workable model due to the increasing volatility and diversity of society. Directly-deliberative polyarchy therefore proposes that decision making and implementation should be undertaken by local political units whilst central administration, parliament and courts only provide, monitor and guarantee the framework for such decentralized decision making (Dorf and Sabel 1998). This system is called ‘polyarchy’ because the core areas of policy making and implementation are devolved to lower level units, thus creating ‘a permanent dis-equilibrium’ of political power (Gerstenberg and Sabel 2002, p. 292; see also Sabel and Zeitlin 2007).9 It is directly-deliberative because a wide range of political actors participate in local decision making which is reached by deliberation, that is, the exchange of arguments mutually acknowledged as being rational (Cohen and Sabel 1997, p. 320). The main novelty of directly-deliberative polyarchy is that in return for greater policy-making authority, local units must provide central and higher level units with information regarding their solutions, experiences and performance, which can then be disseminated and made available to other local units. Therefore, local policy making is publicly scrutinized, benchmarked and criticized. The authors hope that this will enhance accountability and foster mutual ‘policy learning’ between local units (Cohen and Sabel 1997, p. 314; Dorf and Sabel 1998, p. 267), whilst these units develop policies that are both legitimate, due to direct participation, and effective, since solutions are tailored to local problems. Directly-deliberative polyarchy criticizes the uniformity and preciseness of law that seeks to tackle problems at the national level and guarantees equal social rights and social service access. Cohen and Sabel argue that uniformity of law does not take regional differences and social diversity into account and cannot respond to highly volatile social environments (Cohen and Sabel 1997, p. 324). From the directly-deliberative polyarchy perspective this applies not only to secondary, but also constitutional law. The proponents of this concept therefore suggest that participants within local units consider general constitutional principles whilst constitutional courts restrict themselves to taking an overview of the application of directly-deliberative policy making’s general principles and procedures by local units (Cohen and Sabel 1997, pp. 327, 335). Furthermore, since the creation and implementation of rules need to be more flexible and responsive to rapidly changing social contexts, directlydeliberative polyarchy assumes that policy solutions are only found during the problem-solving process (Sabel and Zeitlin 2007, p. 37). This means that rule makers and rule takers can no longer be clearly distinguished but mutually depend upon one other. Therefore, strict separation of powers is not workable and decision making and implementation are merged in

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local units in which citizens, interest groups and private and voluntary organizations participate. As a consequence of this new arrangement, the roles of the constitution, central parliament and government are redefined. The constitution provides merely a general framework, enabling deliberative and experimental local decision making but containing no substantial rules (Cohen and Sabel 1997, p. 335). Constitutional courts should therefore no longer make substantial decisions, but monitor the procedural requirements of directly-deliberative decision making. Central legislatures support local deliberation via the definition of areas that are open to this type of decision making. Since most policies are locally implemented in this architecture, administrative agencies merely ‘provide the infrastructure for information exchange between and among units’ (Cohen and Sabel 1997, p. 334).

ANALYSIS AND CRITIQUE OF DIRECTLYDELIBERATIVE POLYARCHY The model of directly-deliberative polyarchy is thought-provoking because it seeks to radically remodel democracy and is based on relevant insights into the challenges contemporary societies pose for democracy and the welfare state. However, a range of criticisms can also be levelled at this model, and this section discusses whether it is suitable for legitimizing the Open Method of Coordination and whether it successfully redefines the relationship between democracy and social policy in a multi-layered European Union. Firstly, the model of directly-deliberative polyarchy correctly emphasizes that contemporary economies and societies are rapidly changing. Through the internationalization of the economy, businesses and capital have become more mobile, as the increasing rate of technological innovation leads to the development of new production forms and products so that both production and consumption increasingly underlie rapid change. The employment sphere is affected by that since new skills are required and employment sectors generated whilst more traditional jobs disappear. In addition, societies become more diverse through migration, and despite ‘globalization’, the significance of regional and local identities rises in a range of places worldwide. However, it is difficult to measure empirically the scope of these changes in comparison to earlier phases of economic and technological change. In addition, it is not entirely clear which political consequences have to be drawn from these economic and social changes and whether they require an approach as radical as that suggested by directly-deliberative


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polyarchy. This is not the place to find answers to these issues; I intend only to raise the question whether directly-deliberative polyarchy identifies the right degree of change, and if so whether these changes require the abolition of constitutional and representative democracy. One can argue, for example, that in times of rapid social change and high job insecurity, national or even supra-national provisions are necessary to enable job mobility, social security in periods of temporary unemployment or further education. Such ‘uniform’ social security provision could be a precondition for the success of a flexible economy. Secondly, directly-deliberative polyarchy is in accord with the scholarly debate that attests a serious crisis of representative democracy and rule of law in developed Western economies. It is equally true that the establishment of a federation with a fully-fledged parliamentary democracy at the EU level is seen as unfeasible. Nevertheless, it is doubtful whether the necessary consequence must be the abolition of representative democracy and rule of law, or whether it is in fact important to search for new ways through which these principles can be upheld but reformed to be workable in the contemporary context of economy and society and be strengthened at the European level. For example, there are very good reasons behind the principle of the separation of powers in liberal democracies, even if this can probably never be fully realized. Powers are divided between the legislature, executive and courts in order to inhibit authoritarianism and monopolization of power through effective ‘checks and balances’. Rule makers are thereby prevented from creating self-serving rules unresponsive to the requirements of the ‘common good’ or will of the citizens. The main arguments brought forward by directly-deliberative polyarchy against the rule of law and representative democracy are that the production of rules by such institutions is too time-consuming and that they are too rigid and uniform to respond to diversity and volatility. However, if directly-deliberative polyarchy is seriously practised it is far from clear that its procedures will be less time-consuming and more responsive to social change than those of representative democracy (Scheuermann 2004, p. 118). Moreover, the rules produced would have only local or regional coverage, which restricts the mobility of economic actors and renders any type of longer-term planning, still required to a certain degree by public and private organizations, unfeasible. The most significant problem with directly-deliberative polyarchy is, however, that assumptions regarding the way in which constitutional principles will be realized seem to be overly optimistic. Sabel, Cohen and Dorf suggest that instead of providing courts with the responsibility of overseeing compliance with constitutional

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principles, participants in local units are required to take the general constitutional principles and requirements of directly-deliberative rulemaking into account (Cohen and Sabel 1997; Dorf and Sabel 1998). Participants in local units are not only citizens but also interest groups, private and voluntary organizations, NGOs and so on. The underlying assumption is that these different actors are dependent upon one another in such a way that, after closer inspection, all participants are equally powerful and rules are created that equally serve the interests and needs of all participants (Gerstenberg and Sabel 2002, p. 293). However, this belief is extremely idealistic since it is highly likely that local actors are differently dependent upon one another, and have different capabilities and capacities to organize themselves and influence policies; thus power asymmetries between local actors will exist. This is particularly the case in the area of social policy with potentially redistributive consequences. Those in precarious situations and in need of support are regularly less able to organize themselves and in danger of being overruled by those actors who have to pay for this support due to the latter’s short-term self-serving interests. Directly-deliberative polyarchy’s normative idea that diverse political actors can collaborate deliberatively on an equal footing, without differences in interest and power affecting the outcome and regularly violating the rights or needs of the weaker participants, is laudable but unrealistic. Finally, directly-deliberative polyarchy promotes the localization of policy making and implementation, arguing that this is the best way of generating locally tailored solutions through the direct involvement of those local actors affected by the rules produced. In contrast to directlydeliberative polyarchy, democratic welfare states seek to provide equal social rights or even life chances and living standards across the country to level out regional disparities. Even if the central level does not prescribe precise policies in such a setting, it must be responsible for financial redistribution between different social groups and regions. Directly-deliberative polyarchy is relatively inexplicit about its design in relation to these issues. On the one hand, it perceives itself as a model ‘after the welfare state’ (Cohen and Sabel 1997, p. 362) but on the other, as an alternative to market liberalism and rigorous deregulation (Cohen and Sabel 1997, p. 315; Scheuermann 2004, p. 102). It believes that the decentralization of policy making to local units will accommodate ‘weak interests’ at the local level because the powerful will realize that their success depends on the powerless (Gerstenberg and Sabel 2002, p. 293). As discussed above, this is a fairly idealistic assumption since the question of whether weaker actors are able to influence more powerful actors in any significant way very much depends upon the issue at stake and the degree of dependency of the stronger actors on the weaker. It also remains unclear whether the central


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level can play a role in regional redistribution and support for deprived areas. Directly-deliberative polyarchy states that central legislatures can be responsible for providing resources to local bodies which meet basic requirements in terms of membership and benchmarking (Cohen and Sabel 1997, p. 334). If funding of local-level policies is entirely dependent upon these criteria, it might emerge that the most deprived areas are least likely to be able to meet them and are thus in danger of becoming even further impoverished. In turn, this can limit the legitimacy of local units’ authority and the whole policy design more generally. The discussion of directly-deliberative polyarchy has so far addressed some of its general principles but has not specified whether they apply to the national or the European level. Originally, the model of directlydeliberative polyarchy was developed by American scholars, with predominantly the United States in mind as a potential country of application (Cohen and Sabel 1997; Dorf and Sabel 1998; Fung and Wright 2001). However, it has also been applied to the European Union (Gerstenberg and Sabel 2002; Sabel and Zeitlin 2003; Sabel and Zeitlin 2007) and the OMC in particular (Eberlein and Kerwer 2004; Smismans 2005). It is fair to say that European integration places additional pressures upon representative democracy and rule of law because policy making has become even more complex given the diversity between European member states and because European citizens do not share a common political identity. Consequently, European parties and a European public sphere are currently virtually non-existent, whilst European law and capital mobility across the European Union weaken national institutions of representative democracy. Given the problems with directly-deliberative polyarchy, it is, however, questionable whether this model provides a suitable alternative to the current system as well as to other potential reform options. For example, in the EU’s current design, rule of law is guaranteed through a complicated system of checks and balances with an independent Court of Justice responsible for overseeing adherence to the Treaties of the European Community and European Union. A complex system of division of powers exists between: the Commission and other Executive Agencies as the executive branch; the Commission (having the right of initiative); the Council and the European Parliament co-operating in EU law making; and finally the European Court of Justice as the judiciary branch of government. Furthermore, representative democracy is an important principle at the EU level. The members of the Council are (indirectly) democratically legitimized because they have been selected in national parliamentary elections whilst the members of the European Parliament are directly elected in EU elections. Even if the European Parliament remains the weaker partner in EU law making overall, as in some areas it is only

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consulted by the Council, it has been transformed into a proper second legislative chamber on par with the Council in the co-decision procedure (Article 251, Treaty of the European Community). Gerstenberg and Sabel (2002) and Sabel and Zeitlin (2007) certainly do not suggest abolishing this existing EU design and replacing it with an ideal model of directly-deliberative polyarchy. However, they apply directly-deliberative polyarchy to legitimize developments such as comitology and the Open Method of Coordination. However, when Gerstenberg and Sabel praise the increasingly significant role of comitology, for example in the area of product standards, this is perceived as an alternative to the approach in which the European Court of Justice decides upon the appropriateness of standards. They therefore promote a move away from more traditional European governance approaches towards directly-deliberative polyarchy. Sabel and Zeitlin (2007, pp. 39ff.) also suggest that directly-deliberative polyarchy could work very effectively if it was employed in the context of a ‘default penalty’, which would be the threat that policy solutions would be sought by institutions of traditional policy making if directly-deliberative polyarchy failed.10 They believe that this threat would be so powerful that participants in directly-deliberative polyarchy would ‘deliberate in good faith’ to prevent the default penalty, which they perceived as completely unworkable (Sabel and Zeitlin 2007, p. 41). Whilst this appears to be an attractive idea, greater experience with these modes of governance and more empirical research is required to reveal whether their promises will deliver. The main argument I wish to put forward here is that even if elements of directly-deliberative polyarchy that complement other established modes of EU governance might be a workable and justifiable solution, directlydeliberative polyarchy is more difficult to justify in the area of European social policy. The main reasoning behind this view is that in the areas covered by the Open Method of Coordination, no such ‘default penalties’ exist because the EU does not have any further authority in these fields. In addition, since the areas covered by the OMC concern long-standing traditions of social policy at the national level and therefore touch upon core values and interests related to redistributive policies, it is difficult to perceive how the EU’s informal role as agenda setter can be democratically justified if the EU and national parliaments do not play a stronger role in this process.11 In other words, the Open Method of Coordination causes problems as it does not fulfil the complex requirements regarding the relationship between democracy and social policy, and the model of directly-deliberative polyarchy is not sufficient to legitimize this sort of arrangement. The final section of this chapter is concerned with presenting potential


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reform options in relation to the Open Method of Coordination with the aim of strengthening its transparency and accountability and providing a framework of parliamentary democracy.

SUMMARY AND CONCLUSIONS: EMBEDDING THE OMC IN REPRESENTATIVE DEMOCRACY Social policy in Europe is increasingly organized in a multi-level governance system which can neither be reverted to a system of nationally independent and autonomous welfares states nor transformed into a European super welfare state. This chapter argues that the new multi-level governance framework poses considerable problems for the relationship between democracy and social policy (see introduction), both in terms of a ‘democracy deficit’ in EU social policy making and European social policy’s restricted capacity to generate output legitimacy. Regarding the first dimension, one can claim that due to its potentially redistributive effects, social policy requires particularly sound procedures of democratic policy making, providing for public discussion, will formation and input legitimacy. These requirements are arguably fulfilled to a certain degree in the areas of binding regulatory and redistributive EU social policy, because the European Parliament has the right of codecision in most of these areas, such as the adoption of directives on health and safety at the workplace,12 coordination of social security systems13 and the implementation of the European Social Fund.14 One important exception is the Common Agricultural Policy, which has redistributive effects, but in which the EU Parliament has no right of co-decision. Strengthening the EU Parliament’s role in this area would therefore present a significant improvement in terms of democratic legitimacy. The democratic quality of binding EU social policy would be further enhanced if other issues relating to the EU’s democracy deficit could be tackled, such as the lack of ‘contestation for leadership and policy’ (Follesdal and Hix 2006). As demonstrated in the above discussion regarding the OMC, the requirements of input legitimacy, transparency and accountability are less sufficiently fulfilled in relation to this new governance method. This conclusion will therefore concentrate on reform options in this area. With regard to the second dimension, the role of social policy for the legitimacy of political power and the functioning of democracy, the dilemma is that European integration and the internationalization of the economy generally put national welfare states under pressure. Whilst this would not be a problem for output legitimacy if electorates were content with declining welfare states, it can prove problematic if there is a stable

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or increasing demand for public social security provisions against a backdrop of flexible, rapidly changing labour markets and ageing societies. Nonetheless, the national welfare state cannot be rebuilt at the supranational level. However, welfare state retrenchment potentially limits output legitimacy or even poses a threat to the stability of democracies due to increasing social inequality and conflicts. The OMC has been developed as a response to these dilemmas of European social policy, but its compromise character cannot overcome these fundamental tensions. One radical proposal may involve the abolition of the OMC based on the argument that it is not effective enough in strengthening social Europe and that more is gained by leaving the responsibility for social policy with the member states. However, despite its numerous inherent difficulties, the abolition of the OMC would be a step in the wrong direction. The need to coordinate social policies at the EU level is undisputable, and therefore energies should concentrate on improving the OMC’s design. The model of directly-deliberative polyarchy has been developed in order to theorize and justify the OMC. As previously discussed, directlydeliberative polyarchy stems from relevant observations regarding the economic and social context of contemporary democracy and social policy. However, the model presents a radical departure from principles such as the rule of law and representative democracy. This chapter therefore argues that an ideal-type directly-deliberative polyarchy would not be a viable and appropriate model for national or European democracy and social policy. However, directly-deliberative polyarchy could provide useful elements within the EU’s multi-layered polity if it is firmly embedded in the principles and institutions of representative democracy and the rule of law. From this perspective, an alternative reform option consists of making a set of very general OMC objectives legally binding through their adoption by the co-decision procedure at the EU level. Member state governments would then be obliged to implement these aims. Authors such as Habermas, Offe and Preuss would argue that this could be legitimized by a new concept of European citizenship which is not so much based on assumptions about shared ‘European’ characteristics as centred around the recognition of the requirement for mutual solidarity among the citizens from the various member states (Habermas 2001; Habermas [1998] 2001; Offe and Preuss 2006). This concept is very attractive and may have future political relevance if it is accepted and promoted by key European political actors. Yet it is likely that policy makers and citizens would currently object to its employment in justifications of legally binding OMC. However, a range of proposals can be made to improve the transparency,


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accountability and input legitimacy of the OMC. For example, even if OMC objectives are adopted as non-binding guidelines, the European Parliament should have the right of co-decision whilst the Committee of the Regions and the Economic and Social Council should be consulted in the adoption of these objectives. This would enhance the OMC’s publicity and enable open political discussion regarding its goals. Council discussions preceding the adoption of OMC objectives should be transcribed and made publicly available in order to strengthen the transparency and accountability of national ministers to their national parliaments and electorates. The same should apply to discussions in the Social Protection Committee and Employment Committee as they undertake crucial decisions concerning quantitative indicators and targets within the OMC. Moreover, whilst the current situation provides no political consensus for rendering OMC objectives legally binding, there could be legally binding rules regarding the decision-making procedures of OMC objectives at the EU, as well as national, levels. OMC processes at the national level could, for example, require national governments to consult with national parliaments before the objectives and guidelines are adopted at the EU level. Most national governments already consult with other key political actors such as social partners, NGOs and sub-national authorities about the OMC objectives. However, governments should be required to provide detailed and publicly accessible information concerning the actors involved as well as the methods of their involvement. This may include whether they were consulted or allowed to contribute parts to the national reports or programmes and the ways in which governments are obliged to respond to their proposals. Furthermore, if OMC guidelines and objectives are decided within the ‘normal’ processes of decision making at the EU level, national parliaments should in turn be obliged to discuss whether, and if so, how, these objectives could be linked to national policy making. This would provide a basis for a public and transparent discussion regarding the link between EU social policies and national policy making. The obligation for this discussion does not imply that national parliaments must adopt the objectives. Parliaments would be allowed to reject an implementation of OMC objectives after providing justifications raised in the debate. This process would limit the current dominance of executives in the OMC process and strengthen the legislative branch of policy making. This discussion remains an initial inconclusive draft of proposals and is intended only to illustrate the ways in which transparency, accountability and parliamentary democracy could be strengthened in relation to the OMC. Additional theoretical and empirical research is required in order

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to examine ways in which directly-deliberative polyarchy could be embedded in representative democracy to establish a new and viable relationship between democracy and social policy in the EU.

NOTES 1. Policies are output-legitimate when they meet the interests of the citizens affected by these policies, that is, when these policies are effective in the sense that they contribute to solve problems (‘politics for the people’). Policies are input-legitimate when they reflect the will of the citizens, which is normally provided for by procedural arrangements related to the majority rule (‘politics by the people’) (Scharpf 1999, pp. 6ff.). 2. Wincott (2006, pp. 749f.) concludes from analysing Eurobarometer surveys that citizens rate the welfare state positively in countries with more generous welfare arrangements whilst they complain about the (malfunctioning of the) welfare state in countries where provision is weak (mainly Southern and Eastern European member states). Taylor-Gooby (2004) maintains that although European citizens are becoming more sympathetic to open market principles, they still support ‘mild egalitarianism’. 3. When I use the term European social policy, I am referring to the interplay between EU and national social policies, whilst EU social policy denotes only social policies adopted at the EU level. 4. A similar argument has been made by De Swaan to explain the establishment of the ‘caring’ welfare state. He claims that the welfare state was a project of the ‘rich’, who are dependent on the ‘poor’ to stabilize public order and labour productivity (De Swaan 1988, p. 3). 5. Some recent studies explain declining support for the EU as being caused by high unemployment and social inequality (Nissen 2004, p. 23; Moreno and McEwen 2005, p. 8); this can be interpreted as a lack of output legitimacy provided by the EU. 6. This might not be the default mode of OMC usage at the domestic level, but there is evidence that some governments use the OMC in this way, for example in Germany (Büchs 2007), the Netherlands (Visser 2005, p. 199) and France (Erhel et al. 2005, p. 217). 7. See the new regulations on the European Social Fund (European Parliament/Council 2006), preamble paras 7, 13, 15, Articles 4.1, 4.4 and 4.5. 8. In the literature, different variants of directly-deliberative polyarchy exist. This model is sometimes also called directly-deliberative democracy (Gerstenberg and Sabel 2002, p. 295), democratic experimentalism (Eberlein and Kerwer 2004) or experimentalist governance (Sabel and Zeitlin 2007). 9. However, Cohen and Sabel (1997, pp. 317f.) use the concept of ‘polyarchy’ in Dahl’s (1989) sense of a political system in which basic democratic principles are guaranteed, such as right of suffrage for all adult citizens, right of assembly and access to information and the election of the government. 10. Sabel and Zeitlin refer to the Florence Electricity Forum as an example (2007, p. 40). 11. This view stands in stark contrast to Smismans’ (2005, pp. 121f.) judgement regarding the OMC, claiming that this method is still far too centralized to fulfil the criteria of directly-deliberative polyarchy. 12. According to Articles 137, 1a and 2b Treaty of the European Community (TEC). 13. Article 42 TEC. 14. According to Articles 148 and 162 TEC. However, the assent procedure applies to decisions on the general structural fund framework; see Article 161 TEC.


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REFERENCES Bellamy, R. (2006), ‘Still in deficit: rights, regulation, and democracy in the EU’, European Law Journal, 12 (6), 725–742. Büchs, M. (2007), New Governance in European Social Policy: The Open Method of Coordination, Basingstoke: Palgrave Macmillan. Büchs, M. (2008), ‘The Open Method of Coordination as a “two-level game”’, Policy and Politics, 36 (1), 21–37. Cohen, J. and C. Sabel (1997), ‘Directly-deliberative polyarchy’, European Law Journal, 3 (4), 313–342. Dahl, R. (1989), Democracy and its Critics, New Haven: Yale University Press. De Swaan, A. (1988), In Care of the State: Health Care, Eduction and Welfare in Europe and the USA in the Modern Era, Cambridge: Polity. Dorf, M. C. and C. F. Sabel (1998), ‘A constitution of democratic experimentalism’, Columbia Law Review, 98 (2), 267–473. Eberlein, B. and D. Kerwer (2004), ‘New governance in the European Union: a theoretical perspective’, Journal of Common Market Studies, 42 (1), 121–142. Erhel, C., L. Mandin and B. Palier (2005), ‘The leverage effect: the Open Method of Coordination in France’, in J. Zeitlin, P. Pochet and L. Magnusson (eds), The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies, Brussels: Peter Lang, pp. 217–247. European Commission (2006), European Employment and Social Policy, Special Eurobarometer 261, available under: http://ec.europa.eu/public_opinion/ archives/ebs/ebs261_en.pdf, download 29 May 2007. European Council (1997), Presidency Conclusions, Luxembourg Extraordinary European Council Meeting on Employment, 20 and 21 November 1997, available under: www.europa.eu/rapid/pressReleasesAction.do?reference5DOC/97 /23&format5DOC*aged5/language5EN5guiLanguage5en, download 12 December 2008. Follesdal, A. (2006), ‘Survey article: the legitimacy deficits of the European Union’, The Journal of Political Philosophy, 14 (4), 441–468. Follesdal, A. and S. Hix (2006), ‘Why there is a democratic deficit in the EU: a response to Majone and Moravcsik’, Journal of Common Market Studies, 44 (3), 533–562. Fossum, J. E. and A. J. Menéndez (2005), Democratic Constitution-Making: Reflections on the European Experiment, ARENA working paper No 18, May 2005, available under: http://www.arena.uio.no/publications/workingpapers2005/papers/wp05_18.pdf, download 28 May 2007. Friedrich, D. (2006), ‘Policy process, governance and democracy in the EU: the case of the Open Method of Co-ordination on social inclusion in Germany’, Policy and Politics, 34 (2), 367–383. Fung, A. and E. O. Wright (2001), ‘Deepening democracy: innovations in empowered participatory governance’, Politics and Society, 29 (1), 5–41. Gerstenberg, O. and C. F. Sabel (2002), ‘Directly-deliberative polyarchy: an institutional ideal for Europe?’ In C. Joerges and R. Dehousse (eds), Good Governance in Europe’s Integrated Market, Oxford/New York: Oxford University Press, pp. 289–341. Habermas, J. ([1998] 2001), The Postnational Constellation. In: J. Habermas, Political Essays, Cambridge: Polity Press, pp. 58–112.

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Habermas, J. (2001), ‘Why Europe needs a constitution’, New Left Review, 11 (Sep./Oct.), 5–26. Held, D. (1995), Democracy and the Global Order: From the Modern State to Cosmopolitan Governance, Cambridge: Polity Press. Jacobsson, K. (2004), ‘Between deliberation and discipline: soft governance in EU employment policy’. In U. Mörth (ed.), Soft Law in Governance and Regulation: An Interdisciplinary Analysis, Cheltenham, UK and Northampton, MA, US: Edward Elgar. Joerges, C. and F. Rödl (2004), ‘Social Market Economy’ as Europe’s Social Model? EUI Working Paper LAW No. 2004/8, Florence: European University Institute. Kröger, S. (2006), When Learning Hits Politics, or Social Policy Coordination Left to the Administrations and the NGOs? European Integration Online Papers, available under http://eiop.or.at/eiop/index.php/eiop/article/viewFile/2006_003a/18, download 17 June 2006. Majone, G. (1996), ‘Which social policy for Europe?’ In Y. Mény, P. Muller and J.-L. Quermonne (eds), Adjusting to Europe: The Impact of the European Union on National Institutions and Policies, London/New York: Routledge, pp. 123–136. Majone, G. (1998), ‘Europe’s “democracy deficit”: The question of standards’, European Law Journal, 4 (1), 5–28. Manin, B., A. Przeworski and S.C. Stokes (1999), ‘Introduction’. In A. Przeworski, S. C. Stokes and B. Manin (eds), Democracy, Accountability and Representation, Cambridge: Cambridge University Press, pp. 1–26. Moreno, L. and N. McEwen (2005), ‘Exploring the territorial politics of welfare’. In N. McEwen and L. Moreno (eds), The Territorial Politics of Welfare, London/ New York: Routledge, pp. 1–40. Nissen, S. (2004), ‘Europäische Identität und die Zukunft Europas’, Aus Politik und Zeitgeschichte, B 38, 21–29. Offe, C. and U. K. Preuss (2006), The Problem of Legitimacy in the European Polity: Is Democratization the Answer? Webpapers on Constitutionalism and Governance beyond the State, No 6, Year 2006, available under http://www. bath.ac.uk/esml/conWEB/Conweb%20papers-filestore/conweb6-2006.pdf, accessed 10 March 2008. Rokkan, S. (1999), ‘State formation, nation building, and mass politics in Europe’. In P. Flora, S. Kuhnle and D. Urwin (eds), The Theory of Stein Rokkan, Oxford: Oxford University Press. Sabel, C. F. and J. Zeitlin (2003), ‘Active welfare, experimental governance, pragmatic constitutionalism: the new transformation of Europe’, Draft prepared for the International Conference of the Hellenic Presidency of the European Union, The Modernization of the European Social Model and EU Policies and Instruments, Ioannina, Greece, 22–23 May. Sabel, C. F. and J. Zeitlin (2007), Learning from Difference: The New Architecture of Experimentalist Governance in the European Union, European Governance Paper No. C-07-02 (EUROGOV), May 10 2007, available under http://www. connex-network.org/eurogov/pdf/egp-connex-C-07-02.pdf, download 21 May 2007. Scharpf, F. W. (1997), ‘Economic integration, democracy and the welfare state’, Journal of European Public Policy, 4 (1), 18–36.


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Scharpf, F. W. (1999), Governing in Europe: Effective and Democratic? Oxford/ New York: Oxford University Press. Scheuermann, W. E. (2004), ‘Democratic experimentalism or capitalist synchronization? Critical reflections on directly-deliberative polyarchy’, Canadian Journal of Law and Jurisprudence, 17 (1), 101–127. Smismans, S. (2005), ‘Reflexive law in support of directly deliberative polyarchy: reflexive deliberate polyarchy as a normative frame for the OMC’, in O. D. Schutter and S. Deakin (eds) Social Rights and Market Forces: Is the Open Coordination of Employment and Social Policies the Future of Social Europe? Brussels: Bruylant, pp. 99–144. Streeck, W. (1996), ‘Neo-voluntarism: a new European social policy regime?’ in G. Marks, F. W. Scharpf, P. C. Schmitter and W. Streeck (eds), Governance in the European Union, Thousand Oaks, CA: Sage, pp. 64–94. Taylor-Gooby, P. (2004), ‘Open markets and welfare values: welfare values, inequality and social change in the silver age of the welfare state’, European Societies, 6 (1), 29–48. Trubek, D. and L. Trubek (2005), ‘The Open Method of Coordination and the debate over “hard” and “soft” law’. In J. Zeitlin, P. Pochet and L. Magnusson (eds), The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies, Brussels: Peter Lang, pp. 83–103. Visser, J. (2005), ‘The Open Method of Coordination as selective amplifier for national strategies of reform: what the Netherlands want to learn from Europe’. In J. Zeitlin, P. Pochet and L. Magnusson (eds), The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies, Brussels: Peter Lang, pp.173–215. Weiler, J. H. H. (2002), ‘A constitution for Europe? Some hard choices’, Journal of Common Market Studies, 40 (4), 563–580. Wincott, D. (2006), ‘European political development, regulatory governance, and the European Social Model: the challenge of substantive legitimacy’, European Law Journal, 12 (6), 743–763. Zeitlin, J. (2005), ‘The Open Method of Coordination in action: theoretical promise, empirical realities, reform strategy’. In J. Zeitlin, P. Pochet and L. Magnusson (eds), The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies, Brussels: Peter Lang, pp. 447–503.

4.

Combating social exclusion in the European Union Even Nilssen

INTRODUCTION Historically social policy has been covered by the principle of subsidiarity and has thus been a national responsibility within the EU. This is still the case, but since the late 1980s, questions concerning poverty and social exclusion have gained increasingly more attention at the supranational level. This may be due to the perceived problems of globalization, an ageing population, unemployment and the establishment of the internal market (Trubek and Trubek 2005; Lopez-Santana 2006). The discourse on ‘social exclusion’ originally came to prominence in EU discussion in the late 1980s in preference to the language of ‘poverty’, due to the hostility of some national governments to talking about poverty and to the adoption of the language by the research community to define a research agenda for the analysis and measurement of the multidimensional phenomenon of exclusion (Armstrong 2005). Combating social exclusion became an important goal at the EU level after the Lisbon Council of March 2000, and later that year the new Open Method of Coordination was launched to address this field of social policy. This method differs primarily from the traditional Community method in a lack of binding rules and sanctions in the implementation of policy. OMC is primarily a system of mutual learning based on objectives, guidelines (in some areas), indicators, national action plans, peer reviews and benchmarking. This chapter concentrates on the content of this process in the field of social exclusion, focusing primarily on the Joint Reports from the Commission and the Council. What are the founding ideas, how do they relate to each other and how is a coordinated social inclusion strategy in the European Union legitimized? Hence, the aim of the chapter is not to analyse the effect of OMC inclusion on national policy making, but to elaborate on the kinds of ideas that the EU is attempting to spread through the process of the Open Method of Coordination in this field of social policy. 72

Combating social exclusion in the European Union

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STUDYING IDEAS AND DISCOURSES: A CONCEPTUAL FRAMEWORK As demonstrated in the introduction to this volume, the literature on the globalization and Europeanization of welfare states has primarily focused on economic and technological forces and less on the transmission of political ideas and values, or more-or-less directly expressed systems of meaning and knowledge. Ideas and policy discourses are an underresearched topic within the literature on international organizations and policy transfer (Campbell 1998, 2002; Stone 2004). Where such research has been undertaken, these studies have demonstrated the significance of discourse formation and ideas for policy solutions (Weir and Skocpol 1985; Hall 1992; Ervik and Kuhnle 1993; Goldstein and Keohane 1993; Rueschemeyer and Skocpol 1996; Schmidt 2000; Beland 2006; SeeleibKaiser and Fleckenstein 2007). This chapter primarily concentrates on the different ideas that form the basis of the EU discourse on combating poverty and social exclusion. What kinds of ideas are permeating the EU Social Inclusion Strategy and the Open Method of Coordination in the field of social inclusion and social protection, and how are they related to each other? To study ideas implies that attention is directed to theories, conceptual models, norms, world views, frames, principled beliefs and the like, rather than self-interest (Campbell 2002). Ideas may have both a normative and a cognitive foundation. Following Campbell (2002) I will make a distinction between four kinds of ideas: Cognitive frameworks (which Campbell calls cognitive paradigms and world views); normative frameworks; frames; and programmatic ideas. Cognitive frameworks are what we may call cognitive background ideas, which policy makers more-or-less take for granted when they are making policy choices. We may speak of cognitive paradigms and theoretical analyses that specify cause and effect and limit the range of alternatives policy makers are likely to perceive as useful (op. cit, p. 22). It may for instance be different kinds of macro-economic theories such as Keynesianism or supply-side economics. Normative frameworks are also background or taken-for-granted ideas, but they are different from cognitive frameworks because they concern norms rather than theories about causes and effects. They primarily contain assumptions about values, attitudes, identities, morals, ethics and other ‘collectively’ shared expectations. Policy makers may operate according to a logic of social or ideological appropriateness rather than a logic of instrumentality or consequentiality. Neo-liberal thinking may for instance function as a normative (ideological) framework for policy

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makers rather than a cognitive macro-economic theory about economic causes and effects. Frames are orientated towards how policy makers present policies in order to make them politically acceptable. These are not background ideas, but (normative or cognitive) ideas put in the forefront of the political argumentation process. They concern how a certain policy or policy proposal is justified in public. For instance, the concept of economic globalization was used as a frame to justify shifts towards conservative, neo-liberal policies in many countries during the 1980s and 1990s (Campbell 2002, p. 27). Programmatic ideas are precise instrumental (cognitive) ideas that facilitate policy making among elites by specifying how to solve particular problems. While cognitive paradigms are ideas which provide an overarching understanding of the world, and what political institutions and policy instruments ought to be like in order to achieve certain goals (they are not explicitly referred to in the policy process), programmatic ideas “are more precise guidelines about how already-existing institutions and instruments should be used in specific situations according to the principles of wellestablished paradigms” (Campbell 2002, p. 28). Changes in policy may, for instance, stem from new programmatic ideas or a rediscovering of old ideas. In studying the EU discourse on social exclusion, programmatic ideas will certainly be in the forefront of our attention. Another concept which seeks to grasp the ideational aspects of policy making, and which is commonly used in the literature, is the concept of ‘policy discourses’. Following Taylor-Gooby and Daguerre (2002) policy discourses may be defined as: coherent systems of ideas that link normative judgements about policy goals to practical accounts of the policies likely to reach them. Such discourses may legitimate particular policy direction to the extent that they reflect widely held values. (p. 6)

This does not imply another analytical perspective, but the concept of policy discourses is useful for several reasons. First, a policy discourse may help to link together different kinds of ideas, for instance normative frameworks and programmatic ideas. Second, it focuses on the relationships between normative (and cognitive I would add) judgements about goals and more instrumental policy ideas. Different ideas may be attached to certain goals and different goals may be attached to certain ideas. Third, as Schmidt (2001) has pointed out, policy discourses consist of both a set of policy ideas and an interactive process of policy construction and communication. The first dimension contains the cognitive and normative content of the discourse, which in our case relates to the different kinds


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of ideas accounted for above. The second, communicative, dimension is closely attached to what we called framing ideas, or more precisely how different policies are framed (by providing a common language) in order to persuade the public and other relevant actors that the policies developed are necessary (cognitive function) and appropriate (normative function) (Schmidt 2001, pp. 249–50). Focusing on how different policy ideas are framed may also contribute to explaining why they are widespread or accepted (or why they are not). The general approach in this chapter is what Beckman (2005) calls an “idea-centred” perspective. This means that the analysis is directed towards arguments rather than the different actors who offer them. The focus of attention is the content and relationship between ideas in the EU battle against social exclusion. It is, however, important to note that ideas do not develop and spread in a social vacuum. At the supranational level attempts are made to spread ideas through the Open Method of Coordination (OMC), which of course entails a close relationship between the EU supranational level and the member states. Before turning to the ideational analyses, I will give a brief account of the institutional dynamics of OMC inclusion.

THE INSTITUTIONAL DYNAMICS OF OMC INCLUSION Traditionally, social exclusion policies have not been seen as positive policies in their own right at the EU level (Daguerre and Larsen undated). Until the 1990s, such questions were given little attention due to the revival of liberal ideology and the idea that social policy should above all help to complete the internal market. The Social Rights Charter of 1989 sought to guarantee minimum standards of social assistance within the EU. The fourth anti-poverty programme was vetoed in 1994 as member states argued that poverty should be dealt with at the national level (that is, the ‘subsidiarity’ argument). At the Lisbon Council of March 2000, however, the member states agreed that they should coordinate their policies on combating poverty and social exclusion on the basis of an Open Method of Coordination.1 This was seen in the light of the Union’s overall strategic goal of becoming, by 2010, “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”. The Lisbon European Council agreed on the need to take steps that would have a decisive impact on the eradication of poverty by 2010. The Council stated that:

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The role of international organizations in social policy Investing in people and developing an active and dynamic welfare state will be crucial both to Europe’s place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty. (quoted in O’Connor 2005, p. 346)

The main objectives set for the OMC inclusion process were: 1) to facilitate participation in employment and access resources, rights, goods and services for all; 2) to prevent the risk of social exclusion; 3) to help the most vulnerable; and 4) to mobilize all relevant bodies in the process. The European Council relaunched the Lisbon process in March 2005 and sharpened the context into which work on social protection and inclusion must fit. The revised Lisbon strategy concentrates on policies to boost growth and employment. At the same time, reflecting the European Council’s vision of “growth and employment-making for social cohesion”, policies within the revised Lisbon agenda should contribute to social cohesion and inclusion (COM (2005) 706). The application of OMC inclusion consists among other things of a process involving the submission of National Action Plans (NAP inclusion) on the part of the member states and their assessment by the Commission and the Social Protection Committee (SPC), resulting in a Joint Report of the Council and the Commission. In February and March 2001 the Commission held bilateral meetings with each member state in order to assist them in drawing up their National Action Plans (Ferrera, Matsaganis and Sacchi 2002). The first NAP inclusions were worked out during 2001 and the next were available in 2003. Currently, the NAPs2 are worked out annually as part of the streamlining of social inclusion and social protection, pensions, health and long-term care. The aim of ‘streamlining’ was twofold: to create a stronger process, and to integrate better with the Lisbon process, in particular the Broad Economic Policy Guidelines (BEPGs) and the European Employment Strategy (COM (2005) 706). The Social Protection Committee plays an important role at the supranational level in the field of social protection. The SPC was developed in spring 2002 from a high-level working group for exchange of information in the field of poverty and social exclusion. This committee is, in contrast to the implementation committees (the Comitology under the Commission) and the preparatory committees (under the Council), formally both under the Commission and the Council; it has, among other things, the overall responsibility for developing indicators in the field of social exclusion. Most members of the SPC belong to ministries for social affairs or labour market ministries in the member states (high-level bureaucrats). There is, however, also a sub-group – the indicator group – which consists mainly of experts, primarily in economics and statistics. This group has


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continued working over the past years to refine the original list of ‘Laeken indicators’. Membership of the indicator group and of the SPC mostly does not overlap. The SPC is primarily a deliberative political group oriented towards building consensus among the member states in the field of social protection, pensions, health and long-term care. The committee works closely with the Employment Committee (EMCO) and (less closely) with the Economic Policy Committee (EPC). Focusing on the actors of the OMC process, De la Porte and Pochet (2002) note that the member states are the key players and the European Commission is the orchestrator, influencing the game in a more subtle manner than in its former role as a fully-fledged political player. The Council is important in setting the overall objectives for action to combat poverty, while the SPC participates together with the Commission in the assessment of the NAPs and has the main responsibility for the preparation of social indicators. The European Parliament and the European Court of Justice play minor roles, if any role at all.

THE BASIC IDEAS OF THE EU SOCIAL INCLUSION STRATEGY We will now turn to the analysis of the basic ideas permeating the EU battle against poverty and social exclusion – what is generally called the Social Inclusion Strategy (SIS) – principally concentrating on the Joint Reports produced by the Commission and the Council, as mentioned above. Each Joint Report is primarily an assessment of developments in the member states based on the National Action Plans (NAPs) and the central objectives developed at the EU level. Certain policies in the member states are highlighted and, although benchmarking is not very well developed in the field of social inclusion, highlighting and descriptions of best practices may be said to contain an element of benchmarking. The reports represent the basic documents in the general (written) communication between the supranational and the national level within the process of the Open Method of Coordination, and are thus the main source in exploring the founding ideas of this process. However, other EU documents will also be utilized in order to place the Joint Reports in a more general EU policy context. The Primary Discourse: Active Social Inclusion through Work The most striking discourse in the EU battle against poverty and social exclusion is what we may call the ‘active social inclusion discourse’ (ASID). Generally, this discourse seeks to strengthen the relationship

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between traditional social policy (distribution/redistribution) and labour market policy (Kildal 2001; Lødemel and Trickey 2001). In the Scandinavian countries, active labour market policies (ALMP) have a long history. In western Europe the idea of an “active society” has also become more important in the field of social policy and labour market policy since the early 1990s, due among other things to high unemployment rates and an increasing number of people dependent on different kinds of public benefits. ‘Policy makers have been concerned with the notion that “passive” benefits provided to workless people contribute to the rigidities that complicate macroeconomic policy and imply slow adjustment to changing economic realities” (Lødemel and Trickey 2001, p. 12). This is reflected in the Joint Reports: “Member States are increasingly adopting “active inclusion” as the preferred route to promoting social and labour market integration” (Joint Report 2007, p. 52). At the EU level, the dominant motto of the Social Inclusion Strategy is closely linked to the European Employment Strategy, and can be expressed as: “the best safeguard against social exclusion is a job” (see de la Porte and Pochet 2002). Employment is considered a key factor for social inclusion, not only because it generates income but also because it can promote social participation and personal development. In the Joint Report (2004) some measures to promote employment emphasized in the National Action Plans are highlighted: ●

●

●

●

Several member states promote active ageing by means of improving the working conditions for older workers, reducing early retirement schemes or stimulating demand on the part of employers as well as labour supply. Most member states refer to the active involvement of employers in the creation of more open and inclusive labour markets. Besides the more traditional instrument of employment subsidies to employers, this is done mainly by employment campaigns in favour of specific target groups, particularly disabled people and migrants, measures to stimulate social corporate responsibility, and general actions focused on combating discrimination. Member states offer personalized guidance to the unemployed or job seekers, which means that an individually-tailored combination of measures is used to create pathways towards employment. Various approaches concerning families are identified – the extension of child facilities, the provision of financial support for families with young children, the creation of family-friendly working environments, the increase in flexible or part-time working patterns, reviewing the parental leave and maternity schemes and raising


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awareness of employers about the importance of creating familyfriendly working environments. Promoting employment stands as the main objective in fighting poverty and social exclusion. This trend is followed up in succeeding Joint Reports. The new Employment Guidelines (integrated guidelines package 2005– 2008) address the problem of integration of those furthest from the labour market by encouraging member states to: introduce work incentives in support of preventive and active labour market measures, including early identification of needs, job search assistance, guidance and training as part of personalized action plans; provide the social services needed to support the labour market inclusion of disadvantaged people; and contribute to social and territorial cohesion and the eradication of poverty (Integrated guideline no. 9). Furthermore, the above guidelines propose a continuous review of tax and benefit systems, including an effort to make work pay and to ensure adequate levels of protection (COM (2006) 44). The Joint Report 2007 states that: Member States acknowledge more clearly that economic and labour market reforms must contribute to strengthening cohesion and social policies must support economic and employment growth. Active inclusion policies can increase labour supply and strengthen society’s cohesiveness. Increasing child wellbeing will help more people to develop their full potential and contribute fully to society and the economy. (Joint Report 2007, p. 4)

On the supply side of the labour market, the report emphasizes the need to equip individuals with the skill and knowledge required by today’s labour market, to provide them with the right incentives to participate actively in society and to support them in their job search. On the demand side, antidiscrimination and labour law, and financial incentives for employers to hire (for example, wage subsidies) are mentioned. In 2006 the Commission claimed that successful policies to make work pay must find a proper balance within what is called the “challenge triangle” of increasing work incentives, alleviating poverty and avoiding unsustainable budgetary cost (COM (2006) 44). Active social inclusion implies combining three elements: 1. 2. 3.

a link to the labour market through job opportunities or vocational training; income support at a level that is sufficient for people to have a dignified life; and better access to services that may help to remove some of the hurdles encountered by some individuals and their families in entering

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mainstream society, thereby supporting their reinsertion into employment (for example, counselling, healthcare, childcare, lifelong learning to remedy educational disadvantages). Thus, the core elements of the programmatic ideas of the ASID may be said to contain: ●

● ●

active labour market policies to tackle lack of employability – in particular through investment in education and training and job counselling (for example, targeted human capital policies); “make work pay” and financial incentives to work (for example, interaction between tax and benefits); non-financial incentives and the removal of social obstacles to entry into the labour market (for example, reconciliation of work and family life).

