From learning to steering in Danish labour market policy - or from a beautiful swan to an ugly duckling? Henning Jørgensen Professor, Aalborg Universitet, CARMA henningj@socsci.aau.dk, Welfare States in Transition, Chicago 15th May 2009

Activation as part of the ”modernization” of the welfare systems Activation part of a new intervention paradigm employment as goal and central 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

Expenditures on Labour market policy 2005

Construction of activation systems based 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

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)

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

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

The Danish flexicurity system: not a model – only relationships   Strong rotation between jobs Low job security Quick structural adaptation The primary axe of the Flexicurity model Flexible labour market The social partners Active labour market and educational policies Social security Income security High percieved job security Employment security

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

- individual action plans - activation offers (mostly education) Danish LMP reform 1993/1994 * Content: - from rules to needs - individual action plans - activation offers (mostly education) * Steering - regionalization - the social partners in pivotal positions

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

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

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

New structural reform 2007 - 2009 Towards one-tier system: Joint entrance for all kinds of unemployed people into jobcentres (common for municipalities and public employment service) From 14 to only 4 regions: (now mostly monitoring agencies) From corporatist steering to state-municipality steering: (reduced role of the social partners)

Danish ”employment policy” 2007- 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 (but still rights and dialogues) Processes: * The social partners no longer in pivotal positions: municipalities takes over decision-making responsibility * coordination weakened, contractualisation in use Polity: * schizophrenic mixture of control and competition (decentralized operations – centralized steering)

The Labour Market Steering System in Denmark 2007 - 2009 State financing unemployment benefits and efforts BER RBR Monitoring of effects and results Jobcentres (91) B (77) C (14) LBR S M M KB Municipal financing of assistance and efforts

A new labour market steering system from 1.8.2009 Municipalities take over all responsibilities Economic incentives to steer activities Strong monitoring and intervention from the side of the state

Policy changes - assessment Content Continuity Break Process Incremental change Reproductive adaptation Gradual change Abrupt/ Brusque change Regime survival System transformation

Institutional recalibration of the system Contractualization introduced at all levels Performance management system and ”steering” as to results New measurement system from 2007 Central standards and manuals

Evidence-based measurement system Is partial: includes only some aspects of LMP (employment records) Measures only on the supply side: is one-sided Register last years performance: too static The role of dialogues has been reduced

Consequences internally The frontline people have a new role definition: agents for a ”behavioral” policy Employees will experience de-professionalization The PES is becoming a traditional bureaucracy (run by the municipalities)

Implementation depends on organizing principles The labour market calls for shifting and dynamic interventions: But the jobcentres are transformed into traditional bureaucracies! Tasks Technologies Uniform Variable Standardized Bureaucracy Professional organisation Non-standardized Management Learning organisation

Internal behavioral consequenses: ”Wicked” problems redefined as ”tame” ones Steet-level bureaucrats have less discretion No further training and education in the system Controlling the unemployed people: they need to learn how to handle their own situation and to reshape their attitudes (a moral-theraupeutic problem)

Danish policy change now more ”European” as to institutional reform Policy design separated from policy implementation MBO is subsituting law making and political regulation Measurement og monitoring to help performance management (central steering) Individualization and moral-therapeutic practices (case-management) Contractualization Quasi-markets and outsourcing of tasks from PES Standardization of procedures and ways of operating

But: cooperative adaptation is still the key to good governance Institutionalizing social dialogues Placing responsibilities on actors Developing common norms Coupling mechanisms Trust and learning

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

Danish LMP: from beautiful swan to an ugly duckling? LMP no longer ”owned” by the social partners In LMP: Threats and sanctions to become dominant (paternalistic values introduced) From qualification measures (learn-fare) to ”shortest possible way to a job” (work-first) Organizational change from a learning system to central steering of a fully bureaucratized system Leaving Danish flexicurity behind?