From the Manpower Revolution to the Activation Paradigm

J. Timo Weishaupt J. Timo Weishaupt From the Manpower Revolution to the Activation Paradigm From the Manpower Revolution to the Activation Paradigm: Explaining Institutional Continuity and Change in an Integrating Europe examines the evolution of labor market policy in Western Europe, while paying close Explaining Institutional Continuity attention to the OECD and the European Union as proliferators of new ideas. changing welfare states Three evolutionary phases are identified: (a) a “manpower revolution” phase and Change in an Integrating Europe during the 1960s/1970s, when governments emulated Swedish manpower From the Manpower Revolution to the Activation Paradigm policies and introduced/modernized their public employment services; (b) a phase of international disagreement about the root causes of and remedies for unemployment, triggering a diversity of responses during the late 1970s and 1980s; and (c) the emergence of an “activation paradigm” in the late 1990s, causing a process of institutional hybridization. The book’s main contention is that the evolution of labor market policy is not only determined by historical trajectories or coalitional struggles, but also by policy makers’ changing normative and cognitive beliefs. The case studies include Austria, Britain, Denmark, Germany, Ireland, and Sweden. J. Timo Weishaupt received a Ph.D. at the University of Wisconsin, Madison. Currently, he is a Junior Professor for the Sociology of the Welfare State at the University of Mannheim. “A major contribution to the crowded but inconclusive literature on the activation of European labour market policies.” Jonathan Zeitlin, Professor of Public Policy and Governance, University of Amsterdam “This volume provides an impressive in-depth analysis stretching over five decades of policy development.” Dr. Werner Eichhorst, Deputy Director of Labor Policy, IZA, Bonn isbn 978 90 8964 252 3 www.aup.nl Amsterdam University Press 9 7 8 9 0 8 9 6 4 2 5 2 3 Amsterdam University Press from the manpower revolution to the activation paradigm CHANGING WELFARE STATES Advanced welfare states seem remarkably stable at ﬁ rst glance. Although most member states of the European Union (EU) have undertaken compre- hensive welfare reform, especially since the 1990s, much comparative welfare state analysis portrays a ‘frozen welfare landscape’. Social spending is stable. However, if we interpret the welfare state as more than aggregate social spending and look at long-term trends, we can see profound transformations across several policy areas, ranging from labour market policy and regulation, industrial relations, social protection, social services like child care and education, pensions, and long-term care. Th is series is about trajectories of change. Have there been path-breaking welfare innovations or simply attempts at political reconsolidation? What new policies have been added, and with what consequences for competitiveness, employment, in- come equality and poverty, gender relations, human capital formation, and ﬁ scal sustainability? What is the role of the European Union in shaping national welfare state reform? Are advanced welfare states moving in a similar or even convergent direction, or are they embarking on ever more divergent trajectories of change? Th ese issues raise fundamental questions about the politics of reform. If policymakers do engage in major reforms (despite the numerous institutional, political and policy obstacles), what factors enable them to do so? While the overriding objective of the series is to trace trajectories of contemporary welfare state reform, the editors also invite the submission of manuscripts which focus on theorizing institutional change in the social policy arena. editors of the series Gøsta Esping-Andersen, University of Pompeu Fabra, Barcelona, Spain Anton Hemerijck, VU University Amsterdam, the Netherlands Kees van Kersbergen, VU University Amsterdam, the Netherlands Kimberly Morgan, George Washington University, Washington, USA Romke van der Veen, Erasmus University, Rotterdam, the Netherlands Jelle Visser, University of Amsterdam, the Netherlands From the Manpower Revolution to the Activation Paradigm Explaining Institutional Continuity and Change in an Integrating Europe J. Timo Weishaupt Cover illustration: Vincent van Gogh, Two farmers digging over (after Millet), Saint-Rémy, October 1889, Oil on canvas Cover design: Crasborn Grafisch Ontwerpers bno, Valkenburg a/d Geul Lay-out: V-3 Services, Baarn isbn 978 90 8964 252 3 e-isbn 978 90 4851 305 5 nur 759 © J. Timo Weishaupt / Amsterdam University Press, Amsterdam 2011 