Such policies embrace both incentive and deterrent measures to further self-reliance to work, for example, supply-side measures to help ease the transition from benefit to work and to make work pay, including voluntary training programmes, arrangements to support childcare and in-work benefits (incentives), and tighter conditional rules and stricter eligibility criteria within social assistance provision (deterrents) (Lødemel and Trickey 2001, p. xii). Kildal (2001) distinguishes between three kinds of activation policies: Active Labour Market Policy (ALMP), Workfare and Welfare to Work. ALMP may be seen as the traditional Scandinavian policy for integrating people into the labour market (a remedy for full employment) and may involve both universal and selective instruments (op. cit, p. 2). Traditionally, these policies have been founded on voluntary agreements and rights rather than obligation and coercion though they include both carrots and sticks. Recipients of (universal) unemployment benefit are for instance required to actively seek work. Workfare, which has been particularly important in the US, implies programmes which oblige able-bodied recipients to work in return for their benefits on terms inferior to comparative work in the labour market, and are essentially linked to the lowest tier of public maintenance systems (op. cit, p. 3). Welfare to Work is exemplified by the Labour (UK) Government’s “New Deal” programmes, which imply a partnership between public and private sectors and an offer of four options for certain groups of welfare recipients (aimed at those most at risk of social exclusion): a six-month subsidized private-sector job, six months with a non-profit organization, paid training or education (for those without basic qualifications), or work in a new ‘environment


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taskforce’ (Kildal 2001, p. 4). Welfare to Work shares with Workfare the work requirement and the compulsory element in the lowest safety net and there is a coercive element to all three activation policies. However, it is only Workfare that lacks training elements and options and that implies inferior working conditions (op. cit, p. 4). There exist, of course, different mixes of these kinds of policies at the national level in the EU (see Clasen 2005; Lødemel and Trickey 2001). However, there seems to have been a development in the member states towards a stronger use of work requirements (obligations) in this field of social policy. In many member states the entitlement to benefits has been made conditional on active job search, availability for work or participation in training. In some instances, this takes the form of an individual contract, stipulating the duties of the recipient in terms of participation in different activation schemes (COM (2006) 44). “Active inclusion emerges as a powerful means of promoting the social and labour market integration of the most disadvantaged. Increased conditionality in accessing benefits is a major component” (Joint Report 2007, p. 2). The Joint Report (2007), though, expresses a mild warning regarding this development “this must not push those unable to work further into social exclusion” and “more attention needs to be given to ensuring adequate levels of minimum income”. According to the report, the need to guarantee adequate minimum income levels receives insufficient attention in many of the National Strategy Reports (former NAPs). There are no indications in the documents that the EU on a supranational level is pursuing or recommending Workfare policies as defined above. Although activation seems to imply more conditions and coercion, it also contains educational measures, vocational training, and so on. Active social inclusion also implies “income support at a level that is sufficient for people to have a dignified life” (COM (2006) 44). People who are not able to work need access to ‘quality services’, although this concept is hardly elaborated on in the Joint Reports. The active social inclusion discourse touches upon some important normative assessments which are not part of the explicit framing of such policies at the supranational level and thus may be perceived as ideas constituting a normative framework of the discourse. The ASID is connected to a more general discourse on ‘rights and duties’. The idea of a ‘new welfare contract’ between the citizen and the state is salient in current western policy discourse, crossing national and political borders. The idea may be summarized as follows: access to welfare benefits is conditional on certain duties the citizen has to meet, above all, the duty to work (Kildal 1999; White 2003). Today, the idea of social rights, which has been coupled to the notion of citizenship, seems to

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give way to a principle of reciprocity,3 the essence of which is to combat a policy of ‘something for nothing’ by balancing benefits and contributions, rights and duties (Mead 1997, p. 221). The general idea of reciprocity is certainly not homogeneous and it may be expressed in many different ways in various policy areas. Active social inclusion represents but one such potential way, highlighting the citizen’s duty to participate in work-related activities in order to be supported by the welfare state. The language of the EU Social Inclusion Strategy (SIS) is only indirectly related to a language of morals or justice and ideas of individual rights and duties. It concerns questions of justice in the sense that the idea of combating social exclusion and poverty itself embraces moral assessments. In the SIS, however, the main concerns are to determine the best means to obtain the overall objective of social inclusion. The language of the Joint Reports is primarily instrumental. Active social inclusion is not justified in terms of rights and duties, but as the best way to achieve social inclusion for people at risk of poverty and social exclusion. However, the increasing emphasis on deterrents in social policies and the strengthening of labour market policies in the field of social inclusion implies a move towards emphasizing duties rather than rights. Using Levitas’s conceptual distinctions (1998) between a redistribution discourse (RED) which contains rights to resources and a social inclusion (through work) discourse (SID) which favours the obligation of self-reliance, there has been a strengthening of the latter discourse in European social policy. This does not mean, however, that activation and rights are logically antagonistic – one may have a right to activation services – but activation measures as presented in the Social Inclusion Strategy are more concerned with the material and social importance of self-reliance than the political–moral question of equal autonomy (see Weale 1983). In this context, an active citizenship becomes closely related to a person’s connection to the labour market. To receive public benefits implies a subordinated role (socially and morally) as a passive citizen. The Secondary Discourse: Targeting Social Services ‘Targeting’ is another important concept in the current international debate about the development of the welfare state (Gough et al. 1997; Hatland 2001). The concept of ‘targeting’ is generally understand to apply to the kinds of welfare policies emphasizing that welfare measures as far as possible should reach the persons in most need of help. Such a principle may contradict a principle of universality, although it does not necessarily do so (Kildal and Kuhnle 2005). Targeted policies may be complementary to universal ones for example in the form of supplementary measures for people with special needs (Titmuss 1968). Targeting will, however, imply


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some kind of differentiation of welfare contributions. It may be related to: 1) the concepts of inclusion and exclusion, which imply a differentiation of welfare contributions according to social groups (for example, membership), 2) a fine-meshed differentiation of social categories, for instance of the terms of eligibility or need, what we may call tailoring, and 3) the division between legal rights and local assessments of needs in the distribution of welfare services, for instance by the use of means testing (Nilssen 1999). Here targeting indicates the increase of the scope of the local (for example municipal or professional) use of discretion in the process of welfare distribution (Hatland 2003). The combination of target groups (inclusion), tailored according to needs and local discretion is a prominent part of the idea of targeting in the SIS. In the Joint Report of 2004, the trends in the member states are described as follows: ●

●

●

●

●

The NAPs particularly highlight the challenge of developing tailored and individualized supports to those who are most disadvantaged and distant from the labour market. While many measures are planned to continue and reinforce a universal welfare system, there are measures on specific areas and attempts to tackle the problems of the most vulnerable people. Some countries, whether or not they have universal welfare systems, adopt a more individualistic approach directed towards those at risk. More and more member states rely on packages where personalized guidance is offered to the unemployed or job seekers. An individually tailored combination of measures is used to create pathways towards employment. Member states continue to devote particular attention to delivery mechanisms as a means of developing more effective programmes. The trend towards greater decentralization continues.

Of course the most important general group at risk of poverty and social exclusion are those out of work (specifically long-term unemployed), or people with very low income. Within these general groups, a lot of different subgroups are mentioned as targets for different kinds of integration policies (immigrants, substance abusers, disabled people, lone mothers and so on). Currently at the EU level it seems that some groups are emphasized as specifically important: immigrants, ethnic minorities and disabled people. The European Council has for instance identified disabled people as one priority for increased labour market participation (Joint Report 2007). Tackling child poverty is another priority:

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The role of international organizations in social policy While the overall approach is universal, complementary measures targeting the most disadvantaged children and families are often parts of the strategy. Two aspects stand out: ensuring equal opportunities with respect to education, including early intervention, and promoting parents’ participation in the labour market. (Joint Report 2007 Supporting document 44 (SEC (2007) 329))

The ideas of ‘active social inclusion’ and ‘targeting’ are very closely integrated in the policies against poverty and social exclusion. This is also reflected in the future key priorities in the field of OMC inclusion, stated in the Joint Report of 2004: ●

●

●

● ● ●

promoting investment in and tailoring of active labour market measures to meet the needs of those who have the greatest difficulties in accessing employment; ensuring that social protection schemes are adequate and accessible for all and that they provide effective work incentives for those who can work; increasing the access of the most vulnerable and those most at risk of social exclusion to decent housing, quality health and lifelong learning opportunities; implementing a concerted effort to prevent early school leaving and to promote smooth transition from school to work; developing a focus on eliminating poverty and social exclusion among children; making a drive to reduce poverty and social exclusion in immigrants and ethnic minorities.

Targeting is interpreted as an effective strategy in the attempt to get people activated. Possible problems related to effectiveness, stigma and social control (see Marshall 1965; Titmuss 1974) are not discussed. However, the 2006 Joint Report asked for an assessment of the impact of some of the activation measures on the most vulnerable groups: The growing emphasis on benefit conditionality is not, to date, accompanied by systematic monitoring of its impact on the most vulnerable groups. The trend towards decentralising responsibility to the regional and/or local level has considerable potential for integrated delivery of social protection and social services. Again, however, the impact needs to be monitored. (Joint Report 2006, p. 5)

As a programmatic idea, targeting is considered to be secondary because it is submitted to the active social inclusion discourse, that is, it is primarily instrumental in helping the most vulnerable groups to be integrated into the labour market. Even tackling child poverty is primarily framed by such


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arguments, the main objectives being to hinder exclusion from work in the future and to help families by reconciling work and family life. Targeting may, however, be understood from a more ideological approach, that is, as a normative framework. As pointed out by Mkandawire (2005) ideologies play an important role in the choice of instruments used to address problems of poverty, inequality and insecurity: The technical nature of the argument cannot conceal the fact that, ultimately, value judgements matter not only with respect to determining the needy and how they are perceived, but also in attaching weights to the types of costs and benefits of approaches chosen. Such a weighting is often reflective of one’s ideological predispositions. (Mkandawire 2005, p. 1)

The normative idea of targeting is often seen as antagonistic to the idea of universalism, although on a logical level these concepts are not necessarily in opposition. As mentioned above we may find targeting within universalism, for example, extra resources to people in need within a universal benefit scheme. However, targeting may be seen as an alternative to universal measures. Such arguments often rest on an ideology where individual responsibility and a limited role for the state are put in the forefront. Mkandawire argues that it is this neo-liberal ideological position, which sprouted up in the 1980s and 1990s, that has set the limits on social policy and underpins the preferences for ‘user fees’, ‘means testing’ and market delivery of social services or ‘partnerships’ in their delivery. He also points out that this ideology “has also eliminated the equity concerns that have been central to all successful experiences of poverty eradication” (op. cit, p. 2). Of course many elements in the discourse on targeting might have a neo-liberal foundation, for instance market solutions and ‘partnerships’ in service delivery, and a comprehensive use of (professional) discretion might seem contradictory to universal rights (see Marshall 1965). However, the programmatic idea of targeting in the supranational context of the EU is not strongly attached to neo-liberal ideology as understood above. Firstly, targeting in its relation to active social inclusion does not imply a retrenchment of the state, at least not in the short run. Secondly, neo-liberal thinking is more closely linked to Levitas’s redistribution discourse (RED) (1998) than the social inclusion discourse (SID). Means testing, user fees and market delivery are instruments in the distribution of resources rather than instruments for social inclusion (through work) although the market may play a part in the latter types of policies too. Means testing and ‘work testing’ are oriented towards different considerations – the first to reach the ‘deserving poor’ in the distribution of resources, the second to integrate the ‘undeserving poor’ (that is, those who can work) into the

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labour market by the use of active policies (incentives and deterrents). In this way, targeting in relation to the active social inclusion discourse is considered to be a secondary discourse decoupled from independent normative ideas. This does not, however, mean that the use of such measures has no normative implications. The influence of a combination of more local discretion and benefit conditions may for instance infringe on citizen’s rights and legal security, and the differentiation of target groups will always be in danger of causing stigmatization. However, the idea of targeting in the Social Inclusion Strategy is primarily connected to perceptions of efficiency. As we have seen, the ASID is also presented in a purely instrumental way, although this discourse contributes to a greater extent than targeting to specifying the main goals in the EU fight against poverty and social exclusion (that is, social inclusion through work).

FRAMING THE FIGHT AGAINST SOCIAL EXCLUSION: THE DISCOURSE ON THE SUSTAINABILITY OF THE WELFARE STATE The discourses on active social inclusion and targeting are of course attached to the general overarching goal of fighting poverty and social exclusion. Although these goals may be seen primarily as ethical or moral objectives (for example, as honouring our collective ethical obligation towards fellow human beings or as securing basic (moral) human rights), this is actually not the way these goals are framed in the process of the Social Inclusion Strategy. Another discourse plays an important role in the framing of activation and targeting as programmatic ideas, and it has a material–economical foundation rather than a normative–moral one; the discourse on the sustainability of the welfare state. This concerns the definition of problems that legitimize the use of certain programmatic ideas in European social policy. Generally, this discourse addresses questions about the social and economic challenges of the welfare state and whether these will undermine or cause the dismantling of the historical accomplishments of this state structure. In the modern form, the concerns about and critique of the welfare state include strong statements and certainties, for example that welfare state provisions: contradict the basic logic of capitalism; hinder the function of market mechanisms; create dependent people instead of making them autonomous; create disincentives to work; and create insurmountable fiscal burdens for the state because of uncontrollable costs, which in their turn would undermine economic growth. In the mid-1990s, Europe was experiencing an acute crisis with high


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unemployment rates, adverse demographic conditions, transformations of household structures and external threats such as intensified international competition (Lopez-Santana 2006, p. 481). Most European counties raised the question of the sustainability of their welfare states given such conditions: The matter in question was how to achieve coordination to reform and modernize existing social policies and institutions, and how to spread them where they have been missing (e.g. new member states), while maintaining and restructuring member states’ welfare institutions. Common problems suggested a supranational European-wide response. (Lopez-Santana 2006, pp. 481–82)

This was also an integrated part of the Lisbon process. The Lisbon Council of March 2000 emphasized the importance of investing in people and developing an active welfare state in order to relieve the existing problems of unemployment, social exclusion and poverty (O’Connor 2005). The relationship between growth and employment on the one hand, and social cohesion on the other, was reinforced by the European Council’s relaunching of the Lisbon process in March 2005. As mentioned above, the revised Lisbon strategy concentrates on policies to boost growth and employment (COM (2005) 706). At Hampton Court in October 2006, the Heads of State and Government discussed how social systems could be sustained in the face of three major challenges: global competition, the impact of new technologies and an ageing population. The conclusion called for “strengthening instruments like the EU’s integrated guidelines for growth and jobs, and reinforcing their interaction with more effective EU level co-ordination in the area of social protection” (Joint Report 2006, p. 3). One of the most conspicuous problems of the effort to modernize social protection systems in the EU has been changes in the characteristics of the ageing population in the European member states. The Commission presents the general problem like this: In the coming decades, the size and age-structure of Europe’s population will undergo dramatic changes due to low fertility rates, continuous increases in life expectancy and the retirement of the baby-boom generation. Ageing populations will pose major economic, budgetary and social challenges. (COM (2006) 574) In the renewed EU Sustainable Development Strategy, the June 2006 European Council proposed continued EU support to the effort by member states to modernize social protection systems and ensure their sustainability (ibid.)

The Joint Report on Social Protection and Social Inclusion (2005, p. 7) states:

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The role of international organizations in social policy In order to achieve their key role in European society and economy, social protection systems need to be responsive to wider social trends. The complex set of demographic, economic and societal factors that have driven and will continue to drive structural changes across the EU have put societal protection systems under pressure to adapt and modernise.

The Report maintains that the shifts in age structure of the population will have important implications for the full range of social policies. Social protection systems need to be shaped so as to respond to the economic and social needs of the future. Social inclusion policies are not only important to prevent and combat poverty “but may also contribute to increasing labour supply, through developing people’s capacity to work and action to make work pay” (Joint Report 2005, p. 8). The Joint Report (2004) concludes that several member states have also considered active ageing by way of improving the working conditions for older workers, reducing early retirement schemes or stimulating demand on the part of employers as well as labour supply: Faced with demographic ageing, all EU Member States must modernise their social protection systems in order to ensure adequate pension and healthcare provision in the future without jeopardising the stability of public finances. (Joint Report 2004, p. 51)

The EU’s sustainable Development Strategy (COM (2001) 265; COM (2005) 37) outlines long-term aspirations for European society and threats and challenges to be addressed if these challenges are to be met. Social policy is concerned with the aspirations of a cohesive society, and the challenges of a gap between rich and poor and of an ageing society. In the OMC process, however, the problem of sustainability is at the centre of attention: The perspective of sustainability places long-term dimensions of social protection and social inclusion policies firmly in the policy frame, giving added impetus to focus on child poverty, through which poverty and exclusion pass from generation to generation and Europe’s future human resources are diminished. (Joint Report 2006, p. 6)

Hence, even the priority of combating child poverty may be grasped from the sustainability discourse. When considering the content of the OMC inclusion process, it is important to see the programmatic ideas of active social inclusion and targeting in relation to such ideas of sustainability. The strength of the ASID, both at the national and supranational level in the EU, has to be understood in relation to the common interpretations of the sustainability problem in general and the problem of an ageing population in particular. This does


Table 4.1

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The ideational foundation of the EU Social Inclusion Strategy General objectives Combating poverty and social exclusion

Framing ideas Programmatic ideas

The discourse on the sustainability of the welfare state The active social inclusion discourse (primary) The discourse on targeting (secondary)

not, however, mean that ethical and moral considerations are absent, but I will contend that the discourse on the sustainability of the welfare state constitutes the most prominent legitimizing idea in the framing of the EU fight against social exclusion.

FINAL REMARKS Combating poverty and social exclusion has become a part of the more general Lisbon process in the EU, and from 2000 the problems of social inclusion and social protection have been a part of the Open Method of Coordination. These questions are not directly attached to the legal processes of the EU (hard law), but are, rather, submitted to a softer and non-binding policy coordination within the Union. The analysis of this coordination is summarized in Table 4.1. By framing the fight against poverty and social exclusion with ideas founded in the discourse on the sustainability of the welfare state, the general objective is turned in a material and economic direction. The whole project becomes primarily a material-instrumental project with few references to any normative (moral or ethical) frameworks. Simultaneously, this may be seen as the reason for the relatively extensive support of the SIS among the member states. It would probably have been much more difficult to legitimize institutional action on a supranational level while framing such problems on purely normative arguments. The discourse on the sustainability of the welfare state is tied to the perception of more general economic problems in the member states (for example, due to globalization and an ageing population) which intersect across several policy fields at the EU level, entailing a strong acceptance of the need for coordinated action. This also implies a very close connection between social policy, employment policy and general economic policy. Social policy becomes to a large extent labour market policy. Active social inclusion and targeting appear to be the most dominant set of programmatic ideas within the framework of the Social Inclusion

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Strategy. This seems to involve a general strengthening of duties, conditionality, compulsion and local discretion in social policy. Although access to quality services for those who cannot work is considered important, the subject of redistribution is not very thoroughly elaborated on at the EU level. Hence, the strong focus on the ASID may obstruct a debate on redistribution. As Wacquant (1996) points out, it may require an unrealistically high level of economic growth to make employment by itself solve the problem of social exclusion. Although there are traces of neo-liberal thinking in the EU Social Inclusion Strategy (for example, the emphasis on work incentives), neoliberalism does not constitute the founding normative or cognitive frameworks of the process. There is no strong push towards a retrenchment of the state (although public savings is a long-term objective), workfare (as defined above), residual welfare measures or privatization. The strategy may rather be seen as a part of a growing attention within the European Employment Strategy to what is termed “flexicurity”. Flexicurity principles aim to combine sufficient flexible work contracts with effective policies to support labour market transitions. On the supply side this means: ● ●

●

Effective active labour market policies supporting transitions between jobs, as well as from unemployment and inactivity to jobs. Credible lifelong learning systems enabling workers to remain employable throughout their careers, by helping to cope with rapid change, unemployment spells and transition to new jobs. Modern social security systems, combining the need to facilitate labour market transition with the provision of adequate income support during all absences from the labour market.4

The Commission states that “Active inclusion . . . is fully complementary to the “flexicurity” approach while targeting those at the margins of the labour market” (COM (2007) 620). One of the major challenges ‘flexicurity’ is supposed to meet is the problem of sustainability: The considerable ageing of European societies, together with relatively low employment rates on average, (assuming unchanged policies), are projected to put at risk the financial sustainability of social protection systems. (COM (2007) 620)

In this context, EU policy makers have directed their attention to welfare states such as Denmark and the Netherlands rather than liberal (residual) Anglo-American welfare regimes.


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Summing up, the analysis of the relationship between the dominant ideas and discourses in the EU fight against social exclusion has shown: 1) that these ideas are primarily material although they do have strong normative implications (for instance on the balancing between rights and obligations); 2) that the strength of the ideas of active social inclusion and targeting involve a strengthening of social policy as labour market policy, at the expense of redistribution; 3) that this must be seen in connection with the way the EU Social Inclusion Strategy is framed – the legitimizing ideas are primarily founded in the material discourse on the sustainability of the welfare state; and 4) that this may be one important reason for the increased attention given to social inclusion policy at the supranational level following the Lisbon process.

NOTES 1. According to de la Porte and Pochet (2002), the Blair government played a dynamic role in putting the question of poverty and social exclusion on the top of the European agenda during the Portuguese Presidency. 2. Currently termed National Report on Strategies for Social Protection and Social Inclusion. 3. The principle of reciprosity generally implies a kind of balance between individual contributions (often understood as duties) and collective distributions of welfare resources. 4. European Commission 2006 – Employment in Europe p. 76.

REFERENCES Armstrong, K. (2005), ‘How open is the United Kingdom to the OMC process on social inclusion?’ In Zeitlin, J. and Pochet, P. with Magnusson, L. (eds) The Open Method of Co-ordination in Action: The European Employment and Social Inclusion Strategies. Brussels: Peter Lang. Beckman, L. (2005), Grundbok i idéanalys. Stockholm: Santérus Förlag. Beland, D. (2006), ‘The social exclusion discourse: ideas and policy change’, Policy and Politics 35 (1), pp. 123–139. Campbell, J. (1998), ‘Institutional analysis and the role of ideas in political economy’, Theory and Society 27, pp. 377–409. Campbell, J. (2002), ‘Ideas, politics, and public policy’, Annual Review of Sociology 28, pp. 21–38. Clasen, J. (2005), Reforming European Welfare States: Germany and United Kingdom Compared, Oxford: Oxford University Press. Daguerre, A. and Larsen, T. (undated), The EU Inclusion Strategy and the Open Method of Co-ordination (OMC). EU Policy Maps, Working Papers for WRAMSOC. Canterbury: University of Kent. De la Porte, C. and Pochet, P. (2002), Building Social Europe through the Open Method of Co-ordination. Brussels: Peter Lang.

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Ervik, R. and Kuhnle, S. (eds) (1993), Kunnskap, risiko og sosialpolitikk: institusjonelle perspektiver på skandinavisk utvikling. Bergen: Alma Mater. European Commission (2006), Employment in Europe, http://ec.europa.eu/employment_social/employment_analysis/employ_2006_en.htm, accessed 11 December 2008. Ferrera, M., Matsaganis, M. and Sacchi, S. (2002), ‘Open coordination against poverty: the new EU “social inclusion process”’, Journal of European Social Policy 112 (3), pp. 227–239. Goldstein, J. and Keohane, R.O. (eds) (1993), Ideas and Foreign Policy: Beliefs, Institutions, and Political Change. Ithaca, NY: Cornell University Press. Gough, I., Bradshaw, J., Ditch, J., Eardley, T. and Whiteford, P. (1997), ‘Social assistance in OECD countries’, Journal of European Social Policy, 7(1), pp. 17–43. Hall, P.A. (1992), ‘The movement from Keynesianism to monetarism: institutional analysis and British economic policy in the 1970s’, in Sven Steinmo, Kathleen Thelen and Frank Longstreth (eds), Structuring Politics: Historical Institutionalism in Comparative Analysis, Cambridge: Cambridge University Press. Hatland, A. (2001), ”Mer målrettet velferdspolitikk?”, Horisont 4. Hatland, A. (2003), “Lokalt skjønn i gammel og ny sosialpolitikk”, in Benum, Haave, P., Ibsen, H., Schrumpf, E. and Schiøtz, A. (eds) Den mangfoldige velferden: festskrift til Anne-Lise Seip. Oslo: Gyldendal Akademisk. Joint Report (2004), Joint Report by the Commission and the Council on Social Inclusion. Brussels. Joint Report (2005), Joint Report on Social Protection and Social Inclusion. Brussels Joint Report (2006), Joint Report by the Commission and the Council on Social Inclusion. Brussels. Joint Report (2007), Joint Report by the Commission and the Council on Social Inclusion. Brussels. Kildal, N. (1999), ‘Justification of Workfare: the Norwegian case’, Critical Social Policy 19 (3), pp. 353–370. Kildal, N. (2001), Workfare Tendencies in Scandinavian Welfare Policies. Geneva: International Labour Office. Kildal, N. and Kuhnle, S. (2005), ‘The principle of universalism: tracing a key concept in the Scandinavian welfare model’, in Kildal, N. and Kuhnle, S. (eds) Normative Foundation of the Welfare State. London: Routledge. Levitas, R. (1998), The Inclusive Society? Social Exclusion and New Labour. London: Palgrave. Lødemel, I and Trickey, H. (2001), An Offer you Can’t Refuse: Workfare in an International Perspective. Bristol: Policy Press. Lopez-Santana, M. (2006), ‘The domestic implications of European soft law: framing and transmitting change in employment policy’, Journal of European Public Policy 14 (4 June), pp. 482–499. Marshall, T.H. (1965), Class, Citizenship, and Social Development. New York: Anchor Books. Mead, L.M. (1997), ‘Citizenship and social policy: T.H. Marshall and poverty’, Social Philosophy and Policy 14 (2), pp. 197–230. Mkandawire, T. (2005), Targeting and Universalism in Poverty Reduction. Programme Paper Number 23. Geneva: United Nations Research Institute for Social Development.


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Nilssen, E. (1999), Penger, makt og velferd: en studie av trygd og forsikring, Sefos Rapport 1/1999. Bergen: Sefos. O’Connor, J. (2005), ‘Policy coordination, social indicators and the social-policy agenda in the European Union’, Journal of European Social Policy 15 (4), pp. 345–361. Rueschemeyer, D. and Skocpol, T. (eds) (1996), States, Social Knowledge and the Origins of Modern Social Policies. Princeton, NJ: Princeton University Press. Schmidt, V. (2000), ‘Values and discourse in the politics of adjustment’, in Scharpf, F.W. and Schmidt, V.A. (eds) Welfare and Work in the Open Economy, Vol. 1: From Vulnerability to Competitiveness. Oxford: Oxford University Press. Schmidt, V. (2001), ‘The politics of economic adjustment in France and Britain: when does discourse matter?’ Journal of European Public Policy 8 (2 April), pp. 247–264. Seeleib-Kaiser, M. and Fleckenstein, T. (2007), ‘Discourse, learning and welfare state change: the case of German labour market reforms’, Social Policy and Administration 41(5), pp. 427–448. Stone, D. (2004), ‘Transfer agents and global networks in the “transnationalization” of Policy’, Journal of European Public Policy 11 (3 June), pp. 545–566. Taylor-Gooby, P. and Daguerre, A. (2002), State of the Art Paper: The New Context of Welfare, Working paper. http://www.kent.ac.uk/wramsoc/workingpapers/firstyearreports/backgroundreports/soavii.pdf, accessed 6 December 2008. Titmuss, R. (1968), Commitment to Welfare. London: George Allen and Unwin. Titmuss, R. (1974), Social Policy. London: George Allen and Unwin. Trubek, M. and Trubek, L. (2005), ‘Hard and soft law in the construction of social Europe: the role of the Open Method of Co-ordination”, European Law Journal 11(3), pp. 343–364. Wacquant, L. (1996), ‘The rise of advanced marginality: notes on its nature and implications’, Acta Sociologica 39 (2), pp. 121–141. Weale, A. (1983), Political Theory and Social Policy. London: Macmillan Press. Weir, M. and Skocpol, T. (1985), ‘State structures and the possibilities for “Keynesian responses” to the Great Depression in Sweden, Britain and the United States’, in Evans, P.B., Rueschemeyer, D. and Skocpol, J. (eds), Bringing the State Back in, Cambridge: Cambridge University Press. White, S. (2003), The Civic Minimum: On the Rights and Obligations of Economic Citizenship. Oxford: Oxford University Press.

5.

Policy making and application of law: free movement of persons and the European Court of Justice Aksel Hatland and Even Nilssen

INTRODUCTION A major characteristic that separates the European Community from other international organizations like the UN and the OECD, is that the implementation of their policies is carried out by a powerful court of law, the European Court of Justice (ECJ). This court has proved to be much more than an obedient servant that fulfils its political masters’ political will, as it is also a policy-making body that creates new rights and duties through its case law. And it is a watchdog that controls other institutions of the EU, like the Commission and the European Parliament, and acts in accordance with the treaties that constitute the framework for political cooperation in the European Union. The ECJ is a referee that supervises the other political institutions of the European Community and the member countries, to ensure that they adhere to the rules of the game. The European Court of Justice is composed of one judge from each member state. That all member states are represented should strengthen the legitimacy of the Court’s decisions. Partly to protect the judges from pressure from their home land, the individual votes are not made public and minority opinions are not issued. The ECJ speaks with one voice.1 There seems to be broad agreement among students of European politics and law that the ECJ has been a powerful actor in shaping the development of the European Union in many fields (see Dehousse 1998; Beach 2001; de Burca and Weiler 2002; de Burca 2005; Ferrera 2005). The platform for these powers of the Court follows from the Consolidated Version of the Treaty Establishing the European Community (below called the Treaty). According to Article 220 of the Treaty “[t]he Court of Justice . . . shall ensure that in the interpretation and application of this Treaty the law is observed”. The concept “law” covers more than written statutes. This is clearer in other languages than English. In the Danish version of 94

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the Treaty, for instance, the wording værne om lov og ret is used and in the German version sichern . . . die Wahrung des Rechts. The Court has understood this use of the concept ‘right’ (ret or Rechts) as a mandate not only to interpret written law, but also to find unwritten law, and thus fill the gaps the lawmakers have left open, to create a consistent legal system (Sejersted et al. 2004, p. 52). This has proved to be a powerful tool in the hands of the judges in Luxembourg. This chapter will describe and explain the political role of the ECJ in the field of welfare policy, using free movement of persons and their connected social rights as an illustrating example. By ‘political role’ we mean that the court not only applies written law on individual cases, but that it creates new rights and duties both for individuals and for political institutions. An important characteristic that distinguishes the ECJ from more purely political institutions is that it reacts proactively. It does not choose freely what issues it will engage in, but must make a decision whether it likes it or not. Freedom of movement and social rights have constituted an important part of the ECJ’s caseload since the Court was established in 1958. During the period 2000–2007 the Court completed 3132 cases. Of these, 104 were about freedom of movement and 265 about social policy and social security for migrant workers.2 Self-employed people’s rights to establishment and to provide services across country borders is an issue that surpasses the framework of this chapter. The issue is well covered in Arnull (2006, chapter 13). When reading this contribution, it is important to bear in mind that community law does not prevent the application of national legislation or administrative arrangements providing for more favourable treatment.

SUPREMACY AND DIRECT EFFECT AS A POLITICAL PLATFORM Some fundamental questions were not clarified by political institutions in the treaties that established the European Communities. The Court had to solve these questions itself. The first principle concerns the relation between community law and national law. The Treaty says nothing directly about how conflicts between the legal systems should be solved. In a landmark decision in 1962 (Van Gend and Loos, Case 26/62), the ECJ established the principle of supremacy. A Dutch transport company objected to national duty rules in the Netherlands. The Court said: that the states have acknowledged that community law has an authority which can be invoked by their nationals before those courts and tribunals. The

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The role of international organizations in social policy conclusion to be drawn from this is that the community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only member states but also their nationals. Independently of the legislation of member states, community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes in a clearly defined way upon individuals as well as upon the member states and upon the institutions of the community.

The doctrine of supremacy states that Community norms that produce direct effects are not merely the law of the land but the “higher law” of the land (Weiler 1994). There is a clear parallel here with the system of judicial review in nation states, where supreme courts can declare acts of laws to be in conflict with the constitution of the country and thus invalid. A second basic problem that was unsolved by the legislators was whether community law was binding only for the member states or if it had direct effect on citizens and companies. Could the citizens of a member country use community law against their own states? The ECJ here formulated far-reaching principles in its judgment in a case between an Italian lawyer and a nationalized electricity company (Costa v. ENEL, Case 6/64). The Court stated: By creating a community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the states to the community, the member states have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves.

From this strong legal platform, the judges in Luxembourg have produced a huge amount of case law that has had profound effects on citizens’ rights to move freely across borders, to reside in whatever member state they wish and to claim social rights in the country where they stay or live. But although these rights have been expanded both by political decisions and by ECJ rulings, they are still not unlimited.

FREE MOVEMENT OF PERSONS There has been a clear trend in EU policy to expand the rights of citizens in the European Economic Area (EEA) to move freely across European borders and to take up residence in countries where they are not national


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citizens. To understand the conflicts these policies have created, it is helpful to make a distinction between a full-time economically active person or service provider, on the one hand, and social assistance recipients, criminals and terrorists, on the other. Among the great majority of European politicians, the first group is looked upon as a positive contribution to economic development in Europe, while the second group is looked upon as an economic burden and a risk to public security that they do not want to take responsibility for. The development has taken place between those two extremes, gradually expanding the right to cover other groups than the economically active segments of population. The vanguards in creating free movement for persons have been the workers. Free movement for this group is a major political measure to reduce unemployment and increase the Community’s workers’ chances of finding work. It is a cornerstone of European cooperation. The principle of free movement of workers is put into words in Treaty Article 39: 1.

Freedom of movement for workers shall be secured within the Community. 2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.

The political institutions of the communities have clothed these naked principles somewhat with regulations (see Arnull 2006, pp. 444–445). Of special importance is Regulation 1612/68. It provides that a worker who resides in a member state other than his own is entitled to be joined by his family, so long as he is able to provide for them. There is also a right for the worker to have his or her children educated on the same terms as nationals of the member state. But much of the policy development in the area of free movement is left to the European Court of Justice.

WHO IS A WORKER Since workers have much stronger rights to move freely and to take up residence in countries where they are not national citizens, it is vital to determine who is defined as a worker. But the Treaty is silent on the matter, and it has been left to the Court to define this. There is a huge caseload on the issue. The ECJ has held that this is a matter of community law, not of national law. If the member states’ own definitions of who they recognize as workers were respected, it would be possible for member states to undermine the principle of free movement.

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A main issue has been whether a person working for a below-subsistence wage, and who is partly dependent on social benefits, should be recognized as a worker and thus have a right to stay in a country. Repeatedly the member states have wanted to refuse residence permits to citizens of other European countries who cannot support themselves. In the Levin Case (Case 53/81), a British woman wanted to settle in the Netherlands, but the Dutch authorities claimed that her income was not sufficient for her subsistence. The Court rejected this argument and said: The provisions of community law relating to freedom of movement for workers also cover a national of a member state who pursues, within the territory of another member state, an activity as an employed person which yields an income lower than that which, in the latter state, is considered as the minimum required for subsistence, whether that person supplements the income from his activity as an employed person with other income so as to arrive at that minimum or is satisfied with means of support lower than the said minimum, provided that he pursues an activity as an employed person which is effective and genuine.

The Court defined guiding principles in the Lawrie Blum case (Case 66/85). Lawrie Blum was a non-German citizen who wanted to participate in a teacher-training programme with a small and insecure income. The Court defined a worker as: a person [who] performs services for and under the direction of another person in return for which he receives remuneration.

In principle, the purpose of the employment was irrelevant. Shaw, Hunt and Wallace (2007, p. 285) discern three elements from this definition: 1) the employed person must perform services of economic value, although not of a purely economic nature; 2) the employed person must be carrying out services for, and under the direction of, another person; 3) the employed person must receive remuneration, although that remuneration need not be sufficient to provide a minimum level of subsistence. They conclude (p. 286) that “while the Court has tried to expand the concept of worker as widely as possible, it is still, at heart, an economic concept”. A famous court case which illustrates the ECJ’s power to secure freedom of movement is the Bosman case (Case 415/93). It allowed professional football players in the European Union to move freely to other clubs at the end of their term of contract with their present team. A player could sign a pre-contract with another club for a free transfer if the player’s contract with their existing club has six months or less remaining. The ruling also prohibited domestic football leagues in EU member states from imposing


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quotas on foreign players to the extent that they discriminated against nationals of EU states. According to its wording, the Treaty (Article 39) states that there should be freedom to accept offers of employment in another country. It says nothing about unemployed persons’ freedom to look for work in another member state. But again the ECJ chose an expanding interpretation of the Treaty. In Case 292/89 the Court found that jobseekers fell within the scope of Article 39, although a member country, after a “reasonable” period of time, may require that a job seeker who has not found work should leave the country. This principle was later codified into EU legislation, now Council Directive 2004/38 on Citizens’ Rights.

DISCRIMINATION AS AN OBSTACLE TO FREE MOVEMENT Prohibition against discrimination on grounds of nationality is a main principle of European Community law. It is of great importance for the free movement of persons. There is a huge caseload of ECJ rulings on this principle. The question of discrimination on grounds of language requirements is one of the most difficult. In the Groener case (Case 379/87) a Dutch art teacher working in Dublin applied for a full-time post at an art college. Under Irish law it was required that applicants for such posts should hold a certificate of proficiency in the Irish language. She could not fulfil that requirement and the case was brought before the European Court of Justice. The Court accepted the requirement and stated: The importance of education for the implementation of such a policy must be recognized. Teachers have an essential role to play, not only through the teaching which they provide but also by their participation in the daily life of the school and the privileged relationship which they have with their pupils. In those circumstances, it is not unreasonable to require them to have some knowledge of the first national language.

It follows that the requirement imposed on teachers to have an adequate knowledge of such a language must, provided that the level of knowledge required is not disproportionate in relation to the objective pursued, be regarded as a condition corresponding to the knowledge required by reason of the nature of the post to be filled within the meaning of the last subparagraph of Article 3(1) of Regulation No 1612/68. It must also be pointed out that where the national provisions provide for the possibility of exemption from that linguistic requirement, where

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no other fully qualified candidate has applied for the post to be filled, community law requires that power to grant exemptions to be exercized by the Minister in a non-discriminatory manner. An example of a case where linguistic requirements were not accepted is that of Angonese (Case 281/98). Angonese applied for a job in a bank in the province of Bolzano, where both Italian and German are spoken. Angonese was perfectly bilingual, but he lacked a formal certificate issued only by the authorities in Bolzano. The ECJ found that this was discrimination contrary to Article 48 of the EC Treaty (after amendment, Article 39). Discrimination on other moral grounds was brought up in two joined cases (Cases 115 and 116/81). Two French women were working in Belgium as “waitresses in a bar which was suspect from the point of view of morals”. They were refused a permit to reside in Belgium. Prostitution was, however, legal in Belgium. When the cases were brought before the Court, it stated: A member state may not . . . expel a national of another member state from its territory or refuse him access to its territory by reason of conduct which, when attributable to the former state’s own nationals, does not give rise to repressive measures or other genuine and effective measures intended to combat such conduct.

If a profession is legal in a member state, the national authorities cannot discriminate against citizens of other member states.

ECONOMICALLY INACTIVE PERSONS’ RIGHTS TO FREE MOVEMENT Over time it became more and more obvious that the directives and regulations of the European Community were insufficient to grant the principle of free movement to all European citizens. During the last 25 years, however, this right has been gradually expanded to different groups of economically inactive persons. These developments have taken place in a complex interplay between the legislative powers of the European Communities and the ECJ (see Shaw, Hunt and Wallace 2007, pp. 289–291). The principles are now unified in the Citizens’ Rights Directive. A landmark decision in extending rights to economically inactive persons was the Martinez Sala case (Case 85/96). Martinez Sala was a Spanish citizen who had been a German resident since she was a child and who had been economically active for some periods. When she had a child, she applied for a child-raising allowance, which was turned down. The Court argued that since she was a citizen of the Union and lawfully


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residing in Germany, she had the right not to be discriminated against on grounds of nationality. The decisive argument was no longer that she was economically active, but that she was a European citizen. The principles for students’ rights to study freely on a non-discriminatory basis, now included in the Directive mentioned above, are chiefly based on the ECJ’s Case 293/83. A French citizen studied in Belgium and was required to pay a fee that Belgian students did not have to pay. The Court found that discriminating. Retired people’s rights to residence have gradually been expanded and now cover the whole group, if they are able to support themselves. This follows from the Citizens’ Rights Directive. People of “independent means” are also granted rights to entry and residence in accordance with Council Directive 90/364. But there are still important legal exceptions from the principle of free movement. In a welfare policy context, the most important of these exceptions affects recipients of social assistance. It is a recurrent theme in EU law that members of this group may be expelled from a country they visit. The Citizens’ Rights Directive (Directive 2004/38) Article 7, paragraph 1, for instance states: All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they . . . have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State.

The principle of freedom of movement is, according to Article 39, “subject to limitations justified on grounds of public policy, public security or public health”. In Régina v. Bouchereau (Case 30/77) the Court drew up guiding principles on the concept of public policy. The questions arose within the context of proceedings against a French national who had been employed in the United Kingdom since May 1975 and who was found guilty in June 1976 of unlawful possession of drugs. But the Court did not accept this as a sufficient reason to lose his residence permit. It stated: The existence of a previous conviction can, therefore, only be taken into account in so far as the circumstances which gave rise to that conviction are evidence of personal conduct constituting a present threat to the requirements of public policy.

In Bonsignore (Case 67/74) German authorities wanted to expel an Italian citizen who was convicted of involuntary manslaughter. Mr Bonsignore had accidentally caused the death of his brother by his careless handling of a firearm. The Court again interpreted the Treaty strictly. It stated:

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According to article 3 (1) and (2) of directive no 64/221, measures taken on grounds of public policy or of public security shall be based exclusively on the personal conduct of the individual concerned . . . [and] previous criminal convictions shall not in themselves constitute grounds for the taking of such measures. . . . These provisions must be interpreted in the light of the objectives of the directive which seeks in particular to coordinate the measures justified on grounds of public policy and for the maintenance of public security envisaged by articles 48 and 56 of the treaty, in order to reconcile the application of these measures with the basic principle of the free movement of persons within the community and the elimination of all discrimination, in the application of the treaty, between the nationals of the state in question and those of the other member states.

On the other hand, the Court has accepted that a member state may expel a person who is a member of an organization considered socially harmful, for instance supporting political violence, although that organization is not illegal (Case 41/74). Restrictions justified with reference to “public health” are an area regulated by political authorities. Directive 64/221 contains a list of diseases that are accepted as legal reasons to deny a residence permit.

IMPORT AND EXPORT OF SOCIAL SECURITY BENEFITS The European communities’ role in social protection legislation has been controversial since the establishment of the European Community in the 1950s, but so far nation states have had the upper hand. The legal authority of this principle is now Treaty Article 137 paragraph 4, which states that the measures adopted by the Community “shall not affect the right of Member States to define the fundamental principles of their social security systems”. There are, however, important exceptions from the main rule, of which the coordination of benefits from different national systems is of special importance. Coordination is closely linked to the right to move freely between states. If people lose their social protection rights, this would undermine the right to move freely across borders. For workers, this link has been acknowledged since the creation of the European Community. Today the link is legally anchored in Treaty Article 42, which states: The Council shall . . . adopt such measures in the field of social security as are necessary to provide freedom of movement for workers.

There is a tremendous caseload from the European Court of Justice on these issues, which has gradually moved the European Community in a more mobility-friendly direction (see Leibfried 2005).


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Recent examples of the ECJ’s role in this area are Molenaar (Case 160/96), Jauch (Case 215/99) and Leclere (Case 43/99), all of which concerned frontier workers who had paid contributions to social security schemes in countries where they had worked but did not live. They claimed different benefits for care of family members and the ECJ supported their claims. According to Martinsen (2005, p. 109) the rulings of Jauch and Leclere demonstrate “that although the social ministers of the Member States have collectively decided to tie certain benefits to national territory, and although it is a political decision to which benefits this special rule applies, the political autonomy to administer according to that special rule is not free from judicial supervision.” These Court decisions all affect the disputed areas between earned social security rights for the economically active population, where there is broad agreement on the principle of exportability, and social assistance, where there is almost as broad a consensus on non-exportability. The main conflicts take place in the middle ground between these two extremes. In 1992 for instance, the Council overturned the ECJ’s interpretation of Regulation 1408/71, which the ministers of the Council found opened up the export of social assistance type measures (Shaw, Hunt and Wallace 2007, p. 354). In June 1992, Regulation 1408/71 was amended to include a new category of ‘special non-contributory benefits’ that were exempt from export. Following this change, member states were required to list the benefits considered to fall within this category, in Annex IIa to Regulation 1408/71. These exemptions have been challenged in a string of cases. Of special importance is Case 299/05. It illustrates not only the Court’s role in deciding the rights of citizens of the European Community, but also the Court’s watchdog functions towards the other institutions of the Community, in this case the Commission on the one hand and the Council of Ministers and the European Parliament on the other. On 31 July 2003, the Commission presented a proposal for the amendment of Regulations 1408/71 and 574/72 in order to update these Community Regulations and to take account of changes in national law and recent developments in the case law of the Court of Justice, in particular in relation to rulings concerning the identification criteria for special noncontributory cash benefits (Annex IIa of Regulation 1408/71). Although the number of benefits retained in the Annex had been very much reduced, the Council of Ministers had been unable to agree on the list of benefits proposed by the Commission. The Commission, having examined all the benefits which could be categorized as ‘special non-contributory’ benefits in the light of the criteria in Article 4 (2a) of Regulation No 1408/71 and the Court’s interpretation of that provision (criteria based on the case law

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of the Court), drew up and proposed a new list of benefits which could be included in Annex IIa. The Commission considered it necessary to revise the list of entries in Annex IIa and focused particularly on the removal of the following group of benefits: Child Care Allowance (Finland); Disability Allowance and Care Allowance for disabled children (Sweden); and Disability Living Allowance, Attendance Allowance and Carer’s Allowance (United Kingdom). At the request of Finland, Sweden and the UK, the Council nevertheless agreed to reinsert these benefits in Annex IIa. The European Parliament approved the Council’s position. On 26 July 2005, the Commission brought an annulment procedure against the European Parliament and the Council of Ministers. The benefits mentioned above were considered wrongly listed in Annex IIa. The European Court of Justice made its judgment on 18 October 2007. The Court supported the position of the Commission (which again argued its case on the basis of ECJ case law) and overruled the political decisions of the Council and the Parliament. According to the findings of the Court: 1) a benefit could be deemed to be special only if its purpose was solely that of specific protection for the disabled, closely linked to the social environment of those persons in the member state concerned. In the existing cases, they were also intended to ensure the necessary care and supervision of those persons, where it was essential, in their family or a specialized institution. They could not therefore, be classified as special benefits in the light of Article 4; 2) by contrast, a benefit was regarded as a social security benefit where it was granted, without any individual and discretionary assessment of personal needs, to recipients on the basis of a statutorily defined position, and related to one of the risks expressly listed in Article 4(1) of Regulation No 1408/71. Concerning Sweden and Finland the ECJ concluded: the Commission is justified in claiming that Regulation No 647/2005 is vitiated by an error of law to the extent that that allowance is referred to on the list in Annex IIa as amended, which is reserved for special non-contributory benefits.

The same conclusion was valid for the UK benefits. Hence, it was not up to the Council and the Parliament to decide which benefits could be defined as special non-contributory benefits and thus be included in Annex IIa of Regulation 1408/71. This list had to be validated by the ECJ based on the Court’s interpretation of the relevant case law. The founding principle of this case law was the principle of free movement of persons within the EU. This meant that the exceptions from this principle had to be strictly interpreted within the relevant legal regulations


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of the EU. As Martinsen (2005) points out, these cases demonstrate the tension between political decision making and judicial supervision in the EU. The member states have collectively, through the Council of Ministers, decided to tie certain social benefits to conditions of residence (territoriality) and “although it is a political decision to which benefits this special rule applies, the political autonomy to administer according to that special rule is not free from judicial supervision” (op. cit. p.109). Hence, the scope of the principle of exportability was certainly enlarged by the Court (de-territorialization).

DISCUSSION The landmark decision in Case 299/05, which we have just referred to, may serve as the terminal station of our journey through the case law of the European Court of Justice. The journey has clearly shown that the Court has consistently tried to expand the rights of citizens of Europe to move freely and to bring social security rights with them. This development has taken place at the expense of national governments which want to reserve jobs and benefits for their own citizens. The strong influence the Court has had on European integration policy has of course not passed unnoticed by European politicians. Famous is Valéry Giscard d’Estaing, who, as the president of France in 1975, told other European leaders that something had to be done to stop the Court from issuing its “illegal decisions” (Kennedy 2006, p. 140). In 1993, in a debate in the UK House of Commons on the Maastricht Treaty, Prime Minister Margaret Thatcher said that “some things at the Court are very much to our distaste . . . It has by its decisions greatly extended the powers of the centralized institutions against the nation state” (Arnull 2006, p. 3). Before the signing of the Treaty of Amsterdam, the House of Lords Select Committee on the European Communities conducted an inquiry into the issue, and gave a strong answer to criticism of the type Margaret Thatcher represented. It stated (quoted in Arnull 2006, p. 4): A strong and independent Court of Justice is an essential part of the structure of the European Union. . . . We note the criticisms of “judicial activism” which have been levelled against the Court but these appear to be based mainly on Cases where the Court has made Community law effective against defaulting Member States at the instance of individuals seeking to enforce their rights. We accept that enforceable remedies are essential.

