The Future of Work Lunchtime Seminar May 20, 2010

1. The Future of Work Lunchtime Seminar May 20, 2010 by Prof. Martin Seeleib-Kaiser THE FUTURE OF WORKCreating a Cross Disciplinary Agenda

2. The Dual Transformation of Social Protection and Human Capital: Comparing Britain and Germany Timo Fleckenstein, Adam M. Saunders and Martin Seeleib-Kaiser Forthcoming in Comparative Political Studies, 44:12 (2011) Acknowledgments: We thank Peter Kemp and Johannes Lindvall for comments and suggestions on an earlier draft. The research was generously supported by the John Fell OUP Research Fund and the Fritz Thyssen Foundation.

3. Overview • Puzzle • Explaining Varieties of Work and Welfare • Reconceptualizing Trajectories of Social Protection • De-industrialization, Increased Female Employment and Changed National Skill Profiles • Conclusions

4. Puzzle • Both Britain and Germany witnessed a dual transformation of welfare through a far-reaching retrenchment of unemployment insurance and a remarkable expansion of family policy • Established theories within the comparative political economy literature seem ill-equipped to provide an explanation (path dependence, welfare production regime, VoC)

5. Explaining Varieties of Work and Welfare • Core differences between Britain and Germany according to the VoC literature • Britain (LME): reliance on general skills/ minimalist unemployment protection • Germany (CME): reliance on specific skills/comprehensive and generous unemployment protection • Commonalities: Both countries have been characterized as belonging to the strong male breadwinner model

6. Explaining Varieties of Work and Welfare • The comparative political economy literature on skills has used the International Standard Classification of Occupations (ISCO-88) as a tool. It differentiates between nine major groups: 1) legislators, senior officials and managers; 2) professionals; 3) technicians and associate professionals; 4) clerks; 5) service workers and shop and market sales workers; 6) skilled agricultural and fishery workers; 7) craft and related trades workers; 8) plant and machine operators and assemblers; 9) elementary occupations

7. Explaining Varieties of Work and Welfare • Furthermore it distinguishes between 4 skill levels: 1st skill level: primary education of about 5 years; 2nd skill level: first and second stages of secondary education; 3rd skill level: post-secondary but non-tertiary education of about 4 years; 4th skill level: undergraduate or postgraduate degree

8. Explaining Varieties of Work and Welfare • The established model in the literature for determining the specialization of occupational skills is based on a measurement formulated by Iversen/Sockice (2001). According to their model skill specificity is a function of a) the number of unit groups of each major group divided by the 390 unit groups that comprise ISCO-88; and b) the share of each major group as a percentage of the entire workforce; the two ratios are then divided to derive the absolute skill specificity, which in turn is divided by the group’s corresponding ISCO skill level to calculate its relative skill specificity.

9. Explaining Varieties of Work and Welfare • Although very systematic the model developed by Iversen/Soskice has some serious limitations: • For instance according to their approach workers belonging to the major group of ‘elementary occupations’, such as hand packers and street food vendors, have significantly higher skill specificity than workers belonging to the major group of ‘service workers and shop and market sales workers’, such as garbage collectors as well as waiters and waitresses. • Furthermore, it cannot account for the potential of skill polarization in post-industrial societies.

10. Explaining Varieties of Work and Welfare • Alternatively we propose a modification of Esping-Andersen’s (1993) occupational classification schema in which a distinction is made between a Fordist and post-industrial hierarchy of occupations:

11. Explaining Varieties of Work and Welfare • Model • Integration of Esping-Andersen’s hierarchies with the ISCO-88 major group classification to form a single schema in order to take account of changes in national skill composition over time • Distinction between three skill sets • high general, • low general and • specific to account for the potential of skill polarization in post-industrial economies

12. Explaining Varieties of Work and Welfare • Skills Re-Classification

13. Reconceptualizing Trajectories of Social Protection • Implicit assumptions based on existing explanations of cross-national varieties of work and welfare: • Germany: comprehensive and generous unemployment insurance; weak family policies • Britain: unemployment insurance and family policy minimal

14. Reconceptualizing Trajectories of Social Protection Despite the persistence of such trends over the post-war period, during the past decade significant changes in both countries have become increasingly observable

15. Reconceptualizing Trajectories of Social Protection • Germany: • Unemployment insurance (based on the normative expectation of Lebensstandard-sicherung) • Benefit levels should be generous and linked to previous earnings • Benefit duration should provide for continued coverage during periods of layoffs • Benefit recipients should not be required to accept a job unless it is in a similar occupation and at a similar level of pay

16. Reconceptualizing Trajectories of Social Protection • Germany: • Unemployment insurance (continued) • Number of policy reforms since the mid-1990s have significantly reshaped the nature of German unemployment protection: • Labor Promotion Reform Law of 1997/98 (significant redefinition of suitability criteria) • Hartz Reforms of 2004 (limit of unemployment insurance payments to 12 months and integration of unemployment assistance and social assistance programs) • Significant implications for specific-skilled workers who are now required to accept lower paid or even low-wage jobs outside their established occupation

