Handbook of Labour Market Policy in Advanced Democracies 1800880871, 9781800880870

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HANDBOOK OF LABOUR MARKET POLICY IN ADVANCED DEMOCRACIES

Handbook of Labour Market Policy in Advanced Democracies Edited by

Daniel Clegg Professor of Comparative Social Policy, School of Social and Political Science, University of Edinburgh, UK

Niccolo Durazzi Senior Lecturer in Political Economy of Social Policy, School of Social and Political Science, University of Edinburgh, UK

© Daniel Clegg and Niccolo Durazzi 2023 With the exception of any material published open access under a Creative Commons licence (see www​.elgaronline​.com), all rights are reserved and no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher.

Chapters 16, 17 and 24 are available for free as Open Access from the individual product page at www.elgaronline.com under a Creative Commons Attribution-NonCommercialNoDerivatives 4.0 International (https://creativecommons.org/licenses/by-nc-nd/4.0/) license. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023943168 This book is available electronically in the Sociology, Social Policy and Education subject collection http://dx​.doi​.org​/10​.4337​/9781800880887

ISBN 978 1 80088 087 0 (cased) ISBN 978 1 80088 088 7 (eBook)

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Contents

viii xi

List of contributors Acknowledgements 1

Introduction: labour market policy as a field of government action and an object of research Daniel Clegg and Niccolo Durazzi

1

PART I   CORE CONCEPTS 2

The rise and demise of unemployment Jérôme Gautié

3

Insider–outsider divides in advanced democracies: labour market policies, new inequalities and attitudes Hanna Schwander

14

27

4

Activation: a research topic in its own right? Jochen Clasen and Clara Mascaró

44

5

The academic and policy roots of flexicurity and its pathways Sonja Bekker and Janine Leschke

54

6

Assessing labour market policy change Emanuele Ferragina, Federico Danilo Filetti and Alessandro Arrigoni

68

PART II   CHANGING CONTEXTS 7

Macroeconomic regimes and labour market policies Bob Hancké and Toon Van Overbeke

8

Women, work, and labour market policy Sonja Avlijaš

103

9

Labour market policy in the era of mass migration: perspectives on Europe Gemma Scalise

116

10

Technological change and labour market policy preferences David Weisstanner

132

11

Putting the platform economy in its place: contested regulatory terrains Alessio Bertolini, Matt Cole and Shelly Steward

148

v

88

vi  Handbook of labour market policy in advanced democracies

PART III   ACTORS 12

Political parties and labour market policies Reimut Zohlnhöfer and Linda Voigt

161

13

Trade unions and the evolution of labour market policy Joshua Gordon and Dennie Oude Nijhuis

177

14

Employers and labour market policy Sabrina Colombo, David Natali and Emmanuele Pavolini

193

15

International organisations: policy agendas and transfer mechanisms in global labour governance Vicente Silva

16

The European Union: a significant player in labour policymaking Vincenzo Maccarrone, Roland Erne and Darragh Golden

206 219

PART IV   JOB AND INCOME SECURITY 17

Minimum wages: by collective bargaining and by law Georg Picot

18

Employment protection legislation: towards more inclusive or segmented labour markets? Agnieszka Piasna

235

249

19

The parabola of unemployment insurance in advanced democracies Daniel Clegg and Larissa Nenning

264

20

The rise of in-work benefits: policy, politics and evaluation Joan Abbas and Ewan Robertson

280

21

From early retirement to later exit from work: shifting towards active ageing Bernhard Ebbinghaus and Kun Lee

295

22

Universal basic income: the new political economy of an old idea Leire Rincon and Tim Vlandas

309

PART V   EMPLOYMENT PROMOTION AND SUPPORT 23

Skill formation: part of and complement to the labour market policy mix? Donato Di Carlo and Niccolo Durazzi

24

Effects and explanations of active labour market policy: theoretical and empirical challenges for cross-national research Axel Cronert