Academic legal scholars who have studied European law, have in general held a friendly and supportive attitude to the ECJ. They have seen the

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development of a stronger supranational system of law as a good thing. One well-known dissident is the Danish professor Hjalte Rasmussen (1986), who argued strongly that the Court has used guidelines that are essentially political in nature. But his study has been strongly criticized by other legal scholars, for instance by Cappelletti (1987). One argument against the ECJ could be that the Court is disloyal to the democratic legislators’ will, expressed in acts of law. That would be an unfair accusation. To be sure the Court has many times declared community laws and national laws to be invalid, but always because they are incompatible with the superior treaties. The Court has shown strong loyalty to the main principles of the treaties, for instance the principle of free movement. For Scandinavian students like the authors of this chapter, it is striking that the Court in its decisions pays relatively little attention to the wording of an act and instead emphasizes the purpose of the laws in question. There seems to be broad consensus that the Court has developed a teleological style of interpretation. As we have seen in this chapter, the Court often justifies its judgments by referring to the principle of free movement. This may be problematic, since it is the legal texts that national and European democratic institutions have discussed and accepted. But there are many reasons why the Court has developed this style. Compared to national law, Community law is relatively young and has many legal black holes. The Court must fill these holes whether it likes it or not, and the purposive method is a helpful tool for doing this. Preparatory work, written sources from the preparation of acts of law, are much used in Scandinavia to clarify the intentions of a law. Such sources play a minor role in the European Community. They often do not exist. It should also be added that regulations and directives are written in all the official languages of the EU member states. Language versions often differ slightly and may justify different interpretations, as for instance the problems with the concept of “law” referred to above. For these reasons the Court must try to avoid too myopic literal interpretations. In this context, it should also be added that one of the sources of the Court’s important role lies in the vague language of many legal texts. They are compromises between conflicting political interests and ideologies, and the output of these compromises are often ambiguous formulations which the court has to interpret. Another criticism against the Court’s role as a policy maker is that when it decides in individual cases, the judges often formulate general legal principles. That is policy making in the legal field, and it is policy making by unelected legislators. They are not accountable to the voters for the consequences of their acts. Judges are not well suited to balance the conflicting needs of various interest groups or to decide the


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economic consequences of public spending and taxation. Judges are best suited to deciding what happened in the past, not how the future should be shaped. But they do not act entirely freely. They always refer to the principles and sources that are accepted by the highest political authorities of the European Community. An important justification for formulating general principles is that these principles are signals to national courts on the way they should deal with similar cases. These legal signals may avoid cases ending up on the Court’s waiting list in Luxembourg. They will prevent a case overload at the ECJ that would seriously reduce the efficiency of the legal system of the European Union.

FINAL REMARKS The critique of a democratic deficit within the EU also concerns the European Court of Justice. This comprises both the judges’ lack of a democratic mandate and the deficiency of popular support for the Court within the Community (Gibson and Caldeira 1998; Mancini and Keeling 1994), and primarily deals with the genuine political role performed by the ECJ, that is, the role of creating political decisions. As we have seen, the ECJ played a central role in constituting the founding doctrines of the legal system in the EU (direct effect and supremacy), hence strengthening its own supranational power base. On the other hand we may argue that the ECJ has played an important liberal-democratic role within the EU system, ensuring natural and legal subjects their legal human rights within the Community (Eriksen and Fossum 2001). There is a strong relationship between democracy and liberal constitutional rights, and in the field of free movement of persons it may be claimed that the ECJ has contributed to enhancing the freedom of EU citizens. Through its jurisprudence, the ECJ has enlarged its competency to include many new policy areas. Beach (2001, p. 15), quoting Tridimas (1996, p. 199), asserts that this judicial ‘activism’ has led to a situation where “[c]ommunity law can be said to be as much a result of the case-law of the Court as of the text of the founding and amending treaties”. The treaties possess the characteristics of what can be termed a legal ‘framework’, setting out general objectives and constituting the institutional framework of the Community. The legal material of community law is even more limited and vague than the corresponding material on the national level, leaving a larger scope for the interpretations of the Court. The political role of the Court goes beyond the trivial point that all rules have to be interpreted. The Court may also influence political agenda setting,

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operate as a policy innovator and have a legitimizing function for certain kinds of policies (Dehousse 1998). Dehousse concludes that the Court’s contribution, due to the competences it possesses, “has been important – sometimes even decisive – in shaping the trinity of institutional structures, Community policies and decision-making” (op. cit, p. 94). Our analyses show that the judicial process does not rest above or outside politics, as a neutral arena in which courts scientifically interpret the meaning of policy decided by others. As an actor in the politico-legal system of the EU, the ECJ may create political outcomes through the legal process. As pointed out by Schepel and Blankenburg (2002), there is a strong relationship between the juridification of politics and the politicization of law: The ‘juridification’ of the Union’s political process inevitably brings with it the ‘politicization’ of Community law. Judicial review inevitably blurs the boundaries between adjudication and lawmaking and draws courts squarely into political debates. (op. cit, p. 12)

This has certainly been the case in the field of free movement of persons within the EU. Nevertheless, if political leaders really meant that the ECJ is too influential and that its power should be restricted, they have the power to do so, through changes to the treaties. The general revision of the treaties that is now taking place in the European Union represents a golden opportunity to change the role of the Court. There are no signs, however, of such a development and there seems to be no political leader in Europe who advocates profound changes in the role of the Court. So much of the criticism we have heard from political leaders seems to be crocodile tears wept for domestic voters. The Presidency Conclusions of the European Council, which met in Brussels 21–22 June 2007, stated in the official press release: The Conference recalls that, in accordance with well settled case-law of the EU Court of Justice, the Treaties and the law adopted by the Union on the basis of the Treaties have primacy over the law of Member States, under the conditions laid down by the said case-law

The ECJ is now firmly rooted as a central institution in the European Union. Its role is consolidated in the proposal for a new Constitutional Treaty.

NOTES 1. For an overview of the Court’s organization and procedures, see Arnull (2006) chapters 1–5.


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2. http://curia.europa.eu/en/instit/presentationfr/rapport/stat/07_cour_stat.pdf, accessed 6 December 2008.

REFERENCES Arnull, Anthony (2006), The European Union and its Court of Justice. Oxford: Oxford University Press. Beach, Derek (2001), Between Law and Politics: The Relationship between the European Court of Justice and EU Member States. Copenhagen: DJØF Publishing. Cappelletti, M. (1987), ‘Is the European Court running wild?’ European Law Review, 12/1, pp. 3–17. De Búrca, Gráinne (ed.) (2005), EU Law and the Welfare State: In Search of Solidarity. Oxford: Oxford University Press. De Búrca, Gráinne and J.H.H. Weiler (eds) (2002), The European Court of Justice. Oxford: Oxford University Press. Dehousse, Renaud (1998), The European Court of Justice. New York: St. Martin’s Press. Eriksen, Erik Oddvar and John Erik Fossum (2001), Democracy through Strong Publics in the European Union, Arena Working Papers 01/16. Oslo: University of Oslo, Arena. Ferrera, Maurizio (2005), The Boundaries of Welfare: European Integration and the New Spatial Politics of Social Protection. Oxford: Oxford University Press. Gibson, James and Gregory A. Caldeira (1998), ‘Changes in the legitimacy of the European Court of Justice: A post-Maastricht analysis’, British Journal of Political Science, 28, pp. 63–91. Kennedy, Tom (2006), ‘The European Court of Justice’, in John Peterson and Michael Shackleton (eds) The Institutions of the European Union. Oxford: Oxford University Press. Leibfried, Stephan (2005), ‘Social policy’, in Helen Wallace, William Wallace and Mark A. Pollack (eds) Policymaking in the European Union. Oxford: Oxford University Press. Mancini, Frederico and David T. Keeling (1994), ‘Democracy and the European Court of Justice’, The Modern Law Review, 57/2, pp. 175–190. Martinsen, D. Sindbjerg (2005), ‘Social Security Regulations in the EU: The de-territorialization of welfare?’ In G. de Búrca (ed.) EU Law and the Welfare State: In Search of Solidarity. Oxford: Oxford University Press. Rasmussen, Hjalte (1986), On Law and Policy in the European Court of Justice: A Comparative Study in Judicial Policymaking. Dordrecht: Nijhoff Publishers. Schepel, Harm and Erhard Blankenburg (2002), ‘Mobilizing the European Court of Justice’, in G. de Búrca and J.H.H. Weiler (eds) The European Court of Justice. Oxford: Oxford University Press. Sejersted, Fredrik, Finn Arnesen, Ole-Andreas Rognstad, Sten Foyn and Olav Kostad (2004), EØS-rett. Oslo: Universitetsforlaget. Shaw, Jo, Jo Hunt and Chloë Wallace (2007), Economic and Social Law of the European Union. Basingstoke: Palgrave Macmillan. Tridimas, Takis (1996), ‘The Court of Justice and judicial activism’, European Law Review, 21/June, pp. 199–210.

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Weiler, J.H.H. (1994), ‘A quiet revolution: the European Court of Justice and its interlocutors’, Comparative Political Studies, 26(4), pp. 510–534.

LIST OF ECJ CASES Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend and Loos v. Netherlands Inland Revenue Administration. 5 February 1963 Case 6/64, Costa v. ENEL, 15 July 1964 Case 41/74, Yvonne van Duyn v. Home Office, 4 December 1974 Case 67/74. Carmelo Angelo Bonsignore v. Oberstadtdirektor der Stadt Köln, 26 February 1975 Case 30/77, Régina v. Pierre Bouchereau, 27 October 1977 Case 53/81, D.M. Levin v. Staatssecretaris van Justitie, 23 March 1982 Joined cases 115 and 116/81, Rezguia Adoui v. Belgian State and City of Liège; Dominique Cornuaille v. Belgian State, 18 May 1982 Case 293/83, Françoise Gravier v. City of Liège, 13 February 1985 Case 66/85, Deborah Lawrie-Blum v. Land Baden-Württemberg, 3 July 1986 Case 379/87, Anita Groener v. Minister for Education and the City of Dublin Vocational Educational Committee, 28 November 1989 Case 292/89, The Queen v. Immigration Appeal Tribunal, ex parte Gustaff Desiderius Antonissen, 26 February 1991 Case 415/93, Union royale belge des sociétés de football association ASBL v. JeanMarc Bosman, Royal club liégeois SA v. Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman, 15 December 1995 Case 85/96, María Martínez Sala v. Freistaat Bayern, 12 May 1998 Case 160/96, Manfred Molenaar and Barbar Fath-Molenaar v. Allgemeine Ortskrankenkasse Baden-Württenberg, 15 March 1998 Case 281/98, Roman Angonese v. Cassa di Risparmio di Bolzano SpA, 6 June 2000 Case 43/99, Ghislain Leclere, Alina Deaconescu v. Caisse nationale des prestations familiales, 31 May 2001 Case 215/99, Friedrich Jauch v. Pensionsversicherungsanstalt der Arbeiter, 8 March 2001 Case 299/05, Commission of the European Communities v. European Parliament, Council of the European Union, 18 October 2007.

6.

EU and OECD advice and changes in German family policy: can reforms be attributed to participation in learning processes? Tord Skogedal Lindén

INTRODUCTION How has German family policy changed recently, and can reforms be attributed to ideational influence of the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD), through learning processes initiated by these organizations? Based on official documents and interviews with key policy actors at national and international level, I ask whether international organizations (IOs) may serve a mediator function providing the knowledge leading to policy reforms. In this chapter I put forward three hypotheses to be analysed. First, since the EU has no family policy in the sense of a coherent set of objectives for government activity in this policy area, but rather several policies that affect the situation of families, the influence on Germany is probably not very evident. This holds also for the OECD even though its family policy advice is more coherent. Secondly, since the German parental leave and childcare reforms described below are presented as extension more than retrenchment of the welfare state, the German government will most likely claim credit for these reforms rather than make other bodies responsible for the changes. Furthermore, politicians confronted with an unsuccessful policy like the former German parental leave scheme, will search for alternatives in politically close environments (Rose 1991). German Christian Democrats will thus consult conservative sources. In social terms, the EU and the OECD are considered restrictive and rather conservative in giving the economy priority over social policy and not intervening much in family affairs. My third hypothesis says, therefore, that a reason for the introduction of Elterngeld (parental leave) and an increase in childcare facilities, which is not what one would expect from a Christian Democratic led coalition government, could be the idea disseminated by 111

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international organizations, that such arrangements will have general economic advantages. Focussing on possible external influences, this chapter does not discuss domestic political factors like change of government, nor socioeconomic trends such as ageing, fertility or cultural change, although these of course are crucial for understanding the reforms. To anticipate the results, I somewhat paradoxically find that IOs play an important role even in a field where they have no clear mandate. This is best described as a mediator role providing arguments, information and comparisons. This interpretation contrasts with much of the earlier research on the EU’s and the OECD’s roles in family issues. The chapter develops in seven steps: first, the reasons why family policy merits closer examination are given. This is followed by a brief presentation of data and methodology. German family policy and recent reforms are then described. Fourthly, the theoretical framework of the chapter is discussed. Next, EU and OECD recommendations and proposals are depicted. Then, in section six, reforms and advice are compared, and lastly, I discuss whether reforms can be attributed to German participation in EU and OECD learning processes.

CASE SELECTION AND POLICY FIELD The EU influences what kind of policies states can have, but EU social policy initiatives are still weak (Leibfried 2005). The EU has no family policy in the sense of a coherent set of objectives for government activity in this policy area, but several policies that affect the situation of families. Family policies are cross-sectoral and there exist several traces of family policy in other EU social policy fields. One implication of this is that when searching for EU influence on the area, the search cannot be restricted to policies that are declared to be specifically about families, but must include other fields of social policy, especially reconciliation policies. Regarding the second organization studied in this chapter, the picture is somewhat different. The OECD issues direct family policy recommendations through its Babies and Bosses series. The EU can only address family policy through soft law because there is no Treaty basis for the provision of benefits in cash or kind. This is very much the case also for the OECD. Germany is experiencing dramatic demographic decline and low employment rates among mothers, but is often accused of being unable to reform the welfare state. However, it has now witnessed substantial changes in its family policy. From being a paradigmatic representative of a conservative welfare regime (Esping-Andersen 1990), recent reforms have moved

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Germany towards a family policy associated with Scandinavian countries. An important aim in this chapter is to discuss this radical change, focussing especially on parental leave. Another reason for the case selection is that Germany takes part in voluntary EU- and OECD-led policy exchanges, thus laying itself open to influence. More generally, Germany is interesting as Europe’s most populous country and because of its position as one of the most influential EU members. Since the new German family policy has so many similarities with Scandinavian policies, it practically invites an analysis of possible ideational influence and learning. Policy ideas are “specific policy alternatives as well as the organized principles and causal beliefs in which these proposals are embedded” (Béland 2005: 2). Analytically, this approach seems interesting since family policy is a field in expansion rather than retrenchment and thus less likely to be understood by exclusively focussing on economic constraints or predetermined paths. It is less institutionalized than more traditional areas like pensions, meaning for instance that there are few interest organizations or other veto players in this area. This should make it particularly interesting in a study occupied with the impact of ideas on social policies, but family policy reforms have rarely been studied from this perspective before, with exceptions provided by, for example, Bleses and Seleib-Kaiser (2004) and Kübler (2007). It is furthermore a field characterized by much change and continuous development of new arrangements, and has gained steadily more importance in elections and everyday politics (Dienel 2002). Also, family policies are cross-sectoral and thereby say much about the welfare state as a whole (Clasen 2005). Actually, the family is pivotal for social welfare, but until recently it has not been considered economically important (O’Connor 2004: 193). There have been many studies in recent years of the effects of recommendations of international organizations on domestic social policy, for example, the World Bank (Orenstein 2006), the OECD (Armingeon and Beyeler 2004) and the EU (Falkner et al. 2005). The impact on family policy has barely been addressed by this literature, with some exceptions (for example, Hantrais 2003, 2004).1 Since IOs have been less willing or interested in issuing advice in this field, it has been too early to analyse their possible influence until recently. Researchers now increasingly take an interest in family policy, mainly due to its newly realized importance for the overall economy.

DATA AND METHODOLOGY Several sources will be used to inform the research question. EU family policy proposals will be searched for in the European Council

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recommendations on the EES (European Employment Strategy) as well as in the Employment Guidelines. Recommendations are probably the most efficient instrument of EU social policy since they are individually tailored and often reiterate a policy problem within a particular country. Directives will not be considered since this chapter focusses on voluntary adaptation within the framework of learning processes of the Open Method of Coordination (OMC), but EU Council and Commission Joint Reports on social inclusion will be studied as they also express views on family policies.2 The OECD presents its view on national family policy through its Starting Strong and Babies and Bosses series. Its Economic Survey analyses the economic challenges and policy options of Member States. Common to all sources is that they contain ideas about what ought to be done and are not part of legislation connected with any sanctions. I also draw on in-depth interviews with representatives of the EU, the OECD and German political parties as well as independent experts. For reasons of simplicity and space, I concentrate on the main advice and views disseminated by the EU and the OECD within the two major areas of reconciliation of work and family life: infrastructure and parental leave arrangements. These organizations are mainly interested in family policy when it supports employment and economic policy. The German reforms, serving as a counterpart to the recommendations and policy suggestions of international organizations, are outlined in the next section.

CONSERVATIVE FAMILY POLICY AND RECENT GERMAN REFORMS Esping-Andersen (1990) refers to Germany as a conservative welfare regime where the principle of subsidiarity makes the family and church important producers of welfare while the state is less active. His typology has been challenged by several researchers. Lewis and Ostner (1995) present an alternative categorization of welfare regimes based on the gender division of work and the strength of the male breadwinner/family wage model. In their typology, Germany is a strong male breadwinner country. Here women are dependent wives with regard to social entitlements: women rely on their husbands and the level of female labour market participation is low. The Scandinavian countries represent the opposite, as weak male breadwinner countries. Here women are treated as workers more than wives and mothers, and the level of female labour market participation is high. Leitner claims that welfare states like Germany, called explicit familialistic in her categorization, have scarce public and private provision of services and leave much to the family (2003: 357). Also, parental leave


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periods are long, parental benefits low, incentives for shared parenting few and the financial dependence of women high (2003: 370). These descriptions do not fit the situation in the last decade entirely, as women increasingly take part in paid work (development towards a dual breadwinner model) (Lewis 2001, 2006). However, regardless of which kind of classification scheme one uses, Germany is considered a country where many women stay home to take care of the children, especially during the first years, and the use of public childcare for smaller children is uncommon, although there are substantial regional differences. Women often work part-time. Against this background, the recent German reforms involve major changes. Here I will describe the reforms to enable a comparison with the EU and OECD suggestions and recommendations depicted later. The black–red coalition taking office in 2005 introduced a new parental leave allowance (Bundesregierung 2006). This parental leave, called Elterngeld, replaces the earlier Erziehungsgeld, a parental upbringing allowance, with a 14-month benefit granting parents 67 per cent of net salary (minimum €300, maximum €1800 per month). Under the earlier Erziehungsgeld it was possible to take three years’ leave (two years’ paid) with a means-tested upper benefit level limit of €300 a month, meaning that the benefit was not coupled to previous earnings and that no former employment record was needed. The change to a wage-dependent benefit is actually more in accordance with the principle of status maintenance than the former means-tested, poverty-focussed benefit. Clearly inspired by Scandinavian experiences, two months of the new leave are reserved for the partner who does not stay at home for the rest of the period. Should he or she choose not to make use of this right, the parental benefit will be reduced accordingly. This is an incentive for shared parenting (lone parents will get 14 months). The use of parental leave benefits to change the attitude and behaviour of parents (fathers) is new. The main change of the reform is the focus on a dual-earner and dual-carer model. The Tagesbetreuungsausbaugesetz (TAG, law on the extension of day care) has been in force since January 2005 and is supposed to increase childcare places, particularly for smaller children. This law will result in 230 000 new places by 2010. A new bill of 2008 goes further in promising a 35 per cent coverage rate for children aged 1–3 by 2013 as well as a legal right to a place in day care. These reforms represent value change as the state becomes much more involved. See Table 6.1 for a detailed comparison of the old and new parental leave schemes. In the discussion of the extent to which the Elterngeld and other reforms can be explained by participation in EU and OECD learning processes,

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Table 6.1


Main characteristics of old and new parental leave schemes Erziehungsgeld

Elterngeld

Main beneficiaries

All residents treated equally

People with employment record

Monthly amount

Means tested (upper limit €300)

Wage-dependent (67 % of net salary, minimum €300, maximum €1800)

Time off

3 years (2 years paid)

14 months

Father quota

–

2 months

View on division of labour within the family

Male breadwinner, female caregiver

Dual earner, dual carer (gender equality)

one should look at the traditional policy of the parties in government. To do this I turn to party programmes. If international organizations are to be attributed an important influence, then the parties must have changed their mind on the basis of EU/OECD discourse. The coalition that gained power in Germany in the autumn of 2005 consists of the social democratic SPD, the conservative CDU and its Bavarian sister party CSU. In the party programme of 2005, the CDU and CSU emphasize the importance of tax exemptions and childcare institutions to enable parents to reconcile work and family life. There is no reference to the later Elterngeld initiative. The programme of the SPD paints a different picture. Here Elterngeld is described and there is also a focus on building more childcare institutions where children under three are given priority (SPD 2005: 46). The SPD and the Greens worked on a reform in 2004 which would have introduced an earnings-related programme similar to Elterngeld but it met little support with the Christian Democrats (Hausding 2006). In other words, the party programme of the SPD is much closer to both German family policy of today and the proposals of the EU and the OECD (see below). Going back to the SPD party programme for 2002, I find a similar focus on childcare as in 2005 (SPD 2002: 47, 48), but Elterngeld is not mentioned. It is beyond any doubt that today’s policy introduced under the CDU Family Minister von der Leyen is different from the traditional German family policy – especially for the Christian Democrats. The reforms described above move Germany from a strong family-centred welfare regime, which mainly compensates the costs of parenting, towards a weaker family-centred welfare regime where the state takes responsibility


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for parental leave systems and encourages provision of childcare services. The transfer-heavy housewife model, where the family is seen as the primary provider of social services, is no longer the ideal and scepticism to state interference in private matters has been severely reduced. Field experts have called for a study of the reasons behind the change in family policy position within the German political parties (Ostner 2006), and research on countries experiencing substantial reforms (Leitner 2003). I address this from the perspective of supranational policy advice, but first I describe the explanatory approach of this chapter, focussing on the importance of ideas as opposed to a constraints-based approach (budgetary crisis, path dependency).

IDEATIONAL INFLUENCE For almost a decade, the EU has addressed social policy through the Open Method of Coordination (OMC). The OECD can also only influence social policy through voluntary adoption of its recommendations and is applying methods similar to the OMC (Bisopoulos 2003; Schäfer 2006). Pestieau defines the OMC as the “process whereby common goals are laid down and progress is measured against jointly agreed indicators, while best practise is identified and compared” (2006: 162). This new mode of governance was adopted as part of the Lisbon strategy, which links economy, employment and social policy and is supposed to “launch policy-learning processes by “naming and shaming” bad-performing governments and by exchanging examples of best practice” (Nauerz 2004: 1). It is meant to provide Member States with the necessary knowledge to reform their social protection schemes and puts emphasis on learning (de la Porte et al. 2001: 292). How can learning take place and lead to change by influencing policy making?3 Voluntary procedures like the OMC are a way of bringing together national representatives and identifying promising policies, “best practice”, goals and indicators for such goals as well as a loose review of Member States’ progress over time. The reports, conferences and formulation of policy ideas generated by the OMC process, as they are used by the EU and similarly by the OECD in developing social policy, are policy instruments which could be studied to see whether learning can account for domestic welfare reforms. This would allow us to study the role of ideas in specific developments and circumstances (Rueschemeyer 2006: 249). Learning presupposes dialogue and dialogues must be traceable (for example, preparatory documents or governmental documents) if learning is to be ascribed a convincing effect. Thus an analysis of the effects

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of learning processes should study documents related to such processes. First, however, I will give an example of an interesting OMC process. In 2004, Germany participated in an EU peer review in Stockholm on the topic of parental leave and childcare as part of the OMC on employment. Nine countries discussed the host’s system as well as the transferability of Swedish experiences and policies to the participating countries. Independent experts wrote reports on each country where the possibility and the potential benefits of adopting the Swedish model were discussed. For Germany the conclusion was clear: “Given the different institutional arrangements a pure copy of the Swedish experience is not possible, but major elements could be integrated in a new German policy” (Maier 2004: 6). This kind of meeting and information exchange is an example of how the EU might play a role in disseminating ideas. Focussing on the OMC, Zeitlin (2005) discusses four different mechanisms which can shed light on how and why learning happens. Peer pressure through naming and shaming is one. This mechanism presupposes national sensitivity to policy advice, domestic visibility and media coverage. Socialization and discursive diffusion is a second mechanism, resulting in an incorporation of EU concepts in domestic debate. Still, “speaking the same language” does not rule out disagreement and differences in actual policies. The leverage effect, a third mechanism, emphasizes the strategic use of the OMC process by national governments “to advance their own domestic political agenda, promote desired reforms, and overcome entrenched veto positions” (2005: 480). The last mechanism mentioned by Zeitlin is mutual learning, which happens through increased awareness and self-assessment. Although only this last mechanism refers explicitly to learning, they all deal with learning in some way. Zeitlin ends his discussion by saying that the mechanisms may be combined and probably work together at the same time (2005: 482). According to Dostal (2004: 440), both the EU and the OECD provide “a controlled environment for the creation, development and dissemination of political discourse”. The discussion about influence should be guided by some criteria, such as whether Germany participates in exchanges of ideas, timing (whether reforms come soon after advice is issued), and similarity in arguments as well as consultation (interviews) with key actors in the process. To trace the possible effect of the organizations in changing national family policy through ideas, a natural start is to identify the kind of policies they promote.


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FAMILY POLICY ADVICE FROM INTERNATIONAL ORGANIZATIONS The EU has developed family-friendly policies since the early 1990s, reflected, for example, in the employment guidelines and the OMC-similar Alliance for Families of 2007, which could make the EU engage in a more regular exchange of information on family policy. The OECD has focussed on reconciliation issues for some time too, according to Mahon (2006), starting with the report A Caring World (OECD 1999b). The advice and views reflected in the publications of these two organizations are mainly of an instrumental kind, meaning that family policies are supposed to result in economically beneficial developments such as higher female employment or increased fertility rates (Noaksson and Jacobsson 2003). Unsurprisingly, their policy ideas thus focus on infrastructure (childcare facilities) and financial support (parental leave schemes). It is within childcare that we find the most direct policy advice from IOs. In the framework of the EES (European Employment Strategy) there exist some clear objectives, and one of the so called Barcelona targets of 2002 that Member States are asked to ensure is: “the provision of childcare by 2010 to at least 90% of children between 3 years old and the mandatory school age and at least 33% of children under 3 years of age” (Council of the European Union 2005: 7). Another is to achieve an employment rate of at least 60 per cent for women. EU reports often include overviews of coverage for individual countries (“naming and shaming”). There is a Council recommendation from 1992 on the need for childcare institutions, and the focus on childcare is also reflected in the specific employment recommendations4 for Germany, which are quite consistent over time with only minor changes in wording. In the period 2001–2004 the country was advised to: “review possible tax disincentives to female participation in the labour market; increase childcare facilities, especially in the Western Länder, and improve the correspondence between school schedules and working hours” (Council of the European Union 2004: 5). The OECD Babies and Bosses series, which are comparative studies of work and family reconciliation policies in selected countries, present recommendations on issues like taxes and benefits, childcare policies, employment and workplace practices. Concerning childcare, children under three years should be given more attention (2004: 90), just as the EU proposes. In 1998 the OECD launched the Thematic Review of Early Childhood Education and Care Policy (ECEC), which resulted in the two reports Starting Strong I (2001) and II (2006). This review focusses on aspects such as infrastructure, women’s labour market participation and reconciliation of work and family responsibilities. It provides a comparative analysis of

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policies in 20 OECD countries, including Germany, identifies promising strategies, and proposes among other things to increase public investment in services for young children, especially for the youngest (0–3 years). Reports like these have comparisons of national policies and results presented as rankings, and Germany comes out as a laggard. In this connection, the PISA study (Programme for International Student Assessment) should be mentioned too. Although mainly focussing on education, it also resulted in discussions on childcare institutions and how children could improve their school achievement if they had attended pedagogical training from an early age (Evers et al. 2005: 199). Every 12–18 months the OECD publishes Economic Surveys on individual countries. This is a kind of regular peer review and these reports have sometimes focused on childcare issues. Reading the German Economic Survey summaries partly confirms Kildal and Kuhnle’s investigation of Danish and Norwegian surveys in the period 1990–2000. They conclude that there are no recommendations or comments on family support policies (2006: 12). And in 2001 and 2002 there are no German family support recommendations. However, in 2004 Germany is advised to move from benefits in cash to benefits in kind within childcare to increase labour supply (OECD 2004: 5). In 2006, more financial support for childcare was welcomed to reduce labour force participation obstacles (OECD 2006: 7). It could be read as a sign that issues from the Babies and Bosses series are gradually being integrated into the more authoritative Economic Surveys. So, the issue of childcare is treated very explicitly and the EU even identifies targets to be reached by 2010. For parental leave systems, the advice is less direct, but both organizations still express views on existing systems and identify some kind of best practice for Member States to consider. The EU is critical towards measures which keep women out of work for longer periods, a problem identified by the OECD (1995) more than a decade ago: A number of countries with less developed nursery childcare facilities offer fairly generous support to women who take extended career breaks to care for their children in their first two to three years. Naturally, such policies may primarily reflect priorities in family policy. Yet, with a view to the impact on employment rates and the difficulties for many women of returning to the labour market after a long absence, the question arises whether it would not be better to use these resources to invest in an expansion of child care services to speed up the return of women after parental leave. (CEC 2003: 45)

Another possible source of influence is the report A New Welfare Architecture for Europe, a report ordered by the Belgian EU Presidency


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in 2001 and written by Esping-Andersen and other experts. They incorporated much of this report in Why we Need a New Welfare State (Esping-Andersen et al. 2002), where the family is given a central role. Esping-Andersen speaks about the importance of institutional public support (affordable childcare, paid maternity and parental leave, provision for work absence when children are ill) (2002: 94). Increasing female participation rates is considered important since it seems to effect birth rates positively, will reduce the difficulties of financing the welfare state, constitutes an (often highly educated and skilled) untapped productive factor, and is favourable to social inclusion and avoiding poverty. In studies, working papers, conferences and Presidency initiatives, one finds more direct and far-reaching advice than the official position of the EU and the OECD. A recent study prepared for the European Commission, for instance, discusses duration of parental leave, eligibility and remuneration, and presents the Swedish father’s quota as a good way of making men take more responsibility (Platenga and Remery 2005). The OECD has specific and coherent recommendations which are presented in a particular chapter of each Babies and Bosses report, and can thus be easily identified. Germany is not given systematic treatment in the four volumes published up to 2005 and thus its policies cannot be directly measured against OECD advice. I would still argue that the OECD presents views on this country’s policy. (In Volume 5, Germany is said to do poorly.) When OECD representatives participate in international conferences and meetings, they present overall recommendations very much in line with the recommendations given to countries covered by the Babies and Bosses series. OECD officials confirm in interviews that its advice is meant to apply to more than the country under review (OECD interview 5).5 What they recommend is well-paid parental leave of moderate length (around a year). In sum, this review of the proposals, guidelines and actual recommendations at EU level illustrates that the EU encourages its Member States to develop family-friendly policies. There is a discourse on reconciliation of work and family life which seems to dominate all documents and processes, emphasizing in particular the importance of childcare and parental leave schemes. The focus is on how such policies will increase employability, be favourable to economic growth and the sustainability of the welfare state and focus less on the needs of families. Reports often include comparisons of national policies, for example, in the form of tables displaying childcare coverage, parental leave benefit periods and female employment rates. Similarly, the OECD issues country-specific recommendations through its Babies and Bosses series and more general recommendations through other publications and conferences. The OECD addresses the field more

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directly than the EU in that it provides definitions of family policy as well as special web pages for this field. The same discourse on reconciliation of work and family life, however, is present. Its reports also have comparisons of national policies and results presented as rankings. This discourse is so strongly integrated at the EU and OECD level that it merits a closer inspection of possible influence on national policies. I turn to this now. However, before closing this section, one comment is relevant: the EU and the OECD do not have distinct family policies and it is far from certain that they will develop such policies. What they have is ideas on national family policy. Compared with national family policy it is still very limited, and one might even argue that the term ‘family policy’ should not be used. Instead one could call these policies employment-related policies or reconciliation policies. I choose to keep the family policy concept because at the national level this is where we find policies framed as reconciliation policies at the level of international organizations. Furthermore, this term captures the growing attention to and possible emergence of more family policy within IOs.

EU AND OECD DISCOURSE AND GERMAN ARGUMENTATION How do the German reforms relate to the EU and OECD discourses on reconciliation of work and family life? As I have shown, the EU is most specific in its view on childcare facilities. Both the country-specific recommendations for Germany and the Joint Reports on Social Inclusion by the Council and Commission (CEC 2002, 2004) emphasize the need for more places. The German government’s aim of increasing care facilities through the TAG reform is supposed to be reached by 2010, which is the same year as the EU recommends, so here there is correspondence between aims and also measures, since this aim can only be reached through building new facilities. As stated above, the OECD expresses similar opinions to the EU on childcare, so Germany here acts in concordance with this organization’s advice as well. The move from benefits in cash to benefits in kind within childcare is also in line with the EU/OECD discourse. The EU and OECD call upon Member States to review their parental leave schemes and look at how they hamper women in returning to work. Research initiated by them identifies parental leave schemes of the new German type as beneficial and German position papers justify the reform partly by reference to this problem, as stressed by the EU and the OECD. This could therefore be a result of learning. How does the German government argue for its bill on Elterngeld?


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The bill starts out by claiming that the former Erziehungsgeld (childrearing benefit) did not fulfil today’s goals. Too few fathers take time off to care for their children, too many mothers stay out of work for a long period, and the fertility rate does not seem to be positively influenced. The Elterngeld programme was introduced to address these problems. The government expects that more men will stay home to care for their children, that women will return to work earlier and, though not explicitly said in the bill, more children will be born. Information available on the website of the Ministry of Family Affairs6 provides additional insight into the reasons for the reforms. Reading these arguments is like reading direct answers to the challenges identified in EU and OECD documents: Elterngeld in other countries has resulted in higher birth rates combined with higher female labour market participation rates, it is a good way of avoiding poverty, for instance among lone parents, it is good for the society as it leads to shorter leaves and thus increases tax incomes and contributions to welfare programmes, and it is good for business and industry by making skilled workers available. All in all, one could say that the main aim of the bill is to improve the conditions for reconciliation of work and family life. As stated in the 2004 Joint Report on social inclusion, all National Action Plans (NAPs) acknowledge the importance for families of managing the balance between work and family life (CEC 2004: 36). Several measures that could be useful to achieve this are mentioned: extension of childcare facilities, provision of financial support for families with young children, flexible or part-time working arrangements and a review of parental leave and maternity schemes (CEC 2004: 52). The German bill explicitly says that a new law on parental leave is only one of three important aspects of family policy. Equally important are childcare institutions and a family-friendly working life. This is also similar to views expressed in EU and OECD documents. The bill is remarkably free of references to any source to legitimate the expected outcomes. The most specific reference is to ‘international experiences’ and countries like Sweden allegedly showing that arrangements similar to Elterngeld result in higher fertility rates and more men active in childcare. There is no particular mention of the EU, the OECD, national research centres or other sources which could have strengthened the argument. This seems to be in concordance with an analysis by Zohlnhöfer and Zutarven, saying that the OECD is rarely referred to as justification for changes and that the OECD impact on German welfare reform cannot therefore have been comprehensive (2004: 137). Still, there may be several reasons for this lack of references. That the government is unaware of such sources must be considered highly unlikely

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and this is also disproved in interviews. More probable and in line with my second hypothesis, the government expects to gain popularity through this reform and thus does not credit other sources. Also, the reference to Sweden instead of the EU could be explained by the fact that Sweden has a very generous parental leave scheme. This is known among researchers and probably also among journalists, other opinion formers and large parts of the public. Yet another plausible explanation is the exchange of ideas between political (Social Democratic) parties or countries. Bilateral relations could account for just as much as the EU or the OECD, perhaps even more, and should be investigated. An online publication of the family ministry called Monitor Familienforschung provides further evidence of this as it considers German family policy in the light of experiences in other countries and states that “Germany follows the Swedish ideal” (BMFSJF 2006: 8, my translation). It is difficult if not impossible to isolate the effect of the influence of international organizations. Interviews reveal several different sources which informed the reform process.7 However, a main impression from written and oral sources is that Germany has developed its new family policy based on Scandinavian experiences (see for example Leitner, Ostner and Schmitt (2008) for a similar interpretation). This supports hypothesis 1, saying that the EU and the OECD influence would be difficult to find due to the non-coherent policy they offer. Another potential source which can shed light on the latest reform initiatives in Germany is the National Action Plans (NAPs) and National Reform Programmes (NRPs). These reports present individual Member States’ actions so far, as well as future plans regarding objectives and guidelines. Thus, one may find arguments for the new parental leave scheme and extension of childcare here and if one expects to find references to EU influence then this should be the most likely source. Since the bill on parental payment was initiated by the SPD and made an issue in the election campaign of 2005, I restrict the search to the NAPs and NRPs of 2005 and 2006. What information about problems and solutions is considered relevant and legitimate by German policy makers in these reports? On what grounds are decisions made? The German NRP and NAP of 2005 (or more accurately the Implementation Report on National Action Plans on Social Inclusion 2003–2005) are very similar in their argumentation within family-related issues. The themes covered are childcare and all-day schools, reconciliation of work and family life, poverty and female employment rates. Both documents report that 230 000 new care places for children under three years will be provided in the western Länder by 2010 (German NAP/inclusion 2005: 26, German NRP 2005: 8). In this respect, Germany


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has developed a national target, but based solely on number of places. According to the NRP, this will double the available places, but, as stated by Richardt (2004), since it does not give any percentages of coverage, it is difficult to relate it to the Barcelona targets. As in EU or OECD documents, the focus on reconciliation of work and family life is legitimized by reference to the economic issues and increasing birth rates (German NAP/ inclusion 2005: 5; German NRP 2005: 50–51). A clear statement of this is the following quote: “Family friendliness is a substantial positive growth factor” (German NRP 2005: 50, author’s translation). This supports my third hypothesis, that the expected economic effects of new family policies, just as much as the policies in their own right, can explain why they are proposed. However, somewhat different from the hypothesis, I find no final evidence that the argument about the advantages of a new family policy approach originates with the international organizations alone, but rather that such policies in other EU/OECD countries have proved beneficial. In the NAP 2006, day care for children under three is again emphasized and according to the report, coverage was around 11 per cent in 2004 (German NAP/inclusion 2006: 13–14). Since then new places have been created, but what the coverage is now we are not told and again there is no discussion directly connected with the EU goal of 33 per cent. However, in order to prevent the social exclusion of children from disadvantaged homes, the government is prepared to take actions to achieve the goal of offering childcare for children less than three years old (German NAP/ inclusion 2006: 19). Later discussions about further increasing coverage for children until age three has revealed that Germany will reach a rate of approximately 33 per cent in 2013, three years after the Barcelona target. There are several references to the new Elterngeld scheme as a way to improve the work–life balance and increase the female employment rate (German NAP/inclusion 2006: 7) and this reform is justified by reference to the OMC on social inclusion. The new Elterngeld scheme is presented as an instrument for preventing social exclusion and to reach the goals set in the OMC of ensuring participation in society and strengthening social integration: [T]he employment rate of women in Germany has risen continuously in recent years and the Lisbon Strategy target of at least 60% by 2010 has almost been reached. A further increase in women’s participation in paid employment decisively depends on better ways of combining families and careers. The Federal Government wants to improve the general conditions for women to take part in paid employment to secure their livelihoods. The planned further expansion of institutional childcare and day care and the planned introduction of parental benefit and better consideration of childcare costs will all help with this. (German NAP/inclusion 2006: 33)

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According to Büchs and Friedrich, ‘in the NAPs, policies and policy changes are mainly presented as responses to the requirements of the EES, not as outcome of debates and struggles among domestic policy forces’ (2005: 262). The NAP and NRP of 2005 partly contradict this. These reports mostly do not refer to EU recommendations or proposals as reasons for their actions. However, this is hardly needed when EU processes are the point of departure and the whole intention of the reports is to present progress so far and measures that will be introduced. Still, there are some explicit references to EU goals when it comes to women’s employment and childcare institutions (German NAP/inclusion 2005: 15), and the NAP of 2006 presents family policy reforms as responses to the EU OMC inclusion. Umbach (2004) and Büchs (2006) stress that the NAP is no “policy driving document” and described policies are not developed especially for the OMC process (Umbach 2004: 122). Umbach concludes that family-related reforms within employment probably would have taken place anyway, but that the EU level might have provided extra incentives (2004: 122). By investigating EU/OECD advice, German reforms and their timing, I have established more than just circumstantial evidence of a connection. In the early 1990s, international organizations were more sceptical towards the welfare state and did not consider social policy to be economically favourable as they do today (Kildal and Kuhnle 2006: 18). Germany’s policy had been static for a long time and suddenly changed in a period when IOs took a greater interest in family issues. This is suggestive of international influence, and this discussion leads to the main conclusion of the chapter: that international organizations have contributed to the introduction of German family policy reforms, but that domestic actors and relationships are decisive for their final design. This will be further elaborated on below.

REFORMS AS THE RESULT OF EU AND OECD POLICY ADVICE? Correlation and causality are two different things and the former is not sufficient to prove a relationship between proposals and actual policies. Still, the picture painted in interviews with key actors at national and EU/ OECD level supports the hypothesis that international organizations play a role in domestic family policy. Knowledge of their studies, advice and recommendations is confirmed and it is evident from the interviews that this is initiating or at least giving momentum to domestic debate. The discussion has illustrated that similar policies could be interpreted as the


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result of learning through reports generated through OMC processes, conferences and policy ideas or as a combination of the mechanisms described earlier: participation in EU-level discussions and soft pressure through policy advice. However, a research design comparing the degree of similarity between EU and OECD proposals and national action faces several difficulties. The question of uploading is one (Zeitlin 2005). Member States might try to get their own policies, preferences and proposals established as EU/OECD objectives and guidelines. This would mean that there is little external advice at all since it in large part originates with the Member State itself; thus it would make less sense to study the impact of international organizations. If Member States make their already-established policies the subject of future objectives instead of developing common EU objectives, then it is possible that the effect of the supranational level is overrated. This could represent a big problem for interpretation when relying strongly on official texts (Barbier 2004: 11, 14, 15). It would, however, indicate that IOs are thought to give legitimacy for action. Then, can shifts in German policy thinking be (partially) attributed to their participation in learning processes in international organizations like the EU or the OECD? The clearest indication of this would be direct references to EU/OECD recommendations and proposals and statements that said explicitly that the reforms are meant as direct answers to this (de la Porte and Pochet 2002: 48). Not surprisingly, such statements and references are scarce. This does not prove that there has been no influence from international organizations. On the contrary, since the analysis above has shown that there is a quite strong correspondence between what is expressed at the international level and how the German governments argue for their reforms, we do find a strong indication of some influence. The lack of specific references to the EU or the OECD as a place of inspiration is in agreement with my second hypothesis and could be explained by the terms credit claiming and blame avoidance (Weaver 1986). Governments are likely to take the honour for matters the public welcome and deny responsibility for less popular actions: “Governments, particularly member states of the EU, may have political reasons for over/ understating OMC impact e.g. blame avoidance/credit claiming, selfpresentation as good Europeans or defenders of national interest against Brussels” (Zeitlin 2004). Similarly, OMC policies might be disguised to be nationally acceptable (Jacobsson and Schmidt 2002: 89). In other words, the fact that there are few explicit references does not prove anything. Statements from the German Family Minister in newspaper interviews support this interpretation: “I don’t think that we should transfer social competences from the national area to Europe because we would only be

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complicating things but let’s not underestimate the power of European discussions and their influence on national policies” (quoted in Kubosova 2007). Interviews with high-level policy makers in the EU and the OECD confirm this. Germany is presented as a member which used to be “inward looking”, not very keen on contributing to comparisons of German and other countries’ achievements and reluctant to participate in special reviews. Today this has changed radically: It happens very frequently that . . . different Member States, facing a particular national challenge about changing a mind set, as in Germany on family and demographic issues, rely on the European framework for facilitating that mind change. So, to supporting their point in the national, internal debate with the argument that ‘look, it is not just a matter for us, it is an overall recognised important matter by all our partners in the EU’. (High-level Commission bureaucrat, EU Interview 1)

Several policy makers in the EU and the OECD emphasize how Germany has used this arena to get a debate going at home, what was referred to as a leverage effect in the theory section. The influence exerted on Germany is then described more as a reinforcement of national initiatives, meaning that the role of international organizations in this field is best depicted as a mediator function. As one OECD expert expressed it, his organization’s impact largely depended on what a country wants to do with their advice and how interested they are in dealing with an issue in terms of timing (OECD interview 5). Recommendations, best practice and comparisons are not connected with any sort of sanctions and German interviewees confirm that international studies are used when fitting the national agenda. Here a few comments on the development of recommendations are also relevant. They are made in close cooperation with the country in question. Governments may even ask for a sharpening of critique if they need to do unpopular things (OECD interview 6) and may prefer “to [have] uncomfortable messages passed by the OECD” (OECD interview 2). Thus, reports are based on consensus and the arrow of influence can go both ways (see for example Mahon 2007). A similar issue is the initiative by the 2007 German EU Presidency to launch an Alliance for Families which will be a framework for the exchange of family policy best practice. This is illustrative of a very different attitude from that which was present among German policy makers some years ago, as well as of the way the government hopes to ride on the crest of a wave in national debates. Some caution must be exercised when interpreting such initiatives or statements in an EU context. The comment by the German family minister at


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a recent meeting of European family and equality ministers about how Germany’s latest decision to increase childcare facilities was an answer to the Barcelona targets, must for instance be taken with a pinch of salt since holding the EU presidency could obviously colour such statements (von der Leyen 2007). Still, there is no doubt that German governmental reports do consider family policy in the light of experience in EU Member States and with reference to EU goals. Interviews indicate that comparisons of Member States’ policies are taken very seriously at the national level and used in the development of policy. A participant in the Swedish peer review on childcare policies presented briefly above, underscores the role of the EU and the OECD in providing this information, stressing at the same time that the basis for best practice is always found at national level, meaning that the EU is not necessarily the “initial mover” (EU Interview 7). Interviewed members of the German Social (SPD) and Christian (CDU) Democratic Parties also cite rankings as an important stimulus for national debate (German Interviews 2 and 6), and references to rankings or comparisons appear in all interviews conducted in Germany. In these rankings, Germany is presented as a laggard when it comes to childcare and female employment. According to the interviewed CDU representative, the acceptance of certain demands is increased through such international studies and this makes it easier in Germany to address and gather support (German interview 6). This sounds very much like the peer pressure, leverage effect and awareness and self-assessment mechanisms described in the theory section. It can be safely assumed that both the EU and the OECD do play an important role and exert some influence within family policy in offering these comparisons, which more-or-less force Member States to react in some way. The search for solutions, however, seems to be more directed towards individual countries rather than the international organizations. An interview with a high-level politician from the family ministry indicates how European goals were useful in argumentation, but less important for actual policy making, referring instead to Sweden as a main instigator (German Interview 1). This is hardly surprising, as these organizations do not have a family policy of their own and their recommendations and advice are limited (hypothesis 1). The EU and the OECD thus identify and increase awareness on weak points and direct attention towards successful countries through best practice, while the actual learning about concrete arrangements may occur through bilateral exchange (mediator function). Key German policy actors refer to Scandinavia and sometimes France as the main source of inspiration for the new parental leave scheme and childcare policy. Still, the motive behind these references to individual countries could be that the EU is often viewed as bureaucratic and unpopular by the

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population, whereas experience from single countries is more easily understood. From my analysis it seems clear that the exchange of best practice is not something that would have happened through bilateral contact to the same extent without the initial EU and OECD reviews. This picture of how exchange of best practice is welcomed and even used to give legitimacy to domestic reforms would probably be substantially moderated if other countries and social policy fields were included. As Ervik (this volume, Chapter 7) suggests, the UK for instance relies much more on cooperation within the English-speaking world than on the EU or the OECD. This also underlines how ideas have an independent meaning for decision-making processes, but that they still rely on actors and/or institutions willing to defend and promote them. Furthermore, the influence of ideas from international organizations seems to depend on the political climate. This can explain why Germany has only recently paid attention to the EU level. Let me stress this so that the influence of the EU and the OECD is not overrated or misunderstood: it is important only in so far as national actors are interested in reforming. German family policy may thus be an instance of what Mark Thatcher (2002) has shown to be the case for telecommunications. EU regulation in this field does not put a lot of pressure on the Member States, but countries in the process of reform have still benefited from European policy to justify and legitimize reforms.