17. Reconceptualizing Trajectories of Social Protection • Germany: • Family policy • Historically policies bolstered the traditional family structures by promoting the role of men as wage earners and that of women as caregivers; transfer intensive

18. Reconceptualizing Trajectories of Social Protection • Germany: • Family policy (continued) • Significant changes: • 2007: introduction of an earnings-related parental leave (wage replacement rate 67 percent) with a duration of 12 months (with two additional months should they be taken by the partner) • 1992: entitlement of every child (between 3-6) to a place in a childcare facility; since 2002 expansion of provision for children under the age of three to fully meet demand by 2013, increasing provision from 14 percent (2005/06) to 35 percent

19. Reconceptualizing Trajectories of Social Protection • Britain • Unemployment insurance • Historically very ungenerous benefits; • From 1966 to 1982 earnings-related supplement; • 1996: Jobseeker’s Allowance scheme – shortened the duration of contributory-based benefits from 52 to 26 weeks, after which the benefit becomes means-tested; weekly benefit £64

20. Reconceptualizing Trajectories of Social Protection • Britain • Family Policy • Historically no explicit family policy • Philosophy changed fundamentally with the election of New Labour 1997 • Expansion of childcare for low-wage earners and tax credits (activation) • Introduction of unpaid parental leave (1999) • Extension of paid maternity leave from 18 weeks (2002) to nine months (2006); benefit level: 90 percent of previous earnings for 6 weeks; for the remaining time £124.88 per week

21. De-Industrialization, Increased Female Employment and Changed National Skill Profiles • Both economies have de-industrialized • Female employment has significantly increased • The German labor market is increasingly reliant on jobs requiring general skills, whilst the literature assumes a continued reliance on specific skills (Iversen 2005; Cusack et al. 2006; Iversen/Stephens 2008) • Employment growth in jobs requiring high-general skills has been faster than in the area of low-general skills • Jobs requiring low-general skills comprise a far larger share of the British labor market

22. Figure 1: Value Added by Economic Activity in Germany and the United Kingdom (1970-2007) Source: OECD Factbook 2009

23. Figure 2: Employment Rates by Economic Activity in Germany and the United Kingdom (1960-2007) Source: OECD Factbook 2009

24. Figure 3: Employment Rate by Gender in Germany and the United Kingdom (1984-2007) Source: OECD Factbook 2009

25. Figure 4: Employment by Skills in Germany and the United Kingdom (1992-2007) Source: Authors’ calculations. Eurostat New Cronos Data

26. Figure 5: Male Employment by Skills in Germany and the United Kingdom (1992-2007) Source: Authors’ calculations. Eurostat New Cronos Data

27. Figure 6: Female Employment by Skills in Germany and the United Kingdom (1992-2007) Source: Authors’ calculations. Eurostat New Cronos Data

28. De-Industrialization, Increased Female Employment and Changed National Skill Profiles • The analysis of cross-national shifts in employment by skills bolsters arguments for a functional explanation for the changes witnessed in unemployment insurance, especially in Germany • By the time the suitability criteria were reformed in 1997, only 26 percent of the German workforce was employed in occupations requiring specific skills. • Upon the enactment of Hartz legislation this had decreased further to 23 percent • In the late 1990s/early 2000s a majority of the unemployed were long-term unemployed, many of whom had very low educational attainment levels

29. De-Industrialization, Increased Female Employment and Changed National Skill Profiles • The growing emphasis on employment-oriented family policy in both Britain and Germany has paralleled the expanding employment of women. • Despite growth of family policy in both countries, differences in the relationship between work and welfare in this area are evident. • The relatively large percentage of women in jobs requiring low general skills in Britain has favored an expansion of family policies tailored toward those with lower incomes. • The more ‘balanced’ distribution of female employment in jobs requiring high and low general skills in Germany has focused family policy more towards the needs of female employees with high general skills.

30. Conclusion • The decline of the industrial sector and the rise of services have eroded the functional underpinnings of earnings-related social protection for the unemployed in Britain and Germany. • The expansion in female labor market participation has been accompanied by the corresponding ‘new’ social risks of childbirth and child-rearing. This has provided the functional underpinnings for the expansion of employment-oriented family policies.

31. Conclusion • Employment-oriented family policies can be understood as policies for the market in a similar way as unemployment insurance has been. • By making a distinction between high and low general skills, greater insight can be gained in mapping trajectories of post-industrial social protection.

32. Conclusion • Countries with the predominance of low-general skills amongst female workers may be expected to develop rather minimalist public social policies that address new social risks which focus on low-income groups. • Economies with a greater share of high-general skills in the female labor force may develop more generous post-industrial welfare.

33. Conclusion • Overcoming the binary distinction between general and specific skills sheds greater light on the political economy of welfare states in post-industrial societies, opening a new path of inquiry.