Danish Activation Policy: From a Beautiful Swan to an Ugly Duckling?

1. Henning Jørgensen Professor, Aalborg Universitet, CARMA henningj@socsci.aau.dk, ASPEN/ETUI conference, Brno, March 2009 From a beautiful swan to an ugly duckling? – Danish activation policy since 2003

2. Activation as part of the ”modernization” of the welfare systems • Activation part of a new intervention paradigm • employment as goal and the integration mechanism • new moralism build into contractual arrangements • reinventing identities (economic citizenship) • Activation regimes: diversity • different concepts of active labour market policy • LMP expenditures differ strongly • LMP priorities differ strongly • LMP procedures differ strongly

3. Expenditures on Labour market policy 2005

4. Construction of activation systemsbased on: • Egalitarian values • social logic, outcome of struggles • Beveridgean rationale • Paternalistic values • functional logic, outcome of construction • Bismarckian rationale The Danish activation system of the 1990´es based on egalitarian values

5. Activation systems – look at more levels: • Activities: common discourses – different qualities/systems/models • Steering arrangements: corporatism vs. contractualization • Financing: public-private mobilization of resources/incentives based arrangements

6. Contextualization of activation systems • Labour market situations and IR systems • Welfare state traditions • Macro-economic regimes • Learning capability of people and organizations • Power relationships • EU influence in national system Collective mechanisms and collective memories decisive as to successfully (re)integrating individuals and reforming public policies

7. The Danish labour market system • A voluntaristic bargaining system(collective agreements since 1899) • A political interventionist strategy • densely organised labour market • negotiated regulation of labour market questions • active labour market policies (especially since 1994) • generous unemployment benefit system (socializes costs of flexibility)

8. Denmark: Socio-economic and political context • Economic problems and high unemployment during the 80es and beginning of the 90es • New Social Democratic lead governments 1993-2001 • New Policy-Mix of offensive macro-economic policy and active LMP • Readjustments of policy in 1995, 1996 and 1999 in accordance with recovery • New Liberal-Conservative government in 2001 – and a new LMP introduced

9. The Nordic Approach: Macro-economic policy The social partners The welfare state Income security Services and LMP Wage policy Collective agreements

10. ”Flexicurity” Job protection Low High UK USA Social protection Low Italy High Denmark GermanySweden

11. The Danish flexicurity system • Strong rotation between jobs • Low job security • Quick structural adaptation The primary axe of the Flexicurity model Flexiblelabourmarket Activelabourmarket andeducationalpolicies The social partners Social security • Income security • High percieved job security Employment security

12. Work motivation high in Scandinavia Question: ”I would be glad to work even if I did not have a need for the money” Agree(totally or partly) % Percentage Difference Index % 1) Country 75 78 74 70 69 71 60 57 63 55 53 52 47 52 52 47 43 36 64 62 61 52 51 50 36 35 34 27 21 21 19 18 15 15 0 -7 Sweden Denmark Norway Switzerland Japan Germany USA Hungary Portugal UK FranceNetherlands Cyprus Ireland Spain Czech Rep. Slovenia Bulgaria 1) Difference between ”agree” and ”disagree”Source: International Social Survey Programme (ISSP), 1997.

13. Structure of tax and contribution receipts

14. Danish LMP reform 1993/1994 * Content: - from rules to needs - individual action plans * Steering - regionalization - the social partners in pivotal positions

15. Activation in Denmark Measures Before 1994 Work Measures After 1994 Arbejde Work

16. Unemployment figures (%), 1994-2006 OECD, Employment outlook, 2007.

17. LMP regimes – employment rates 2002

18. 25 1974 20 1975 1973 15 1971 Wage increase (percentage) 1961 1966 1965 1976 1970 1968 1969 1972 1979 1967 1977 1982 1980 10 1978 1962 1987 Labour market policy reform 1981 1959 1964 1963 1956 1983 1988 1960 1986 5 1984 1957 1985 1998 1958 2001 1999 1991 1996 2002 1997 1995 1989 1990 2000 1994 1992 1993 0 0 2 4 6 8 10 12 14 Unemployment (percentage) Denmark: the Phillips curve flattened out! Source: ADAMs databank