CONCLUSIONS The comments on methodological challenges connected to this chapter’s approach show that I cannot fully answer the question of whether shifts in the policy thinking of Germany should be attributed to their participation in learning processes in international organizations. To trace ideas, however, is more than causal analysis. It is interesting per se to see how different actors use concepts, argue and justify policies. Concerning the findings of the chapter, it seems that my hypotheses are supported by the analysis. The EU/OECD influence on German policy is not completely clear, something which, in accordance with the first hypothesis, can be explained by the lack of a distinct EU/OECD family policy, but also by methodological challenges. The issue of family policy reforms was not raised by the EU or the OECD alone. It has probably gradually become important due to socioeconomic trends and cultural changes, factors this chapter has not addressed.8 The two organizations do play a role, though mainly by providing information, and in particular, the comparisons they bring are influential. As such, their monitoring


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and distribution of information rather than their policy development and advice is important. However, bilateral learning is more influential. Second, the German government claims credit for this reform probably because the parental leave reform is quite popular with the public. Somewhat paradoxically, family policy is a field with little developed formal and systematic exchange of best practice as there is, for instance, no OMC for this field, but traces of learning are still very evident in Germany. A huge interest in learning is present among both politicians and bureaucrats. Last, it seems plausible to argue that one of the main reasons behind the Elterngeld reform, which is not traditional Christian Democratic family policy, is, as argued by the EU and the OECD, the overall economic advantages it is expected to bring about. The interviews and documentary sources do not provide final evidence for this, but the reasons given for the reforms clearly support this interpretation. Interviewed representatives of the OECD regard coupling of issues to be one of the organization’s main contributions to national debate, for example, how ageing cannot be solved through pension reforms alone – issues such as fertility must also be included (OECD Interview 2). The third hypothesis might seem to contradict the argument of ideational influence and rather imply that interests constitute the crucial part. However, what the hypothesis really says is that the impact of the idea is strengthened and made even more attractive by the fact that it has proved to be so beneficial for employment rates of women, fertility rates and sustainability of the welfare state. According to an SPD interviewee, the need for family reforms in Germany first gained momentum when familyfriendly policies were understood to be economically important (German Interview 2). This interpretation is disseminated at the level of international organizations. As such, German reforms may be an instance of how ideas can create interests and override earlier interests, as opposed to how ideas merely justify interests that were already present (Hochschild 2006). Family policy is a less institutionalized field, open to new ideas, and as the German reforms entail a multiplicity of justifications, almost everybody could find an interpretation with which they could agree, be it politicians from the SPD, CDU or CSU.9

NOTES 1. Falkner et al. (2005) focus on directives, that is, partly forced influence, while Mahon (2006, 2007) studies the content of OECD family policy suggestions. Kvist and Saari (2007) look briefly at family and demographic issues.

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2. See Falkner et al. (2005) for a discussion of the effect of the pregnant workers (1992) and parental leave (1996) Directives. 3. For a discussion of actors involved in the OMC process, see de la Porte and Pochet (2005). 4. The Council recommendations are based on proposals from the Commission. Recommendations are objects of discussion, and negotiations take place before a recommendation is issued (Büchs and Friedrich 2005: 254). In other words, the final recommendation is not pure “EU expert advice” but rather the result of cooperation and negotiation with national officials. According to Zeitlin (2005: 478) this is not uncommon for Germany. This is also confirmed in interviews with stakeholders in the EU and should be kept in mind when investigating “EU influence” on national social policy. Similarly, OECD studies on social policy are largely based on direct funding from countries examined in the reports. The case selection is thus partly decided by who is willing to pay. This suggests that only countries interested in advice are actually reviewed. 5. Twenty semi-structured expert interviews of politicians, representatives of interest organizations and high-level officials in Germany, within the EU Commission, the OECD Directorate for Employment, Labour and Social Affairs (DESLA) and OECD Economics Department (ECO) were conducted in 2007. The informants were either involved in the development of national family policies or involved in the formulation of ideas and debates surrounding family policy in the EU and OECD. In order to preserve the anonymity of interviewees, citations and information are referred to by interview codes. Each reference includes the country or organization the interviewee is affiliated to as well as a number. 6. http://www.bmfsfj.de/Politikbereiche/familie,did576746.html 7. For example, conferences held by political organizations such as the German Friedrich Ebert Foundation and the “Eltern-Kinder-Geld” Deutsch-Schwedisches Dialogforum, 26 April 2006. 8. See for instance Pfau-Effinger (2008) for a discussion of such factors. 9. I owe this suggestion to a discussion with Sigrid Leitner, who, however, should not be held responsible for the way it is used here.

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Esping-Andersen, Gøsta (1990), The Three Worlds of Welfare Capitalism, Cambridge: Polity Press. Esping-Andersen, Gøsta (2002), ‘A New Gender Contract’, in Esping-Andersen, G., Gallie, D. Hemerijck, A. and Myles, J. (eds), Why We Need a New Welfare State, Oxford: Oxford University Press. Esping-Andersen, Gøsta, Duncan Gallie, Anton Hemerijck and John Myles (2001), A New Welfare Architecture for Europe? report submitted to the Belgian Presidency of the European Union, www.socsci.aau.dk/ccsw/students/Esping-A. report_2001_.pdf, accessed 6 December 2008. Esping-Andersen, Gøsta, Duncan Gallie, Anton Hemerijck and John Myles (eds) (2002), Why We Need a New Welfare State, Oxford: Oxford University Press. Evers, Adalbert, Jane Lewis and Birgit Riedel (2005), ‘Developing Child-Care Provision in England and Germany: Problems of Governance’, Journal of European Social Policy, 15, (3), pp. 195–209. Falkner, Gerda, Oliver Treib, Miriam Hartlapp and Simone Leiber (2005), Complying with Europe: EU Harmonisation and Soft Law in the Member States, Cambridge: Cambridge University Press. German NAP/inclusion (2005), Implementation Report 2005 on the 2003 National Action Plan for Social Inclusion, http://ec.europa.eu/employment_social/spsi/ docs/social_inclusion/2005/de_en.pdf, accessed 16 January 2009. German NAP/inclusion (2006), National Strategy Report: Social Protection and Social Inclusion 2006. Berlin: Bundesministerium für Arbeit und Soziales. German NRP (2005), Nationales Reformprogramm Deutschland: ‘Innovation forcieren – Sicherheit im Wandel fördern – Deutsche Einheit vollenden’, 7 December, www.jugendpolitikineuropa.de/downloads/22-177-342/Nationales_ Reformprogramm.pdf, accessed 6 December 2008. German NRP (2006), National Reform Program Germany 2005–2008: Implementation and Progress Report 2006, http://ec.europa.eu/growthandjobs/ pdf/nrp/DE_nrp_en.pdf, accessed 6 December 2008. Hantrais, Linda (ed.) (2003), Comparing Family Change and Policy Responses in Europe, Cross-National Research Papers 6 (7), Loughborough: Loughborough University, European Research Centre. Hantrais, Linda (2004), Family Policy Matters: Responding to Family Change in Europe, Bristol: Policy Press. Hausding, Götz (2006), ‘Das Elterngeldgesetz passiert die Landerkämmer: mehr Kinder für Deutschland’, Das Parlament, 56, (46), 13 November. Hochschild, Jennifer L. (2006), ‘How Ideas Affect Actions’, in Goodin, Robert E. and Tilly, Charles (eds), The Oxford Handbook of Contextual Political Analysis, Oxford: Oxford University Press. Jacobsson, Kerstin and Herman Schmid (2002), ‘Real Integration or Just Formal Adaptation? On the Implementation of Action Plans for Employment’, in Caroline de la Porte and Philippe Pochet (eds), Building Social Europe through the Open Method of Co-ordination, Brussels: P.I.E.-Peter Lang. Kildal, Nanna and Stein Kuhnle (2006), ‘International Ideas and Employment and Family Support Policies in Denmark and Norway 1990–2005’, Paper presented at the ECPR Joint Sessions of Workshops Workshop EU Social Policy: Europeanization or the Persistence of National Differences? 25–30 April 2006, Nicosia, Cyprus. Kübler, Daniel (2007), ‘Understanding the Recent Expansion of Swiss Family


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Policy: An Idea-Centred Approach’, Journal of Social Policy, 36, (2), April, pp. 217–237. Kubosova, L. (2007), ‘Europe Needs Family-Friendly Policies, Says German Minister’, EU Observer, 27 March. Kvist, Jon and Juho Saari (eds) (2007), The Europeanisation of Social Protection, Bristol: Policy Press. Leibfried, Stephan (2005), ‘Social Policy: Left to the Judges and Markets?’ In Wallace, Helen, Wallace, William and Pollack, Mark A. (eds), Policy-Making in the European Union, Oxford: Oxford University Press. Leitner, Sigrid (2003), ‘Varieties of Famialism: The Caring Function of the Family in Comparative Perspective’, European Societies, 5, (4), pp. 353–375. Leitner, Sigrid, Ilona Ostner and Christoph Schmitt (2008), ‘Family Policies in Germany’, in Ostner, Ilona and Schmitt, Christoph (eds), Family Policies in the Context of Family Change: The Nordic Countries in Comparative Perspective, Wiesbaden: VS-Verlag für Sozialwissenschaften, pp. 175–202. Lewis, Jane (2001), ‘Decline of the Male Breadwinner Model: Implications for Work and Care’, Social Politics, 8, (2), pp. 152–169. Lewis, Jane (ed.) (2006), Children, Changing Families and Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Lewis, Jane and Ilona Ostner (1995), ‘Gender and the Evolution of European Social Policies’, in Pierson, Paul and Leibfried, Stephan (eds), European Social Policy: Between Fragmentation and Integration, Washington: Brookings Institution, pp. 159–193. Mahon, Rianne (2006), ‘The OECD and the Work/Family Reconciliation Agenda: Competing Frames’, in Jane Lewis (ed.), Children, Changing Families and Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Mahon, Rianne (2007), ‘Babies and Bosses: Gendering the OECD’s Social Policy Discourse’, paper prepared for the International Sociological Association RC19 Annual Academic Conference, Florence, 6–8 September 2007. Maier, Frederike (2004), Parental Insurance: Statements and Comments, http:// pdf.mutual-learning-employment.net/pdf/sweden04/gerSWE04.pdf, accessed 16 January 2009. Nauerz, Myriam (2004), Does the European Employment Strategy Lead to a Soft Form of Europeanisation? An Analysis of the ‘Local Dimension’ in Germany. Master of European Studies thesis, College of Europe, Bruges Campus. Noaksson, Niklas and Kerstin Jacobsson (2003), The Production of Ideas and Expert Knowledge in OECD: The OECD Jobs Strategy in Contrast with the EU Employment Strategy, Score Rapportserie 2003:7, Stockholm: SCORE. O’Connor, Julia S. (2004), ‘Gender Citizenship and Welfare State Regimes’, in Kenneth, P. (ed.), A Handbook of Comparative Social Policy, Cheltenham, UK and Northampton, MA, US: Edward Elgar. OECD (1998, 1999a, 2001, 2002, 2004, 2006), Economic Survey of Germany, Paris: OECD. OECD (1995), Employment Outlook, Paris: OECD. OECD (1999b), A Caring World: The New Social Policy Agenda, Paris: OECD. OECD (2001), Starting Strong I: Early Childhood Education and Care, Paris: OECD. OECD (2002, 2003, 2004, 2005, 2007), Babies and Bosses: Reconciling Work and Family Life (Vols 1–5), Paris: OECD.

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OECD (2005), Extending Opportunities: How Active Social Policy Can Benefit Us All, Paris: OECD. OECD (2006), Starting Strong II: Early Childhood Education and Care, Paris: OECD. Orenstein, Mitchell A. (2006), ‘Transnational Politics of Pension Reform in the Developing World’, paper presented at the 4th Annual ESPAnet Conference Transformation of the Welfare State: Political Regulation and Social Inequality, 21–23 September, Bremen, Germany. Ostner, Ilona (2006), ‘Paradigmenwechsel in der (west)deutschen Familienpolitik’, in Berger, Peter A. and Kahlert, Heike (eds) (2006): Der demographische Wandel: Chancen für die Neuordnung der Geschlechterverhältnisse, Frankfurt: Campus Verlag. Pestieau, Pierre (2006), The Welfare State in the European Union: Economic and Social Perspectives, Oxford: Oxford University Press. Pfau-Effinger, Birgit (2008), ‘Cultural Change and Path Departure: The Example of Family Policies in Conservative Welfare States’, in Oorschot, Wim van, Opielka, Michael and Pfau-Effinger, Birgit (eds) Culture and Welfare State: Values and Social Policy in Comparative Perspective, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 185–204. Platenga, Janneke and Remery, Chantal (2005), Reconciliation of Work and Private Life: A Comparative Review of Thirty European Countries. Brussels: European Commission. Richardt, Nicole (2004), ‘European Employment Strategy, Childcare, Welfare State Redesign: Germany and the United Kingdom Compared’, paper prepared for the Conference of Europeanists, Chicago, 11–13 March 2004. Rose, Richard (1991), ‘What is Lesson Drawing?’ Journal of Public Policy, 11, (1), pp. 3–30. Rueschemeyer, Dietrich (2006), ‘Why and How Ideas Matter’, in Goodin, Robert E. and Tilly, Charles (eds), The Oxford Handbook of Contextual Political Analysis, Oxford: Oxford University Press, pp. 227–251. Schäfer, Armin (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, 13, (1), pp. 70–88. SPD (2002), Erneuerung und Zusammenhalt: wir in Deutschland: Regierungsprogramm 2002–2006. SPD (2005), Vertrauen in Deutschland: Wahlmanifest der SPD. Thatcher, Mark (2002), ‘Europeanization and Domestic Institutional Reform: The Regulation of Telecommunications’, paper delivered to the European Consortium for Political Research joint sessions of workshops, Turin, Italy, 22–27 March. Umbach, Gaby (2004), Employment Policies in Germany and the United Kingdom: The Impact of Europeanisation, Political Science Report, London/Cologne: Anglo-German Foundation for the Study of Industrial Society. von der Leyen, Ursula (2007), Statement von Bundesfamilienministerin Ursula von der Leyen anlässlich der Eröffnung des Informellen Treffens der EU-Gleichstellungsund Familienministerinnen und -minister am 15. und 16. Mai 2007 in Bad Pyrmont, www.bmfsfj.de/bmfsfj/generator/Kategorien/Presse/audio,did598130.html, accessed 6 December 2008. Weaver, R. Kent (1986), ‘The Politics of Blame Avoidance’, Journal of Public Policy, 6, (4), pp. 371–398.


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Zeitlin, Jonathan (2004), ‘The OMC in Action: The European Employment and Social Inclusion Strategies’, presentation to the conference The EES: Discussion and Institutionalisation, Brussels, 30–31 August, http://eucenter.wisc.edu/OMC/ Papers/EUC/OMCinAction_files/frame.htm, accessed 6 December 2008. Zeitlin, J. (2005), ‘The Open Method of Co-ordination in Action: Theoretical Promise, Empirical Realities, Reform Strategy’, in Zeitlin, J. and Pochet, P. with Magnusson, L. (eds), The Open Method of Coordination in Action: The European Employment and Social Inclusion Strategies. Brussels: Peter Lang. Zohlnhöfer, Reimut and Zutarven, Jan (2004), ‘Too many rivals? The OECD’s influence on German welfare policies’, in Armingeon, K. and Beyeler, M. (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar.

7.

Policy actors, ideas and power: EU and OECD pension policy recommendations and national policies in Norway and the UK Rune Ervik

INTRODUCTION This chapter will explore the role played by the OECD and the EU in shaping the central ideas of national pension reforms through an interactional and relational process with member states. In addition, important bilateral (and multilateral) exchanges of ideas between countries, taking place outside the realms of these international organizations, are scrutinized. Focus will be on specific key actors within the EU and the OECD which are involved in explicit pension policy advice and recommendations, rather than taking account of all possible actors across different policy areas that might influence pensions some way or another. The following questions will be addressed: What are the leading ideas and core paradigms of these key policy actors? How are their ideas internally institutionalized and empowered, and how does that enhance or inhibit their ability to influence? How do these policy groups relate to national actors and reform policies in pensions? Do we find bilateral or multilateral exchange of reform ideas that are considered to be of importance to national policy makers? Finally, do these discourses and ideas influence national policies? To scrutinize these issues, this chapter draws mainly on insights gleaned from the literature on ideas and their impact on policies (Blyth 2002; Campbell 2002; Hall 1989, 1993; Schmidt 2002), but also from the pension politics and reform literature (Clasen 2005; Immergut, Anderson and Schulze 2007). The empirical sources of the chapter consist of semi-structured interviews conducted with key actors at the international level (EU and OECD) and the national level in Norway and the UK. In addition, relevant policy documents and secondary literature sources concerning pensions are scrutinized. These two countries are highly advanced political economies, but reveal important differences in terms of systems of political government and how 138

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their welfare states are organized, including their pension systems. The different structures of the two pension systems result in different outcomes in terms of replacement rates, as the UK combines targeting of public resources, voluntarism and individual choice in setting individual targets for replacement rates, whereas Norway combines both minimum security and a more generous system of income-related pensions within the public system.1 In the UK the net replacement rate as a percentage of individual pre-retirement net earnings (for mandatory pension programmes) was 57.7 per cent for individual earnings at 0.75 of average earnings, whilst in Norway the replacement rate was 73.1 per cent. For an individual earning twice the average salary, the replacement rate was 29.8 per cent in the UK and 50.1 per cent in Norway (OECD 2005c, p. 82). The two countries also have different relations with the EU, the UK being a member, whereas Norway is a non-member, but with almost full economic membership through the EEA agreement. They are both members of the OECD and have been so since its establishment in 1961. The EU and the OECD are obviously very different types of organizations, the EU being a political organization, whereas the OECD has been described as an expert organization (Noaksson and Jacobsson 2003). However, given the constraints presented above, their roles in pension policy, as represented by the EU Open Method of Coordination and the OECD country surveillance, are fairly similar in terms of what are called soft methods of governance and the application of peer pressure to obtain common goals or best practice (Pagani 2002; Schäfer 2006). The chapter is structured into the following four main sections. The first section introduces theoretical perspectives on the role of ideas in policy making at the national level, and argues for the relevance of including ideas, institutions and also power when accounting for the role of international organizations in policy formulation. Section two addresses the question of different pension policy actors and policy paradigms within the two organizations. The third section looks into the actual recommendations and advice on pensions, as found in Country Surveys of the OECD, and more indirectly in the Country Summaries of the Joint Reports on Pensions within the EU in the UK case. In addition, to trace the potential influence of these ideas, national actors’ views are reported, along with other sources of influence, for instance other countries. The final section sums up the findings.

IDEAS, INSTITUTIONS, ACTORS AND POWER In accounting for the effect of economic ideas, and more specifically Keynesian ideas, on public policies across nations, Hall (1989) distinguished

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between three broad theoretical approaches, termed economist-centred (Salant 1989), or in more general terms, a profession or discipline-centred perspective, state-centred (Weir 1989), and coalition-centred perspectives (Gourevitch 1989). The first one explains the success of Keynesian ideas as the outcome of an internal paradigm shift within the sphere of economics. A policy paradigm represents an interpretive framework that policy makers work within. This framework of ideas and standards specifies goals of policy, the instruments likely to reach the goals and the nature of the problems the instruments are meant to address (Hall 1993, p. 279). The state-centred approach argues that the influence of new economic ideas depends on the institutional configuration of the state, creating administrative biases and bureaucratic capacities, and prior experience with related policies, suggesting the importance of path dependency. The key point of explanation within the coalition approach is that policies must mobilize broad support among a wide coalition of socio-economic groups on whose votes and support politicians depend in order to be elected. Although these perspectives emphasize different key drivers in accounting for the influence of ideas, they could also be seen as complementing each other in a broader explanatory framework emphasizing the role of institutions and politics. Policy paradigms, and more focused or practical policy stories (Ney 2003), are applied by various actors in the ongoing debate on pensions at the national and the international level.2 The next section describes the main paradigms and analyses some of the key actors within the EU and the OECD.

POLICY ACTORS AND PENSION PARADIGMS WITHIN THE EU AND THE OECD Pension Policy Paradigms and Patterns of Interaction of the Two International Organisations At the global level, two distinct pension paradigms can be identified: the multi-pillar paradigm of the World Bank (WB) and the social insurance paradigm of the International Labour Organisation (ILO) (see MaierRigaud in Chapter 8 of this volume). How should we place the EU and the OECD relative to these distinct paradigms? This is not easy as neither of these organizations has formulated any explicit model, or could have in the case of the EU. However, within the EU, the Open Method of Coordination (OMC) on pensions has created some common goals which member countries have agreed to try to reach. Analysing the OMC


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pension discourse as laid out in the Joint Reports (European Commission 2003, 2006b), the following key elements were identified (Ervik 2006). Firstly, the issue of financial sustainability takes precedence over the goal of adequacy. To obtain sustainability there is a need to raise employment rates and to stem growth in public pension expenditure. Secondly, this argumentation implies a new division of pension pillars by increasing the role of occupational and private pensions. Thirdly, it entails internal normative changes of pension pillars by strengthening traits known from private pension insurance. Fourthly, seen as a pension model, the OMC on pensions promotes a ‘hybrid model of pension provision’ (Ervik 2006, p. 37) containing elements from systems with a strong base of private pensions (as in the UK), minimum pension guarantees (Nordic countries), and earnings-related pensions (Continental countries). As in the case of the EU, the OECD does not specify an explicit pension model, but the organization has specified some action principles for age-related reforms that were set out in the publication: Maintaining Prosperity in an Ageing Society (OECD, 1998) and in a follow-up report (OECD 2000). The principles most relevant for pensions are: 1. 2.

3.

Reform of public pension systems to remove financial incentives to early retirement. Fiscal consolidation should be pursued, and public debt burdens reduced. This could involve phased reductions in public pension benefits and anticipatory hikes in contribution rates. Retirement income should be provided by a mix of tax and transfer systems, funded systems, private savings and earnings (OECD 1998, pp. 18–19).

The overall objectives were risk diversification, a better balance of burden sharing between generations, and giving individuals more flexibility over their decision to retire. In more detail, the first principle involved linking contributions and benefits on a lifetime basis (actuarial fairness) and moving strongly towards actuarial neutrality of pension benefits for people who retire earlier or later than the standard retirement age. The third point, specified in more detail, points toward some key elements of the foreseen structure of the retirement income system: reducing the size of public pension benefits where these are now unnecessarily high. Once poverty alleviation goals have been met, the total amount of an individual’s retirement income should not be a goal of public pensions in isolation but reflect individual choice based on all resources available on retirement. (OECD 2000, p. 48)

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This suggests a reduction of public responsibility in terms of guaranteeing a targeted replacement level, or that the target should be less ambitious than hitherto. Instead a greater responsibility is put on individuals in securing their chosen pension level. A new balance of pension tiers or pillars is foreseen, strengthening occupational pensions and private provisions in order to obtain a diversification of risks. With reference to basic security and poverty alleviation, the OECD argues in favour of targeting spending through means such as refundable tax credits: ‘operating at unobtrusive and low costs. However, a low basic minimum to all also has merit, including fewer work disincentives’ (OECD 2000, p. 48).3 All this is based on a diagnosis of the traditional system of pay-asyou-go (PAYG) financing with a high degree of public involvement, which finds that system to be highly unsustainable in the long run. A core element of this policy paradigm is the view that strong public involvement, especially through tax financing, has distorting effects on the output of the economy and therefore contributes in making the ageing challenge in terms of financing even more severe: ‘taxes are already sub-optimally high in many countries and raising them would further harm growth’ (OECD 2005a, p. 32). This is also considered to be the least generationally fair option, as it puts a heavy burden on future workers. Therefore financial sustainability implies a move away from tax financing, towards contribution-based systems adhering to principles of actuarial fairness and neutrality. To sum up, the key message from the OECD is that pension reforms need to ensure that growth in public spending is reduced, that occupational and private pensions play a stronger role in the future and that systems are increasingly based on actuarially fair premiums. Also, work incentives should be improved and forms of automatic demographic adjustments should be introduced.4 The above pension policy paradigm has its stronghold within the Economics Department and the Economic Development and Review Committee (EDRC), which has responsibility for the Economic Surveys (OECD Interview No. 2 2007; OECD Interview No. 6 2007). However, the reform agenda of these policy actors is not hegemonic within the OECD. Recently, there has been increasing focus on questions of adequacy within the organization. This work is developed within the Directorate for Education, Labour and Social Affairs (DELSA) and has resulted in the publication of the Pensions at a Glance Series (OECD 2005c). Importantly, this publication is produced in cooperation with the European Commission, and the OECD applies the model to calculate replacement rates in pensions that is used within the OMC (OECD Interview No. 2 2007). The aim of the work is to increase the attention


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given to the social sustainability of pension systems. It is too early to judge the extent to which this increasing focus on adequacy will alter the reform principles of the OECD. Comparing the OECD pension policy discourse with the OMC pension discourse we can see strong parallels in the framing of the sustainability issue, and in terms of advocating a stronger role for non-public sources of retirement income. Still, it is fair to place the EU somewhat more to the ‘left’ of the OECD, since the common goals of the OMC on pensions contain a stronger reference to goals of adequacy and solidarity than do the reform principles of the OECD. In addition, the pension models of these organizations could be very roughly placed between the ILO and the WB, when these are placed at opposite ends of a continuum. In presenting the development of the pension model on adequacy within the OECD, one interviewee describes a highly interactional learning mode between member countries and the OECD: [T]he way this works, is that we started by collecting information from the internet from the countries . . . and from correspondence we drafted our understanding of their pension systems. They corrected us, so we have a correspondent from the Ministry, usually the Social Affairs ministries, sometimes it is also Finance Ministry or the Pension institutions, they corrected what we have done, they give us up-to-date information. We construct the model, we send them the result, they check our result. When they find them strange, they say we have a feeling there is something strange going on, did you misunderstand some component of our system or so? And so we do this every two years and this one is the first [that is, the 2005 report]. (OECD Interview No. 2 2007)

By this iterative and interactive mechanism, the aim of the research was to bring out the policy aspects of pension systems. Similar interactive mechanisms are also involved in the making of the Country Surveys of the OECD (OECD Interview No. 6 2007) and parallel descriptions of the interaction between member states and the European level. It also points to a strong dependence of the OECD (and also the EU) on national stocks of (pension) knowledge. In terms of flows of ideas and knowledge there is thus a more-or-less constant exchange and interaction between the two levels. Initiative arises at the international level, or: [I]t happens very frequently that in different Member States, facing a particular national challenge about changing a mindset, as in Germany on family and demographic issues, rely on the European framework for facilitating that mind change. So to supporting their point in the national, internal debate with the argument that ‘look, it’s not just a matter for us, it is an overall recognised important matter by all our partners in the EU’. So there is a sort of mirror play game. (EU Interview No. 1 2007)

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However, as will be described later, not all member states are equally eager to rely on the European framework in order to facilitate change. This will depend on the national context and vary from one policy area to another. As was explained above, on balance the understandings and approaches of these two organizations are fairly similar, and so they should not be seen as competitors in the international market for pension ideas. Instead, cooperation and a certain division of labour characterize the interactions between them. The Commission views the OECD as an important organization, especially when it comes to doing technical analysis and reviewing policies. The organization is not considered as a competitor but as an actor with which to cooperate: [T]hey have micro-modelling which is much more sophisticated than what we can do. We financially support the work of the OECD, but when it comes to policy development, taking into account the role of social partners, the role of NGOs, the interaction between the economic and social field or the employment sector, then we are better placed than the OECD, is our view . . . Very frequently the OECD is called up to present its findings and we build upon that referring to those findings. But we feel that they are OECD work so they should also apply in Australia, New Zealand, Japan, USA that in our view is a very different social setting. So we do not want to be compelled by these OECD analyses, we insist to translate this into the in our view more typically European social model. But we want to build on the strength of the OECD, not to be put in a situation of competition with the OECD. That we cannot do, even if we have, of course, our own expertise, on social issues based on the work of the EUROSTAT and a lot of investment in social indicators. (EU Interview No. 1 2007)

The relationship is seen as harmonious, that is, the knowledge produced within the OECD is not seen as framing EU policy in any way but is easily translated into the EU context. Actors, Ideas and Power within the OECD and the EU The description and analysis of EU and OECD pension policy actors reveal a picture of heterogeneity, that is, there exist some internal divisions in terms of epistemological and ideological outlook. Thus within the EU we find a division between economically-oriented actors and socially-oriented actors, manifested for instance through the division between the different committees within the OMC on pensions, where the Social Protection Committee (SPC) has responsibility for adequacy and the development of indicators to cover that aspect, whereas the Economic Policy Committee (EPC) has responsibility for financial sustainability and indicators in that field. This is done by the Indicators Sub Group


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(ISG) for adequacy in pensions, and the EPC working group on Ageing Populations (AWG) for sustainability. These sub-groups can be seen to resemble some sort of epistemic communities (Haas 1992). There is thus, seemingly, a balance between the economically- and the socially-oriented actors, but in reality the power tends towards the economically-oriented actors for several reasons. Firstly, the SPC and the EPC report to different Council formations and Commission Directorates with unequal amounts of power. The ECOFIN council and the DG ECFIN are considered to be more powerful than the DG Employment and Social Affairs: Because it is well established ECOFIN is a very powerful Council. I would say up until now the Employment Committee (EMCO) has been even stronger than the SPC. The problem with the SPC is because of diversity, it covers four different areas. Although we don’t do much work on making work pay because we get involved with joint opinions with [EMCO] but primarily that is really for the EMCO. And the other three areas I don’t think there is a single member state now where it works in the stream responsible for social inclusion, pensions and health. So it means that you got a more fluid . . . different people coming in and out, whereas in EMCO and EPC it will be the same people at every meeting. And I think that is one of the reasons why we are weaker. (EU UK Interview No. 3 2007)

Secondly, the SPC has a more varied agenda than the EPC, which focuses on economic sustainability and public pension expenditures. Thirdly, the EPC has more frequent meetings than the SPC, which also has a higher turnover of representatives than the EPC. The more homogenous discourse within the EPC, the permanency of delegates, the more focused attention on the issue of sustainability, and the earlier institutionalization of the sustainability aspect within pensions, which is the responsibility of the EPC, suggest that this committee has a stronger capacity for influence than the SPC. In addition, the economically-oriented actors within the EU are even further strengthened by the powerful Financial Committee, which is seen as substantially more influential than the EPC (EU Interview No. 1 2007). Thus, within the OMC on pensions, we find on the one hand socially-oriented actors and on the other hand economically-oriented players (EU Interview No. 1 2007; EU UK Interview No. 3 2007; Pochet 2003). Also within the OECD there is a division between what interviewees have named ‘softies’ versus ‘hardliners’, ‘left vs right’ (OECD Interview No. 2 2007; OECD Interview No. 6, 2007). Within social policy, the first group is associated with the Directorate for Education, Labour and Social Affairs (DELSA), whereas the Economic Development and Review Committee (EDRC) and the Economics Department are the home of the more economically-oriented actors. Clearly this is a rough distinction, and

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there will also be variations within these two groups. Still, the existence of various voices within the OECD is no guarantee that these are reflected in the recommendations of the organization. It is still the case that the economically-oriented actors are in a stronger power position than the social ones. This should come as no surprise since the original rationale for establishing the organization was to advocate free trade and contribute to economic growth. Economic policy and economics is more strongly institutionalized than social policy and the Economic Surveys are seen as one of the flagships of the organization (Marcussen 2004).

PENSIONS RECOMMENDATIONS OF THE OECD AND THE EU IN NATIONAL CONTEXTS In this section, the recommendations of the OECD for Norway and the UK, as well as the country surveys of the Joint Reports, will be scrutinized to see the extent to which there is concordance or not between recommendations and policy reforms planned or actually made. This analysis also enables us to explore the internal ‘struggles’ between the socially- and the economically-oriented actors, by looking at the recommendations as expressions of this internal interface. This section will also account for the importance of bilateral and multilateral contacts for learning and idea exchange in pension policy. Norway: Look to Sweden OECD Economic Surveys on Norway: closing the future fiscal gap, work incentives and securing actuarial fairness The Country Surveys have a formalized and standardized set of procedures. The outcome of the Surveys is the result of an interaction between the Ministry of Finance and the country desk of the OECD. This means that policy ideas flow both ways and sometimes the government argues for strengthening recommendations in the Survey that are considered to be important, but highly sensitive at the domestic agenda level (OECD Interview No. 6 2007). The Economic Surveys of Norway have increasingly focused on the need for pension reform. During the 1990s the main concerns of the OECD in the area of pensions were to reduce the costs of public pension schemes by relying more on occupational pensions in the private sector, to reduce minimum pensions, to reduce earnings-related National Insurance Scheme (NIS) pensions, to reduce the number on disability pensions by tightening eligibility criteria, and to raise the effective retirement age (Kildal and


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Kuhnle 2004, p. 66, table 5.2). Apart from reducing the minimum pension, the recommendations were in concordance with Norwegian policy development, according to the authors. The 1995 Survey contained a detailed analysis of ageing and public finance, and recommended saving a growing portion of the petroleum revenues to finance future pensions, increasing the age of effective retirement, arresting the increase in early retirement, creating incentives for deferred retirement, and reducing the favourable tax treatment of pension benefits (Antolin and Suyker 2001, p. 28). Both the 2001 and the 2004 Surveys have focused on the long-term sustainability of the pension system. The 2004 Survey (OECD 2004a) argued for reforms to reduce spending on the public pension system. In this report, the OECD also commended the conclusions of the Norwegian Pension Commission. Their proposals were seen to: ‘fit in well with OECD-wide best practice reforms’ (OECD 2004a, p. 23). Table 7.1 sums up the recommendations of the 2005 survey, which contains a chapter on pension reform; the table also includes some recommendations from the 2007 Survey. I have also characterized what type of recommendations these are, that is, whether they are seen as contributing to securing sustainability, strengthening work incentives, improving adequacy or a combination of these. In summary, the recommendations have been fairly consistent over the time period and have been informed by three core objectives: to secure financial sustainability of public pensions, to install the principle of actuarial fairness, and to provide work incentives. In terms of the recommendations, there are few signs of a possible impact of the social or ‘softies’ side, as the recommendations still reflect the pension policy paradigm of the Economics Department and the EDRC. At a general level of pension policy paradigm we find strong parallels between the OECD and the reform proposals of the Pension Commission. Given the highly interactional pattern in terms of ideas between the country desks and missions on the one hand, and Norwegian actors on the other hand, this should come as no surprise. However as will be shown below, it was the reform of a neighbouring country that had the strongest impact when considering ‘foreign’ influence. The importance of Swedish reform ideas In many of the publications on the Norwegian pension reforms, the OECD points to Sweden as a reference for the Norwegian reforms. This view is also clearly stated by one of the national actors interviewed, who was centrally engaged in the Pension Commission’s work. When asked about outside inspirations from countries or international organizations, the interviewee said that Norwegian reform work ‘very much looked

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Financial sustainability, (generational fairness) Enhance work incentives (actuarial neutrality), financial sustainability Enhance work incentives, financial sustainability, increase fairness

Do not index pension and minimum benefit guarantees to wages Remove subsidies to early retirement schemes

NIS old age

Occupational pension schemes within public sector

Early retirement

Align the public-sector early retirement conditions with the objectives of the NIS reform, i.e. on actuarially fair terms Enhance work incentives, Reform public sector schemes: phase financial sustainability, out guaranteed ⅔ replacement rate to increase fairness be coherent with a flexible actuarially fair scheme, + consider switch from PAYG to funding

Enhance work incentives, financial sustainability, increase fairness

Promote actuarially fair retirement schemes

NIS old age

Non-NIS schemes, early retirement

Main goals

Recommendation

No action

Yes, White Paper October 2006 preserves key principles: all years to count, life expectancy adjustment, but more progressive benefit structure. Maintain long term fiscal savings (3% of GDP) Yes, partly: indexing benefits to prices and wages No, government has signalled to increase subsidies contrary to OECD advice No action

Implementation

OECD recommendations for the Norwegian pension system: OECD Economic Surveys 2005 and 2007

Pension scheme type

Table 7.1

149

Sources:

Implement October 2006 proposals (see Enhance work incentives, Yes above) financial sustainability, increase fairness Government has announced Enhance work incentives, Reform AFP and public occupational financial sustainability, future changes in line with schemes after introduction of recommendation increase fairness flexible retirement from age 62 within the NIS based on actuarial adjustment, in a way consistent with the NIS reform (i.e. actuarially fair adjustments). Green Paper May 2007: Strengthen work and Transfer assessment of disability recommends no transition of flexible combination of benefit eligibility to NIS doctors and disability assessment from GPs. benefits and partial work, vocational experts to reduce GPs’ Recommends increasing review financial sustainability conflict of interest, regular review of entitlements and improve of disability entitlements, extend incentives for combining work possibilities of combining work and and disability benefits partial benefits

Financial sustainability, Green Paper 2007: Remove incentives to move on to a increase fairness (between recommendations in line with disability pension rather than take up schemes) these principles an actuarially fair notional defined contribution scheme (NDC) as proposed in the reforms Abolish distortions due to taxation Enhance work incentives, No action financial sustainability

NOU (2007: 4); OECD (2005a, 2007); Pedersen (2007); Stortingsmelding (2007).

Disability pension

Early retirement

Income taxation and incentives to work 2007 Survey NIS old age

Disability pensions

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to Sweden’ (Norway Interview No. 1 2007). The Swedish reform work was characterized as being both very thorough and ground-breaking, managing to create a balanced system with contribution-based and noncontributory elements in line with values that are strongly held in the Nordic countries. The contact with Swedish policy actors was close and a lot of details on the Swedish reform crossed the border very easily, and thus could be fed into the Norwegian reform process directly. In terms of ideas, the interviewee specifically mentioned the ‘idea of automatic stabilization elements’, a central feature of the Swedish National Defined Contribution system, which aimed at automatic adjustments of the system to take into account economic growth rates as well as demographic change, without political interference. The demographic adjustment factor, the lifetime earnings principle for pension benefit accrual, and flexible pensioning, were seen as imported from Sweden. In addition, the method of organizing the policy process, by setting up a commission including all the political parties, was also a copy of the Swedish reform process, aimed at creating a broad political consensus among the political parties without too much interference from organizational interests, especially from the unions with their presumably strong veto power. In terms of consensus, the Pension Commission was successful in including all parties behind the main principles of reform, apart from the left-wing Socialist Left Party and the right-wing Progressive Party. In addition, the interviewee pointed to historical and institutional reasons for looking to Sweden that reveal close similarities between the two countries, specifically pointing out that: ‘It was natural, since we in fact imported our pension system from Sweden in the 1960s’ (Norway Interview No. 1 2007). Figure 7.1 offers support to this view. It is based on a search for keywords (countries and international organizations) in the Green Paper of 2004 (NOU 2004: 1). The keyword search should only be interpreted as exploratory and as a very crude indicator of attention to possible outside pension ideas. Clearly some of the references will, for instance, be to comparative statistics, whereas others will have more substance in terms of discussing or exemplifying outside experience. With these caveats in mind the search gave the results detailed in Figure 7.1.5 The key word search reveals a strong focus on Sweden and the Swedish reform, but much reference is also to the OECD. However, in the OECD case this often concerns OECD countries and OECD as a source of knowledge and comparative statistics. The main proposals issued in the 2004 Green Paper (NOU 2004: 1) were strongly influenced by the Swedish reform ideas and their concern with long-term sustainability, and this also implied that the Ministry of Finance and its experts became the key framers of the reform content. The


151

Number of references

140 120 100 80 60 40 20 0 Sweden

OECD

EU

Finland

Denmark

US

Countries/International Organizations

Source:

NOU (2004: 1).

Figure 7.1

Reference to country/international organizations in the Norwegian Pension Commission report

result was that some important distributive issues became somewhat of a secondary concern. Thus, calculations revealed that the flexible retirement option was not a real choice for those on low incomes, many of these being women, because the pension benefit they would get was too meagre to live on. The focus on the demographic adjustment factor introduced to secure generational fairness implied that intra-generational inequalities, such as differences in health status and longevity, were a blind spot of the Commission’s work. After the publication of the report, the flexible retirement option was criticized by the labour organization, LO. Also, within some of the political parties, politicians argued in favour of a more redistributive system. The final outcome of the process was that future savings were somewhat relaxed, which enabled a higher yearly pension accrual (increasing from 1.25 to 1.35), but at the same time the upper ceiling for pension accrual was reduced from 8 times the basic amount (G) to 7.1G (Arbeids- og Inkluderingsdepartmentet 2007; Stortingsmelding 2007). The end result could thus aptly be described as: ‘Sweden light’ (Norway Interview No. 1 2007). We have seen that the pension paradigm ideas on financial sustainability adopted from Sweden, and particularly the idea of automatic stabilization elements, was a core element informing reform understanding in the Norwegian context. Institutionally, the generational fairness and sustainability view was already strongly anchored within the Ministry of Finance, whose experts could be seen as constituting an epistemic community.6 By involving all the political parties and trying to depoliticize the pension

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issue, this opened the way for a stronger role for neutral economic expert analysis, creating a consensual reform framework that the major parties could adhere to. This strategy was fairly successful in terms of obtaining the main goal of the reform: to secure future financial sustainability and strengthen the principles of generational and actuarial fairness. In this way the Norwegian case demonstrates the importance of linking together ideas, institutions and power in explaining reform outcomes, as argued in the introduction. It also illustrates how ideas taken from individual countries influenced the reform process more than advice from international organizations did. Finally, it exemplifies learning within the same welfare state family and so resembles the pattern found in the UK case, which is scrutinized in the subsequent section. The UK: Policy Learning within the Family OECD Surveys and UK pensions: questioning the voluntary approach In the 1990s, UK pension policy was not a key focus of OECD Country Surveys. The 1994 Survey briefly mentioned the pensions area with the observation that there was no serious problem with UK pension policy (Manning 2004, p. 207). However, since the turn of the millennium, pensions have been increasingly focused on. The Survey for 2002 (OECD 2002) raised worries about the level of savings and whether these were high enough to secure future adequacy. The gradual shift of pension provision from state to private has been accompanied by a more complex three-tier structure. The survey noticed that a high percentage of the population did not make sufficient contributions to a private pension. In addition, the existence of means testing created disincentives to saving, and finally, the current income- and asset-tested system of public pension income and the differential indexation of these benefits would increase the numbers of pensioners dependent on the Minimum Income Guarantee (MIG ) (OECD 2002, pp. 78–80). In order to address the adequate savings problem the OECD recommended the government to consider the introduction of a minimum level of contributions to private schemes. Recommendations also involved reform of the Basic State Pension (BSP), MIG and its interaction with Pension Credit and other benefits, to reduce complexity and savings disincentives. Better regulation of private pensions was also recommended. The key recommendation of the 2004 Survey was to consider a rise in the level of the BSP if income inadequacy on retirement remained a problem, though such measures should not be allowed to destabilize public finances (OECD 2004b, p. 225). The OECD Survey for 2005 devoted a specific chapter to pensions and


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contained several policy recommendations for pension reforms (OECD 2005b). Table 7.2 sums up some of the key recommendations of the OECD. There is also here a high degree of concordance between OECD recommendations and those presented by the Pensions Commission.7 There is more focus on adequacy issues than in the Norwegian case and recommendations stressing the importance of creating a system that avoids disincentives to saving. As part of this worry over incentives and adequacy, the OECD recommends increasing the value of the basic pension. However this would increase future public spending, and to reduce this, the organization argues strongly in favour of raising the State Pension Age, at least in line with the increase in life expectancy. Whereas the Pensions Commission and the government expressed worries about the fairness of such measures because of low life expectancy within lowincome groups and in some parts of the country, the OECD argued that: ‘differences in life expectancy among low-income groups due to the greater prevalence of smoking, drinking or obesity are issues better tackled more directly through public health policy’ (OECD 2005b, p. 80). Thus, the importance of securing future financial sustainability by avoiding, as far as possible, any increase in public pension spending, gives preference to concerns over distributive fairness. European Commission Joint Reports on Pensions: evaluations and advice for the UK Since the OMC on pensions was established in 2001, there have been two full rounds with National Strategy Reports and Joint Reports. What are the challenges, evaluation and advice given to the UK through this process? The country chapter of the Joint Report (European Commission 2003) addresses the adequacy question, indicating a strong growth in pensioners’ income in the period 1979–1996, where net income rose by 64 per cent as compared to 34 per cent for average earnings. However, for the poorest fifth of pensioners, growth was only 30 per cent. Growth in occupational and private pensions, which benefited most pensioners apart from those at the lower end, explained this development. The Minimum Income Guarantee (1999) raised the income of the poorer pensioners, but the means testing of the scheme severely punished the saving efforts for those on low income eligible for the MIG. To address this adequacy challenge the government introduced the Pension Credit to replace the MIG in 2003. The Credit has a less severe income test than the MIG, and so has fewer negative incentives for saving. The State Earnings Related Pension Scheme (SERPS) provided only small entitlements, and 60 per cent of employees contracted out into occupational and private pensions. A key challenge was to secure access to opportunities for additional provision in

154

Occupational pensions

Taxation of pensions

State Basic Pension

State Basic Pension

Reducing complexity of the current Build consensus and Key point in Pensions Commission system increase certainty reports 2004, 2005, 2006 Reduce complexity, Basic pensions and Pension Credit is Reduce reliance on means testing, enhance adequacy to rise in the long term in line with particularly its projected growth in average earnings, starting from 2012. the future: raise basic pension, Contributory period reduced to 30 remove link to contributions, index years for full entitlement to BSP to future earnings rather than prices Increase state pension age at least Fiscal sustainability, White Paper 2006: steady rise in the in line with rising life expectancy generational fairness state pension age as people live longer. Increase from 65 to 66 from 2024–26; additional increases by one year in 2034–36 and one year also in 2044–46. Lower cap on tax subsidies to Better targeting Government introduces a single and pension savings towards low and simplified tax regime from April 2006, medium incomes but no targeting towards low and medium incomes Increase coverage, (See below) Change the default option so that employees automatically contribute secure adequate savings to company pension schemes, unless they specifically opt out

Implementation

Overall pension system

Main goals

Recommendation

OECD recommendations for the UK pension system: OECD Economic Survey 2005

Pension scheme type

Table 7.2

155

Sources:

Increase pension Contingent on eliminating, or at savings to secure least constraining the extent of adequate pensions future means testing of state pensions, and if other steps to encourage private savings were judged to be unsuccessful, consider introducing mandatory savings in a second reform stage. This could be collected by the state but administered by the private sector. This should be accompanied by a reduction in the fiscal subsidy to such savings for higher income earners

Pensions Commission, White paper 2006: Automatic enrolment into a new National Pensions Savings Scheme (NPSS) system of low-cost personal pension savings accounts with provision for an employer contribution. These personal accounts are due to take effect from 2012

Department for Work and Pensions (2006); OECD (2005b, p. 81); Pensions Commission (2006).

