The determinants of welfare state reform: external challenges

1. The determinants of welfare state reform: external challenges Europeanization and Welfare State Change.The Case of Unemployment Protection in Italy and France Political EconomicsAY 2010-2011 Paolo R. GrazianoLectures 9-10

2. 1.1a. WS Change and Europeanization • ‘Traditional’ focus of comparative WS literature: • WS regimes (Esping Andersen, 1990) • WS ‘new’ politics (Pierson, 2001) • WS recalibration (Ferrera and Hemerijck, 2003) • ‘New’ focus of Europeanization and WS Change literature: • WS compliance (Falkner and others, 2005) • OMC and National Employment and Social Inclusion (Zeitlin and Pochet, 2005) • Europeanization of social protection (Kvist and Saari, 2007)

3. 1.1b. Europeanization and WS change: where is the link? • WS literature has been traditionally interested in the national dimension and has primarely focused on aggregate social expenditure data • ‘Evocative’ use of Europeanization in recent WS literature • Further need to set the link between Europeanization and WS (change)

4. 1.2a. Conceptual Issues: Europeanization • Europeanization per se is not convergence nor mere EU integration • top-down and bottom-up process (i.e. construction and diffusion) • process is different from its (direct and indirect) effects • dimensions involved: policy, polity and politics • widening the focus: Europeanization as a case of regionalization

5. 1.2b. Conceptual Issues: WS change • Non contested definition of WS (i.e. social policies such as employment, health care, pensions, social inclusion, etc.) • WS change has often been studied in relation to social expenditure (see Esping Andersen, 1990 – and many others) • More recently, WS change = overall policy change (possible ‘paradigmatic change’ à la Hall, 1993; Culpepper, Hall and Palier and others, 2006) • WS policy key elements: policy goals, policy domains and policy instruments, i.e. policy structure (objectives, principles, procedures and financial instruments)

6. 1.3. Research Design • Linking Europeanization (i.e. construction at the EU level and national diffusion of EU policies and institutions) and nationalWS change (i.e. in the national actors’ strategy in building EU policies and/or policy structure modifications connected to Europe ) • Three step research design: • A. EU policy analysis • B. National policy analysis (i.e., if applicable, description of dimensions of change) • C. Change/Immobilism explanation (if change or policy misfit detected)

7. 1.4. Methodology • What: neoinstitutional process tracing (in particular, the historical variant of neoinstitutionalism: key feature is the timing and the sequencing of policy evolution) • How: policy document analysis (policy structure), newspaper analysis and semi-directive interviews with key informants (policy process) using positional method • Who: key actors involved in the decision-making process • When: since memory is weak, the timing of the research is crucial…

8. 2.1. Europeanization and Employment Policy Change in Italy and France • Case selection: Italy and France considered as different welfare state models, in particular with respect to public coverage of employment protection (Esping Andersen, 1990; Ferrera, 1996) • Basic research question: in the light of common external pressures, the result is policy convergence or differences still remain? • A three step research design: • A. EU policy evolution • B. National policy evolution • C. Policy change/immobilism explanation • Methodology: neoinstitutional process tracing, through policy-making data collection (mainly communications, actions plans and recommendations) and about 20 interviews with key decision-makers at the EU and national level

9. 2.2.a. The construction of EU policies • Italy: weak capacity of preference formation, representation and negotiation in the EU • France: strong capacity of preference formation, representation and (especially) negotiation in the EU • Result: • Italy = EU policy taker • France = EU policy maker

10. 2.2.b. EU policy structure (after EES) • Policy structure: • objectives: quantified employment targets • principles: from four pillars (employability, entrepreneurship, equal opportunities, adaptability) to three overarching ones (full employment, quality and productivity, cohesion and an inclusive labour market) – i.e. flexibility first and flexicurity after 2007 • procedures: OMC (benchmarking, best practice approach, etc.), i.e. standardized ‘soft law’ • instruments: ESF (European Social Fund) • In sum: soft but continuous pressures towards activation policies

11. 2.2.b. The diffusion of EU policies. Italian ‘traditional’ policy structure (before EES) • objectives: poorly defined • principles: employment security • procedures: discretionary • instruments: national, predominance of passive measures, low overall unemployment expenditure (around 1% of GDP)

12. 2.2.c. The diffusion of EU policies. French ‘traditional’ policy structure (before EES) • objectives: poorly defined • principles: employment security • procedures: automatic • instruments: national, predominance of passive measures, medium-high overall unemployment protection expenditure (3% of GDP)

13. 2.2.d. The new Italian policy structure (after EES) • objectives: well defined (EES definition) • principles: flexicurity (Italian style, i.e. security for insiders, flexibility for former outsiders or newcomers) • procedures: increasingly automatic (although with a limited scope since unemployment protection measures are still limited) • instruments: both European and national, significant increase of active measures, limited overall increase unemployment protection expenditure

14. 2.2.e. The new French policy structure (after 1997) • objectives: well defined (EES definition) • principles: employment security • procedures: automatic • instruments: both European and national, but still predominance of passive measures, constant overall unemployment protection expenditure

15. 2.3. Explaining differential WS changes • In sum: very limited convergence towards a common employment policy structure, but why? • In search for an explanation: • EU policy construction style • the domestic politics of unemployment protection (i.e. partisan and trade union politics) • nature of European constraints and opportunities (being weak, they were more relevant in the cases of greater ‘policy misfit’ and high budget deficits – i.e. Italian case)

16. 2.4. Conclusion • In both cases some changes have been registered… • …but France and Italy remain clearly different welfare states (with respect to unemployment protection) • European pressures (even if weak) make a difference, especially in those cases where there is a clear ‘policy misfit’… • …but the pressures must be connected to the EU policy construction style and the domestic politics of unemployment protection which ‘use’ quite differently European constraints and opportunities. • Predictions: no full Europeanization of all domestic welfare states but differential Europeanization (and, in a broader perspective, ‘regionalization’) of domestic policies – not only welfare state policies.