19. Some basic figures for Danish flexicurity:”the security of the wings” (up to 2004) 13 percent of the workforce complete a CVT-courses each year 30 procent change jobs each year 20 procent of the workforce experience unemployment each year Flexible labour market CVT ALMP Social security 11 procent in ALMP each year

20. Public finances in Denmark, % of GDP 1995 2004 General government expenditure Denmark 60.3 56.3 Total OECD 42.4 40.8 Tax and non-tax receipts Denmark 58.0 58.6 Total OECD 38.4 37.5 Budget balances Denmark - 2.3 2.3 Total OECD - 4.0 -3.3 Government debt Denmark 78.4 49.4 Total OECD 73.7 76.4 Source: OECD

21. New LMP reform of the new government:”More people to work” 2002/2003 • Individual and flexible contacts with the unemployed persons • Job plan • Offers • guidance and qualification • trainee service • wage subsidies

22. Those outside - Who are they?

23. New structural reform 2007 - 2009 • Towards one-tier system: • Joint entrance for all kinds of unemployed people in jobcentres (common for municipalities and public employment service) • From 14 to only 4 regions: • From steering bodies to mostly monitoring agencies • From corporatist steering to state-municipality steering: • Reduced role of the social partners • Strong, big municipalities in pivotal positions • More rule-based efforts • More standardized measures • Erosion of regionalized labour market policy • The social partners without much power and motivation

24. Danish employment policy 2009 Content: * Shift of priority from fighting unemployment towards increasing the supply of labour * Activation to become threatening to unemployed people in order they will find a job themselves Processes: * The social partners no longer in pivotal positions: municipalities takes over decision-making responsibility * coordination weakened in the system Polity: * schizophrenic mixture of control and competition (decentralized operations – centralized steering)

25. The Labour Market Steering System in Denmark 2006 Parliament Minister of Employment National Employment Board Central ”Arbejdsmarkedsstyrelsen” Labour Market Administration GoalsResources Evaluations ”Arbejdsformidlingen” (AF) Employment Service Regional Labour Market Board Regional Educational Institutions UnemploymentOffices County Municipalities Firms

26. The Labour Market Steering System in Denmark 2007 - 2009 State financing unemployment benefits and efforts BER RBR Monitoring of effects and results Jobcentres B C LBR S K K KB Municipal financing of assistance and efforts

27. The new labour market steering system from 1.8.2009 • Municipalities take over responsibilities • Economic responsibility for unemployment transferred as well • Economic incentives to steer activities • Strong monitoring and intervention from the side of the state

28. Danish LMP: from beautiful swan to an ugly duckling? • LMP no longer ”owned” by the social partners • In LMP: Threats and sanctions for those who do not have the ”right” attitudes and motivation • From qualification measures to ”shortest possible way to a job” • Towards a unified benefit system? • Leaving Danish flexicurity behind?

29. Policy changes - assessment

30. Ways of creating policy change

32. Implementation depends on organizing principles The labour market calls for shifting and dynamic interventions: But the jobcentres are transformed into traditional bureaucracies!

33. Internal behavioral consequenses: • ”Wicked” problems redefined as ”tame” ones • Steet-level bureaucrats have less discretion • No further training and education in the system (e.g.: you just need to know how to act according to an order!) • Controlling the unemployed people: they need to learn how to handle their own situation and to reshape their attitudes

34. External actors institutionalizing cooperation competition ”Market”- competition ”Cartel”-like competition individual reasons collective reasons Partnership Network cooperation

35. cooperation trust coupling mechanisms learning norms coordination institutional set-up resources incentives motivation goals cognition political system actors

36. Why do ideas travel? The new institutionalists speak of ”isomorphic mechanisms” • Coercive • Normative • Mimetic (rarely) (perhaps: but norms only direct imitation) (yes!)

37. Imitation and invention go hand in hand • Imitation a first cognitive step • Imitation weakens the original attraction of the invention • Imitiation has to be adapted to national institutional settings and traditions multiple and intertwined processes

38. Looking for national solutions: • Translation is a vehicle • Imitation its motor • Fashion sits at the wheel or you can use present Danish activation system as an non-inspiring example: it is an ugly duckling!

40. Forms of activation systems