Mandatory saving

156


order to improve living standards. The introduction of the State Second Pensions (S2P) scheme to replace the SERPS, in place from April 2002, aimed at helping those on low incomes to build up more entitlements. The strong reliance on private provision and the complexity of schemes represented a challenge in terms of supervision. In addition, whereas historically these schemes have produced high returns, the recent downturns in stock markets have worsened their situation. According to the report, this may have caused an increased interest in defined contribution schemes by employers. The sustainability of public pension expenditure was seen as being well secured into the future. Projections from EPC at the time showed a decrease in spending from 2000 to 2050, from 5.5 per cent of GDP to 4.4 per cent. Apart from the more modest role of public provision, in comparison with other countries, this was caused by the indexation of basic pensions to prices so that their value in relation to earnings would decline. The strategy for keeping the public expenditure low in the future entails focusing public spending on lower income groups and encouraging private provision. The overall evaluation of the UK by the EC is positive, the progress towards addressing adequacy is noted, but further evaluations of the strategy have to wait, to see the extent to which access to occupational and private pensions can encourage people to save enough. The report also points out that for those who are now nearing retirement, working longer is the most efficient way to secure their living standards. In this connection the measures to increase increments for deferring retirement are commended. Concerning financial sustainability, this is considered to be well under control, but the report stresses that reliance on private providers also involves a risk: ‘If private provision produces significantly less than the anticipated coverage or level of pensions, future governments may face increased claims of means-tested benefits’ (European Commission 2003, p. 161). The country summary of the 2006 Joint Report (European Commission 2006a) finds that although the poverty rate for those aged 65+ in the UK (24 per cent, 2003) is above the EU average (18 per cent, 2003), due to recent reforms of the S2P and Pension Credit, state pension adequacy has been improved, and poverty rates are expected to decline further as the full effect of the Pension Credit appears. Concerning financial sustainability, public spending is under control and employment rates of older workers are already high. The report reiterates the point made in the 2003 report, on the need for older people to stay longer in the labour market to increase their old-age income. The greater reliance on private provision in terms of adequacy and sustainability makes access to these forms of saving a key challenge. In relation to this, the report pointed out that the


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shift to defined contribution schemes has been accompanied by lower than average contributions to these new schemes, which may suggest less generous occupational pensions in the future. The evaluations in the two reports are positive, especially those regarding the financial sustainability of public pensions, but also concerning improvements made in poverty figures. There is somewhat more concern with the income replacement part of the adequacy goal, and the extent to which the voluntary approach is effective in ensuring that all individuals save enough. In general, the country fares well according to the report, and there is no direct critique of policy choices. How is this OMC process viewed by UK policy actors, and how is it considered to be of importance in terms of learning? It is limited for the UK. We don’t get that much learning from other Member States in terms of pensions reform as a result of the EU process because our pension system is so different from other Member States. Yes, we talk a lot with the Dutch and the Irish because they also have a well-developed second-pillar pension system, occupational pension system. But we did that before OMC came along. We are interested, like virtually everybody else, our ministers have been to Sweden to learn from the Swedes. But again, we would have . . . we did that . . . we went with the ministers before OMC was invented. (EU UK Interview No. 3 2007)

The interviewee identified the OECD as a more important organization, in terms of economic policy and pension policy ideas, than both the EU, through the OMC on pension process, and the work done by the ILO (OECD Interview No. 2 2007). However, bilateral or multilateral contacts with countries within the English speaking ‘family of welfare’ were seen as being of primary importance: That’s one of the things about the UK, we are interested in what is going on in Europe but have very close links with the English speaking countries Australia, New Zealand, US, Canada and for years we had very, at senior levels, bilateral or multilateral meetings on policy operational issues in social security . . . literally the permanent secretary, the head of our departments would meet every year to 18 months and it used to be those five countries. And ten years ago Ireland joined as well so it is now six countries. (EU UK Interview No. 3 2007)

Thus, in terms of pure social security, these contacts were seen as definitely more important than the EU, when it comes to policy ideas and as sources of inspiration and guidance, because there were more similarities. This was also true in terms of what the UK has done in operational terms. This closely parallels the findings of the Norwegian case as described above.

Number of references

158


30 25 20 15 10 5 0 Sweden

US

OECD

EU

Australia

Nether lands

Ireland

Countries/International Organizations Source:

Pensions Commission (2004).

Figure 7.2

Reference to keywords in the 2004 UK Pension Commission report

A keyword search based on the same procedure as in the Norwegian case was applied, to search for references to outside countries and organizations. The keyword search was done on the Pensions Commissions report of 2004 (Pensions Commission 2004). The results can be seen in Figure 7.2, bearing in mind the caveats mentioned in the Norwegian case.8 The pattern revealed is roughly in line with the statement of the interviewee, as there are more references to the OECD than to the EU. Englishspeaking countries such as the US, Australia and Ireland are often referred to, and the Netherlands also seems to be a natural reference, because of its occupational pension system. However, the Swedish case seems somewhat at odds with the ‘within the family of welfare’ argument. A closer look at the references to Sweden reveals that much of the discussion concerns the Notional Defined Contribution (NDC) scheme.9 Also, in the second report, containing the recommendations for pension reform, the Swedish case is discussed in relation to the proposed National Pension Savings Scheme (NPSS), the question of compulsion or voluntary forms of enrolment, and whether to move to an NDC system within the basic pension system. In both cases the recommendations were not in favour of the NDC. The method chosen in the latter case was to increase State Pension Age in line with life expectancy. For the NPSS, the chosen solution was a so-called auto-enrolment scheme, where all are automatically enrolled but have a right to opt out, in contrast to a compulsory scheme. This principle was seen as an intermediate solution between voluntarism and a compulsory approach. The inspiration came from New Zealand’s planned so-called KiwiSaver scheme: ‘New Zealand is now planning to introduce auto-enrolment at national


159

level, we believe that this principle should be applied in the UK’ (Pensions Commission 2005, p. 108). This example thus illustrates learning within the family of English-speaking countries. At the same time, the strong presence of the Swedish NDC reform within the Commission’s work indicates that Sweden has become a kind of international model country.

CONCLUSIONS This chapter has addressed the pension reform issue by exploring the role played by the OECD and the EU in shaping the central ideas of national reforms through an interactional and relational process with member states. In addition it has focused on important bilateral (and multilateral) exchanges of reform ideas between countries, taking place outside the realms of these international actors. In the introduction, several questions were asked in order to scrutinize this issue and the following sub-sections sum up and conclude the key findings. Different Paradigms and the Bias of Power within the Two Organizations The analysis of EU and OECD pension policy actors reveals a picture of heterogeneity, that is, there exist some internal divisions in terms of epistemic and ideological outlook. Thus, within the EU, we find a division between economically-oriented actors and socially-oriented actors. In the first case this was manifested, for instance, through the division between the different committees within the OMC on pensions, where the SPC has responsibility for adequacy and the development of indicators to cover that aspect, whereas the EPC has responsibility for financial sustainability and indicators in that field. Within the OECD, economically-oriented actors have their strongholds within the Economics Directorate, through the Economics Department and the EDRC, with responsibility for the Economic Surveys, whereas the DELSA is the home of the more sociallyoriented actors, with concerns for the social sustainability of pensions. In both cases the different groups could be viewed as separate actors within a common but heterogeneous policy community, because of frequent interaction and communication. Both the EU OMC on pensions and the OECD country economic surveillance revealed that power tended towards the economically-oriented actors and the economic sustainability framework. This reflected a history of both organizations, wherein economic perspectives were more firmly entrenched in their institutional set-up and goals than social perspectives. In sum, a more homogenous discourse within the EPC, the permanency

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of delegates, the more focused attention on the issue of sustainability, and the earlier institutionalization of the sustainability aspect within pensions, which is the responsibility of the EPC, suggested that this committee had a stronger capacity for influence than the SPC. Similar patterns of institutional anchoring of these pension paradigms were found within the OECD. Although the sustainability paradigm is more strongly empowered than the redistributive social insurance paradigm within these organizations, this does not mean that it is easily transferred to member states and their pension policies. This will depend on how these relations are structured, and the extent to which domestic policy makers see the policy ideas of these actors as appropriate in their national context. International Actors and Member States: Relations, Relevance and the Importance of Policy Learning within the Family In terms of relations, what I found here was an interactional pattern between member states and the two organizations. Rather than being a process where pension reform ideas are developed at the European or OECD level and then transformed directly to the national level, they are the results of negotiation, debate and the exchange of views between these two levels. Thus, what comes out in terms of policy recommendations is to some extent shaped by domestic actors. This means that the application of variable oriented methodology to measure the impact of an independent variable (ideas of international organizations) on a dependent variable (policy change at national level) is ill-suited to capture these interaction effects (see Hall 2003, pp.381–383). Both for the UK and Norway, bilateral contacts with neighbouring countries were considered to be of more importance than those with the international organizations in terms of providing ideas and examples to learn from. In the UK case, there was a well-established contact network with other Anglo-Saxon countries belonging to the same welfare state family. In the Norwegian case, the key country was Sweden and its seminal pension reform. In this case also, a long history of exchange of social policy ideas and close networks with a neighbouring country within the same family of welfare made Sweden a natural reference. Clearly, this finding cannot be generalized to other fields or other countries. As Lindén (Chapter 6 in this volume) points out in relation to the area of family policy, in the case of Germany the European level was actively used in order to strengthen the domestic reform agenda. This diversity of findings underlines the need for context-sensitive analysis, taking into account both variations between policy areas and national cases.


161

Finally, the EU and especially the OECD could be seen as selective or biased ‘reform boosters’. They have a role as reform agenda framers influenced by a specific knowledge base and an interpretive framework strongly based on economics. For national actors involved in reform processes, reference to these knowledge bases and interpretive frameworks may amplify the role of some domestic actors in the policy debate. However the outcome of such a policy debate is uncertain (see Kildal and Kuhnle 2004) and, as we have seen in the two cases, national institutions and politics are decisive in shaping the concrete reform contents.

NOTES 1. For a more detailed presentation of the two pension systems see Clasen (2005, pp. 93–136); Ervik (2005a); OECD (2005c); Schulze and Moran (2007, pp. 49–97). 2. Policy stories ‘provide a narrative, framed by fundamental normative beliefs about social organizations, that selectively highlights certain aspects of a policy issue while de-emphasizing others’ (Ney 2003, p. 93). Thus, policy stories could be understood as blends of ‘cognitive paradigms’, ‘normative frameworks’, ‘frames’ and ‘programmatic ideas’ (see Campbell 2002). The concept of ‘policy stories’ was spontaneously applied by one of our interviewees (OECD Interview No. 5 2007). 3. Refundable tax credits, also called non-wastable tax credits, denote amounts subtracted from tax liability which are permitted to exceed tax liability. The amount in excess over tax liability is paid out to the tax payer (OECD 1984, p. 9). 4. Although these principles were stated nearly ten years ago they are still adhered to as guidelines for reform. Thus in 2004 these principles were referred to as OECD-wide best practice reforms (OECD 2004a, pp. 23–24). 5. The key word search included both the country name and the adjective form (Sweden, Swedish). The diagram does not show references to countries with 20 or fewer references. Search of countries included Iceland (15 refs), UK (18), Netherlands and Germany (both 12 refs). The World Bank was referred to once, whereas no reference was made to the ILO. 6. Thus Norway and the Ministry of Finance has been one of the pioneering countries in introducing the generational accounting techniques on a regular basis since the mid1990s (Ervik 2005b, p. 45). Epistemic communities are networks of knowledge-based experts articulating cause and effect relationships of complex problems, framing issues for public debate and proposing specific policies to tackle problems (Haas 1992). 7. The Commission appointed in 2002 had as its mandate to report on the need for moving beyond a voluntary approach, which has been a cornerstone in UK pension policy. 8. The key word search included both the country name and the adjective form (US, American).The diagram does not show references to countries with three or fewer references. New Zealand, Canada, Denmark, Germany and Finland all had three references, whereas there were no references to Norway, the World Bank or the ILO. 9. NDC schemes are public schemes where each worker’s contribution is recorded in an individual (notional) account and a rate of return is applied to the accounts. They are notional since ‘both the contributions and the interest accumulated exist only on the books of the managing institution. At retirement, the accumulated notional capital in each account is converted into a stream of pension payments using a formula based on life expectancy at the time of retirement’ (OECD 2005c, p. 25).

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Historical Analysis in the Social Sciences, Cambridge: Cambridge University Press, pp. 373–404. Immergut, Ellen M., Karen M. Anderson and Isabelle Schulze (eds) (2007), The Handbook of West European Pension Politics, Oxford: Oxford University Press. Kildal, Nanna and Stein Kuhnle (2004), ‘Norway: an Amenable Member of the OECD’, in Klaus Armingeon and Michelle Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 60–74. Manning, Nick (2004), ‘Mutual Admiration? OECD Advice to the UK’, in Klaus Armingeon and Michelle Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 197–210. Marcussen, Martin (2004), ‘Multilateral Surveillance and the OECD: Playing the Idea Game’, in Klaus Armingeon and Michelle Beyeler (eds), The OECD and European Welfare States, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 13–31. Ney, Steven (2003). ‘The Rediscovery of Politics: Democracy and Structural Pension Reform in Continental Europe’, in Robert Holzmann, Mitchell Orenstein and Michal Rutkowski (eds), Pension Reform in Europe: Process and Progress, Washington DC: World Bank, pp. 79–110. Noaksson, Niklas and Kerstin Jacobsson (2003), The Production of Ideas and Expert Knowledge in OECD: The OECD Jobs Strategy in Contrast with the EU Employment Strategy (No. 7). Stockholm: SCORE. NOU (2004), Modernisert folketrygd: bærekraftig pensjon for framtida, Oslo: Finansdepartementet, Sosialdepartementet. NOU (2007), Ny uførstønad og ny alderspensjon til uføre, Oslo: Arbeids- og inkluderingsdepartementet. OECD (1984), Tax Expenditures: A Review of the Issues and Country Practices, Paris: OECD. OECD (1998), Maintaining Prosperity in an Ageing Society, Paris: OECD. OECD (2000), Reforms for an Ageing Society, Paris: OECD. OECD (2002), OECD Economic Surveys 2001–2002: United Kingdom, Paris: OECD. OECD (2004a), OECD Economic Surveys: Norway, Paris: OECD. OECD (2004b), OECD Economic Surveys: United Kingdom, Paris: OECD. OECD (2005a), OECD Economic Surveys: Norway (Vol. 2005/17, October), Paris: OECD. OECD (2005b), OECD Economic Surveys: United Kingdom, Paris: OECD. OECD (2005c), Pensions at a Glance: Public Policies across OECD Countries, Paris: OECD. OECD (2007), OECD Economic Surveys: Norway, Paris: OECD. Pagani, Fabrizio (2002), Peer Review: A Tool for Co-operation and Change: An Analysis of an OECD Working Method, SG/LEG(2002)1, Paris: OECD. Pedersen, Axel West (2007), ‘Tapere og vinnere med ny AFP’, Dagens Næringsliv, 15 May. Pensions Commission (2004), Pensions: Challenges and Choices: The First Report of the Pensions Commission, London: Pensions Commission. Pensions Commission (2005), A New Pension Settlement for the Twenty-First Century: The Second Report of the Pensions Commission, London: Pensions Commission. Pensions Commission (2006), Implementing an Integrated Package of Pension

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Reforms: The Final Report of the Pensions Commission, London: Pensions Commission. Pochet, Phillipe (2003), ‘Pensions: The European Debate’, in Gordon L. Clark and Noel Whiteside (eds), Pension Security in the 21st century: Redrawing the PublicPrivate Debate, Oxford: Oxford University Press, pp. 44–63. Salant, Walter S. (1989), ‘The Spread of Keynesian Doctrines and Practices in the United States’, in Peter. A. Hall (ed.), The Political Power of Economic Ideas: Keynesianism across Nations, Princeton, NJ: Princeton University Press, pp. 27–52. Schmidt, Vivien. A. (2002), The Futures of European Capitalism, Oxford: Oxford University Press. Schäfer, Armin (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, 13(1), 70–88. Schulze, Isabelle and Michael Moran (2007), ‘United Kingdom: Pension Politics in an Adversial System’, in Ellen M. Immergut, Karen M. Anderson and Isabelle Schulze (eds), The Handbook of European Pension Politics, Oxford: Oxford University Press, pp. 49–97. Stortingsmelding (2007), ‘Opptjening og uttak av alderspensjon i folketrygden’, Stortingsmelding, 5 (2006–2007). Weir, Margaret (1989), ‘Ideas and Politics: The Acceptance of Keynesianism in Britain and the United States’, in Peter A. Hall (ed.), The Political Power of Economic Ideas: Keynesianism across Nations, Princeton, NJ: Princeton University Press, pp. 53–86.

8.

In search of a new approach to pension policy: the International Labour Office between internal tension and external pressure Remi Maier-Rigaud

INTRODUCTION For decades, the International Labour Organization (ILO) has been one of the major players in global social policy. Today, facing the increasing openness of markets and transboundary trade, the ILO’s labour standards policy has become even more important to set a social framework for economic globalization. Against this background, the policy field of social security seems at first to have “clearly taken a backseat to labour legislation” (Maydell 1994, p. 507) within the ILO. Yet, ensuring adequate social security is still one of the organization’s long-term goals, notably pursued by its Social Security Department. In this chapter, the search of the International Labour Office’s (ILo)1 Social Security Department for a new approach to pension policy is analysed. The search coincides with a substantial restructuring of the Department in 2005. The goal of this organizational reform was to level the hierarchies. The first hypothesis of this chapter is that this organizational reform also enabled a reconciliation of different, partly rivalling policy traditions. Therefore, it is asked whether the new organizational structure can be interpreted as an attempt to reach a consolidated approach to social security. Such a finding would support the general view that changes in the organizational structure of a bureaucracy reflect a shift in policy orientation. This leads to the second hypothesis, that staff members or branches who have gained relative power due to the restructuring are likely to be more influential regarding the policy direction of the new Department. The third and final hypothesis is that external pressure seems to have at least partly influenced the organizational restructuring as well as the development of a new approach. This pressure stems from the emergence of the World Bank pension model during the 1990s. In this view, the 165

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types of ideas dealt with in the new approach are likely to reflect external developments, notably the activities of the Social Protection Department of the World Bank (for example Holzmann and Hinz 2005). The pension policy ideas developed by the Department will be analysed on the basis of Office documents and papers. Among those sources, the discussion paper Social Security For All: Investing in global social and economic development (ILo 2006) is singled out as a seminal account of the new approach to social security. Regarding the organizational structure of the Social Security Department, the website of the Office has been the main source (ILo 2007). The relation between the restructuring of the Department and conflicting policy positions is analysed on the basis of interviews conducted with staff members during September 2005 in Geneva. This chapter is structured in six parts. The first part identifies the Office within the ILO as the main provider of ideas and expertise. In the second part, the restructuring of the Social Security Department and the cleavages (between the former branches) are briefly outlined. In the subsequent three parts the search for a new approach within the Department is analysed using different types of ideas as outlined in a typology by Campbell (2001, 2002). Accordingly, the third part deals with the programme of the Department, namely the development approach to social security, whereas the fourth part analyses the frames used to promote it. The fifth part shifts the attention to the cognitive background of the policy discourse. Here, underlying paradigms in terms of major economic theories, on which the position of the Department is explicitly or implicitly based, are identified. The sixth part draws the chapter to a conclusion.

THE OFFICE WITHIN THE ORGANIZATION In order to get a clear cut view of the ILO’s position on pension policy, it is crucial to identify who is responsible for social policy agenda setting within the ILO. Therefore, it is imperative to distinguish between the IL Organization (ILO) and the IL Office (ILo). The ILO refers to the formal instruments and policies adopted. By contrast, ILo denotes the administration, which is the Office or secretariat of the Organization, providing a broad spectrum of expertise and policy ideas. The position of the Organization consists of the decisions reached by the delegates at the International Labour Conference (ILC). The current official position in the field of social security was put forward in the conclusions adopted at the ILC in 2001 (Social Security: A new consensus, ILo 2001). It is based on the relevant Conventions and Recommendations

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as well as the ILO Constitution (Kulke 2007). The Organization, and more precisely the ILC, is slow to move. This inertia stems from the Organization’s mandate to base its results on broad societal consensus which is reflected in its tripartite structure, bringing workers, employers and government representatives together. As the standards of the ILO have to be applicable in any national context, they are very basic in scope, lacking fundamental advice on the design of social security systems. Clearly, this is the downside of the “social legitimacy” (Bronstein 2005, p. 346) that the Conventions and Recommendations enjoy. Compared to these legal instruments, the policy conclusions2 adopted at the ILC discuss policy alternatives, and hence give more decision guidance for members who want to reform their social security schemes. Nevertheless, it is frequently pointed out that it is “for each society to determine the appropriate mix of schemes, taking account of the conclusions of this general discussion and relevant ILO social security standards” (ILo 2001, p. 4). Thus, in general, the Organization does not provide very detailed or far-reaching policy recommendations. Besides this rather basic official position, more pronounced programmes can be found within the ILo. This administrative body has two main functions: to generate expert knowledge as well as to conduct technical cooperation missions. As the Organization’s think tank, the Office regularly publishes research on social security policy, which, in general, goes beyond the official positions of the Organization. The research undertaken by the Office includes a wide scope of disciplines, mainly law and economics, as well as actuarial science and statistics. In order to diffuse its knowledge and research results, the ILo issues studies, reports and periodicals as well as organizing seminars and conferences. These findings are not exclusively made available to the Governing Body (GB) and the ILC. Quite to the contrary, the Office seeks to draw a wide international attention to its output. In this context, the International Training Centre3 and the International Institute for Labour Studies (IILS)4 are important bodies which contribute and complement the generation and dissemination of knowledge by the Office. Accordingly, the self-perception of large parts of the staff is to see themselves as researchers and the Office as a para-university institution or think tank.5 In addition, the organizational structure of the Office is quite loose and lacks standardized procedures or strict hierarchical relationships.6 Instead, it depends on informal relations to ensure that the administration functions effectively and efficiently. Because of these two factors, the research vocation and the looseness of internal organization, the position of the Office tends to be less stringent than the diplomatic results deliberated within the legislative body (the basic organizational structure is summarized in Figure 8.1).

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‘Think tank’

International Labour Organization

International Labour Organization and Office

GB 5 Governing Body, ILC 5 International Labour Conference

Figure 8.1

Note:

Technical cooperation mission

Office

GB

Administrative

Tripartite

Legislation: Conventions and Recommendations

ILC


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Although the positions found in the Office are not officially adopted by the ILO, they are closely interrelated. First, the knowledge generated within the Office is rooted in the official position and frequently refers to social security standards and ILC conclusions. Some staff members understand their duty as being to strictly apply the officially agreed positions of the Organization in their work.7 Thus, even though the expertise and the concepts generated in the Office go beyond the official position, they are inclusive of the conclusions reached at the ILC. Second, the relationship also runs in the other direction. This means that the conclusions adopted at the ILC are normally based on the work of the Committee on Social Security of the ILC, which draws on inputs from the Office. The conclusions tend to reflect, in a very condensed and diplomatic form, the original input provided by the Office. For instance, in 2001, the 84-page Office report on social security (ILo 2001a) was submitted to the ILC and resulted in 6 pages of conclusions (ILo 2001). Besides the generation of expert knowledge, the other main function of the Office is to conduct technical cooperation. Of course this could be actively used to influence national social security policies, but the comments and proposals made by the Office to individual governments remain mostly technical. For example, the Office helps to conduct actuarial evaluations of existing pension schemes and highlights different problems and solutions without advocating what is in its view the best reform option. This is because the Office has to bear in mind its administrative role within a tripartite organization, which implies that it should avoid, for example, siding with one group of its constituents. Only by regarding the implementation of Fundamental Conventions, and to a lesser degree regarding ratified Conventions, has the Office the possibility of playing a more active and political role (Bronstein 2005, pp. 347–357). In general, technical assistance as available to the Office is an instrument of direct influence on national welfare legislation, which distinguishes the ILO from most other international organizations treated in this book (for example, the EU, the OECD), whose channels of influence tend to be more indirect (on the purely ideational influence of the OECD see also Schulz-Nieswandt and Maier-Rigaud 2007). In sum, the ideas and concepts expressed by the Office go beyond, but do not stand independently from the position of the Organization. But still, why do these positions differ, and what makes it possible to distinguish policy positions expressed in the Office from the officially agreed position of the Organization? The answer lies in the different functions that the Office and the ILC perform. The ILC is a very formal tripartite body, involving strict routines and mainly generating legislation. Thus its organizational structure accounts for slow and gradual policy change based on broad societal consensus. The Office, by contrast, is the Organization’s think

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tank. It moves quickly due to a low level of formality regarding the internal processes and a marked research vocation, but at the price of internal heterogeneity. Relating these findings to the global diffusion of pension policy ideas leads to the conclusion that the Organization’s minimum social security standards are too basic to allow for explicit advice on current pension reform issues. For these policy issues, the ideas expressed by the Office have more direct relevance. Therefore, in the following, there is no reference to the official position of the Organization, but only to the more elaborated, heterogeneous and controversial concepts expressed within the Office.

PROGRAMMATIC TENSIONS AND THE RESTRUCTURING OF THE NEW SOCIAL SECURITY DEPARTMENT8 The Office has four different sectors, dealing with the main issues of the ILO: Standards and Fundamental Principles and Rights at Work Sector, Employment Sector, Social Dialogue Sector and Social Protection Sector. The Social Protection Sector is the smallest of the four. Its budget for the financial period 2006–2007 was about 28 million USD, which is the lowest share compared to the other sectors.9 The Social Protection Sector is composed of the Social Security Department (SEC/SOC), the Labour Protection Department and the Programme on HIV/AIDS (ILO/AIDS). The Social Security Department includes the Strategies and Tools Against Social Exclusion and Poverty (STEP) Programme. The Social Security Department was created in 2005 as a result of organizational restructuring (see Figure 8.2) initiated by the Director General of the ILO, Juan Somavia. His goal was to reduce hierarchy within the Office. In the field of social security, this meant that the formerly distinct branches Social Security Policy and Development (SOC/POL) and Social Security Financial, Actuarial and Statistical Services (SOC/FAS) as well as the InFocus Programme on Socio-Economic Security (IFP/SES) were merged into the newly established Social Security Department under the Director Michael Cichon, who was formerly the branch chief of SOC/ FAS. Thus, the other branch chief positions have been abolished due to the restructuring. The STEP Programme remains largely independent although it was formerly part of SOC/POL and it is now officially part of the Social Security Department. The Department has around 30 full-time staff members. Figure 8.2 depicts the new Department and the different social security doctrines of the (former) branches.10 Since the branches have pursued different approaches to social security, the restructuring was closely linked to the search for a new pension policy

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Social insurance

Development approach to social security

Merged in 2005

Universal benefits

Former SOC/FAS

Universal basic income

Former IFP/SES

Labour Protection Department

Bottom-up strategies

STEP

Programme on HIV

Figure 8.2

The new Social Security Department and competing ideas

Note: SOC/POL 5 Social Security Policy and Development Branch, SOC/FAS 5 Social Security Financial, Actuarial and Statistical Services, IFP/SES 5 InFocus Programme on Socio-Economic Security, STEP 5 Strategies and Tools Against Social Exclusion and Poverty.

Social security doctrine

Former SOC/POL

Social Security Department

Social Protection Sector

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approach by the Department. In order to get a better understanding of the new approach to pension policy, it is important to know the different traditions from which the new approach emerged. The strongest tradition within the ILo is associated with earnings-related, Bismarckian social insurance systems. This social insurance doctrine was deeply rooted in the SOC/POL branch. SOC/POL used to claim for itself the political competencies and regarded SOC/FAS as providing the underlying technical work. This call for a subordination of SOC/FAS resulted from its actuarial tradition. However, this instrumental role did not satisfy SOC/FAS, which had a more practical or technical view on social security that contrasted with the pure social insurance doctrine of SOC/POL. This second tradition of social security thinking within the Department argued that specific social security instruments were needed in order to cover the growing informal sector in developing countries. This difference can be partly explained by the fact that SOC/FAS – unlike SOC/POL – conducted technical cooperation projects, and therefore got a direct picture of the most pressing social security needs and the deficiencies of social insurance. Both SOC/FAS and SOC/POL held a top-down view, which means that sound social security systems on the state level are deemed to improve the security and welfare of people if corruption is sufficiently contained. Thus formal social security systems are considered a crucial element in the delivery of social protection to people throughout the world. This optimism regarding the performance of formal social security systems in developing countries is questioned by those staff members who follow the tradition of the STEP Programme. Proponents of this third tradition argue that bottom-up strategies are more effective, relying for example on microinsurance11 and local development cooperation projects. A fourth line of thought has been cultivated in the InFocus Programme on SocioEconomic Security (IFP/SES). The IFP/SES accentuates the idea of a universal basic income which includes old-age pensions (ILo 2004a). Guy Standing, branch chief of the IFP/SES, was the driving force behind this minority position of IFP/SES inside the Office. In sum, SOC/FAS, SOC/POL, IFP/SES and STEP constituted four distinct traditions of social security thinking. The cleavages between the social insurance doctrine inspired by the tradition of Western Europe, the universal approaches for developing countries, the basic income and the bottom-up approaches, were reflected in the institutional structure of the Social Protection Sector. This diversity in social security thinking, reflected in hardly coordinated or at worst conflicting research agendas, used to be closely linked to the institutional structure. Together, they give an explanation for the many-voiced impression the ILo gave in the field of social security.


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These traditions were cultivated simultaneously in the respective branches and programmes, giving a specific professional socialization to their staff members, although there were possibilities for combining these traditions.12 These grown imprints are unlikely to disappear suddenly with the emergence of the Social Security Department as a result of the fusion of SOC/FAS, SOC/POL and IFP/SES. However, the internal institutional reform is a first step towards a more homogeneous approach in the future. It facilitates the reconciliation of opposing tendencies within the Office and reduces the scope of internal tensions. Therefore, the first hypothesis stating that these internal reforms enable more homogeneous policies is supported, although the programmatic developments are still to be analysed in the next section. In order to reach a more systematic account of the ILo’s approach to pension policy, Campbell’s typology of ideas and their respective influence on policy making is chosen as an analytical framework (Campbell 2001, 2002). Campbell’s structural typology is based on the distinction between the cognitive and the normative level on the one hand and the explicitness of the ideas in the policy debate on the other. Three of his categories are used here: programmes, frames and paradigms. “Programmes” are defined as policy prescriptions offering policy makers a clear course of action. They are policy-field-specific cognitive processes which are located in the foreground of the policy debate. “Frames”, which are also in the foreground of policy making, serve to legitimize policies and to “sell” those policies. “Frames” are normative, since they affect form rather than content. This has been studied in the wider context of behavioural economics, for instance by Kahneman (2003: 1458), who defines framing effects as being in play when “extensionally equivalent descriptions lead to different choices by altering the relative salience of different aspects of the problem”. By contrast, “paradigms” are defined here as basic theories in the background that underpin programmes and frames located in the foreground of policy making: “When programmatic ideas fit the dominant paradigm, they appear natural and familiar and, as a result, are more likely to appeal to policy makers than alternatives that do not” (Campbell 2001, pp. 170–171). Paradigms are used here as a cognitive category that guides the perception and reasoning.

PROGRAMMATIC DEVELOPMENTS: TOWARDS A DEVELOPMENT APPROACH The preceding section has described how internal organizational reform contributed to a consolidation of the ILo approach in the field of social

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security. But what is the content of this new approach? It is hypothesized that the SOC/FAS tradition is going to dominate the future pension policy of the ILo. Since the former branch chief of SOC/FAS, Michael Cichon, became the Director of the new Social Security Department, there should be clear indications of SOC/FAS thinking in the new approach. Unlike the World Bank, the ILo has never constructed a pension model from scratch. Instead, the pension programme of the ILo has a long history and can be described as path dependent, stemming from traditional ideas of social security. For decades, the role of the ILo as a main global pension policy actor was unquestioned (Orenstein 2003). Only gradually after the Chilean pension privatization in 1981 and then during the 1990s when the World Bank entered the pension field, was the dominant position of the ILo challenged.13 Due to this powerful external competitor, the ILo lost some of its prior relevance as pension policy adviser.14 At first, the reaction of ILo staff members towards the external competitor was defensive: pension systems should concentrate on their core function, securing income in old age, instead of trying to foster growth and employment through pension policy (Beattie and McGillivray 1995, pp. 20–21). The extensive reaction of the ILo in 2000 (Gillion et al. 2000) came too late to substantially influence the pension discourse triggered by the World Bank in the mid-1990s.15 Instead, the Office itself came under the influence of the World Bank approach. The interorganizational competition in giving policy advice pressured the ILo, on the one hand, to revise its programme in order to come up with distinctive and more detailed policy recommendations. On the other hand, the Office had to address the issues that were brought up by the World Bank. The Office even adapted the World Bank’s conceptual differentiation between different “pension pillars” (Deacon 2007, p. 65): “The ILO finally produced its response . . . in a textbook style volume on pension policy that de facto opened up the ILO position towards multi-tiered pension systems” (Cichon 2004, p. 3). The fact that funded and defined contribution pillars were included in the pension programme of the Office shows that the global intellectual domination of the World Bank model also affected the policies of the Office (Gillion et al. 2000, pp. 464–478; Gillion 2000, p. 62) and created the impression of a convergence between the positions of the two organizations (Queisser 2000). Besides external pressure, a second influence on the development of a new programme is the persistent and in some parts even growing informal economy in developing countries. The question of how to cover the maximum share of the population by pension schemes and social security in general has increasingly gained attention in the Office recently. Consequently, the Office is discussing new ways and means to extend social security to those working in the informal economy. Besides


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universal benefits and social assistance, innovative concepts such as micro insurance and the idea of a Global Social Trust16 are being developed by the ILo (ILo 2001a, pp. 25–36; ILo 2002; ILo 2004, pp. 36–38). The coverage of workers in the informal economy by pension schemes was on the agenda of the ILC in 2001 (ILo 2001, p. 1). It led to the introduction of the “Global Campaign on Social Security and Coverage for All” in 2003. The Office report prepared for the ILC addresses the problem of coverage and discusses social protection types financed from the general budget, such as means-tested or universal benefits (ILo 2001a, pp. 25–36). Despite the Office being very critical of means testing due to social stigmatization, complicated administrative procedures and disincentives undermining the ability of such social assistance schemes to relieve poverty effectively (ILo 2001a, pp. 33–34), it concludes that “both types of benefit provided by the State can help those who are in greatest need” (ILo 2001a, p. 36). However, the tendency towards recommending tax-financed universal schemes for developing countries was already present in 2001 and has been strengthened since then (Pal et al. 2005; Gassmann and Behrendt 2006; Mizunoya et al. 2006). The intensive research activities of the department finally led to the proposition of a “development approach to social security” (see Figure 8.2). This comprehensive concept implies that different social protection floors should be defined depending on the level of development a country has reached. Concerning old-age pensions, this would result in a dual strategy: low-income countries should introduce universal basic pensions with national and international financing (for example, Global Social Trusts). A social insurance scheme for the formal sector should only be installed if it is affordable. For middle- and high-income countries, the ILO prescribes, very generally, that universal access to old-age pensions with reliable income replacement levels should be secured (ILo 2006, pp. 27–37 and Annex 1). The lack of more specific recommendations for developed countries shows that the attention of the Office is focused on developing countries.17 What is new in this development approach is, on the one hand, the clear recommendation of universal basic benefits and, on the other, the developmental aspect. The latter indicates that the Office is thinking about a departure from its tradition of applying the same standards to all its member countries irrespective of a country’s stage of development. The recognition of the importance of universal basic pensions has to be viewed against the background of the unsatisfactory failure of traditional social insurance schemes and individual savings schemes to reach high levels of coverage in low income countries (Cichon 2004, p. 15): “For too long has the ILO clung to supporting Bismarckian style pension schemes in developing countries as the only means to achieve income security and poverty

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alleviation in old age“ (Cichon 2004, p. 21). This self-criticism expressed within the Office is explicitly related to the World Bank18, which is a clear indication of the rivalry between the organizations. The development approach addresses the question of how to provide coverage for the informal sector without departing from state-based governance solutions. Moreover, it embodies the idea of global solidarity in the financing of social security schemes. These two central features of the approach carry the signature of SOC/FAS. The Director of the Department had already announced this shift of the ILo position in an unpublished paper of 2004 as he pointed out that “the Office now clearly promotes the exploration of universal basic pensions as a component of a basic socio-economic floor” (Cichon 2004, p. 15). This “new tentative ILO paradigm” (Cichon 2004, p. 16) envisaged by Cichon foreshadowed in almost all respects the development approach to social security. Therefore, in line with the second hypothesis, the SOC/FAS approach has clearly established itself through the reform, since its positions have prevailed in recent ILo documents. By spreading the development approach (Cichon and Hagemejer 2007; Kulke 2007) the Office is currently trying to revive the human rights underpinning of its work. The Director and other staff members of the Social Security Department suggest creating a new legal instrument deemed to guarantee and support the implementation of a basic social floor (Cichon and Hagemejer 2007, p. 193; Kulke 2007, pp. 138–140). This renewed interest in setting social security standards can be interpreted as an attempt by the ILo to gain ground in the global pension policy debate with the World Bank. Concentrating on standard setting as the Organization’s comparative advantage is appealing, but it also runs risks. As mentioned earlier, the social security standards are minimum standards and relate to the goals of social security. They are basic in scope and do not make any direct prescription regarding the choice of social security instruments (Kulke 2007, p. 128). If the Office relies exclusively on its Conventions and Recommendations in its policy advice, then a wide range of issues especially concerning the means of realizing social security will no longer be addressed. This is highly problematic, since the design of a scheme is crucial for its efficiency (Cichon and Hagemejer 2007, p. 182). At least in this respect, it would leave the mainstream economic agenda of the World Bank and regional organizations such as the OECD unchallenged.

(RE-)FRAMING THE DEBATE? Generally, the ILo frames its pension policy through a terminology heavily based on a human rights approach, with keywords such as “social justice”,


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“solidarity”, “equity” and “public good”. For example, in the conclusions of the ILC in 2001, social security is referred to as a “basic human right” important for “social cohesion, . . . social peace and social inclusion”. It contributes through “national solidarity and fair burden sharing” to “human dignity, equity and social justice” and is also important for “political inclusion, empowerment and the development of democracy” (ILo 2001, pp. 1–2). The positive, idealistic and noble-minded language is usually combined with references to the social standard-setting competencies of the Organization. This legal approach has an inherent authoritative claim and underscores the legitimacy of the prescriptions. Moreover, by referring to the global scope and the successful history of social security, the ILO tries to sustain public confidence in mandatory, earnings-related public retirement schemes, as the following quotation demonstrates: “profound improvement in social conditions can be attributed to the creation of social security pensions, which must be counted as one of the great social developments of the last hundred years” (Gillion et al. 2000, p. v). This reference to the historic achievements of social security is a framing technique called “transposition”.19 Success stories associated with social security are transposed to the current debate, trying to import confidence and persuasive power. In addition, the Office reframes problems and solutions in order to challenge prior framing by the World Bank. For example, the ILo refuses to speak of an “old-age crisis” and claims that the demographic problem is overrated by the World Bank. According to the ILo, demography is just one factor among economic factors (employment, productivity) and governance factors (such as pension legislation) which, taken together, determine the system dependency ratio. Put into perspective, demographic ageing is no longer a crisis scenario but boils down to a “manageable” challenge (ILo 2001a, pp. 53–55, 2006, pp. 15–17). Thus, the Office frankly acknowledges the need in many countries to conduct parametric reforms20 of pension schemes, based on regular actuarial evaluation. Raising the age of retirement is regarded as an important measure in reducing the financial pressures of retirement schemes. Further reforms that would fundamentally alter the structure of pension schemes are not envisaged by the ILo. Instead, the stability and reliability of public insurance schemes is emphasized and is clearly opposed to the World Bank frame (Deacon et al. 1997, pp. 73–77). In contrast to the crisis framing of the World Bank, the ILo maintains that reform pressures do not come from design deficits of social security schemes, which become apparent due to adverse demographics, but from the globalization context (ILo 2001a, pp. 53–55; 2004a, pp. 21–29; Ervik 2005, p. 40). The problems are framed as triggered by globalization,

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creating poverty and coverage problems, involving serious hardship for large parts of the world population. One important aspect of this frame is the “new uncertainty” (ILo 2006, p. 19) which results from globalization in two ways simultaneously. A first effect of globalization is pressure on the labour market to contain wage costs. Workers are called on to adapt to intensified competition in an increasingly integrated world economy. However, unemployment and discontinuities in career patterns hit the unskilled and low paid particularly hard, since they lack the capabilities to adapt to fast changes. This is often paralleled by welfare state retrenchment as a second indirect effect of globalization: governments perceive themselves in a race to the bottom regarding social spending and tend to follow the World Bank frame of fiscal sustainability. In sum, adverse labour market effects and cuts in the benefit levels of social security that lead to a cumulative deprivation of resources and thus to new uncertainties for large parts of the population (ILo 2006, pp. 19–21), are presented as today’s main challenge for social security schemes. Recently, the ILO reframed its programme by emphasizing the “investment” dimension of social security. Although the Office in general is very critical of privately funded schemes21 there is also a tendency to view them as a chance for economic development (ILo 2005a, p. 13). This reframing is explicitly seen as a necessary reaction to the ongoing global debate: Perhaps sadly, in today’s globalizing world we will only be able to stop the race [to the bottom] if we can show that social transfers are good for economic development while in previous decades it might have sufficed to demonstrate their positive social results. The international social protection policy debate has become one on national fiscal space for transfers in the face of global forces pushing down the overall tax rates. (Cichon and Hagemejer 2007, p. 170)

This newly chosen frame can be traced back to the World Bank’s framing, according to which private, fully funded pension schemes are supposed to result in economic growth effects. Since the World Bank dominates the global agenda, the Office considered itself obliged also to address investment and growth issues. By regretting that social reasons seem not to suffice anymore to make a policy approach convincing, the Office implicitly blames the reframing on external pressure. Still, “investment” is used in a broad sense. Social security schemes are seen as an investment in people and thus as an instrument for social and economic development (ILo 2006, p. 27), for example through productivity gains that come along with higher social security levels (ILo 2005a, pp. 6–10). The framing of social security as a productive factor indicates that in accordance with the third hypothesis, external pressure coming from the World Bank has had an impact on the new Office approach to pension


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policy. Although there is no overall policy convergence between the two international organizations, evidence of the strong implicit influence of the World Bank is especially seen in the frames used by the Social Security Department. Summing up, the Office – apart from its references to social values – broadly uses three frames: the rejection of the demographic crisis frame, the globalization frame and the growth/investment frame. Especially the growth/investment and the demographic crisis frames illustrate the defensive position of the Office in global pension policy issues. Apparently, the ILo is urged to deal with the World Bank view on how pension policies relate to demographic and growth issues. The predominance of the World Bank model in the global debate pressured the ILo to reformulate its pension policy approach. In order not to lose its standing and relevance in pension policy making, the Office has had to address the new global pension policy agenda.