25

Public employment services: mapping reform trends in advanced democracies J. Timo Weishaupt

327

343 360

Contents 

vii

26

The changing role of frontline employment advisors Rik van Berkel

374

27

Predictive algorithms in the delivery of public employment services John Körtner and Giuliano Bonoli

387

PART VI  REGIONAL EXPERIENCES 28

29

30

Liberal labour markets at the crossroads: the cases of Australia and New Zealand Shaun Wilson

400

Labour market policy reform in East Asia: from economic crises to welfare politics Ijin Hong, Chung-Yang Yeh and Jaewook Nahm

417

Canada and the United States: labour market policies and varieties of federalism in two liberal welfare states Daniel Béland, Shannon Dinan and Alex Waddan

435

31

Labour market policy in the Visegrad countries Michał Polakowski

449

32

Labour market policy reforms in Southern Europe: too much of the wrong medicine? 463 Arianna Tassinari, Fabio Bulfone and Angie Gago

PART VII  IMPACTS 33

Labour market policies and social inequality in labour market outcomes Thomas Biegert

34

Poor workers in advanced democracies: on the nature of in-work poverty and its relationship to labour market policies Rod Hick and Ive Marx

479

495

35

Labour market policies as a social determinant of wellbeing Elke Heins

508

36

Labour market problems and political integration Paul Marx

523

Index

536

Contributors

Joan Abbas is former Postdoctoral Research Fellow, University of Bergen. Alessandro Arrigoni is Independent Researcher. Sonja Avlijaš is Marie Sklodowska-Curie Research Fellow in the Faculty of Economics, Belgrade University. Sonja Bekker is Associate Professor of Law, Economics and Governance, Utrecht University. Daniel Béland is Professor of Political Science, McGill University. Alessio Bertolini is Researcher at the Oxford Internet Institute, University of Oxford. Thomas Biegert is Assistant Professor of International Social and Public Policy, London School of Economics and Political Science. Giuliano Bonoli is Professor of Social Policy at IDHEAP, University of Lausanne. Fabio Bulfone is Assistant Professor in Public Administration, University of Leiden. Jochen Clasen is Professor of Comparative Social Policy, University of Edinburgh. Daniel Clegg is Professor of Comparative Social Policy, University of Edinburgh. Matt Cole is Lecturer in Work, Technology and Employment, University of Sussex. Sabrina Colombo is Associate Professor of Sociology of Labour and Economic Processes, University of Milan. Axel Cronert is Researcher in the Department of Government, Uppsala University. Donato Di Carlo is Lecturer in Political Economy and Director of the Luiss Hub for New Industrial Policy and Economic Governance (LUHNIP), University Luiss Guido Carli, Rome. Shannon Dinan is Assistant Professor of Political Science, Université Laval. Niccolo Durazzi is Senior Lecturer in Political Economy of Social Policy, University of Edinburgh. Bernhard Ebbinghaus in Professor of Sociology, University of Mannheim. Roland Erne is Professor of European Integration and Employment Relations, University College Dublin. Emanuele Ferragina is Associate Professor of Sociology, Centre de Recherche sur les Inégalités Sociales (CRIS), Sciences Po Paris. Federico Danilo Filetti is Postdoctoral Research Associate, Kings College London. Angie Gago is Postdoctoral Researcher in the Centre of Comparative, European and International Law, University of Lausanne. viii