All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (elec- tronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book. Table of Contents List of Boxes, Figures and Tables Abbreviations Acknowledgements I Introduction I.1 The Research Questions I.2 Competing Predictions about Labour Market Policy Regime Change: The Argument in Brief I.3 Research Design, Case Selection, and the Evidence I.4 Book Outline II Theoretical Approach II.1 Introduction II.2 Defining Institutions II.3 Historical Institutionalism: Explaining Continuity II.4 Historical Institutionalism: Beyond Continuity II.5 Causal Mechanisms to Explain Institutional Transformations: Ideas and Agency II.6 Three Institutional Trajectories II.7 Analytical Grid: Four Dimensions of Labour Market Policy Regimes part I origin and crisis of european labour market policy regimes III Origin of European Labour Market Policy Regimes and the Manpower Revolution III.1 Locating the Origins of Unemployment and Labour Market Policy 73 III.2 Locating the Origin of Active Manpower Policy 83 III.3 The OECD and the Diffusion of Active Manpower Policy 85 III.4 Five Country Cases: Austria, Denmark, Germany, Ireland, and the UK 89 III.5 Conclusions 101 IV Labour Market Policy Regimes in Crisis: Divergence into Three Distinct Clusters 105 IV.1 Labour Market Policy Regimes Under Stress: 1973-1979 105 IV.2 National Policies after the First Oil Crisis: Moderate Optimism and the Expansion of Active Manpower Policies 108 IV.3 Conclusions 118 IV.4 After the Second Oil Crisis: Shattered Illusions and Diverging Pathways 119 IV.5 National Policy Responses: Social-Investment, Labour-Shedding, and Marketisation Strategies 121 IV.6 Conclusions 139 part II the emergence of the activation paradigm V The OECD’s Repeated Reassessments and the EU as a Proliferator of New Ideas 151 V.1 The New Aspiration for an “Active Society” and the Road to the 1994 OECD Jobs Study 151 V.2 The European Union as a Proliferator of New Ideas: From Delors’ 1993 White Paper to the European Employment Strategy 156 V.3 The Consolidation of Activation and the Emergence of the PES Service Model 165 V.4 Further Ideational Convergence: The Reassessed OCED Jobs Study and the Revised Lisbon Agenda 173 V.5 Conclusions 186 VI The Emergence of the Activation Paradigm: Analyzing Institutional Hybridisation 193 VI.1 Normative/Cognitive Dimension 194 VI.2 Organisational Dimension 201 VI.3 Financial Dimension 219 VI.4 Work Incentives Dimension 225 VI.5 Conclusions 245 FROM THE MANPOWER REVOLUTION TO THE ACTIVATION PARADIGM VII Explaining Transformative Change in Two Crucial Cases 253 VII.1 Explaining the Process of Hybridisation in Continental Europe: Germany as a “Least Likely” Case 254 VII.2 Explaining Hybridisation in the Liberal World: Turning Vice into Virtue in Ireland 276 VII.3 Conclusions 291 VIII Conclusion 295 VIII.1 Do National Labour Market Policy Reform Efforts Exhibit Covariation across Western Europe, and if so, How and Why? 295 VIII.2 What Impact, if any, Have the Recommendations of International Organisations such as the OECD and the EU had on National Reform Agendas? 303 VIII.3 Have Recent Reform Activities, in the Context of the OECD Jobs Study and the EES, Fundamentally Transformed the Historic Composition of National Labour Market Policy Regimes, and if so, to What Effect? 305 VIII.4 Reactions to the Global Financial and Economic Crisis and the Future of the Activation Paradigm 308 List of Interviews and Personal Conversations 315 Notes 321 Bibliography 341 Index 387 TABLE OF CONTENTS List of Boxes, Figures and Tables List of Boxes 1 Five Instruments of Active Labour Market Policy 67 2 Summary of 1964 OECD Recommendations 87 3 1994 OECD Jobs Study Recommendations 4 Five Guidelines Proposed at the 1994 Essen Council 158 5 Institutional Components of the EES (Luxembourg Process) 162 6 Four Pillars of the European Employment Strategy (1997-2002) 163 7 The New Deal Measures in the UK 165 8 The Danish “Active Line” 170 9 The “Ten Commandments” of the EES (2003) 175 10 Quantified Targets in the 2003 Guidelines 175 11 Common Principles of Flexicurity 178 12 Seven Policy Lessons in the OECD Reassessed Jobs Study (RJS) 180 13 Maximum Unemployment Benefits Durations in Months for Prime-Aged Workers, Indicating Changes in the Duration of UB Benefits Payments from mid-1990s to 2008 229 List of Graphs and Figures 1 Points of Entry for New Ideas, Interpretations, and Reflections 55 2 Organisation of Employment Services 65 3 The Processes of Peer Review in the EU and the OECD 185 4 Employment Levels Among Older Male Workers Aged 60-64 in Percent, 1996, 2002, and 2008 231 5 The Core Elements of the Activation Paradigm

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