A PARADIGMATIC TRANSITION? The economic paradigms22 guiding the policies of the ILo are far from being evident. Especially with respect to labour market theories and growth theories, the ILo does not embody a consistent paradigmatic foundation for its programme. The argumentation of the Office throughout its various documents changes from neoclassical supply-side economics to Keynesian demand-side and other unorthodox economic thinking. This is problematic since these are strongly opposed paradigms which cannot be reconciled in a consistent way. How social security should be financed is strongly contested. A central argument in this debate is that social security contributions act as a tax on labour, inhibiting growth. Indeed, as long as individual social security contributions are simply perceived as unrelated to the individual future benefit, they have the same effect as a tax on labour (paid by either the employer or the employee, depending on whether wages are rigid or flexible), and thus create distortions in the labour market. Based on this neoclassical paradigm, the Office claims that social security contributions have to be closely related to benefits (Gillion et al. 2000, p. 477), because then the labour supply decision would not be negatively affected. This is the core argument in favour of individual accounts. The alternative, to finance social protection out of general revenue, encounters other problems. It might increase the budget deficit, causing interest rates to rise and thereby crowding out public and private investment. Hence, regarding labour market issues, the ILo adheres partly to the same neoclassical

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paradigm as the World Bank. This is surprising because only a couple of years earlier, ILo experts refuted the view that social security gives rise to disincentives to work (Beattie and McGillivray 1995, pp. 6–7). The Office also considers the potential contribution of national pension savings to growth through financial market development (ILo 2005a, p. 5). This is one of the core arguments of the World Bank in favour of funded schemes (James 1996). It implies that traditional social insurance inhibits growth. Although this argumentation is not endorsed by the Office, the consideration of growth effects is a departure from its earlier position. A few years ago the Office refuted the saving–investment–growth nexus, according to which funding has a positive impact on growth. This has been doubted on theoretical and empirical grounds by the ILo (Gillion et al. 2000, pp. 353–366). Unlike the World Bank, the ILo did not follow the neoclassical growth paradigm at the time. To the contrary, its interpretation showed some traces of Keynesianism: “Saving is the process through which domestic consumption is reduced” and “higher saving may cause a near-term economic contraction” (Gillion et al. 2000, p. 354). This opposition was a cornerstone in the defence of state-based social insurance. Apparently, the ILo no longer fully subscribes to this Keynesian23 paradigm, although it is still more cautious about the positive effects of funding. For instance, the ILo discusses developing guidelines or a best practice guide in order to make sure that social security reserves are invested in an economically and socially sound manner. This includes the view that capital accumulated for old age in developing countries should also be invested in those countries and not abroad (ILo 2005a, p. 13). This suggests a tendency towards a very basic agreement on the positive growth effects of pension savings between the Office and the World Bank. The main difference is that the ILo is more cautious with respect to the idea of an unrestricted global flow of pension savings. This is still an important distinction from the World Bank position in terms of social values. In terms of economic theories this distinction is less clear. Although there are many differences in the details (for example, concerning the degree of public supervision or administration of funded schemes), it implies that the Office is following the World Bank agenda to strive for economic goals by means of social security systems. One indication of this trend is that the Social Security Department has been asked by the Governing Body to increase its research activities on the productivity-enhancing role of social protection during the next few years (ILo 2005a). These activities could lead to a paradigm shift in ILo thinking, altering its traditional claim that social objectives constitute a sufficient justification for social protection systems. By contrast, the main positive effects of social security systems on


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economic development, as traditionally defended by the Office, relate to the reduction of insecurity (ILo 2005a: 5; Cichon and Hagemejer 2007, pp. 190–193). These tend to be wider indirect effects. For example, social security might diminish the need for illegal income generation and increase labour productivity due to better health care or the absence of existential fears. Also it is emphasized that institutional settings (such as cultural attitudes, property rights) account for productivity differentials in the use of resources between countries. According to the Office, social security systems are part of society’s institutions and therefore the extent to which they foster economic productivity should be explored (ILo 2005a, p. 3). As a result of the risk pooling inherent in social security, the equilibrium wage is lower, because without social security it is more costly to individually assure a certain level of lifetime income security. Generally, social security can increase the public’s acceptance of globalization, structural and technological change by compensating for hardship placed on those most vulnerable to these changes. Social security is also an automatic stabilizer which smoothes the business cycle. In particular, aggregate demand is stabilized during recessions (ILo 2001a, p. 16).24 This positive view of social security tends to endorse a Keynesian paradigm and is founded in the claim that there is no trade-off between social protection spending and growth. To the contrary, social progress is believed to trigger growth, leading to a “reverse trickle-down effect” (Cichon and Hagemejer 2007, p. 193; see also ILo 2005a, p. 6). Since the ILo has become more open to funding, its position has lost some of its former consistency. The Office used to point out the general equivalence between funding and PAYG. Independent of financing modes, retirement income always relies on current production: “A society has to allocate a certain amount of resources to provide a certain level of consumption for its elderly. The shift from wage-based to capital-based financing does not change that fundamental equation.”25 This implies that average rates of return on pension contributions cannot be systematically higher in funded systems compared to PAYG systems.26 Thus, there is no room for growth effects in this paradigm. By the same token, the ILo has repeatedly stressed that funding does not avert the effects of ageing societies. If an ageing society is defined as exhibiting a high old-age dependency ratio and relies on funded pension schemes, then, when it comes to retirement for a relatively large part of the population, this population has to sell its financial assets in order to get a pension. This translates into high financial asset supply meeting relatively little demand from the younger generation. The normal market mechanism leads to lower prices, causing a meltdown in the value of the assets.27 The result would be reduced consumption possibilities for the pensioners

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and relatively high net incomes for the working generation (Scholz 2000, p. 508–509; ILo 2001a, p. 54).28 In sum, the lack of consistency with respect to the economic paradigms endorsed in the ILo pension policy is striking. It has been shown that the relation between social security and economic growth lacks a clear interpretation by the Office. Instead, single aspects are highlighted in different publications regardless of their paradigmatic compatibility. It indicates that the paradigmatic foundation of the ILo is in a long-term transition process, involving contradictory elements. Although the effects of the World Bank’s agenda setting on the programme of the Office and the frames it uses have been more pronounced so far, they are already partly evident on the paradigmatic level. Signs of a possible paradigm shift are most apparent regarding the perceived effects of pension scheme design on growth. Hence, the third hypothesis that the World Bank activities in the pension field influence the ILo find some support, but it is too soon to evaluate fully the paradigmatic impact. One important caveat in this context is that the World Bank is not entirely original in its recommendations, because of its strong roots in mainstream economics. Thus, even if there is a paradigmatic impact, it has to be shown that it stems from the World Bank and not from the general epistemic environment. During recent decennials, the increased dominance of neoclassical economics in academia has most likely had an impact on the ILo, but in the pension field it is intrinsically tied to the competitive pressure coming from the World Bank. Moreover, it is easier for the World Bank to be paradigmconsistent because unlike the ILo, it is part of the mainstream economic paradigm. By contrast, the ILo traditionally adhered to Keynesian economic thinking.29 Today, some traces of Keynesian thought are left within the Office. Although scepticism towards neoclassical economics still dominates, neoclassical thinking has found subliminal ways into the ILo.30 To this day, there seems to be no consistent economic counter-paradigm endorsed by the ILo and a paradigm shift towards mainstream economics is likely to occur. Even though this would probably not affect the social values and the human rights tradition currently on the verge of revival in the Social Security Department, it would still have a marked impact on a new approach to pension policy and ultimately on the type of pension policies advocated throughout the world.

CONCLUSION Following the internal restructuring of its Social Security Department, the ILo is in search of a new approach to pension policy. In this transitional


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phase, the ILo has already come up with a tentative “development approach to social security”. Apparently, the Office is in search of ways to make its pension policy approach more coherent and attractive through the emphasis on positive economic effects of its pension policy recommendations. This chapter has examined the interconnection between internal organizational factors and the emergence of policy ideas within international organizations. In a wider context, the focus on internal organizational developments is seen as a response to the call of international relations scholars to take a closer look at the internal composition of international organizations and thereby overcome the unitary actor assumption.31 The first hypothesis formulated in the introduction is confirmed by the analysis: the internal restructuring of the Department enabled the drafting of a new, possibly more coherent, approach. Thus, organizational change is closely tied to policy change. The analysis of the internal tensions presented here should be viewed as a contribution to the “demystification of international organizations”,32 since it has provided evidence that international organizations are many-voiced. The second and third hypotheses formulated assumptions about the direction which the Office’s new approach to pension policy seems to take. Although this new approach is still tentative, two tendencies are discernible. First, the position of the former SOC/FAS branch is more pronounced and has tended to dominate the Social Security Department after the internal restructuring. This is most visible concerning social insurance and universal pensions. The restructuring reduced the omnipresence of social insurance orthodoxy traditionally endorsed by the ILo. Instead, the role of universal social pensions has been strengthened within the Office in order to reach higher coverage rates especially in developing countries. Second, external factors have affected the pension policy of the Office on different levels. Since the global pension policy discourse is dominated by the World Bank, it has also left imprints on the new ILo approach. The impact is most visible on the programmatic level, and concerning the framing. The paradigmatic foundation is less affected, although the economic underpinning of the ILo position is experiencing a phase of disorientation which could lead to a paradigm shift. Whether, ultimately, interorganizational competition explains not just the reorientation of the Office’s pension policy but also the organizational restructuring itself, has been beyond the scope of this chapter. However, it seems plausible to interpret the internal restructuring as an intermediate variable, affected by the external pressure stemming from the rivalry with the World Bank over social security issues and influence on member countries. In this view, organizational reforms would not just be intrinsically

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motivated, but also driven by external pressure to make the Office more competitive in the global pension policy debate. The impact of external, interorganizational competition on organizational and ideational developments of international actors needs to be studied more thoroughly. Research in this direction would contribute to a more complete picture of the different ways in which international actors exert influence.

ACKNOWLEDGEMENTS I thank the Stein Rokkan Centre for Social Studies and especially the project group “Policy Discourses, International Actors and National Welfare Policy: Norway in a Comparative Perspective” for their hospitality during my research stay in summer 2007 as well as the Research Council of Norway and E.ON-Ruhrgas for financial support.

NOTES 1.

2. 3.

4.

5.

6. 7.

Usually, the acronym ILO can refer to both the Office or the Organization. For most of the literature this is of no importance, since the positions of the Office and the Organization are not distinguished. For the argument made here, the distinction is, however, crucial. Thus, throughout the chapter the acronyms are unambiguously defined: The uppercase letter ‘O’ refers to the Organization and the lower case letter ‘o’ denotes the Office. This includes non-binding instruments such as codes of good practice and guidelines. The Centre provides training courses and workshops for civil servants, policy makers and social partners in all issue areas of the ILO. In the field of social security these relate to the administration, governance and financing of social security schemes, social assistance and social budgeting. They are prepared in close collaboration with the Social Security Department of the ILo and the International Social Security Association (ISSA). See International Training Centre (2007). The IILS is an autonomous research institution which occupies the interface between academic research and policy issues relevant for the work of the Office. Its goal is to provide the ILO guidance relating to fundamental, long-run questions and to “open up new perspectives for social policy” (IILS 2007). See IILS (2007, 2007a) as well as Gaudier (2001). This view was conveyed to the author in several interviews with ILo staff members from different departments conducted in September 2005. Indeed, the ILo traditionally played an important role in scientific discourses on economic and labour issues (Endres and Fleming 2002). Even Keynes in his General Theory of Employment, Interest, and Money (1936/1991, p. 349, fn. 1) explicitly pays tribute to the economic knowledge of ILo economists. Today, ILo economists take part in academic discussions and publish regularly in international social policy journals. However, they are much less influential in academia and international politics than in former times. This contrasts with the high degree of formality which characterizes the procedures involving the ILC and the Governing Body. A staff member complained about the insufficient attention many colleagues paid to the official policy of the Organization in their work.

In search of a new approach to pension policy 8.

9. 10. 11.

12. 13. 14. 15. 16.

17.

18. 19.

20.

21. 22. 23.

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This section is based on interviews conducted during September 2005 with staff members of the Social Security Department. The responses of the interviewees often reflected interpretations or perspectives on the internal developments of the Department. Thus, the author is aware that there is no absolute agreement on every point made, although most of the description given here is based on a variety of sources. The largest share of the budget goes to Social Dialogue (about 45 million USD), followed by Employment (about 40 million USD) and Standards and Fundamental Principles and Rights at Work Sector (about 30 million USD) (ILo 2005, p. 125). These are discussed in the remainder of this section. The developmental approach to social security is analysed in greater detail in the subsequent section “Programmatic developments: towards a development approach”. In general, microinsurance is considered as an option to provide single medical benefits but not to provide comprehensive health insurance or even old-age pensions (ILo 2001a, p. 32). For approaches to community health financing see the edited volume by Dror and Preker (2002). As one of the staff members pointed out, there is the possibility of a social insurance tier on top of a universal basic income. Most prominent is the World Bank (1994) report Averting the Old Age Crisis. The strong influence of the World Bank on pension reforms in different countries is described for example by Müller (2003). Many of the staff members of the Social Security Department expressed their regret concerning this belated reaction by the Office. Global Social Trust means providing minimum benefits to the informal economy in developing countries. It is conceived as being financed from contributions and taxes in developing countries but also from voluntary contributions from individuals and organizations in rich countries. The reason behind this external financing is to kick start a self-supporting social security scheme which creates confidence in collective schemes. There are already positive experiences concerning health financing in Ghana and Tanzania involving international donations (Cichon and Hagemejer 2007, p. 182). One obvious reason for this focus is that ILo advice has hardly any effect on social security policies in developed countries. Even the OECD and the EU do not have a strong impact on the social policies of their members. Generally, policy learning between states is more important than international actors in the diffusion of social policy ideas in developed countries. This is shown by contributions in this volume with respect to old-age pensions (Ervik, Chapter 7), employment (Kildal, Chapter 2) and family policies (Lindén, Chapter 6). “[T]here is no reason for the critics of the WB approach to triumph” (Cichon 2004, p. 21). A different framing technique is “bricolage”, where existing theoretical concepts are recombined (Douglas 1986, p. 66). A possible example is the ecological concept of “sustainability”, which has been transferred to many different fields. In the wider pension context, “sustainability” is a prominent feature of the generational equity debate (Williamson, McNamara and Howling 2003, pp. 6–7) and is used in this way for example by the World Bank. “Parametric reform” refers to one end of a continuum of reform options (the other is “systemic” or “structural reform”). It denotes a type of pension reform that preserves the basic structure of the scheme but changes parameters (for example, the statutory retirement age, contribution rate or minor changes in the benefit formula). The recent discussion paper states that “core security remains a task of the state” because “[p]rivate insurance fails to deal adequately with social risks” (ILo 2006, p. 29). Due to limitations of space, this section deals exclusively with the economic paradigms found within the Office and not its long tradition of workers’ and human rights. In the early days of the Office, ILo economists were part of the vanguard in the development and promotion of demand-side macroeconomic theory (Endres and Fleming 1996,

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24. 25. 26.

27.

28.

29.

30.

31.

32.

The role of international organizations in social policy p. 225). Although in general the ILo was under the influence of Keynesian economics and contributed to this school (for example concerning macroeconomic stabilization, especially the prioritization of aggregate employment instead of price stabilization), it did not follow the orthodoxy rigidly and pursued independent research on monetary policy, public investment and development economics between 1919 and 1950 (Endres and Fleming 2002, pp. 244–251). In the 1940s, economists in the ILo were already elaborating and diffusing the argument that countercyclical macroeconomic policy should be supported by social security schemes (Endres and Fleming 2002, p. 165). ILo (2001a, p. 54) and similar: Gillion (2000, pp. 46–49). This insight is not new: Barr (1979) and earlier Mackenroth (1952) argue for this aggregate view and refute microeconomic views as “fallacies of composition”. Of course exceptional performances in one sector of the economy can, for example, lead to rates of return of some pension funds above the real growth rate of the economy. However, the fact that there are some pension funds with returns above the average and some with returns below, illustrates the distributional effect of competing private pension funds. Proponents of funded pension schemes make several objections to this asset-meltdown hypothesis (see for example: Bundesministerium für Wirtschaft und Arbeit 2005: paras 15–24). Generally, they refer to the international diversification possibilities and the differences in the demographic structure of societies. Moreover, it is claimed that because in ageing societies, labour is less available and thus their economies substitute labour for capital, the prices of only some forms of capital (for example domestic real estate and risky forms of capital such as shares) are supposed to fall. For a critical assessment of the possibilities for an international diversification of pension fund capital see Scholz (2000, pp. 512–513), who describes the policy of investing in economies with inverse demographic structures as “pension-mercantilism”. It is implicitly assumed that funded schemes are defined contribution, which is normally the case. In such a scheme the demographic (and other) risks have to be borne exclusively by the pensioners, whose effective benefits depend on market performance. However, the effect would be similar in a defined contribution PAYG system, which again shows the equivalence of funded and PAYG schemes in real terms as well as the different risk distributions according to whether a scheme is defined benefit or defined contribution. Interestingly, in the 1920s there were neoclassical tendencies in the ILo. This is manifest in the Douglas Report of 1924 on the interrelation of family allowance arrangements and the functioning of the labour market. According to Endres and Fleming it stressed individual responsibility and work incentives and refuted systematic income distribution for the benefit of families. Such arguments were dominant in the ILo reseach during the 1920s but are absent in the work of the ILo after 1935 (Endres and Fleming 2002, pp. 160–163). One aspect not mentioned so far, but which was pointed out by Office staff members, is the difficulty the ILo has in finding young economists who diverge from the mainstream academic orientation. It would be interesting to explore the relation between composition of ILo staff and its recruitment procedures as has been done for other international organizations like the IMF and the World Bank. Although scholars like Moravcsik (1997) and Gourevitch (2002) envisage more a domestic foundation of international organizations, their basic claim is that international organizations have to be explained by individual preferences or motives – be it on the member state or the internal level of international organizations. I owe this observation to Aksel Hatland, who commented on an earlier version of this chapter.


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Gillion, Colin (2000), ‘The Development and Reform of Social Security Pensions: The Approach of the International Labour Office’, International Social Security Review, 53 (1), 35–63. Gillion, Colin, J. Turner, C. Bailey and D. Latulippe (eds) (2000), Social Security Pensions: Development and Reform, Geneva: International Labour Office. Gourevitch, Peter (2002), ‘Domestic Politics and International Relations’, in Walter Carlsnaes, Thomas Risse and Beth A. Simmons (eds), Handbook of International Relations, London: Sage, 309–328. Holzmann, Robert and Richard Hinz (2005), Old-Age Income Support in the 21st Century: An International Perspective on Pension Systems and Reform, Washington, DC: The World Bank. IILS (International Institute for Labour Studies) (2007), About the IILS, URL: http://www.ilo.org/public/english/bureau/inst/about/index.htm (accessed 5 March 2007). IILS (International Institute for Labour Studies) (2007a), The Research Programme, URL: http://www.ilo.org/public/english/bureau/inst/research/research1.htm (accessed 5 March 2007). ILo (2001), Social Security: A New Consensus, Geneva: International Labour Office. ILo (2001a), Social Security: Issues, Challenges and Prospects, Report VI to the International Labour Conference, 89th Session, Geneva: International Labour Office. ILo (2002), Exploring the Feasibility of a Global Social Trust, GB.285/ESP/4, Geneva: International Labour Office. ILo (2004), A Fair Globalization: The Role of the ILO, Report of the DirectorGeneral on the World Commission on the Social Dimension of Globalization, Geneva: International Labour Office. ILo (2004a), Economic Security for a Better World, Geneva: International Labour Office. ILo (2005), The Director-General’s Programme and Budget Proposal for the Biennium 2006–07, GB.292/PFA/8(Rev.) 292nd Session, Geneva: International Labour Office. ILo (2005a), Social Protection as a Productive Factor, Governing Body document submitted to the Committee on Employment and Social Policy for debate and guidance, GB.294/ESP/4, Geneva: International Labour Office. ILo (2006), Social Security For All: Investing in Global Social and Economic Development: A Consultation, Issues in Social Protection, Discussion Paper 16, Geneva: International Labour Office. ILo (2007), Social Protection, URL: http://www.ilo.org/public/english/protection/ (accessed 19 February 2007). International Training Centre (2007), About the Centre, URL: http://www.itcilo. org/en/about-the-centre (accessed 11 December 2008). James, Estelle (1996), ‘Providing Better Protection and Promoting Growth: A Defense of Averting the Old Age Crisis’, International Social Security Review, 49 (3), 3–17. Kahneman, Daniel (2003), ‘Maps of Bounded Rationality: Psychology for Behavioral Economics’, American Economic Review, 93 (5), 1449–1475. Keynes, John Maynard (1936/1991), The General Theory of Employment, Interest, and Money, London: Harcourt Brace. Kulke, Ursula (2007), ‘The Present and Future Role of ILO Standards in Realizing


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the Right to Social Security’, International Social Security Review, 60 (2–3), 119–141. Mackenroth, Gerhard (1952), ‘Die Reform der Sozialpolitik durch einen deutschen Sozialplan’, Schriften des Vereins für Sozialpolitik, N.F. 4, 39–76. Maydell, Bernd von (1994), ‘Perspectives on the Future of Social Security’, International Labour Review, 133 (4), 501–510. Mizunoya, Suguru, Christina Behrendt, Karuna Pal and Florian Léger (2006), Costing of Basic Social Protection Benefits for Selected Asian Countries: First Results of a Modelling Exercise, Issues in Social Protection, Discussion Paper 17, Geneva: International Labour Office. Moravcsik, Andrew (1997), ‘Taking Preferences Seriously: A Liberal Theory of International Politics’, International Organization, 51 (4), 513–553. Müller, Katharina (2003), ‘The Making of Pension Privatization in Latin America and Eastern Europe’, in Robert Holzmann, Mitchell Orenstein and Michal Rutkowski (eds), Pension Reform in Europe: Process and Progress, Washington, DC: The World Bank, 47–78. Orenstein, Mitchell A. (2003), ‘Mapping the Diffusion of Pension Innovation’, in Robert Holzmann, Mitchell Orenstein and Michal Rutkowski (eds), Pension Reform in Europe: Process and Progress, Washington, DC: The World Bank, 171–193. Pal, Karuna, Christina Behrendt, Florian Léger, Michael Cichon and Krzysztof Hagemejer (2005), Can Low Income Countries Afford Social Protection? First Results of a Modelling Exercise, Issues in Social Protection, Discussion Paper 13, Geneva: International Labour Office. Queisser, Monika (2000), ‘Pension Reform and International Organizations: From Conflict to Convergence’, International Social Security Review, 53 (2), 31–45. Scholz, Wolfgang (2000), ‘Alterssicherung und Kapitaldeckung’, Betriebliche Altersversorgung, 55 (7), 507–515. Schulz-Nieswandt, Frank and Remi Maier-Rigaud (2007), ‘Die OECD als sozialpolitischer Ideengeber? Eine Analyse der Wirkungen auf die EU im Kontext der Globalisierung’, in Christoph Linzbach, Uwe Lübking, Stephanie Scholz and Bernd Schulte (eds), Globalisierung und Europäisches Sozialmodell, BadenBaden: Nomos, 399–421. Williamson, John B., Tay K. McNamara and Stephanie A. Howling (2003), ‘Generational Equity, Generational Interdependence, and the Framing of the Debate Over Social Security Reform’, Journal of Sociology and Social Welfare, XXX (3), 3–14. World Bank (1994), Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth, Oxford: Oxford University Press.

9.

Towards a European convergence in pension policy outputs? Evidence from the OMC on pensions Axel West Pedersen and Henning Finseraas

INTRODUCTION The purpose of this chapter is to explore whether the pension reforms enacted by individual EU member countries over the last decade have produced common trends and/or convergence in the degree and pattern of income security offered to wage earners. We use data collected by the Social Protection Committee of the EU as part of the Open Method of Coordination (OMC) on pensions. The data contain information on current and so-called prospective replacement rates for hypothetical cases of workers in each of the member countries, and they offer a unique opportunity to compare the output of national pension systems before and after recently enacted reforms. If attempts at policy coordination and processes of policy diffusion from international and supra-national organizations like the OECD and the EU constitute important stimuli for current reforms in national pension systems, we should expect to find both common trends and convergence in the actual output of these reform processes. However, a possible convergence in policy outputs could merely be the result of common problem pressures and commonalities in the domestic policy environment. We should hasten to emphasize, therefore, that our sole ambition is to try to map changes in national policy outputs using data generated by the OMC process, as it is far beyond the scope of this chapter to assess any causal links. Population ageing and the prospect of rising dependency ratios in coming decades has put pension reform on the political agenda throughout Europe. A primary focus of contemporary reform efforts is to contain increases in public expenditure on pensions and thereby limit the financial burden on wage earners and tax payers. In addition to expenditure reduction, current reform initiatives typically comprise efforts to increase 190

Towards a European convergence in pension policy outputs?

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effective retirement ages, and – in some cases – to eliminate redistributive mechanisms and strengthen the link between contributions and benefits (see Whiteford and Whitehouse 2006 for an up-to-date survey of pension reforms in OECD countries). Worries about population ageing and calls for pension retrenchment started to appear in national debates in the 1980s, and by the late 1980s they were strongly supported by international organizations – in particular the OECD. In 1994 the World Bank published its famous report on the “ageing crisis”, arguing for privatization and the introduction of a “multipillar” system as the only viable solution to population ageing (World Bank 1994). Although few, if any, countries followed the Bank’s radical solution, the report undoubtedly had a strong agenda-setting effect, and, without suggesting a direct causal link, a number of countries did enact and implement significant reforms during the 1990s. Pension retrenchment has taken different forms, from subtle changes in the parameters of existing pension systems to more radical reforms of public pension systems, often coupled with increasing stimuli for private provision. While the EU was largely silent on pension policy issues in the 1990s, the Maastricht Treaty and the decision to establish an Economic and Monetary Union (EMU) might have had an indirect effect on the reform activity by increasing the pressure for cost-cutting pension reforms in some member countries. It has been argued that central and southern European governments in the early 1990s used the EMU convergence criteria to justify unpopular cuts in public expenditure, as well as more structural measures intended to improve long-term fiscal sustainability. A primary example is the Italian pension reform of 1993 that was launched as part of a series of fiscal austerity measures intended to secure Italy’s inclusion in the Euro-zone (Rhodes 2001; Schludi 2005). As part of the Lisbon strategy, and in an attempt to revitalize a social dimension to European integration at the beginning of the new millennium, the EU launched a so-called Open Method of Coordination on pensions. The core idea of the OMC, as a tool for policy coordination, is to bypass the huge institutional differences that exist between national welfare systems by creating processes that combine peer pressure with policy learning organized around an agreed set of outcome indicators or objectives. At the Laeken summit in 2001, the member states agreed on a list of common objectives to be pursued in the pension reform process. The objectives were organized under three main headings: “safeguarding the pension system’s ability to meet social objectives, maintaining financial sustainability, and meeting changing needs” (Porte 2004). In short, the three main concerns are covered by the terms: “adequacy, sustainability,

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and modernization”, and the even shorter version of the EU pension gospel is “adequacy and sustainability”. Taken at face value, the EU pension gospel appears to be fairly balanced compared to the World Bank’s advocacy of a particular privatized model of pension provision, and the OECD’s rather one-sided focus on expenditure cuts and improving work incentives. Indeed, there are obvious tensions between “sustainability”, which in practice tends to imply cuts in public expenditure on pensions, and “adequacy”, which tends to imply the maintenance of high benefit levels to old-age pensioners. There are ways to avoid a direct trade-off between these two objectives, however. One is to induce workers to postpone retirement, which – if successful – will simultaneously decrease expenditure and increase the tax and contribution base. Another is to let private institutions take over a larger share of retirement provision. The first of these two options is being explicitly advocated by the member states and the Commission – in the OMC on pensions as well as in the European Employment Strategy – as a key element of EU policy to meet the challenge of population ageing, and it has been argued that the OMC process on pensions legitimizes and implicitly endorses a strategy of privatization (Ervik 2006). Even though it can be argued that both the Council and the Commission in various policy documents have tended to give priority to the sustainability aspect (Ervik 2006), the Social Protection Committee is putting significant efforts into documenting developments in various aspects of the “adequacy” dimension, by systematically collecting data on the level of minimum protection and on present and future replacement rates offered in the pension systems of the member countries. One such effort materialized in 2006, when the Indicators Sub-Group (ISG) of the Social Protection Committee published a report on “current and prospective theoretical replacement rates” (ISG 2006). The calculation of replacement rates comprises various types of workers and work careers, and it is made both for public pensions taken alone and after taking typical private occupational schemes into account (see the section on data and methods below). Finally, the calculations are made in terms of the ratio between net benefits and net wages. These data offer unique opportunities to investigate common trends and tendencies for convergence in the degree of income security in old age offered to future generations of retirees as a result of the comprehensive pension reform processes that have unfolded over the last decades. Research on welfare state change, and on change in pension systems in particular, suffers from what in recent years has been dubbed the “dependent variable problem”. The question is how one should measure and assess change. As argued by Green-Pedersen (2004), the problem is at its heart a conceptual one, but the conceptual problem of defining the dimensions


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of change and setting qualitative criteria evaluating the degree of change is, particularly in the area of old-age pensions, exacerbated by a lack of relevant data. While changes in other branches of social security can be measured in a rather parsimonious way by looking at institutional output data in terms of replacement rates for typical cases or in terms of outcome data (microdata on incomes, labour force participation and so on), current changes in pension systems will typically only affect benefit levels and outcomes in a rather distant future. Therefore calculations of “prospective replacement rates” for different “typical cases” of workers constitute a very valuable source of information on future outputs of newly reformed pension systems. The replacement rate is defined as the ratio of pension benefits to pre-retirement earnings. We use the data on current and future replacement rates to look at changes in the following four dimensions: ● ●

●

●

Gross (before tax) replacement rates in the public (pillar 1) pension systems. Net (after tax) replacement rates offered by the combination of public pensions and a typical supplementary private occupational pension scheme. Gross replacement rates offered by private supplementary schemes and the share taken up by private benefits in total gross replacement rates. The degree to which low wage earners have higher replacement rates than standard workers.

The first two are alternative measures of the generosity of national pension systems, the third dimension is concerned with the public/private mix in pension provision, while the last dimension taps one aspect of the distributive profile. For each of these four dimensions, we try to distinguish between two aspects that often get mixed up in studies of convergence: general trends (defined and measured as changes in mean values) and “true” convergence (that is, a pattern of decreasing diversity across countries).

THEORETICAL BACKGROUND AND HYPOTHESES There are two competing views within the comparative welfare state literature on whether common trends and/or convergence in the nature and quality of pension provision is likely to occur – independently of any influence from international organizations.

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Functionalist Perspective The functionalist view on welfare state development, typically associated with Wilensky (2002), holds that as countries face similar problem pressures with respect to ageing, we should expect pension systems to converge. Wilensky (2002, pp. 216ff.) identifies affluence, changes in family structure, gender equality, ageing of the population and social security systems, and changes in social stratification and mobility, as important contemporary drivers of convergence. At a more general level, Wilensky argues that all rich countries are characterized by a conflict between providing economic incentives and social equality, and he suggests that in the long run all societies will choose a fairly similar balance between these two goals, although the mixture of policy instruments might vary considerably. In a similar vein, Øverbye (1994) has argued that national pension systems tend to converge around a dual structure offering both poverty prevention through a targeted minimum protection, and standard protection through publicly or privately provided earnings-related benefits. It is not entirely clear however whether a functional logic of policy change can be expected to produce convergence or simply a pattern of parallel change (Øverbye 1994). In spite of the universal nature of the underlying demographic challenges, reform efforts pursued in different countries appear to show considerable variation. One reason might be that the financial challenges posed by population ageing differ according to the nature of existing pension systems. It has been argued, for instance, that the challenges are particularly severe in countries with so-called “Bismarckian” systems that provide relatively generous earnings-related benefits financed on a “pay-as-you-go” basis (Hinrichs 2000; Myles 2002). This potential explanation for variation in reform intensity is entirely compatible with a functionalist view, and it is compatible with a pattern of increasing convergence in important aspects of policy outputs and outcomes. We believe therefore that functionalist reasoning proper would suggest that further convergence is to be expected, given similarities with regard to the type (but not necessarily scope) of problems that existing pension systems are facing. Path Dependency Perspective The functionalist perspective and the associated expectations about convergence have been seriously challenged by perspectives emphasizing path dependence and institutional inertia. Myles and Pierson (2001) point out that welfare institutions, and in particular pension systems, have appeared to be highly resistant to change (see also Pierson 1994).


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Myles and Pierson (2001) do not deny that problem pressures – such as population ageing – are important for welfare state development, but they claim that the main variable determining the reform path is the existing structure of the pension system. More specifically they reject the possibility of convergence towards a privatized, market-based World Bank model. In their view, countries with mature pay-as-you-go defined benefit plans financed by payroll taxes cannot make radical changes to their pension system, mainly due to the “double payment problem”: privatization is ruled out because it requires the current working age population to finance both current pensions and their own pension. While this “double payment problem” does seem to prohibit a full-scale privatization of mature public systems, there appeared in the mid-1990s alternative reform options that circumvent this problem by combining a continuation of pay-as-you-go financing with a change in the accrual of pension rights from the traditional defined benefit to a defined contribution formula. The Swedish and Italian pension reforms are the primary examples of this reform option. By adopting the so-called Notional Defined Contribution (NDC) formula for the calculation of pension rights, these reforms promise to put an effective brake on public pension expenditure, and to improve the work incentives of public pension systems without resorting to large-scale privatization. In the NDC formula, contribution rates are fixed once and for all while the costs of demographic changes must be carried by downward adjustments of benefits (see Williamson 2004). There is no consensus, however, on whether these and similar examples of recent reforms contradict or confirm the hypothesis of path dependency. Most academic commentators have tended to emphasize the continuity aspects of the Swedish reform, mainly with reference to the maintenance of a strong role for the state in old-age pension provision (see for instance Green-Pedersen and Lindbom 2006), and sometimes with reference to the active participation of social democratic parties and the endorsement of trade unions in the political process behind the reforms (Anderson and Traute 2003). Similar debates have been concerned with countries that have adopted more incremental reform strategies – like France and Germany. Is the lack of a one-off radical reform a proof of continuity, or can small incremental changes in some instances add up to path-breaking change (see Palier 2000 for an argument about the latter in the case of France)? The overall expectation from the path-dependency perspective – at least in its more static versions1 – is that we should see little overall change and little convergence in important output indicators as a result of current pension reforms.

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Hypotheses Although the aim of this chapter is to be mainly descriptive, we nevertheless put forward some hypotheses on how we expect the level and variation in future values of our four output indicators to be related to current values. Changes in the generosity of public pensions Given that the dominating concern behind contemporary reform processes is cost containment, our first main hypothesis is that we should see a downward trend in gross replacement rates offered by the public pension systems across the EU member countries. Since the financial pressures for reform should be stronger in countries that at the outset offer the most generous public pensions, we would further – from a functionalist perspective – expect to see a tendency towards convergence in replacement rates. Changes in the generosity of the compound (public and private) system As mentioned in the introduction, it is a common feature of contemporary pension reforms to accompany cutbacks in public pension systems with efforts to stimulate private provision. Thus, we expect that net replacement rates, including private occupational pensions, will turn out to be more stable than gross replacement rates offered by public systems, and we expect to find a tendency for convergence across countries. Changes in the public/private mix We expect the share of private pensions to increase in general, but without necessarily producing a strong tendency for convergence, since a shift from public pay-as-you-go financing to private funding is likely to be hampered by strong path dependencies (Myles and Pierson 2001). Changes in the distributive profile Insofar as the main purpose of contemporary pension reform is cost containment, there is no compelling reason to expect that the distributive profile of the systems should show systematic change. On the other hand, efforts to strengthen the link between contributions and benefits appear to be an important reform motif, as is most clearly exemplified by the structural reforms in Sweden and Italy. The emphasis on this motif could very well imply that the preferential treatment of low-wage earners that was built into many traditional social insurance schemes will tend to disappear.


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DATA AND METHOD We rely on current and prospective theoretical replacement rates reported by the Indicators Sub-Group (ISG) of the Social Protection Committee (SPC). Current replacement rates describe the situation of people retiring today, while the prospective replacement rates describe the situation of a similar worker retiring in 2050. Legislation by mid-2005 is taken into account, including changes which – according to already enacted legislation – will be implemented gradually in the future. Every European Union (EU) member state was asked to report these replacement rates for a representative worker and several variants. We concentrate on the replacement rates for a representative worker, a low-wage worker and a worker with a broken career. The representative worker is assumed to be male, have a working career of 40 years with full-time work, earn an average wage for the whole working career, and retire at 65. Finally, he is assumed to be covered by the most widespread pension scheme, and pension benefits from statutory schemes, private schemes and means-tested supplements are included in the calculations. One should keep in mind that the representativeness of this worker varies across countries, for instance only Ireland and Sweden have an effective retirement age close to 65. However, making the same assumptions across countries helps to highlight the institutional differences, which is what we are interested in. The low-wage worker is assumed to earn two-thirds of the average wage during his whole working career, while the worker with a broken career is assumed to have had a 10-year career interruption, thus reducing the total number of years in work to 30. This interruption can be seen as capturing the effect of childcare. Several macro-economic assumptions are necessary to calculate the prospective replacement rates. Most importantly, a common real rate of return is assumed, but different wage developments across countries. The first of these assumptions is questionable for fast-growing economies, and implies different development for pay-as-you-go schemes and funded schemes. We should emphasize that these prospective replacement rates should not necessarily be seen as realistic projections of the situation obtaining almost 50 years ahead.2 All historical experience tells us that new reforms and/or more incremental institutional changes are likely to be made over the coming decades, and these will of course affect the final policy outputs in 2050. The calculations of projective replacement rates are more to be seen to parsimoniously summarize implications of choices made by contemporary policy makers. Although these implications will most likely be modified in some ways by future politicians, they will at the same time severely constrain their choices.

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The fact that our data have been provided by national bureaucrats and policy makers does warrant particular caution. Although the central guidelines for making these calculations contained a detailed specification of key assumptions, there is a danger that the figures might contain an element of national window dressing. This is particularly likely for the calculations of benefits to be expected from private occupational schemes, since it has been left to the national reporters to choose a particular occupational pension scheme as a typical representative of occupational schemes in general. There are clear indications that some countries have taken the opportunity to choose a comparatively generous scheme. On the other hand, this kind of political bias in the calculations also offers certain advantages, because they can be interpreted as providing information on official policy intentions. Finally we should mention that the definition and measurement of convergence is contested (Plümper and Schneider 2007). Here we follow a fairly simple and eclectic approach. Partly we rely on the visual inspection of graphs, where changes in replacement rate values between 2004 and 2050 are plotted against the original values in 2004. The regression line added to these graphs can give a first impression of a possible tendency for convergence, since a downward sloping regression line can be taken as indicating convergence (the countries with the highest initial values experience the strongest negative change in absolute terms). However, in order to have a better indication of the degree of convergence, we rely on calculations of changes to the coefficient of variation (CoV). Finally we investigate the presence of general tendencies by comparing the unweighted mean scores of actual and prospective replacement rates for the entire country sample.

EMPIRICAL RESULTS In this section we present and discuss the empirical results. We proceed in the following manner. First we present data on the generosity of first pillar public pensions for different categories of typical workers in terms of gross replacement rates (GRR). Then we look at corresponding developments in the total net replacement rates (NRR). Third, we turn to look at the relative significance of the private pillar, and finally we present calculations of the degree of overcompensation of low-wage workers as an aspect of the distributive profile of the respective national pension systems. As already mentioned, we rely on illustrative plots and tables with summary statistics for the entire sample.


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The Generosity of Public Pension Systems Figure 9.1 shows the level and change in replacement rates for a representative worker3 provided by the public system in gross (pre-tax) terms. Values along the X axis show the replacement rates offered in 2004 while the absolute change in replacement rates from 2004 to 2050 is shown on the Y axis. A negative score on the Y axis means that gross replacement rates are smaller in 2050 compared to 2004. As is evident, there is a clear negative trend. The UK, Ireland and Austria are the only countries where the projected gross replacement rate (GRR) is higher in 2050 compared to 2004, while the GRR in the Netherlands is constant at 30 per cent. For the rest of the countries replacement rates are projected to fall. The first pillar changes the most in France, Italy and Sweden with a decline in the GRR by 17, 15 and 13 percentage points respectively. The remaining countries show negative changes in the range between 0 and 10 percentage points. These findings are hardly surprising given the almost universal political emphasis on cost containment. The pattern of changes in replacement rates is also roughly consistent with projected changes in pension expenditures across the EU member countries (see Figure 9A.1 in the appendix). Austria

5 Ireland Change (2004–2050) in gross replacement rate 1st pillar

UK Netherlands

0

Belgium Finland Portugal

–5 Denmark

Spain

Germany –10 Greece Sweden Italy

–15 France 20

Figure 9.1

40 60 80 Gross replacement rate 1st pillar 2004

100

Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), representative worker

Change (2004–2050) in gross replacement rate 1st pillar

200

The role of international organizations in social policy 10

Ireland UK

0

Austria

Netherlands Belgium Denmark

–10

Portugal Spain

Germany Finland France

–20

Greece

Italy

Sweden –30 20

Figure 9.2

40

60 80 100 Gross replacement rate 1st pillar 2004

120

Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), low-wage worker

As for convergence, the negative sloping regression line in Figure 9.1 is indication of a clear convergence tendency. The countries with the highest initial values show the highest absolute decline in replacement levels. Figures 9.2 and 9.3 present corresponding plots for a low-wage worker and a worker with a broken career. With regard to a low-wage worker, the picture appears rather similar to Figure 9.1, although we should note that the changes tend to be larger for the countries that are recorded with reductions in replacement rate. According to the results here, the reduction in GRR for low-wage workers is largest in Sweden (23 percentage points), followed by Italy (18 pp) and France (17 pp). The picture is slightly different in Figure 9.3 (broken career). It is evident that changes are smaller for workers with a broken career, with two exceptions: France and Sweden. The legislated changes will reduce the GRR to 20 percentage points in Sweden compared to 16 percentage points in France. Thus, if we compare the development in Sweden and France – the two countries which appear to have made the most severe changes in their first pillar – we note that while the changes in France are similar for all three groups, the changes in Sweden are most severe for low-wage workers and those with a broken career.

Change (2004–2050) in gross replacement rate 1st pillar

Towards a European convergence in pension policy outputs? 5 UK

Ireland

201

Austria

Netherlands

0

Belgium

Denmark

Germany

Greece Portugal

Finland

–5

Spain

–10

–15

France

Sweden

–20 20

40

60

80

Gross replacement rate 1st pillar 2004

Figure 9.3

Gross replacement rates first pillar (2004) versus change in gross replacement rates first pillar (2004–2050), broken career

As already mentioned, we rely on the coefficient of variation (CoV) as our favourite measure of convergence. The CoV is the standard deviation divided by the mean, and a declining CoV is taken to imply convergence. By using the CoV to measure convergence we implicitly define convergence as taking place if the standard deviation declines faster than the mean. We are aware, however, that this understanding of convergence is somewhat superficial, as the mean may decline faster than the standard deviation if the pressure towards the equilibrium level is increasing with the distance from the equilibrium (Plümper and Schneider 2007). We present mean replacement rates and the coefficients of variation in Table 9.1. The general trend of a decline in GRR is evident, as the mean GRR is reduced for all three types of workers. However, the coefficient of variation is almost stable. Thus, although there is a fairly general trend of falling GRR, the relative differences between countries appear not to be changing much. The Generosity of Compound (Public and Private) Systems Figures 9.4–9.6 display the same type of plots as Figures 9.1–9.3, but for total (public and private) replacement rates after taxes. Before looking

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Table 9.1

Gross replacement rates, first pillar Mean

2004 2050 Change Note:

Coefficient of variation

RW

LW

BC

RW

LW

BC

57 51 26

63 56 26

46 42 24

0.44 0.43 20.01

0.35 0.34 20.01

0.42 0.43 0.01

RW 5 representative worker; LW 5 low wage; BC 5 broken career.

Change (2004–2050) in net replacement rate

10 Belgium Germany 0

Denmark

Austria UK

Ireland

Finland

Italy Netherlands Portugal

Spain Greece

–10 Sweden France –20 60

Figure 9.4

80 100 Net replacement rate 1st pillar 2004

120

Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), representative worker

at changes, one should note that the overall variation in initial replacement rates is much smaller when the impact of private occupational pensions and the tax system is taken into account – particularly if we discard Greece, which is an extreme outlier with compound net replacement rates in excess of 110 per cent. Having said this, the overall picture appears to be quite similar, but the tendency of falling replacement rates is less severe, and the countries are more polarized in terms of changes from 2004 to 2050. Half of the



10

203

Germany Austria Belgium Ireland

0

Netherlands UK Denmark Italy Portugal Spain

Finland –10

Greece France

–20

–30

Sweden

–40 60

80

100

120

Net replacement rate 1st pillar 2004

Figure 9.5


10

Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), low-wage worker

Germany Portugal UK Denmark Netherlands Austria Ireland

Belgium 0 Finland

Greece Spain

–10

France

–20

Sweden –30 50

Figure 9.6

60

70 80 Net replacement rate 1st pillar 2004

90

Total net replacement rates (2004) versus change in total net replacement rates (2004–2050), broken career

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Table 9.2

Net replacement rates, first pillar Mean



RW

LW

BC

RW

LW

BC

81.4 80.5 20.9

86 82 24

69 67 22

0.18 0.18 0

0.19 0.20 0.01

0.18 0.21 0.03

RW 5 representative worker; LW 5 low wage; BC 5 broken career.

countries report modest increases in compound replacement rates, while Sweden and France report decreases in compound replacement rates of about the same or larger absolute magnitude as they did for gross replacement rates in the first pillar. Moreover, while the cuts appear to be fairly even across the three types of workers in France, the Swedish reductions are especially large for lowwage workers and workers with a broken career. The summary statistics, reported in Table 9.2, confirm the impression from the plots. The mean replacement rate for the entire sample is lower in 2050 compared to 2004, although the reduction is small for the representative worker and the broken career type. The coefficient of variation shows that with regard to low-wage workers and workers with a broken career, divergence rather than convergence is taking place. Nonetheless, the change is small. The Public/Private Mix Turning now to changes in the role of private pensions, Figure 9.7 shows gross replacement rates offered by private second pillar pension schemes in 2004 plotted against change between 2004 and 2050 for the representative worker. Data on these variables are only available for a limited number of countries. The figure gives a strong impression of overall growth in replacement rates offered by private second pillar pensions. Only in Ireland are gross replacement rates from the private pillar projected to be lower in 2050 relative to 2004. The figure also shows very clearly that countries with a small second pillar GRR in 2004 are those countries with the largest increase in the GRR for the 2004–2050 period. This overall impression of a general growth trend and a strong tendency for convergence is confirmed in the summary statistics shown in Table 9.3. The table shows figures both on the level of replacement offered by the private second pillar to a representative worker and the share taken up by

Towards a European convergence in pension policy outputs? Denmark

20

Change (2004–2050) in gross replacement rate 2nd pillar

205

Italy Germany

15

10 Belgium

5

Netherlands Sweden

0

UK Ireland

–5 0

10

20

30

40

50

Gross replacement rate 2nd pillar 2004

Figure 9.7

Table 9.3

Gross replacement rates second pillar (2004) versus change in gross replacement rates second pillar (2004–2050), representative worker Growth in second pillar (representative worker) Mean

2004 2050 Change


Level

Share (%)

Level

Share

19 26 7

28 40 12

1.04 0.48 20.56

1.09 0.58 20.51

this pillar in the total gross replacement rate. As is evident, there is a clear tendency for growth in both these indicators on the role played by the private second tier, but even more striking, there is a very strong tendency of convergence with regard to the size of second pillar GRR. The coefficient of variation is more than halved between 2004 and 2050 for both indicators. These results can be seen as evidence for conversion throughout Europe in the direction of some sort of multi-pillar system. However, we should emphasize the point already made in the section on data and methods, that the figures on private second pillar pensions are likely to be less reliable and representative than the figures on the first pillar, and that

206


there might be a systematic bias in the direction of overstating the generosity of the second pillar in these data. Distributive Profile In the final part of our empirical analysis, we focus on distributive aspects of current pension reform. We have chosen one among many possible indicators of the distributive implications of current and prospective replacement rates. Figures 9.8 and 9.9 show the degree of overcompensation offered to low-wage workers in 2004 versus 2050, for GRR and NRR respectively. In other words, the figures show the ratio between replacement rates offered to low-wage and representative workers respectively. Rather than plotting changes in these values against initial values in 2004, we have, in these graphs, chosen to plot absolute values in 2050 against absolute values in 2004. This means that a position along a 45 degree line implies that overcompensation is constant. With regard to the gross replacement rates shown in Figure 9.8, we see two quite distinct clusters of countries. One, in the upper-right corner,

Gross replacement rate proportion (2050)

1.7 Denmark

1.6

Ireland

1.5

UK

Netherlands

1.4 1.3 1.2 Belgium

1.1 Austria Finland Ger Spain PorFra Greece Sweden Italy

1.0 0.9 0.9

Note:

1.0 1.1 1.2 1.3 1.4 1.5 1.6 Gross replacement rate proportion (2004)

1.7

Ger 5 Germany, Po 5 Portugal, Fra 5 France.

