Social Pacts and Reform Partnerships

1. Social Pacts and Reform Partnerships Jelle Visser Amsterdam Institute for Advanced Labour Studies AIAS University of Amsterdam NewGov Practitioners Forum, LSE, 30 March Joint work with Sabina Avdagic (MPIfG, Cologne) and Martin Rhodes (EUI and Denver) in NewGov, and Anton Hemerijck (WRR, The Hague) and Jonathan Zeitlin (Madison-Wisc.) in Governance as Learning

2. Definition of Social Pacts/Partnership • Social Pacts: “Forms of concertation between governments and organized interests negotiating, coordinating and implementing policies across one or more policy areas and levels” (NewGov project) • Partnership: “a way of finding solutions of mutual advantage to different stakeholders by balancing concessions and advantages in the fields of competitiveness, employment, social protection and other relevant policies” (Kok Report, 2003:

3. Why? Benefits of Pacts • Broad packages that encompass several measures, while balancing benefits and costs, tend to be more successful in terms of actually adopting reform than one-off measures or big bang solutions (Reform literature). • Including opposing interests lowers risk of reform reversal (but may slow down speed) • Including interests that affect implementation in design of reform lower risk of various forms of implementation failure (motivation; knowledge; govervance – related to “wicked problems”)

4. Puzzling and Powering

5. Classification of Social Pacts

6. Empirical Cases of Social Pacts

7. The Emergence of Social Pacts Prevalent view in empirical studies: Exogenous shocks/ adjustment needs (impulse/catalyst) Shared understanding (pre-condition) Social pacts • Problems: • How is shared understanding built? Why failing in some cases? • Impulses and preconditions important, but mechanisms ofinstitutional creation left underspecified • Why not (more) diffusion/learning form others?

8. Departing from usual “problem-solving” approaches: Facing a crisis important, but pacts signed only if actors can define them as relatively beneficial – in whatever way – to their own interest 1.interests are not necessarily only material, but can include concerns about legitimacy and public standing 2.interests are not necessarily narrowly defined and short-term, but may involvelonger-term considerations about the functioning of the economy (indirect gains forencompassing organizations: organizational, institutional, leadership)

9. A heuristic bargaining model Aim: To derive hypotheses about (a) actors’ behaviour in nego- tiating social pacts, and (b) about the outcomes of negotiations Negotiations: • Two leading players: rounds of offers and counteroffers • They enter game withpower resources (=breakdown value) • Perceptions of relative power may change in interaction, tn+1 ≠ tn; tn+1 = tn + ε, where ε is a correction factor • If εpositive (actors perceive relative power as increasing), actors are likely to persist in pressing demands and continue negotiations until favourable outcome even at cost of breakdown. If εis negative, they go for quick, but less favourable solution • Time preferences: high discount rate means that actor prefers to reach an agreement soon

10. Predictions of negotiation outcomes:

11. Pacts that were signed

12. Pacts that were not signed