Figure 9.8

Gross replacement rate, low-wage/gross replacement rate, representative worker (2004 versus 2050)


207

1.4

Net replacement rate proportion (2050)

Denmark

1.3

1.2

UK

1.1

Finland

1.0

Ger

Austria Spain Italy Fra Netherlands Por

Greece

Sweden

Ireland

0.9

Belgium

0.8 0.8

Figure 9.9

0.9 1.0 1.1 1.2 1.3 Net replacement rate proportion (2004)

1.4

Net replacement rate, low-wage/net replacement rate, representative worker (2004 versus 2050)

comprises countries with “Beveridgean” public pension systems that offer flat-rate or means-tested benefits (Denmark, Ireland, the UK and the Netherlands); the other comprises the countries with Bismarckian income security systems, in the lower-left corner. The overall picture is one of stability in line with path-dependency theory, but we note that Finland and Sweden deviate the most from a 45 degree line, with a clear reduction in their overcompensation of low-wage workers. Moving to the compound net replacement rates shown in Figure 9.9, the clustering becomes much less evident. Denmark stands out as the country that is most clearly overcompensating low-wage workers both today and in 2050. The country with the most dramatic change is Sweden. While the Swedish system is reported to overcompensate workers to almost the same high degree as Denmark in 2004, the Swedish pension system is reported to have become completely proportional in 2050. A similar but much more modest change can be observed for Finland. In 2050 the UK is the only country in addition to Denmark that offers overcompensation to lowwage earners in excess of 10 per cent. Finally, the general trends are captured in Table 9.4. For the gross replacement rates the picture of overall stability is confirmed. For the

208


Table 9.4

Replacement rates, low-wage/replacement rates, representative worker (2004 versus 2050) Gross replacement rates Mean score


1.17 1.16 20.1

CoV 0.18 0.21 0.03

Net replacement rates Mean score 1.06 1.02 20.04

CoV 0.14 0.10 20.04

CoV 5 coefficient of variance.

compound net replacement rates, on the other hand, there is clear indication of a pan-European convergence towards completely proportional systems that do not offer any overcompensation to low-wage workers. The mean score for overcompensation is 1.02 in 2050, and this figure would have been very close to unity if it had not been for Denmark, and less significantly, the UK.

SUMMARY AND CONCLUSION Pension reforms that will contain expenditure in the face of population ageing have been on national political agendas for more than two decades. While little happened in terms of significant policy changes during the 1980s, many European countries implemented significant changes in their pension systems during the 1990s. In this chapter we have tried to use data generated by the OMC on pensions to investigate whether current pension reforms in Europe have led to significant changes in policy outputs. We have been especially interested in revealing a possible common downward trend and tendencies towards convergence in the replacement rates offered to typical wage earners. We have indeed found a general downward trend in gross replacement rates offered by the respective national pension systems, but little sign of convergence in terms of relative differences between countries. For net replacement rates, including private occupational pensions, the downward trend is significantly smaller, and we find no evidence of convergence. However, when it comes to the public/private mix of income provision, we find both a common growth trend and a strong convergence in the share taken up by private occupational pensions. Finally, we find significant changes in the distributive profile of income protection in old age. The degree of overcompensation offered to low-wage earners tends to decline,


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and we find some convergence towards overall proportional systems of retirement provision. Our findings do suggest, however, that very significant policy changes have taken place in contrast to the prediction of simplistic path-dependence arguments. France and Sweden stand out as cases where both the generosity of retirement provision and its distributive profile appear to be undergoing radical change – in the one case through a structural reform, and in the other through a series of incremental changes. It seems difficult to maintain the impression that continuity outweighs change in an overall assessment of the implications of the Swedish pension reform for pension policy outputs. Obviously we cannot know whether these findings are the result of structural forces and a response to common problem pressures, or if they reflect political or ideational forces operating at the European or domestic level. However, the changes we have found in the distributive profile of retirement income provision can be taken as indications that current pension reforms are more than just a response to objective needs for cost containment.

NOTES 1. Path dependency theory can also be given a more dynamic formulation – see Pierson (2000). 2. The data on which this chapter is based relate to the year 2004. 3. See the definition of the representative worker in the section above.

REFERENCES Anderson, Karen M. and Meyer, Traute (2003), ‘Social democracy, unions and pension politics in Germany and Sweden’, Journal of Public Policy, 23(1), 23–54. Ervik, Rune (2006), European pension policy initiatives and national reforms: between financial sustainability and adequacy, Working paper no.10, Bergen: Stein Rokkan Centre for Social Studies. Green-Pedersen, Christoffer (2004), ‘The dependent variable problem within the study of welfare-state retrenchment: defining the problem and looking for solutions’, Journal of Comparative Policy Analysis, 6(1), 3–14. Green-Pedersen, Christoffer and Lindbom, Anders (2006), ‘Politics within paths: trajectories of Danish and Swedish earnings-related pensions’, Journal of European Social Policy, 16(3), 245–258. Hinrichs, Karl (2000), ‘Elephants on the move: patterns of public pension reform in OECD countries’, European Review, 8(3), 353–378. ISG (2006), Current and prospective pension replacement rates, Brussels: European Union.

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Myles, John (2002), ‘A new social contract for the elderly’, in Gøsta EspingAndersen (ed.), Why we need a new welfare state, Oxford: Oxford University Press, pp.130–172. Myles, John and Pierson, Paul (2001), ‘The comparative political economy of pension reform’, in Paul Pierson (ed.), The new politics of the welfare state, Oxford: Oxford University Press, pp. 305–333. Øverbye, Einar (1994), ‘Convergence in policy outcomes: social security systems in perspective’, Journal of Public Policy, 14(2), 147–174. Palier, Bruno (2000), ‘Defrosting the French welfare state’, West European Politics, 23(2), 113–136. Pierson, Paul (1994), Dismantling the welfare state: Reagan, Thatcher and the politics of retrenchment, Cambridge: Cambridge University Press. Pierson, Paul (2000), ‘Increasing returns, path dependence, and the study of politics’, American Political Science Review, 94(2), 251–267. Plümper, Thomas and Schneider, Christina (2007), The computation of convergence, or: how to chase a black cat in a dark room, Unpublished manuscript. Porte, Caroline de la (2004), ‘The OMC – a deliberative-democratic mode of governance? The cases of employment and pensions’, Journal of European Public Policy, 11(2), 267–288. Rhodes, Martin (2001), ‘The political economy of social pacts: “competitive corporatism” and European welfare reform’, in Pierson, Paul (ed.), The new politics of the welfare state, Oxford: Oxford University Press, pp. 165–196. Schludi, Martin (2005), The reform of Bismarckian pension systems: a comparison of pension politics in Austria, France, Germany, Italy and Sweden, Amsterdam: Amsterdam University Press. Whiteford, Peter and Whitehouse, Edward (2006), ‘Pension challenges and pension reforms in OECD countries’, Oxford Review of Economic Policy, 22(1), 78–94. Wilensky, H. L. (2002), Rich democracies: political economy, public policy, and performance, Berkeley, CA: University of California Press. Williamson, John B. (2004), ‘Assessing the pension reform potential of notional defined contribution pillar’, International Social Security Review, 57(1), 47–64. World Bank (1994), Averting the old age crisis, New York: Oxford University Press.


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APPENDIX Austria

Change in gross replacement rate 1st pillar

5

Ireland UK Netherlands

0

Belgium Finland Portugal Spain

–5 Denmark Germany –10 Sweden Italy

–15

France 0

2

4

6

Growth in old-age and early pension expenditure (2005–2050)

Figure 9A.1

Projected growth in old-age and early pension expenditure 2005–2050 versus change in gross replacement rate first pillar (2004–2050)

8

10.

Global health policy: what role for international governmental organizations? Christof Schiller, Henni Hensen and Stein Kuhnle

INTRODUCTION Although the world has seen substantial improvements in health conditions during the last 100 years, health issues increasingly appear on the agenda at the international level due to the cross-border reach of a number of infectious diseases such as HIV/AIDS, TB, malaria and bird flu. The need for strengthened international cooperation regarding health policy is generally acknowledged, but it tends to be the policy field where nation states defend their right of sovereignty most vigorously. As stated by leading health policy analysts: ‘Health, which at first instance seems to be the field most destined for joint action independent of territory (how often have we heard and used the phrase that disease knows no borders), remains a policy domain most protectively linked to the nation state’ (Kickbusch and de Leeuw 1999, p. 286). Health is a special field of social policy. Health care makes the most fundamental contribution to the promotion of equality of opportunity, and it is also claimed that it is distributed more equally than other social goods (Daniels et al. 2002). National health systems and policies vary enormously for political, cultural, ethical and economic reasons. Yet recently, notions of ‘global public health’ and ‘global health policy’ have been used to describe the heightened importance of international organizations in (national) health policy (Hein 2003; Kickbusch 2000). Their influence in health policy is assumed to have increased at the cost of national sovereignty. However, the way and the extent to which these new actors – international governmental organizations (IGOs), non-governmental organizations and private commercial or non-commercial actors – are able to influence health policies has not been, and is not, self-evident. We shall approach 212

Global health policy

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this question from the angle of some selected international governmental organizations active in the field of health. In recent years, scholars have increasingly turned to the question of how international organizations actually work. We shall, in our analysis of organizational capacity, make use of some of the dimensions proposed by Koremenos and colleagues (Koremenos et al. 2001).1 We shall add the following dimensions: ‘channels’ vis-à-vis national governments, and the scope of health-related issues, instruments and resources as indicators of the relative capacity of organizations. In a first step we will concentrate on four international governmental organizations – the WHO (World Health Organization, UNICEF, the World Bank and the WTO (World Trade Organization) – which are portrayed to be the most influential in international health policy (see for example Buse et al. 2005; Kickbusch and de Leeuw 1999; Koivusalo and Ollila 1997). Even ten years ago, Koivusalo and Ollila (1997) had already identified key actors and policy issues of the international health debate up to the mid-1990s. In this vein, our aim is to map the organizational field of the global health debate up to 2008. We will restrict ourselves to the main important health policy proposals which travel between and within international governmental organizations over time. We are interested in finding out how and to what extent the global health debate has changed by (1) describing the most important health policy proposals emanating from the international organizations and (2) assessing the congruence of those proposals. Finally, we will compare the organizational capacity of each of the organizations examined in order to find out how a possible shift in health policy proposals – that is, a decreased congruence – has been reflected by a change in the organizational capacities of the various organizations over time.

DEVELOPMENT OF A GLOBAL HEALTH POLICY? For a long time, the term ‘international public health’ was widely used to describe international cooperation and coordination within the field of public health. Only recently does the term ‘global public health’ seem to have become the preferred authoritative term in this field.2 The exact meaning of this shift in the use of terms is not quite clear. For example, in a report based on conversations with 29 international health leaders in governmental, non-governmental, professional, multilateral and academic institutions in 1999, it was reported that respondents were quite strictly divided into two groups. One group ‘felt it unnecessary to coin a new phrase to describe business as usual. They believed that “global health”

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was mere jargon’ (Bunyavanich and Walkup 2001, p. 1556). The other group emphasized profound differences, namely ‘“International” elicited conceptualizations of coordination constrained by nation-state boundaries, whereas “global” held a more positive connotation with improvement’ (Bunyavanich and Walkup 2001, p. 1556). These conversations revealed an ambivalent picture. How and to what extent has this shift from ‘international’ to ‘global’ been documented and interpreted in recent scholarly literature? Our review uncovers a spectrum which ranges from the emergence of a ‘world polity’ and ‘world culture’ (Inoue and Drori 2006) at one end, to a revival of national interests (Ingram 2005) in the field of public health at the other end. Although per se this does not necessarily have to be a contradiction, interpretations differ markedly, as will be shown. International cooperation and coordination is not a new phenomenon in public health.3 While tracing the dates of the founding of health-related international organizations and their respective stated objectives, Inoue and Drori find four distinct approaches and corresponding phases in international health, namely international health as: (1) an act of charity mainly from the 17th until the end of the 19th century, (2) a professional activity mainly until World War II, (3) a means of development (mainly until the1990s) and (4) more recently as a basic human right (Inoue and Drori 2006). The bulk of the 2640 health-related international organizations detected by Inoue and Drori were founded after World War II, and most extensively after 1970. They conclude that these globalization trends – namely, the consolidation of a global organizational field and the thematic shift in its framing of health – have dramatic implications for the delivery of health care and for the establishment of health systems on a national level. In their role as ‘teacher of norms’, these international organizations imprint national structures (governmental and non-governmental) with (1) the understanding that health is a core social concern and (2) the specific understanding of the social role of health. (Inoue and Drori 2006, p. 200)

A question that derives from Inoue’s and Drori’s analysis is how the policy proposals of the various actors can be described. Though the relation between founding date and organizational objective certainly provides useful information on discursive trends and the potential of a certain discourse over time, it pays little or no attention to the actual influence of certain actors and their policy proposals. While most scholars would certainly agree that the predominant discourse dimension before the 19th century was based on charity, interpretations concerning the other three approaches and their classification by time period differ somewhat. With regard to the development policy context and discourse, and taking


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into account the actors, context and process within policy reform, Walt and Gilson identify two distinct post-war phases: (1) a low-politics phase dominated by a medical paradigm until the late 1960s and (2) a high-politics phase with a debate on comprehensive versus selective health care at its forefront (Walt and Gilson 1994). Until the late 1960s they portray international health to be ‘a relatively restricted policy field dominated by medicine’ (p. 356). Consequently, during this period the state played a central developmental role and ‘health policy was decided largely on consensual grounds, partly because it was controlled by a medical elite’ (p. 356). Health policy appeared largely as ‘low politics’; this was reflected in international circles, with just a few international organizations (mostly the WHO) providing technical expertise and funds for specific single-disease focussed programmes. Walt and Gilson hence come to label the period between World War II and the end of the 1960s as a period dominated by a ‘medical paradigm’ (Walt and Gilson 1994), which largely corresponds to Inoue’s and Drori’s professional paradigm. By the late 1960s, the medical paradigm was coming more and more under fire from within the medical discipline and from historians, epidemiologists, social scientists and economists, who commented on the social and economic dimensions of health. A new approach found expression in the Alma Ata declaration of 1978 (described below in more detail), as for the first time the role of politics and conflict in health policy was explicitly mentioned. International health began to move up the ladder from being largely a ‘low politics’ issue to become more and more a ‘high politics’ issue, markedly leaving the consensual grounds of former times. In particular, the debate concerning comprehensive versus selective primary health care gained momentum during this time, partly due to the emergence of neo-liberalism in the 1980s and the concomitant preference for selective health care approaches (Walt and Gilson 1994). Other scholars differentiate international health regimes into ‘Westphalian public health governance’ and ‘post-Westphalian public health governance’ (Fidler 2005). The former regime, mainly meant to have lasted until World War II, comprised three aspects, namely ‘(1) the only actors are states; (2) the classical regime contained no provisions about, and showed no interest in, public health conditions inside states; and (3) the classical regime is laid down in consent-based rules of international law’ (Fidler 2005, p. 168). In the classic Westphalian international health regime, state sovereignty could thus not be challenged by any actor, that is, the principle of non-interference in domestic affairs dominated. The last regime began with the founding of the WHO after World War II with an emphasis on the human right to health, as was spelled out in the preamble to the constitution of the WHO. The new understanding of health as a basic human right opened national governance to scrutiny. This

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‘post-Westphalian’ order meant that the WHO was to play the prime role as coordinator and interpreter of epidemiological information and disease control across state borders thus influencing state actions and in practice curtailing Westphalian state sovereignty. The establishment of the WHO marked a departure from the hitherto horizontal governance approach of the Westphalian era, and the beginning of a vertical governance approach. The zenith of the post-Westphalian approach occurred in the late 1970s with the launch of the ‘Health for All’ campaign (Fidler 2005). Major differences in contrast to Westphalian times were that (1) local sources of diseases and general local health problems were now addressed by the WHO and (2) competing concepts were developed, namely the primary health care and the selective primary health care approaches (as described in more detail below). Since the 1990s, however, Fidler detects a revival of the Westphalian approach – a ‘neo-Westphalian’ approach – in parallel to the ongoing post-Westphalian approach, mainly due to the US again becoming re-engaged with public health policy (Fidler 2005). This assessment is further backed by Ingram, who – after having compared public health approaches of the UK and the US – concludes that there exist divergences and contradictions within the new global public health agenda, reflected in differences between US and UK policies. US approaches have been characterized by consistent unilateralism, neo-liberalism and an increasing securitization in relation to global health problems. These contrast with the approaches that the UK has promoted, which, while recognising the links between health, foreign policy and security, have placed much greater emphasis on multilateralism, the new meta-narrative in development, and the maintenance of development and security policies as relatively autonomous policy areas. (Ingram 2005, p. 397)

Returning to the distinction between ‘international’ versus ‘global’ public health policy, our brief review indicates that the picture remains ambivalent. While on the one hand scholars clearly seem to agree that numerous new and heterogeneous actors have entered the international stage and that their operations reach and influence the local level in contrast to former times, there seems to be controversy about the actual thematic shifts and the ideational influence of international organizations over time, be they international governmental or non-governmental organizations. In the following section we shall shed some light on the issue, but restrict our focus to some of the most important international governmental organizations, namely the WHO, UNICEF, the World Bank and the WTO, because these organizations often form the node for many non-governmental organizations. If indeed there was a development of a field of ‘global health politics’, as some scholars stipulate (Hein and


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Kohlmorgen 2003b), then we should find some evidence of this development in our analytical overview despite the fact that many of the new international actors are not considered in our analysis.

THE ROLE OF INTERNATIONAL GOVERNMENTAL ORGANIZATIONS: PROMOTER OF A POLITICAL GLOBAL PUBLIC HEALTH AGENDA? The World Health Organization (WHO) Health policy ideas and health care approach When the WHO started its work it ‘was the main, and, because of its technical expertise, authoritative actor in a fairly small policy arena’ (Walt 2006, p. 141) focussing largely on diseases only. Despite its visionary constitutional objective, the WHO initially concentrated on single disease programmes, such as, for example, the 1955 malaria eradication programme or the 1959 commitment to the global eradication of smallpox. This changed tremendously during the 1970s as developing countries became WHO members, the funding base changed and a wider network of interests became involved in international health policy. The tenure (1973– 1988) of Director-General Halfdan Mahler – a tuberculosis specialist from Denmark – is often portrayed as the ‘golden age of WHO’ (People’s Health Movement et al. 2005, p. 272). During his tenure, the WHO finally developed a stronger political role, in contrast to its earlier focus on technical expertise. The most visible expression of the shift in its role was the 1978 International Conference on Primary Health Care in Alma Ata, cosponsored by the WHO and UNICEF, and the resulting Alma Ata declaration on primary health care (PHC). This was depicted as ‘a very radical contribution to a new social paradigm of health care’ (Narayan and Unnikrishnan 2003, p. 5). The cornerstones of the new primary health care approach, which was to achieve the objective of ‘health for all’ by the year 2000, focussed on: (1) health as a fundamental human right, (2) universal accessibility and coverage, (3) comprehensive care with an emphasis on disease prevention and health promotion, (4) community involvement in health care and education, (5) inter-sectoral collaboration for health and (6) appropriate technology and cost-effectiveness in relation to available resources (Sanders 2003). Further achievements of Mahler’s tenure were the expanded programme on immunization, the model list of essential drugs and the international code on breast feeding. The PHC approach of 1978 has until today remained at least the declared normative yardstick, but much attention was drawn away from it in the

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following years due to competing views within the organization, competing programmes of other IGOs, financial setbacks and poor management. The WHO’s next two Director-Generals, Hiroshi Nakajima (1988–1998) and Gro Harlem Brundtland (1998–2003), followed a markedly different path from that of Mahler. Vertical programmes rapidly gained renewed importance. The tenure of Nakajima, a Japanese researcher with experience in drug evaluations, can easily be described as the most controversial tenure in the WHO’s history due to his widely alleged autocratic manner and poor management abilities, along with rapidly rising cronyism and corruption (Brown et al. 2006). Most memorable was his open dispute with Jonathan Mann, a highly respected American physician who was in charge of the WHO’s global programme on AIDS and who finally resigned from his position due to the conflict. Mann later became the main driver for the establishment of UNAIDS, substantially weakening the WHO’s influence and reputation in the international health community. During Nakajima’s tenure, extra-budgetary funding had finally overtaken the regular budget by the beginning of the 1990s, contributing 54 per cent to the WHO’s overall budget (Brown et al. 2006). The bulk of the money went into vertical programmes and was largely beyond the WHO’s control. This trend was further exacerbated during the subsequent tenure of Gro Harlem Brundtland, a former prime minister of Norway. Two other legacies of Brundtland also stand out: (1) the restructuring of the WHO’s central organization and (2) bringing the WHO back as a crucial player on the international scene. Brundtland was quite successful in changing the management of the headquarters, but her reforms did not extend to the regional and country offices. Concerning the second aspect, Brundtland established a Commission on Macroeconomics and Health, chaired by Jeffrey Sachs and including former ministers of finance, the World Bank, the IMF, the WTO and the UNDP. The resulting report identified a set of disease priorities which would require focussed attention. Furthermore, the report affirmed the role of the state in providing health services in poor and middle-income countries and cautioned against reckless privatization (Brown et al. 2006). Brundtland later pushed successfully for health to be a key aspect of the Millennium Development Goals. In order to sustain the WHO’s role in the international arena, she tried to strengthen the WHO’s financial position by organizing global partnerships and global funds (for example the ‘Roll back Malaria’ and ‘Stop TB’ initiatives) to bring together private donors, governments and bilateral and multilateral agencies, often in the form of public–private partnerships (PPPs). Not only did ties to the World Bank become much closer during Brundtland’s tenure, but the focus shifted ever more to vertical programmes and towards a narrower focus on certain ‘priority diseases’ (Brown et al. 2006).


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Today the WHO appears to be attempting to revive the primary health approach–at least this was the main agenda of Brundtland’s successor, Lee Jong-wook (Jong-wook 2003) during his short tenure from 2003 until he died in May 2006. Similar signals come from the current Director-General Margaret Chan (who in November 2006 succeeded the brief interregnum of Anders Nordström). Thus, in the 2005 World Health Report, the WHO advocates universal health care, which is to be achieved by phasing out user fees and introducing pooled prepayment systems through general taxation, social health insurance schemes or mixed systems. External resources should therefore also be channelled through these pooled prepayment systems (World Health Organization 2005b). At the time of writing, it is still too early to judge whether this revitalization of the Alma Ata vision and approach will be successful or not. Given the WHO’s organizational capacity, as outlined below, success seems highly unlikely. Organizational capacity The WHO was founded as a specialized UN Agency in 1948 in an attempt to bring international cooperation and organizations in the field of health under one common umbrella. It is portrayed as the ‘world’s leading health organization’ (Ling 2002b). The organization can claim universal membership, that is, it currently comprises 193 member states plus two associate member states. In order to fulfil its broad mandate as stated in Article 2a of ‘directing and coordinating international health work’ (World Health Organization 2005a), the WHO relies on a decentralized structure, comprising six regional offices: Copenhagen (European Region), Washington (Region of the Americas), Cairo (Eastern Mediterranean Region), Brazzaville (African Region), New Dehli (South-East Region) and Manila (Western Pacific Region) in addition to its headquarters in Geneva. The regional offices have significant discretionary power over the allocation of the regular budget, that is, they are responsible for formulating and implementing the annual budget and determining programme priorities (Walt 2006). This decentralized structure together with the significant amount of independence of the regional directors from the headquarters has led some critics to speak of ‘seven WHOs’ (Kickbusch 2000). The positive effect of the decentralized structure, combined with significant independence from the UN family in general, is that the WHO with its very wideranging mandate covering up to 22 functions, has the flexibility, at least in theory, to respond to changing contexts and priorities. Furthermore, the rules for controlling the organization are overly democratic, that is, the ‘one state–one vote’ rule applies in the World Health Assembly (WHA) as the supreme governing body, giving the many developing countries unparalleled opportunities to exert influence. Most decisions are made

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by consensus. Conventions and recommendations adopted by the WHA typically cannot be enforced, and are legally non-binding. Some of the initiatives were very influential, such as the International Health Regulations (IHR) of 1969, which replaced the International Sanitary Regulations, and are the only binding rules governing international health, and the ‘Essential Medicines List’ (1977). The WHO has earned the reputation as ‘the leading global authority preparing guidelines and standards on numerous issues, and the foremost source of scientific and technical knowledge in health’ (People’s Health Movement et al. 2005, p. 275). A depiction of the WHO as the world’s leading health organization gives rise to expectations that the WHO would develop to be the prime driver and promoter of a political global health agenda, but other crucial organizational features point in the opposite direction – uncovering an organization which is dramatically losing significance compared to former times. Why is that? First and foremost, this is due to the WHO’s limited financial resources, which are mainly spent on staff and production of knowledge (Kickbusch 2000). In 2001, 3608 fixed-term employees or career staff plus 4746 shortterm employees worked for the WHO, one-third of them being professional staff (Minelli 2006). For financial resources, the organization is dependent on a small number of member states, with the US being the biggest contributor, but also the contributor constantly in arrears. The biennial regular budget, which is collected from the regular dues of the member states, has remained almost constant recently, and amounted to US$ 842 million in the period 2000–2001 and 2002–2003 (Minelli 2006). The biennial regular budget of 2006–2007 saw a slight increase to US$ 915 million (World Health Organization 2007). The regular budget today, however, makes up only 28 per cent of the total WHO budget, the lion’s share being so-called voluntary contributions, which mainly come from member states (67 per cent), other UN organizations (17 per cent) and foundations (6 per cent). This adds up to a comparably tiny sum of US$ 3.3 billion as the total WHO budget for 2006 and 2007 (World Health Organization 2007). These voluntary contributions have risen enormously in the past and have more than tripled from US$ 742 million in the period 1989–1990 (Minelli 2006) to US$ 2.4 billion in the period 2006–2007. Voluntary contributions are to a great extent earmarked for specific projects and vertical single-focus disease programmes, and are virtually beyond the control of the WHO. These extra-budgetary resources provide health ministries with more financial resources, but this method is often used to bypass the WHO’s regional and country offices (Walt 2006). In this vein, 53 per cent of the WHO’s expenditure is spent on so-called ‘essential health interventions’, that is, vertical programmes, while only 13 per cent is spent on health policies, systems and products (World Health Organization 2007).


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Another important aspect is the channels through which the WHO acts vis-à-vis national governments. These channels are restricted. Because the WHO’s mandate – despite being rather broad – is mainly restricted to the health sector, the main interface is with the relatively weak and low-prestige national health ministries. Frequently, the small and poorly funded WHO country offices, often housed within the ministry, have to spend their entire budget on ‘ad hoc financing of fellowships or study tours, workshops and miscellaneous supplies and equipment’ (Walt 2006, p. 137). Consequently, there is often no room ‘to assist in any strategic planning for the health sector or programming the allocation of scarce resources’ (Walt 2006, p. 137). Last but not least, the WHO’s focus on expert knowledge is also reflected in the recruitment practice of the organization. The overwhelming majority of the professional staff are still doctors, who are ill-equipped in terms of policy and management knowledge (People’s Health Movement et al. 2005). A summary of WHO’s organizational capacity can be found in Table 10.1. UNICEF Health policy ideas and health care approach Starting as a relief agency, UNICEF mainly furnished equipment and supplies to countries for mass-disease campaigns against malaria, yaws, TB, typhus and so on, with the WHO providing the technical support (Ling 2002a). From the 1960s, and due to its engagement in rural health services together with the WHO and the Food and Agriculture Organization (FAO) of the UN, UNICEF attempted to broaden its focus to the ‘whole child’ (Ling 2002a). As of the early 1970s, UNICEF had successfully shifted its emphasis to the provision of basic services for children, including education, and had visibly developed into a development agency (Ling 2002a). A landmark in UNICEF’s development was the Alma Ata conference (1978), resulting in the declaration of primary health care and the goal of ‘Health for All in the Year 2000’. This approach was, however, very soon criticized as too idealistic, at a conference sponsored by the Rockefeller Foundation in Bellagio, Italy, in 1979.4 This conference focussed on an alternative concept to that articulated at Alma Ata, namely selective primary health care (SPHC) (Brown et al. 2006). This approach recommends pragmatic low-cost interventions and strongly advocates a shift of priority to diseases with the highest prevalence, highest morbidity or mortality, highest risk of mortality and best possibility of control in terms of effectiveness in method and cost of intervention (Rifkin and Walt

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Table 10.1

Organizational capacity of the WHO

Dimensions Membership rules

Universal. 193 members plus two associate members.

Scope of issues

Limited. Health and environmental issues only.

Centralization of tasks/management

Decentralized. 34-member executive board plus six regional offices (Staff 3608 fixed-term and 4746 shortterm, 37% professionals, 58% general service, 5% others). The six regional offices have a significant amount of independence.

One state, one vote (most decisions are made by Rules for controlling consensus) BUT: 72% of the budget is earmarked for the organization specific projects and programmes (beyond the WHO’s (voting arrangements control as it requires consultations with donors). & financing) Flexibility of arrangements

Formally high, 22 functions and high amount of decentralization.

Enforcement

Not possible. Conventions are non-binding.

Channels

●

●

Rather sparse, primarily through giving advanced health expertise to key national health agencies and research institutions. Trying to create binding instruments like the framework convention on tobacco.

Scope of healthrelated issues

Broad.

Instruments

● ● ● ●

Resources

Research and debate. Setting norms and standards. Technical support (to help make norms, standards and policy options available, but no implementation). Monitoring.

Small. Total WHO budget for 2006–2007 was only US$ 3.3 billion.

1986). Rifkin and Walt point out that this alternative approach is not merely a pragmatic way to realize PHC, but in fact a diametrically different approach, leading to very different outcomes. While PHC understands health (improvement) primarily as a process dependent on individual knowledge and choice, SPHC understands health improvement primarily as a result of programmes based on medical and technological interventions, leading – as Rifkin and Walt show – to a fundamentally different


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understanding of health in general, the importance of equity, the relevance of a multi-sectoral approach and the importance of community involvement (Rifkin and Walt 1986). In practice, SPHC found expression in persona of UNICEF’s new executive director, James P. Grant, and the launch of the so-called ‘Child Survival and Development Revolution’ (CSDR) in 1982, which focused on four inexpensive interventions to reduce child deaths. The acronym ‘GOBI’ represents these four programme components, namely: (G) Growth monitoring to detect early signs of child malnutrition; (O) Oral rehydration to prevent death by dehydration as a consequence of diarrhoea; (B) Breast-feeding to stop the unhealthy and often deadly effects of infant formula in poor communities; and (I) Immunization against the six vaccine-preventable diseases. GOBI-FFF afterwards added food security, female education and family planning to the list (Ling 2002a). The subsequent tenure of Carol Bellamy then saw a slight shift away from the narrow ‘child survival’ approach towards a more comprehensive agenda for child development and rights. The rights of children, the importance of girls’ education and early childhood development generally gained significance during her tenure (People’s Health Movement et al. 2005). At the time of writing, it is too early to assess the main focus of the tenure of the new executive director, Ann M. Veneman. However, a step towards a comprehensive health approach and the development of a closer working relationship with the WHO, in which the WHO takes the lead in developing the strategies, would come as a major surprise. Organizational capacity The United Nations Children’s Fund (UNICEF) was created in 1946 as a temporary agency to provide urgent relief aid to children in post-war Europe.5 Only seven years later – in 1953 – it was transformed into a permanent agency. It spends as much as 80 per cent of its funds on public health programmes (Ling 2002a), indicating a substantial contribution to international health. The organizational capacity of UNICEF is summarized in Table 10.2. Being an integral part of the UN system, it can claim universal membership. Despite its rather limited mandate from the United Nations General Assembly ‘to advocate for the protection of children’s rights, to help meet their basic needs and to expand their opportunities to reach their full potential’,6 the organization has widened its scope of issues considerably. Today, it encompasses areas as diverse as humanitarian assistance, girls’ education, immunization, child protection, early childhood development and HIV/AIDS (UNICEF 2006). As an ‘operating agency’ of the United

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Table 10.2

Organizational capacity of UNICEF


Universal.

Scope of issues

Limited. Health and educational issues only.

Centralization of tasks/ management

Decentralized. 36-member executive board plus 7 regional offices and 126 country offices. 90% of the 7000 staff work in regional or country offices and have significant amount of independence.

Rules for controlling the organization (voting arrangements & financing)

One state, one vote (most decisions are made by consensus) BUT: executive director is always US citizen. Income entirely derived from voluntary contributions and 71% of these are virtually beyond the organization’s control.

Flexibility of arrangements

High.

Enforcement

Not possible.

Channels

Formally restricted, but good access through ‘national committees’ and celebrities.

Scope of health-related issues

Broad. Although primarily focussed on children and mothers, nearly all-encompassing.

Instruments

● ● ● ●

Resources

Research. Emergency relief. Technical support. Monitoring.

Small. Total annual budget for 2005 was US$ 2.7 billion.

Nations system it enjoys – formally speaking – no such independence from the UN family as the WHO or the World Bank, that is, the executive director is appointed by the UN Secretary-General in consultation with its 36-member executive board. Board members are in turn elected by the Economic and Social Council (ECOSOC) of the UN for a threeyear term (Ling 2002a). Although no formal agreement exists, UNICEF has always had a US executive director. The recent appointment of Ann M. Veneman, the former head of the US Department of Agriculture and an agrochemical and food industry lawyer and lobbyist, has led to fierce criticism of this procedure and to the foundation of a ‘Save UNICEF’ campaign by the People’s Health Movement (Margetts 2005; People’s Health Movement 2005).


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Like the WHO, UNICEF has a decentralized structure, comprising seven regional offices and 126 country offices, with a unique 90 per cent of its staff (currently about 7000) being located in country or regional offices (People’s Health Movement et al. 2005). Thus, Ling notes that ‘UNICEF representatives at the country level have considerably more authority and resources than those of its sister UN agencies, but they generally serve under the leadership of the UN resident coordinator’ (Ling 2002a, p. 4). UNICEF thus faces similar challenges to the WHO, that is, on the one hand this structure allows UNICEF to have a high degree of flexibility to respond to different contexts and changing priorities, but on the other hand, it causes high transaction costs. As with most other UN organizations, UNICEF has an unweighted voting structure and a consensus-oriented decision-making procedure (Jolly 1991), giving developing countries in theory good opportunities to influence the organization’s policy. In contrast to the WHO, however, this does not apply to the election of the executive director, which in turn guarantees considerable US influence over UNICEF’s policy. This is further underlined by the fact that in contrast to the WHO, UNICEF derives its resources entirely from voluntary contributions. These can be divided into: (1) so-called ‘regular resources’, which are unrestricted in their use and are used to fund UNICEF’s country programmes, and (2) so-called ‘other resources’, which are restricted in their use for specific purposes detailed by donors. In 2005 these ‘other resources’ accounted for 71 per cent, adding up to a total annual income of US$ 2.7 billion (UNICEF 2006), which is a tiny sum compared to the resources of the World Bank spent on health, but notably higher than the annual budget of the WHO.7 In general, ‘regular resources’ have increased at a much slower pace than ‘other resources’. Another unique feature of the financing structure is the large share of private sector funding, which is 38 per cent compared to 50 per cent government funding, 4 per cent NGO funding, 3 per cent IGO funding and 3 per cent inter-agency arrangements in 2005 (UNICEF 2006). UNICEF’s channels vis-à-vis national governments seem at first sight to be as restricted as those of the WHO. However, due to the unique organizational feature of the so-called ‘UNICEF National Committees’, of which there are currently 37 in the industrialized world, UNICEF is able to mobilize considerable public support for its programmes, not least in industrialized countries. In 2005, the national committees alone were able to contribute 37 per cent of all UNICEF income (UNICEF 2006), not to mention the several channels through which they raise public awareness, for example through dedicated celebrities and their good access to the national governments of donor countries.

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The World Bank Health policy ideas and health care approach The World Bank summarizes its health policy approach as follows: [T]he global community should focus on helping countries design policies that can foster access by the poor to health-enhancing services and protect the poor and near-poor from catastrophic health spending. User fees can be harmonized to achieve these objectives if they reduce financial barriers to the poor by improving the quality of public services, reducing waiting time, reducing the need for costly self-medication, or substituting lower-priced quality public services for more expensive private care. (Gottret and Schieber 2004, p. 31)

Since its inception in 1944, the World Bank has undergone a number of major changes in the field of health policy.8 In the 1950s and 1960s, the Bank focussed mainly on infrastructure projects and physical capital and relied on the then prevailing wisdom that economic growth would ‘trickle down’ and development would follow. A remark by Robert Cavanaugh, the Bank’s chief fundraiser in 1961, summarized the Bank’s position at the time: If we got into the social field . . . then the bond market would definitely feel that we were not acting prudently from a financial standpoint. . . . If you start financing schools and hospitals and water works, and so forth, these things don’t normally and directly increase the ability of a country to repay a borrowing. (Ruger 2005, p. 63)

Indirectly, the World Bank’s preoccupation with health policy began in the mid-1960s, when population growth in developing countries started to become a health issue (Walt 2006, p. 126). Slowly, the Bank’s focus began to emphasize family planning and nutrition. Yet, family planning still only represented a very small fraction of overall Bank lending and the first nutrition loan was not granted until 1976 (Ruger 2005). In 1974, the Bank issued the first report on the policy aspects of lending in the health sector, in which the authors’ recommendation was to ‘stay the course’ and finance health-related components of projects instead of pure health projects (World Bank 2007a). Direct support for health services followed in 1979, when the Bank realized that health policy and poverty reduction could not be separated. During this year, the World Bank’s executive directors decided to provide direct lending for health projects and created the World Bank’s Department for Health, Nutrition and Population (HNP). However, in the 1970s and early 1980s, health sector projects still made up only a small fraction of overall World Bank spending (Wogart 2003) and health policy at the Bank was still mainly an issue of population control.


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According to Wogart, ‘the Bank’s involvement in health and nutrition gave it . . . a better opportunity to discuss population issues in the context of less controversial major health issues’ (Wogart 2003, p. 193). By the end of the 1980s, the Bank had come under excessive scrutiny due to its structural adjustment policies (Abouharb and Cingranelli 2006; Easterly 2001; Pieper and Taylor 1998). A review of the Bank’s health policy between 1970 and 1995 by its own Evaluation Department criticized several aspects of the Bank’s health policy. A main critique was the fragmentation of the programmes (Human Development Network 1997). In Financing Health Care: An Agenda for Reform (1987), the World Bank issued its first health policy strategy (Walt 2006). Not surprisingly, the report focussed on less state involvement and more private health care. The report openly promoted a ‘neo-liberal’ agenda which supports privately managed services backed up by public health programmes (Wogart 2003). In particular, the need for improved health sector financing, including highly controversial user fees/charges, was emphasized.9 In the World Development Report: Investing in Health of 1993, the World Bank reaffirmed this position and set the framework for a health policy based on cost-effectiveness (Walt 2006). Previously, an internal World Bank review of 1800 projects in over 130 countries with a total budget of roughly US$ 140 billion had found devastating results: almost one-third of the projects completed up to 1991 were considered a failure (Wogart 2003). In its first Development Report focussing completely on health, the Bank put forward several key recommendations: ‘educating girls and empowering women, reallocating government resources from tertiary facilities to primary care, investing in public health and essential clinical services, and promoting private and social insurance and competition in health services delivery’ (Ruger 2005, p. 66). In particular, the last-mentioned policies were heavily criticized due to their focus on privatization. In addition, the introduction of ‘disability adjusted life years’ (DALYs10) provoked harsh criticism. After James Wolfensohn became president in 1995, the Bank started to change its priorities from purely macroeconomic strategies towards strategies to fight poverty (Hein and Kohlmorgen 2003a; Wogart 2003). In 1997, the Bank published a strategy paper for its future involvement in health policies. The strategy was supposed to mainly target the poor and increase the efficient allocation of public health finances. Alex Preker, principal economist at the World Bank, clarified the Bank’s position towards user fees: ‘We, in this paper [the 1997 sector strategy], distance ourselves from [user fees] and make it quite clear that it isn’t bank policy. The bank doesn’t have a particular policy on whether user charges should or shouldn’t be used’ (quoted in Abbasi 1999, p. 1005).

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Among the key developments within the World Bank was the espousal of the sector-wide approach, which was strongly supported by Robert Feachum, director of the HNP department (Abbasi 1999). In this approach, the entire health sector is addressed instead of single diseases or fragmented projects (Cassels and Janovsky 1998). Donors agree to fund projects for the entire health sector from one single basket and to negotiate spending together with the lending country (Garner et al. 2000). However, the sector-wide approach does not necessarily imply a choice of a specific policy (for example universal health insurance), but instead refers to the mode of resource allocation. The goal is to reduce duplication of projects and develop a more coherent approach. While the sector-wide approach has the advantage of pooling previously fragmented donor involvement, it means less influence for national governments, since donors gain a voice in the national allocation of resources (Abbasi 1999). The most crucial argument for IMF and World Bank influence vis-àvis national governments is the fact that every national poverty reduction strategy has to be approved by the Boards of the IMF and the World Bank (Eberlei 2003). These are in turn influenced and shaped by the dominant industrial powers, most notably the United States, which leaves much leeway to formulate conditions: ‘In the case of health insurance, this translates into “individualism with a safety net”’ (Wogart 2003, p. 200). Yet reviews of Poverty Reduction Strategy Papers (PRSPs) with regard to health policy show that the majority of strategies ‘lack countryspecific data on the distribution and composition of the burden of disease, a clear identification of health system constraints and an assessment of the impact of health services on the population’ (Laterveer et al. 2000, p. 138). Moreover, while most PRSPs include technical strategies for reducing diseases, the (re)organization of health care spending is addressed in less than half of the PRSPs (Laterveer et al. 2000). This finding is contrary to the World Bank rhetoric on health as the top priority. The authors corroborate that only a quarter of the strategies actually address issues of equity and distribution. Only a few of the papers included budgets for health expenditure (Laterveer et al. 2000). The IMF had stated several times before that ‘the usual track of macroeconomic adjustments is not negotiable in the context of PRSPs’ (Eberlei 2003, p. 70). The fact that health strategies are not a fixed part of all poverty reduction strategies seems to support Buse and Walt, who argue that ‘health is viewed within the Bank, not as a right, . . . but instead as an economic commodity’ (Buse and Walt 2000, p. 177). Recently, the Bank has started to recognize the increased salience of international (non-governmental) organizations. Due to the global public–private partnerships, such as the initiatives Roll Back Malaria,


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Stop TB and the Global Alliance on Vaccines and Immunisation (GAVI), the World Bank is increasingly looking for its unique position among the donor institutions. Most of these initiatives have focussed on combating single diseases and are investing millions. In addition, new private actors such as the Bill and Melinda Gates Foundation are taking over the field of single diseases (Bartsch 2003). These initiatives have increased spending to such an extent that the World Bank is forced to highlight its ‘added value’ – even though the World Bank is still the most important global actor when it comes to health (Hein 2003; Ruger 2005). In response to these developments, the Bank issued a new strategy in May 2007 to emphasize the importance of health systems. Rather than disbursing funds for specific projects, the goal is to link outcomes, for example the vaccination of children, directly with Bank loans. In Healthy Development: The World Bank Strategy for Health, Nutrition, and Population Results, the Bank redirects its focus on strengthening health care systems as a whole (World Bank 2007b). Fairly self-critical, the Bank also admits that health, nutrition and population spending had the lowest performance in the Bank since 2001 (World Bank 2007b). It is too early to assess any effects of the newly devised strategy, since it has not yet found its way into budget allocations. Organizational capacity The World Bank Group is the single largest external financer of health projects worldwide (Buse and Walt 2000; de Beyer et al. 2000). With its membership of 185 states, the Bank has the same coverage as the IMF and the ILO. The World Bank employs roughly 10 000 people in Washington or in one of the more than 100 country offices. Of these, 7000 work in Washington and about 3000 in country offices in the developing world (World Bank 2007b). The distribution of personnel between Washington and the country offices reflects the centralized structure within the World Bank, where 24 executive directors dominate decision making. The organizational capacity of the World Bank is summarized in Table 10.3. The World Bank’s rules for controlling the organization are based on the principle ‘those who pay decide’. It is organized like a cooperative, where member states are shareholders (World Bank 2007a). Voting rights within the Bank are based on shares. In practice, the Bank’s management decides most issues, rather than the member states (Walt 2006), that is, the Board of Governors is ‘largely ceremonial’ (People’s Health Movement et al. 2005).11 Year-round decisions are taken by the 24 executive directors, of whom the five largest shareholders, France, Germany, Japan, the United Kingdom and the United States each always appoint one executive director. The rest of the shareholders are divided into 19 constituencies, each

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Table 10.3

Organizational capacity of the World Bank


185 Member States.

Scope of issues

Broad scope of issues related to poverty reduction and economic development.

Centralization of tasks/ management

Centralized. Main loan decisions are taken by the Executive Board (24 members – of which 5 for the biggest donors). The Board of Governors meets once a year. The World Bank has approximately 10 000 staff members. Of these, 7000 work in Washington and 3000 are employed in 100 regional offices.

Rules for controlling the organization

Shareholder principle.


Little flexibility.

Enforcement

Loan conditionality, but no ‘hard’ institutionalized enforcement mechanism.

Channels

Broad access due to the large range of issues covered (access to all sector ministries).

Scope of health-related issues Nutrition, health sector financing, health insurance, public health expenditure, infectious diseases, population control, family planning. Instruments

● ● ● ●

●

Resources

Financial Assistance and loan conditionality. Research and debate. Setting goals for macroeconomic development and public spending. Technical support (to help implement macroeconomic development strategies, specific projects). Monitoring.

Large. US$ 23.6 billion for projects in developing countries in 2006. Approximately US$ 5 billion for health-related projects (Walt 2006)

represented by one director. Currently, China, Russia and Saudi Arabia also each represents a single ‘constituency’, each electing one executive director on its own. The US holds almost 17 per cent of the shares, thus giving it the possibility to veto any decision requiring a so-called ‘super-


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majority’ of over 85 per cent (People’s Health Movement et al. 2005; World Bank 2007c). Taken together, the five largest shareholders currently control 37.39 per cent of all votes (World Bank 2007c). In contrast, 21 African countries form one constituency with a voting share of 3.36 per cent (World Bank 2007c).12 Due to the broad range of issues covered by the World Bank, the organization has important channels of influence vis-à-vis national governments. The financial institutions have access to all of the sectoral ministries, most importantly the ministries of finance and the office of the prime minister. This gives the World Bank significant ideational influence when it comes to devising national health care strategies. The Bank’s impact on (health) policies stems firstly from the fact that it can influence governments directly via monitoring, provision of information, technical assistance and financial assistance. As a result, the Bank is able to exert a significant ideational and financial influence on the development of health policies in borrowing countries (Abouharb and Cingranelli 2006; Craig and Porter 2003; Easterly 2001; Eberlei 2003). But the World Bank also has significant multiplier and signalling effects to other donors. With an overall spending budget of roughly US$ 25 billion a year (People’s Health Movement et al. 2005), the Bank has an immense impact on development policy (the IMF has outstanding loans of about US$ 28 billion to 74 countries). With cumulative disbursements of US$ 12 billion and cumulative new lending of US$ 15 billion between 1997 and 2006, the Bank spent more than any other development agency on health projects (World Bank 2007b). World Trade Organization Health care policy ideas and health care approach The WTO addresses the procedures and regulation of trade-related health issues, not the content. Thus, it is difficult to identify its health policy ideas. Yet its activities have an immense impact on global health in two ways: they determine which (health) issues are part of the trade agreements, and they set the scope of trade among WTO members (Koivusalo 2003). Four areas of agreements shape the national provision of health care. First, the Agreement on Technical Barriers to Trade (TBT) covers issues such as trade in biotechnological and pharmaceutical commodities, and equal access and questions of benefit sharing of health (medicines and genetic) resources. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is decisive when it comes to patenting new medicines and providing developing countries with access to cheap medicines. The General Agreement on Trade in Services (GATS) involves, among

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others, health care services, movement of patients and cross-border provision of health care services. The Sanitary and Phytosanitary Agreement (SPS) details rules for countries which want to restrict trade to ensure food safety and the protection of human life from plant- or animal-transmitted diseases (Bettcher et al. 2000). Major health issues are influenced by WTO regulations (WTO and WHO 2002), such as: infectious disease control; food safety; tobacco; environment; access to drugs; health services; food security and nutrition; and emerging issues (such as biotechnology). Let us give a brief overview of each of the main WTO treaties to illustrate the different instruments with which the WTO influences or restricts national health policies. The Technical Barriers to Trade (TBT) agreement came into force in 199513 and requires all member states to ensure that product requirements do not create unnecessary obstacles to trade. However, countries are allowed to obstruct trade for ‘legitimate’ reasons, such as health. According to the WTO, of the 725 notifications that were received in 2000, 254 addressed human health or safety issues (WTO and WHO 2002). Mostly these refer to harmful substances or technical devices which might have an impact on human health (such as electromagnetic waves). In practice, it proves to be quite difficult to decide which measures are necessary ‘to protect human, animal or plant life or health’, and which are not. When the WTO was created in 1994, increasing global trade led industrialized countries and multinational corporations to pursue regulations on intellectual property rights. Most developing countries opposed the agreement, fearing that revenues on global (biotechnological and genetic) resources would be directed to the multinational corporations of the North only (Bettcher et al. 2000; Koivusalo 2003). As previous intellectual property regimes had lacked enforcement, the Protection of Intellectual Property (TRIPS) agreement was agreed upon at the Uruguay Round (Bettcher et al. 2000).14 TRIPS raised a variety of concerns in the health sector. The fear was and is that medical technologies and pharmaceuticals in developing countries would be too expensive to be accessible to a wide range of people (Woodward et al. 2001). On the other hand, pharmaceutical corporations and many industrialized countries have argued that intellectual property rights foster and facilitate the development of new and improved medicines. The European Community and the US have both pressured consistently for strict regulations, in line with the demands of the pharmaceutical industry (Koivusalo 2003). Yet research has shown that the pharmaceutical industry still has little incentive to develop medicines for ‘typical’ developing country diseases such as malaria or tuberculosis (Winstanley and Breckenridge 1997). The question of cheap medicine for developing countries surfaced at the WTO summit in 2001, when several


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governments, most prominently Brazil and South Africa, had passed bills that allowed the import (and export) of cheaper generics. Almost 40 pharmaceutical companies, headed by the big players GlaxoSmithKline, Merck and Roche then brought the case to court via their governments (Lee and Drager 2005). It was the pressure of non-governmental organizations such as Médécins Sans Frontières and Health Action International which prevented the companies from following through with their claims. Later the same year, the Doha Ministerial Council agreed to integrate a TRIPS clause allowing member states ‘to protect public health and, in particular, to promote access to medicines for all’ (Lee and Drager 2005, p. 91). Now, TRIPS allows measures necessary to protect public health and nutrition, provided that they are consistent with other TRIPS provisions (TRIPS Agreement Article 8). Each member state has the right to grant compulsory licences. These allow the government to produce pharmaceuticals without the consent of the original patent holder in the case of a national emergency (TRIPS Agreements Article 31b). ‘Public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency’ (Lee and Drager 2005, p. 91). At a meeting of the WTO in August 2003, WTO members decided to allow compulsory licences so that any member country can export generic pharmaceutical products made under compulsory licences to meet the needs of importing countries. The General Agreement on Trade in Services (GATS) is the first worldwide system of regulations for trade in services. Trade in health services is growing rapidly. For developing countries, the migration of health care professionals to developed countries is a problem since these countries lose qualified personnel for the establishment of a domestic health care system. GATS has an influence on health services in several ways: (1) movement of consumers relates to patients seeking treatment abroad or students seeking education abroad; (2) movement of persons supplying services relates to the movement of health personnel; (3) foreign commercial presence relates to foreign direct investments in health care (hospitals, care centres) or health insurance; and (4) cross-border trade relates to care delivery, medical education or technical expertise in medical issues. GATS does not include any service by governments, and thus also excludes public health care. Article 1.3 establishes two criteria defining government services: (1) they must not be supplied on a commercial basis and (2) they must not be supplied in competition with one or more service suppliers. Just like the agreements for TRIPS or TBT, Article XIV of GATS entitles members to protect health issues – under the condition that non-discrimination is applied. However, if private and public providers of health care coexist in most countries – is health care then commercial?

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Critics contend that solidarity and public health care might decrease if GATS is followed through (Pollock and Price 2003). The Sanitary and Phytosanitary Agreement (SPS) was a result of the fear of many developing countries that health and environmental issues would be used to protect domestic agricultural sectors. The Agreement lays out rules for countries which want to restrict trade to ensure food safety and the protection of human life from plant- or animal-transmitted diseases. The goal of the SPS Agreement is thus precisely to ensure ‘that a sanitary or phytosanitary requirement does not represent an unnecessary, arbitrary, scientifically unjustifiable, or disguised restriction on international trade’ (Preamble of the SPS Agreement). In contrast to the TBT Agreement, which allows states to pursue a variety of national objectives (such as human health), the SPS agreement allows for restrictions only when scientifically justified (WTO and WHO 2002). The application is restricted to the protection of human life or health. Scientific justification may, for example, be based on international standards such as the FAO/WHO Codex Alimentarius. However, the definition of a scientific justification is especially difficult when it comes to precautionary measures (Lee and Drager 2005). The most prominent example is the beef hormone dispute between the US and the EU. The US successfully challenged the EU’s ban on beef treated with artificial hormones (Koivusalo 2003; Shaffer et al. 2005). The EU argued that these hormones have negative effects on human health. Precaution would have demanded forbidding trade with hormone-treated meat (Bettcher and Lee 2002). Similar disputes arose between the EU and developing countries regarding pesticides. The assessment of agricultural agreements always draws a thin line between protectionism and justified health protection. All things considered, the WTO provides a number of exceptions from free trade for the health sector. WTO members have the right to restrict trade in goods when such measures are necessary to protect the health of humans, animals or plants, or otherwise relate to the conservation of natural resources, and WTO decisions have reiterated a number of times that WTO members have the right to determine the level of health protection they deem appropriate (WTO and WHO 2002). More difficult is the process of defining whether a measure is ‘necessary’ or not. According to a joint report issued by the WHO and the WTO in 2002, this involves weighing and balancing a series of factors which include the importance of the interests protected by the measure, its efficacy in pursuing the policies, and its impact on imports or exports. The more vital or important the policies, the easier it would be to accept as ‘necessary’ a measure designed for that purpose. (WTO and WHO 2002)


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The dispute settlement mechanism, which will provide the core of international case law on trade issues, is mainly an instrument for settling trade disputes – not an instrument for settling health disputes. Meri Koivusalo summarizes pointedly: ‘The real dilemma in the context of trade and investment agreements is . . . between public interests and public health policies and commercial and private sector profit interests reflected often in national trade and export emphases’ (Koivusalo 2003, p. 203). Organizational capacity The World Trade Organization (WTO) is among the teenagers of international organizations.15 Today, the WTO has a membership of 150 states, covering 97 per cent of the world’s trade (WTO 2007). While the GATT dealt with trade in goods only, the WTO covers trade in services and intellectual property as well. Thus, the WTO – although not concerned with health policy as such – can have far-reaching implications for national health policy. Its organizational capacity is summarized in Table 10.4. WTO’s structure serves as a forum for states to settle trade agreements, monitor national trade agreements according to these agreements and to settle trade disputes. The WTO does not have a unique health strategy, but its policies have an immense impact on health. Its agreements on trade (GATS, TRIPS and so on) have significant market creation functions (Hein 2003). Liberalization of markets and competition are seen as the main drivers of economic growth, which in turn reduce poverty – which in turn improve health (Koivusalo 2003; Ruger 2005). The WTO structure is based on three councils, one each for trade in goods, services and intellectual property. Six additional committees with a smaller scope cover issues such as regional trade agreements and the environment. Most important is the ministerial conference which meets at least once every two years. The day-to-day work in between ministerial meetings is handled by the General Council, with representatives of all WTO member states. It also meets, under different rules, as the Dispute Settlement Body and as the Trade Policy Review Body (WTO 2007). Formal voting follows the rule ‘one state, one vote’, and decisions are made by consensus. The secretariat is quite small, with approximately 630 staff members headed by a director general. Its annual budget is roughly 160 million Swiss francs. Like the WHO, it is based in Geneva, but, unlike the WHO, it has no regional offices. While the WTO grants technical assistance in implementing WTO agreements, it does not offer any form of general development assistance (WTO and WHO 2002). Unlike the GATT before it, the WHO, UNICEF or most of the UN

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Table 10.4

Organizational capacity of the WTO


150 member states.

Scope of issues

Global rules of trade.

Centralization of tasks/management

Centralized. The Ministerial Conference meets at least once every two years. The General Council - which also meets as the Trade Policy Review Body and the Dispute Settlement Body - meets several times a year. In addition, a number of specialized Councils (Goods Council, Services Council and Intellectual Property (TRIPS) Council) and some smaller committees are concerned with the different agreements. The WTO Secretariat is fairly small with 600 staff members and concentrates on legal questions.

Rules for controlling the organization

One state, one vote (decisions are made by consensus).


Little flexibility as all rules of trade are made by states and the WTO has only very limited capacity for providing legal implementation advice. States maintain the right to restrict trade if deemed necessary to protect health issues.

Enforcement

Possible via the Dispute Settlement Body (with Appellate Body).

Channels

Negotiations led by the ministries for international (economic) cooperation.

Scope of healthrelated issues

Multilateral Trade (in Goods) Agreements (MTAs): trade in biotechnological and pharmaceutical commodities, global food trade. Trade-related Aspects of Intellectual Property Rights (TRIPS): patenting rights for medicines. General Agreement on Trade in Services (GATS): health sector services. Sanitary and Phytosanitary Agreement (SPS): nutrition and agricultural trade.

Instruments

● ●

Resources

Setting regulations for trade in health-related sectors. Limited technical assistance on implementation of agreements, mainly to developing countries.

Very small. Total annual budget for 2007 was US$ 149 million.


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agencies, the WTO has a sanctions mechanism. Thus, the WTO is one of the few organizations with a ‘hard’ enforcement instrument. States that do not comply with the rules made by the WTO are called before the Dispute Settlement Body. The decisions of the Dispute Settlement Body are binding for WTO members (subject to appeal).

CONCLUSION Initially, due to its authoritative mission, the WHO was the prime healthrelated international actor and node for all international health-related activities. This position changed dramatically from the 1970s, as more and more IGOs, NGOs and private actors entered the health field and challenged the WHO’s unique position. This development was reflected by the increasing resources, strategies and technical capacities that other actors like UNICEF, the WTO and the World Bank gained over the following years, strengthening their position at the cost of the WHO. Although most organizational features of the WHO supported its authoritative position in the beginning, this changed considerably from the 1970s. As with UNICEF, the WHO, unlike the World Bank, combined open membership rules, a broad mission and competence in health issues, with a highly decentralized management structure and overly democratic rules for controlling the organization. Although the WHO, unlike the WTO and to some extent also the World Bank, never had an enforcement mechanism, its internationally agreed-upon ‘rules of the game’ can be considered to have been immensely successful until the 1980s. The WHO’s channels vis-à-vis national governments were – and still are – fairly restricted compared to the World Bank or the WTO, but this was not considered a major problem until the 1970s, as most countries relied nearly exclusively on the WHO’s international health expertise. The same can be said about the WHO’s rather tiny but comparably stable amount of regular financial resources at that time. As health more and more became a question of ‘high politics’, and other organizations such as UNICEF and the World Bank (and later the WTO) entered the health arena, the WHO’s organizational features turned increasingly into a disadvantage. In contrast to the WHO, the World Bank is characterized by a centralized management structure and rules for controlling the organization, which are based on the relative economic power of countries – in practice reflecting the agreed-upon interest of the most highly developed countries at the cost of developing countries. Although the World Bank, like the WHO or UNICEF, has no formal enforcement mechanism, in practice the World Bank’s loan

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conditionalities may have a similar effect (Okuonzi and Macrae 1995). In a nutshell, the World Bank, in contrast to the WHO, is able to ‘implement’ to some extent its health strategy in developing countries and to frame the health debate accordingly. Only the WTO has a ‘hard’ enforcement mechanism, namely the Dispute Settlement Body. Furthermore, compared to the WHO, the World Bank and the WTO have considerably more channels through which they can act vis-à-vis national governments, as at least the World Bank today covers all relevant policy fields. Last but not least, the financial resources of the World Bank dramatically exceed the respective resources of the WHO. Whereas the World Bank spends an annual amount of approximately US$ 5 billion on health issues, the WHO has a current regular annual budget of approximately US$ 458 million. A comparison of the organizational capacities of the four organizations can be found in Table 10.5. Undoubtedly, the WHO is no longer the prime health-related international actor, but one important actor among others – most notably the World Bank. Consequently, the ideational influence has shifted away from the WHO as the prime actor. As Koivusalo and Ollila claim: ‘health policy is defined within the framework of complex global economic policies, and international organizations such as the WTO, the IMF, the World Bank and the OECD [have a major role defining this framework]’ (1997, p. 208). Does the increased ideational influence of other IGOs mean that the international health field becomes more politicized or that alternative comprehensive health care models are discussed and promoted? In fact, it does not. On the contrary, our review has revealed that, as in the early years of the WHO, the focus of the debate has shifted again towards specific priority diseases in contrast to the time of the Alma Ata declaration. The global health debate has become increasingly ‘technical’ again, that is, the focus has shifted away from a process-oriented and socio-political approach towards the largely technology-based interventionist approach of former times. See Table 10.6 for an overview of the organizations’ health policy ideas and health care approaches. This development has been further fuelled by the numerous global PPPs on specific diseases forming the node for many of the new actors active in the field. This is not to say, however, that these vertical programmes on specific diseases cannot have spillover effects for health policy in general, which certainly points to a global dimension of health policy. But whether further attempts to revive a debate on comprehensive health care approaches on the international scene will be successful or not is too early to say. Given the high fragmentation of the health field at the international level compared to other sectors of social policy, this seems unlikely in the foreseeable future.

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Small

Small

●

●

●

Financial assistance and loan conditionality ● Research and debate ● Setting goals for macroeconomic development and public spending ● Technical support ● Monitoring Large ●

Medium Soft enforcement via loan conditionality Broad access Medium

Shareholder principle

Nearly universal Broad Centralized

WB

Very small

Setting regulations for trade in healthrelated sectors

Broad access Limited

Low Possible

One state, one vote

Not universal Broad Centralized

WTO

Note: The dimension ‘scope of health-related issues’ captures the variety of health-related activities as well as the expertise in all matters related to health.

Resources

●

●

●

Research Emergency relief Technical support Monitoring

Restricted access Broad

Restricted access Broad ●

High Not possible

High Not possible

Research and debate Setting norms and standards Technical support Monitoring

One state, one vote

One state, one vote

●

Universal Limited Decentralized

Universal Limited Decentralized

Membership rules Scope of issues Centralization of tasks/ management Rules for controlling the organization Flexibility of arrangements Enforcement

Channels Scope of health-related issues Instruments

UNICEF

WHO

Comparison of organizational capacities

Dimensions

Table 10.5

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WTO

Definition of health

Definition of social risk

Health-care policy approach

Comprehensive v Selective Primary Health Care

Sector-wide approach vs singledisease approach

Liberalization of global trade vs protection of national social policies from competition and open markets Primary Health Care Selective Primary No single health-care approach, No original health-care Approach Health Care but several important elements: policy approach. Approach The WTO provides a ● Sector-wide approach focusing forum for regulating on an efficient allocation of international trade. health care services Health care is viewed ● Targeted public health largely in economic programmes for the poor terms but exceptions ● Public/private mix in financing for “public health” ● Focus on specific priority exist in all trade diseases agreements Narrow definition, i.e. Narrow definition. Broad definition, i.e. all – levels of income are services should be Individualism with a safety net seen at risk targeted to the poor Viewed as an economic – Related to technical Process-related. commodity methods. Defined as Defined as ‘physical, merely absence of mental and social well disease being of the individual’

Comprehensive v Selective Primary Health Care

WB

Focus of debate

UNICEF

WHO

Comparison of health policy ideas and health care approach

Dimensions

Table 10.6


241

ACKNOWLEDGEMENTS A preliminary version of this paper was presented at the annual conference of Research Group 19 of the International Sociological Association in Florence, Italy, 6–8 September 2007. We extend a note of thanks to the many participants who commented on the paper.

NOTES 1.

2.

3.

4. 5. 6. 7. 8.

9. 10.

The dimensions are membership, scope, centralization, control, flexibility and enforcement, and were suggested in the ‘Rational Design Project of International Institutions’, developed by Koremenos et al., for the purpose of analysing how international institutions ‘operate and how they relate to the problems states face’ (2001: 761). In a recent review concerning the entries under the rubrics ‘international’ and ‘global’ in PubMed (a service of the U.S. National Library of Medicine), Brown et al. find that until the 1990s authors clearly preferred to use ‘international’ (49 158 entries) over ‘global’ public health (27 794 entries), although entries regarding ‘global’ public health had already increased considerably during the 1990s as compared to the 1980s (7 176 entries) and to former times in general. From 2000 to 2004 there seems to be some evidence that the term ‘global’ (38 840 entries) is on track to eventually overtake the term ‘international’ (29 193 entries) in the field of public health (Brown et al. 2006). First attempts to regulate public health between nations can be dated back as far as the fourteenth century, when the city-state of Venice used force to quarantine ships which were expected to be carrying plague-infected rats. The practice soon spread to other ports (Buse et al. 2005). These early practices later paved the way for more formal international agreements in the nineteenth century. Among the participants were the president of the World Bank, the vice president of the Ford Foundation, the administrator of USAID and the executive secretary of UNICEF. UNICEF was originally founded as the UN International Children’s Emergency Fund. See also http://www.unicef.org/about/who/index_mission.html. One has to take into account, however, that there has been a considerable increase in UNICEF’s income between 2004 (US$ 1.9 billion) and 2005; this was due to the Indian Ocean tsunami and South Asia earthquake (UNICEF 2006). Our analysis of the World Bank will concentrate on the IDA and the IBRD. The International Bank for Reconstruction and Development (IBRD) was set up in 1944 as the original institution of the World Bank Group together with its sister organization, the International Monetary Fund. Sixteen years later, in 1960, the International Development Association (IDA) was established with the objective of reducing poverty, by providing interest-free loans and grants to the least-developed countries. Today, the IDA and the IBRD complement each other – the IDA serves the world’s poorest countries while the IBRD lends to middle-income countries. The rest of the World Bank group comprises the private sector arm of the Bank, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), which provides political risk insurance, and the International Centre for the Settlement of Investment Disputes (ICSID). User fees are often criticized for reducing the demand for health care and the uptake of services, and can have serious implications for equity as they disproportionally affect the poor (Abbasi 1999; Ruger 2005). The WHO definition: DALYs for a disease are the sum of the years of life lost due to

242

11. 12.

13. 14. 15.

The role of international organizations in social policy premature mortality (YLL) in the population and the years lost due to disability (YLD) for incidences of the health condition. The DALY is a health gap measure that extends the concept of potential years of life lost due to premature death (PYLL) to include equivalent years of ‘healthy’ life lost in states of less than full health, broadly termed disability. One DALY represents the loss of one year of equivalent full health. DALYs allow a monetary value to be attached to each health care intervention (Abbasi 1999). They represent the shareholders and meet once a year at the general meetings of the IMF and the World Bank. Woods explains how the voting shares are attributed: ‘voting power . . . depends upon the country’s “quota”, which is determined by a formula which attempts to translate relative weight in the world economy into a share of contributions and votes’ (Woods 2001: 85). * A & C and 2006; C & P 2003; Easterly 2001; Eberlei 2003 The TBT Agreement was first established in 1980 and involved only 46 countries until 1995. After that, it became part of the WTO agreements and contained more stringent obligations than the preceding version of the agreement. Previous agreements were the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works. In 1968, the World Intellectual Property Organization (WIPO) was created. Founded after the Uruguay Round (1986–1994), the WTO succeeded the General Agreement of Tariffs and Trade (GATT) in 1995.

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Index Abbasi, K. 227, 228 Abouharb, R.M. 227, 231 activation policies Active Labour Market Policy (ALMP) 78, 80 Welfare to Work 80–81 Workfare 80–81 active social inclusion 79–80, 89–90 active social inclusion discourse (ASID) 77–8, 81, 88–90 elements of programmatic ideas of 80 and welfare contract between citizen and state 81–2 ageing societies 12, 25, 50, 54, 66, 72, 87–90, 112, 142, 135, 147, 177, 181, 190–92, 194–5 Alestalo, M. 9 Alma Ata declaration on primary health care (1978) 15, 215, 217, 221 Amsterdam Council 24 Anderson, K.M. 138, 195 Antolin, P. 147 Armingeon, K. 1, 8, 23, 35, 37, 113 Armstrong, K. 72 Arnull, A. 95, 97, 105 Barbier, J.C. 127 Barcelona Council 27 Barth, E. 9 Bartsch, S. 229 Beach, D. 94, 107 Beattie, R. 174, 180 Beckman, L. 75 Behrendt, C. 175 Béland, D. 1, 6, 7, 73, 113 Bellamy, R. 50, 51, 52 Bertram, C. 36, 37 Bettcher, D. 232, 234 Beveridge, W.H. 38 Beyeler, M. 1, 8, 23, 35, 37, 113

Bill and Melinda Gates Foundation 229 Bisopoulos, A. 117 Blankenburg, E. 108 Bleses, P. 113 Blyth, M. 1, 8–9, 138 Bøås, M. 4 Borrás, S. 24 Breckenridge, A.M. 232 Bretton Woods institutions 2, 4 Broad Economic Policy Guidelines (BEPGs) 76 Bronstein, A. 167, 169 Brown, T.M. 218, 221 Brundtland, G.H. 218–19 Büchs, M. 11, 55, 56, 58, 126 Bundesregierung 115 Bunyavanich, S. 214 Buse, K. 213, 228, 229 Caldeira, G.A. 107 Campbell, J.L. 1, 6, 7, 9, 11, 21, 73, 74, 138, 166, 173 Cappelletti, M. 106 case law 95–105 Angonese (Case 281/98) 100 Bonsignore (Case 67/74) 101–2 Bosman (Case 415/93) 98 Case 299/05 105 Costa v. ENEL (Case 6/64) 96 discrimination (Cases 115 and 116/81) 100 expulsion from member state (Case 41/74) 102 Groener (Case 379/87) 99 Jauch (Case 215/99) 103 jobseekers (Case 292/89) 99 Lawrie Blum (Case 66/85) 98 Leclere (Case 43/99) 103 Levin (Case 53/81) 98 Martinez Sala (Case 85/96) 100–101 Molnaar (Case 160/96) 103 247

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Régina v. Bouchereau (Case 30/77) 101 students’ right to study (Case 293/83) 101 Van Gend and Loos (Case 26/62) 95 Casey, B.H. 31 Cassels, A. 228 Cavanaugh, R. 226 Chan, M. 219 child poverty 83–5, 88 see also poverty Cichon, M. 170, 174, 175–6, 178, 181 Cingranelli, D.L. 227, 231 Clasen, J. 81, 113, 138 Coal and Steel Community (ECSC) 22 coefficient of variation (CoV) 198, 201, 204–5 Cohen, J. 58, 59, 60, 61, 62, 63 Common Agricultural Policy 65 comparing social policy ideas within EU and OECD 20–48 see also European Union (EU); OECD and social policy Concerted Strategy for Modernizing Social Protection, A (1999) 24 Craig, D. 231 Daguerre, A. 21, 74, 75 Daniels, N. 212 de Beyer, J.A. 229 de Burca, G. 94 d’Estaing, V.G. 105 de la Porte, C. 78, 117, 127, 191 de Leeuw, E. 212, 213 Deacon, B. 2, 4, 177 definition of ageing society 181 policy discourse in terms of content 5 scientific justification 234 Dehousse, R. 94, 108 Delors, J. 23, 31 Denmark 20, 27–8, 90, 207–8 Economic Survey of Denmark (OECD, 2008) 28 National Reform Programme for Growth and Jobs 28 DG Employment and Social Affairs 145

DG Employment, Social Affairs and Equal Opportunity units 33 Dienel, C. 113 directly-deliberative polyarchy (and) 49–71 analysis and critique of 60–65 embedding the OMC in representative democracy 65–8 Open Method of Coordination (OMC) see main entry Dorf, M.C. 58, 59, 61, 62, 63 Dostal, J.M. 31–2, 118 Drager, N. 233, 234 Drori, G.S. 214, 215 Dworkin, R.M. 36 Easterly, W. 227, 231 Eberlei, W. 228, 231 Eberlein, B. 49, 58, 63 Economic and Monetary Union (EMU) 191 Economic Co-operation and Development, Organization for see OECD employment, promoting 78–9 employment and social protection (and) comparing EU and OECD 30–34 guidelines for see employment and social protection guidelines legitimacy 36–8 policies concerning 22–4 social policy discourses 34–6 Employment and Social Protection Committees 56 employment and social protection guidelines 24–30 country recommendations: Denmark, Germany and Norway 28–30 general 24–7 Employment in Europe (EU) 23 Encyclopædia Britannica 21 Eriksen, E.O. 107 Ervik, R. 1, 9, 13, 30, 73, 141, 177, 192 Esping-Anderson, G. 9, 112, 114, 121 European Commission (EC) 4, 24, 32, 55–7, 76, 77, 79, 90, 94, 103–4, 142, 192 DG ECFIN 145

Index ECOFIN council 145 and European Employment Taskforce 27 Joint Reports on Pensions: evaluations/advice for UK 153–9 European Communities 95, 105–7 House of Lords Select Committee on 105 European Community 3, 94, 232 EU Community law 99 European convergence in pension policy outputs see Open Method of Coordination (OMC) and pension policy outputs, European Convergence in European Council 26, 55–7, 76, 77, 83, 192 and Lisbon process 76, 87 Presidency Conclusions of (2007) 108 and Social Protection Committee (SPC) 26–7, 67 European Court of Justice (ECJ) 3–4, 12, 63, 77, 94–110 see also case law European Economic Area (EEA) 96, 139 European Economic Community (EEC) 3, 12, 22 European Employment Committee (EMCO) 67, 77 European Employment Strategy (EES) 23–4, 27, 31, 34, 35, 37, 53, 56, 58, 76, 78, 192 and flexicurity principles 90 Open Method of Coordination (OMC) see main entry European Parliament 56, 63–4, 65, 67, 77, 94 Council of Ministers 103–5 European Social Fund (ESF) 58, 65 European Union (EU) 1, 3, 11–12, 20, 49, 72, 94, 111, 138, 190–92 see also OECD Committee of the Regions 67 Economic and Social Council 67 Economic Policy Committee (EPC) 77, 144–45, 156, 159–60

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working group on Ageing Populations (AWG) 145 Employment Guidelines 23–4, 27, 79 EU/OECD policy advice 13 European Social Model 23 governance 64 Indicators Sub Group (ISG) 144–5, 192 Interview No 5 (2007) 32 lawmaking 63–4 see also legislation (EU) National Action Plans (NAPs) 23–4, 76–8 National Strategy Reports 81 and OECD advice and changes in German family policy 111–37 social exclusion in see social exclusion in EU Social Inclusion Strategy (SI) see main entry social policy 65 Social Protection Committee 34, 144, 145, 190, 192 Sustainable Development Strategy 88 Evers, A. 120 Falkner, G. 113 Feachum, R. 228 Ferrera, M. 76, 94 Fidler, D. 216 Finseras, H. 14 Fleckenstein, T. 73 Follesdal, A. 53, 65 Food and Agriculture Organization (AO) 221 Fossum, J.E. 51, 107 France 199, 200, 204, 209, 229 Fraser, N. 1 free movement see also European Court of Justice discrimination as obstacle to 99–100 economically inactive persons’ right to 100–102 and import/export of social security benefits 102–5 legal cases/decisions, discussion of 105–7 of persons 94–108 of workers 97–99 see also case law

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Friedrich, D. 55 Fung, A. 63 Future of Social Protection: A framework for a European debate (1995) 24 Garner, P. 228 Gassmann, F. 175 General Agreement of Tariffs and Trade (GATT) 235, 242 German family policy, changes in 111–37 see also European Union and OECD case selection and policy field 112–13 data and methodology 112, 113–14 introduction of Elterngeld (parental leave) 111–12 and Scandinavian policies 113 Germany 2, 20, 27, 28–9, 239 family policy reforms 12 National Reform Programme for Growth and Jobs 29 Gerstenberg, O. 49, 58, 59, 62, 63, 64 Gibson, J. 107 Gibson, L. 215 Giddens, A. 21 Gillion, C. 174, 177, 179, 180 Global Campaign on Social Security and Coverage for All (ILo) 175 global health policy 212–45 see also health Alma Ata declaration (1978) 15, 215, 217, 221 development of 213–17 and People’s Health Movement 217, 220, 221, 223, 224, 225, 229, 231 primary health care (PHC) 217, 222 role of IGOs in 217–42 see also United Nations Children’s Fund (UNICEF); World Health Organization (WHO) and World Trade Organization (WTO) selective primary health care (SHPC) 221–3 Global Social Trust (Ilo) 175 globalization 1–2, 4, 9, 12, 25, 60, 72–4, 89, 165, 177–9, 181 Goldstein, J. 9, 73 Goodin, R.E. 1

Gordon, L. 1 Gottret, P. 226 Gough, I. 82 Gourevitch, P.A. 140 Green-Pedersen, C. 192, 195 Growth, Competitiveness and Employment (White Paper, 1993, CEC) 23 Haas, P.M. 145 Habermas, J. 22, 37, 49–50, 51, 52, 53, 54, 66 Hagemejer, K. 176, 178, 181 Hall, P.A. 1, 5, 6, 9, 73, 138, 139–40, 160 Hantrais, L. 113 Hatland, A. 12, 82, 83 Hausding, G. 116 health see also global health policy as aspect of Millennium Development Goals 218 Child Survival and Development Revolution (CDSR, 1982) 223 Essential Medicines List (1977) 220 and GOBI-FFF program components 223 International Regulations (IHR, 1969) 220 Hein, W. 212, 216–17, 227, 229, 235 Held, D. 2, 52 Hensen, H. 14 Hinrichs, K. 194 Hix, S. 65 Hochschild, J.L.131 Hulse, M. 2, 4, 177 Hunt, J. 98, 100, 103 ideational influence, tracing 7–10 Immergut, E.M. 138 Ingram, A. 214, 216 Inoue, K. 214, 215 international government organizations (IGOs) 212 International Institute for Labour Studies (IILS) 167 International Labour Conference 166–7 Committee on Social Security 169

Index International Labour Office (ILo) 13, 165–89 see also pension policy, new approach to Employment Sector 170 and paradigmatic transition? 179–82 programmatic developments in 173–6 (re-)framing debate? 176–9 restructuring of new Society Security Department of 170–73 Social Dialogue Sector 170 Social Protection Sector 170 Social Security Department of 13–14, 165–6 Standards and Fundamental Principles and Rights at Work Sector 170 International Labour Organization (ILO) 1, 2, 13, 30, 140, 151, 157, 165 passim social policy agenda setting within 166–70 International Monetary Fund (IMF) 2, 4, 228, 238 international organizations (IOs) 2–5, 111–13, 119, 122, 126–7 International Training Centre 167 Ireland 158, 197, 199, 207 Italy 196, 199, 200 pension reform in (1993) 191 Jacobsson, K. 24, 30, 31, 37, 54, 127, 139 James, E. 180 Janovsky, K. 228 Joerges, C. 55 Joint Report(s) 72, 77–9, 81, 82, 83–4, 87, 88, 141, 156 and employment promotion measures 78–9 on Social protection and Social Inclusion (2005) 87–8 Jolly, R. 225 Jong-wook, L. 219 Kahneman, D. 173 Keeling, D.T. 107 Kennedy, T. 103 Keohane, R.O. 9, 73

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Kerwer, D. 49, 58, 63 Keynesian thinking 3, 182 Kickbusch, I. 212, 213, 219, 220 Kildal, N. 1, 11, 29, 38, 78, 80–81, 82, 120, 126, 146–7, 161 Kohli, M. 38 Kohlmorgen, L. 217, 227 Koivusalo, M. 213, 231, 232, 234, 235 Kok, W. 27 Koremenos, B. 213 Kröger, S. 54 Kübler, D. 113 Kubosova, L. 128 Kuhnle, S. 1, 2, 9, 14, 29, 38, 73, 82, 120, 126, 146–7, 161 Kulke, U. 167, 176 Laeken indicators 77 Laeken summit (2001) 191 Larsen, T. 75 Laterveer, L. 228 law 93–6 see also case law and legislation (EU) community 95–6 national 95 Lee, K. 233, 234 legislation (EU) 99, 101, 103–4 see also World Trade Organization (WTO) legitimacy dual conceptualization of 22 input- and output-oriented 36–8 Leibfried, S. 4, 22, 102, 112 Leitner, S. 114, 116, 124 Levitas, R. 82 Lewis, J. 114, 115 Lindbom, A. 195 Lindén, T.S. 12–13, 160 Ling, J.C.S. 219, 221, 224, 225 Lisbon Council(s) 53, 72, 75–6, 87 Integrated Guidelines for Growth and Jobs 28 Method 11, 24, 37 see also Open Method of Coordination (OMC) process 76, 87, 89, 91 Strategy for Growth and Jobs 27, 28, 56, 191 Summit 26

252


Lødemel, I. 78, 80, 81 Lopez-Santana, M. 72, 87 McEwen, N. 51, 52 McGillivray, W. 174, 180 McNeill, D. 4 Macrae, J. 238 Macroeconomics and Health, Commission on 218 Mahler, Director-General H. 217 Mahon, R. 119, 128 Maier, F. 118 Maier-Rigaud, R. 13, 140, 169 Majone, G. 50–51, 52, 54 making work pay (MWP) 34–6, 39, 48, 79–80, 88, 145 Mancini, F. 107 Manin, B. 55 Mann, J. 218 Manning, N. 152 Marcussen, M. 3, 20, 146 Margetts, B. 224 Marshall, T.H. 84, 85 Marshall Plan 22 Martinsen, D.S. 103, 105 Matsaganis, M. 76 Maydell, B. von 165 Mead, L.M. 36, 82 means and work testing 85 Menéndez, A.J. 51 Meyer, T. 195 Minelli, E. 220 Mizunoya, S. 175 Mkandawire, T. 85 Modernizing and Improving Social Protection in the European Union (1997) 24 Moene, K.O. 9 Moreno, L. 51, 52 Myles, J. 194–5, 196 Nakajima, H. 218 Narayan, R. 217 National Action Plans 23–4, 76–8 National Reform Programmes 55–6, 57 Nauerz, M. 117 Netherlands 90, 95, 158, 199, 207 New Zealand and KikiSaver scheme 158–9

Ney, S. 6, 140 Nilssen, E. 1, 11–12, 83 Noaksson, N. 30, 31, 139 non-governmental organizations (NGOs) 4, 55, 62, 67, 144, 212–14, 216, 228, 233, 237 Norway 20, 27, 138–9, 157–8, 160 OECD Economic Surveys of 146–52 OECD social policy recommendations to 29–30 pension reforms in 13 and Swedish reform ideas 147, 150–52 Nowotny, H. 2 O’Connor, J. 76, 87, 113 OECD 1, 3, 4, 10–11, 12–13, 20, 21, 22, 24, 27–39, 94, 192, 238 advice and changes in German family policy 111–37 compared with EU 30–34 country economic surveillance 159 Country Summaries of Joint Reports on Pensions within the EU 139 Country Surveys 139, 143, 152 Directorate for Education, Employment, Labour and Social Affairs (DEELSA) 31 Directorate for Employment, Labour and Social Affairs (DELSA) 25–6, 31, 142, 145, 159 Economic Development and Review Committee (EDRC) 142, 145–6, 159 Economic Surveys 23, 29, 33, 159 Economics Department 142, 145–6, 159 Economics Directorate 159 Employment Guidelines (1998) 26 Employment Outlook 23 Jobs Strategy 25, 26, 35 Jobs Study; Facts, Analysis, Strategies, The (1994) 23, 24, 31 Local Economic and Employment Development Programme (LEED, 1982) 32 Maintaining Prosperity in an Ageing Society 141

Index Minimum Income Guarantee (MIG) 152 Pensions at a Glance Series 142 Restated Jobs Strategy (2006) 25, 26 Welfare state in crisis, The 3 Offe, C. 51, 53, 54, 66 Okuonzi, S.A. 238 Ollila, E. 213 Open Method of Coordination (OMC) 3, 49, 52, 53–8, 60, 64–5, 72, 89, 139, 140–45, 157, 190–91, 208 embedding in representative democracy 65–8 guidelines and objectives of 67 inclusion, institutional dynamics of 75–7 and pensions 159 transparency, accountability and input legitimacy of 66–7 Orenstein, M.A. 4, 9, 113, 174 Ostner, I. 114, 117, 124 Øverbye, E. 194 Pagani, F. 139 Pal, K. 175 Palier, B. 195 paradigms 6, 182–3 Keynesian 180 medical 215, 217 Pay As You Go (PAYG) 9 pay-as-you-go (PAYG) financing 9, 142, 181 Pedersen, A.W. 14 Pedersen, O.K. 1 pension policy, hypothetical changes in 196 pension policy, new approach to 165–89 see also International Labour Office (ILo) economic paradigms affecting 179–82 and ILO and ILo – distinctions between 166–70 programmatic developments for 173–6 and programmatic tensions/ restructuring of new social security department 170–73 (re-)framing debate on 176–9

253

pension policy outputs: empirical results 198– distributive profile 206–8 generosity of compound (public and private systems) 201–4 generosity of public pension systems 199–201 public/private mix 204–6 pension policy outputs, European convergence in 190–211 data and method 197–8 empirical results see pension policy outputs: empirical results functionalist perspective 194 path dependency perspective 194–5 theoretical background and hypotheses 193–6 pension policy recommendations and national policies (Norway and UK) 138–64 ideas, institutions, actors and power 139–40 policy actors and pension paradigms within EU and OECD see main entry pension recommendations of OECD and EU in national contexts 146–59 see also European Commission; Norway; OECD; Sweden and United Kingdom: policy learning within the family pension recommendations of EU and OECD in national contexts 146–64 different paradigms and bias of power within EU and OECD 159–60 importance of Swedish reform ideas 147–52 international actors and member states: relations, relevance and importance of policy learning within family 160–61 OECD Economic Surveys on Norway 146–52 UK: policy learning within the family 152–9 see United Kingdom

254


pension(s) 9, 14, 7, 42, 76–7, 113, 138–46 ‘Beveridgean’ public pension systems 207 Bismarckian-style schemes 175, 207 old-age 172, 175–6 reforms in EU member countries 14 reforms summary 208–9 Pensions Commissions report (2004) 158 Pieper, U. 227 Pierson, P. 7, 9, 194–5, 196 Platenga, J. 121 Plümper, T. 198, 201 Pochet, P. 5, 78, 117, 127, 145 policy actors and pension paradigms within EU and OECD 140–46 actors, ideas and power 144–6 different paradigms and bias of power within EU and OECD 159–60 pension policy paradigms and patterns of interaction 140–44 policy learning within the family relations, relevance and importance 160–61 policy making and application of law 94–110 see also case law and free movement Pollock, A.M. 234 Porter, D. 231 poverty 11, 72–3, 75–7, 79, 82–9, 121, 123–4, 141–2, 156–7, 175–6, 178, 194, 226–8, 235–6 Poverty Reduction Strategy Papers (PRSPs) 228 Preker, A. 227 Preuss, U.K. 51, 53, 54, 66 Price, D. 234 process trading 8–9 Queisser, M. 174 Radaelli, C.M. 5, 6 Rasmiussen, H. 106 Rawls, J. 22 redistribution discourse (RED) 82, 85 Rein, M. 6 Remery, C. 121 Rhodes, M. 191

Richardt, N. 125 Rifkin, S.B. 221–2 Risse, T. 37 Rödl, F. 55 Rokkan, S. 4, 51, 52 Room, G. 117 Rose, R. 111 Rueschemeyer, D. 1, 73, 117 Ruger, J.P. 226, 227, 229, 235 Sabel, C.F. 49, 57, 58, 59, 60, 61, 62, 63, 64 Sacchi, S. 76 Sachs, J. 218 Salant, W.S. 140 Sanders, D. 217 Scandinavia 113 and Active Labour Market Policy (ALMP) 78, 80 Schäfer, A. 33, 117, 139 Scharpf, F.W. 22, 36–7, 50, 51, 52, 53, 54 Schepel, H. 108 Scheuermann, W.E. 61, 62 Schieber, G. 226 Schiller, C. 14 Schludi, M. 191 Schmid, H. 37, 127 Schmidt, V.A. 2, 5, 6, 38, 73, 74–5, 138 Schmidtz, D. 1 Schmitt, C. 124 Schneider, C. 198, 201 Schön, D. 6 Schulze, I. 138 Schulz-Nieswandt, F. 169 Schweber, L. 2 Sejersted, F. 95 Seleib-Kaiser, M. 73, 113 self-reliance 80, 82 Shaffer, E.R. 234 Shaw, J. 98, 100, 103 Skocpol, T. 1, 2, 73 Smismans, S. 63 social and labour market policies, OECD and EU recommendations 31–2 social exclusion 83–6 combating 77, 89 social exclusion in EU 72–93 see also social inclusion strategy (SI)

Index fighting against – discourse on sustainability of the welfare state 86–9 ideas and discourses on 73–5 and institutional dynamics of OMC inclusion 75–7 social inclusion discourse (SID) 82, 85, 86 social inclusion strategy (SIS) 77–86, 89–91 active social inclusion through work 77–82 ideational foundation of 89 targeting social services 82–6 social policy see also European Union (EU) and OECD ideas, discourses and legitimacy 21–2 ideas and discourses in 5–7, 73–5 internationalization of 2–5 trans-nationalization of 4 social protection 11, 20, 23–7, 31, 34, 37–8, 44–5, 76–7, 102, 117, 172 Social Protection Committee (SPC) 26, 34, 48, 67, 76–7, 144, 90, 192, 197 social rights and citizenship 81–2 Social Rights Charter (1989) 75 Social Security: A new consensus (2001) 166–7 social security benefits, import/export of 102–5 Social Security For All: Investing in global social and economic development (2006) 166 Sorrentino, C. 23 Soskice, D. 9 Stone, D. 1, 21, 73 Streeck, W. 54 Stubbs, P. 2, 4, 177 Suyker, W. 147 supremacy, doctrine of 96 supremacy and direct effect as political platform 95–6 sustainability 86–90 Swaim, P. 25 Sweden 147, 150–52, 199–200, 204, 207, 209 National Pension Savings Scheme (NPSS) 158

255 Notional Defined Contribution (NDC) scheme 150, 158 pension reform in 160

Tannenwald, N. 21 targeting 89–90 discourse on 82–6 social services 82–6 Taylor, T. 227 Taylor-Gooby, P. 5, 21, 50, 74 Thatcher, M. 130 Thatcher, PM Margaret 105 Titmuss, R. 82, 84 Torres, R. 24, 25–6, 31 transparency 36, 66–7 treaties Constitutional Treaty in France and the Netherlands 51 of European Community and EU 63 Maastricht Treaty 4, 191 Treaty Establishing the European Community 94–102 Treaty of Amsterdam (1997) 23, 105 Treaty of Rome (1957) 22 Trickey, H. 78, 80, 81 Tridimas, T. 107 Trubek, D.M. 3, 54, 72 Trubek, L.G. 3, 54, 72 Umbach, G. 126 United Kingdom 138–9, 146, 160, 199, 207, 208, 229 Labour Government: Welfare to Work 80–81 United Kingdom: policy learning within the family 152–59 Basic State Pension (BSP) 152 EC Joint Reports on Pensions: evaluations and advice for UK 153–9 Minimum Income Guarantee (MIG) 152, 153 OECD Surveys and UK pensions: questioning the voluntary approach 152–3 Pension Credit 153, 156 State Earnings Related Pensions Scheme (SERPS) 153, 156 State Second Pensions (S2P) scheme 156

256


United Nations (UN) 94 Economic and Social Council (ECOSOC) 224 General Assembly 223 Secretary-General 224 United Nations Children’s Fund (UNICEF) 15, 213, 216, 217, 237–40 health policy ideas and health care approach of 221–3 National Committee 225 organizational capacity of 223–5 United States of America (US) 4, 229, 230–31, 232, 234 and Workfare 80–81 Unnikrishnan, P.V. 217 Uruguay Round 232, 242 Veneman, A.M. 223, 224 von der Leyen, U. 116, 129 Wacquant, L. 90 Wagner, P. 2 Waldron, J. 36, 37 Walkup, R.B. 214 Wallace, C. 98, 100, 103 Wallerstein, M. 9 Walt, G. 215, 217, 220, 221–2, 226, 227, 228, 229 Weale, A. 72 Weaver, R. 127 Weber, M. 20, 37 Weiler, J.H.H. 52, 53, 94, 96 Weir, M. 2, 73, 140 welfare regime classification 10 welfare state, sustainability of the 86–9 welfare state development, perspectives on 194–6 Welfare State in Crisis, The 22 Westphalian international health regime 215 neo-Westphalian approaches 216 White, S. 1, 81 White Book on Growth, Competitiveness and Employment (1993) 31 Whiteford, P. 191 Whitehouse, E. 191 Wilensky, H.L. 194

Williamson, J.B. 195 Wincott, D. 50, 51, 53 Winstanley, P. 232 Wittrock, B. 2 Wogart, J.P. 226–7, 228 Wolfensohn, J. 227 Wollmann, H. 2 Woodward, D. 232 World Bank 1, 2, 4, 13, 14, 15, 30, 140, 176–83, 213, 216, 224, 225, 237–40 and demographic problems 177 Department for Health Nutrition and Population (HNP) 226 Financing Health Care: An Agenda for Reform (1987) 227 global pension policies of 176–83 health policy ideas and health care approach of 226–9 Healthy Development: The World Bank Strategy for Health, Nutrition, and Population Results 229 organizational capacity of 229–31 pension model 165–6, 174 and pension provision 192 report on ageing crisis (1994) 191 Social Protection Department 166 World Development Report: Investing in Health (1993) 227 World Health Assembly (WHA) 219–20 World Health Organization (WHO) 1, 14–15, 213, 215–16, 224, 225, 234, 237–40 health policy ideas and health care approach 217–19 organizational capacity of 219–21, 222 World Health Report (2005) 219 World Trade Organization (WTO) 1, 15, 213, 216, 237–40 Agreement on Technical Barriers to Trade (TBT) 231, 232, 233 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 231–3, 235 Dispute Settlement Body 235, 237 General Agreement on Trade in Services (GATS) 231, 233–4, 235

Index health care policy ideas and health care approach of 231–5 organizational capacity of 235–7 regulations 232 Sanitary and Phytosanity Agreement (SPS) 232, 234 Technical Barriers to Trade Agreement 232 Trade Policy Review body 235

257

World War II 30, 35, 214, 215 Wright, E.O. 63 Yeates, N. 4 Yee, A.S. 8 Zeitlin, J. 37, 54, 55, 56, 57, 59, 63, 64, 118, 127 Zohlnhöfer, R. 123 Zutarven, J. 123

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