Contributors 

ix

Jérôme Gautié is Professor of Economics, University of Paris 1 Panthéon-Sorbonne. Darragh Golden is Postdoctoral Researcher, University College Dublin. Joshua Gordon is Assistant Professor of Public Policy, Simon Fraser University. Bob Hancké is Associate Professor of Political Economy, London School of Economics and Political Science. Elke Heins is Senior Lecturer in Social Policy, University of Edinburgh. Rod Hick is Reader in Social Policy, Cardiff University. Ijin Hong is Associate Professor of Public Administration, Sun Yat-Sen University. John Körtner is PhD candidate at IDHEAP, University of Lausanne. Kun Lee is PhD candidate in Social Policy, University of Oxford. Janine Leschke is Professor MSO in Comparative Labour Market Analysis, Copenhagen Business School. Vincenzo Maccarrone is Postdoctoral Researcher, University College Dublin. Ive Marx is Professor and Director of the Centre for Social Policy Herman Deleeck, University of Antwerp. Paul Marx is Professor of Political Science and Socio-Economics, University of Duisbrug-Essen. Clara Mascaró is PhD candidate in Social Policy, University of Edinburgh. Jaewook Nahm is Assistant Professor, Korea National University of Education. David Natali is Professor of EU and Comparative Politics, Sant’Anna School of Advanced Studies, Pisa. Larissa Nenning is PhD candidate in Social Policy, University of Edinburgh. Dennie Oude Nijhuis is University Lecturer at the Institute for History, University of Leiden. Emmanuele Pavolini is Professor of Economic Sociology and Social Policy, University of Macerata. Agnieszka Piasna is Senior Researcher in the Economic, Employment and Social Policy Unit, European Trade Union Institute. Georg Picot is Professor of Comparative Politics, University of Bergen. Michał Polakowski is Policy Officer at the Economic and Social Research Institute (ESRI), Dublin. Leire Rincon is Postdoctoral Researcher, Autonomous University of Barcelona. Ewan Robertson is Teaching Fellow in Comparative Social Policy, University of Edinburgh. Gemma Scalise is Assistant Professor in Economic Sociology, University of Milan-Bicocca. Hanna Schwander is Professor of Political Sociology and Social Policy, Humboldt University.

x  Handbook of labour market policy in advanced democracies

Vicente Silva is LSE Fellow in Social Policy, London School of Economics and Political Science. Shelly Steward is Director of the Future of Work Initiative, Aspen Institute. Arianna Tassinari is Assistant Professor in Economic Sociology, University of Bologna. Rik van Berkel is Associate Professor in the School of Governance, Utrecht University. Toon Van Overbeke is Assistant Professor in Europe, Climate and Digital Society, Maastricht University. Tim Vlandas is Associate Professor of Comparative Social Policy, University of Oxford. Linda Voigt is Research Associate in the Institute of Political Science, University of Heidelberg. Alex Waddan is Associate Professor of Politics, University of Leicester. J. Timo Weishaupt is Professor of Sociology, University of Göttingen. David Weisstanner is Assistant Professor of Health and Social Policy, University of Lucerne. Shaun Wilson is Associate Professor of Sociology, Macquarie University. Chung-Yang Yeh is Associate Professor of Sociology, Soochow University. Reimut Zohlnhöfer is Professor of Political Science, University of Heidelberg.

Acknowledgements

We are very grateful to Joe Chrisp, Jan Eichhorn, Marco Palillo and Philip Rathgeb for providing helpful comments on draft chapters.

xi

1. Introduction: labour market policy as a field of government action and an object of research Daniel Clegg and Niccolo Durazzi

INTRODUCTION Labour market policy is a crucial arena – perhaps the crucial arena – in mediating the relationship between democracy and capitalism in affluent countries. As the functioning of capitalist labour markets inherently produces a variety of social risks (e.g. unemployment; precarity; skill obsolescence; in-work poverty – to mention only a few), labour market policy is a major tool that democratically elected governments have at their disposal to cushion these risks and respond to citizens’ demands for social protection. Yet there is not a single recipe as to what is the ‘optimal’ approach in labour market policy to address the social risks produced by capitalist labour markets. Should governments protect jobs? Or should they rather protect incomes? Should they prioritise speed in the transitions from unemployment to (re-)employment? Or should they rather emphasise job quality? These are just examples of a broader set of questions that every democratic government faces and to which multiple, and potentially starkly differing, answers could be provided. Crucially, each answer entails specific policy choices and carries distinct political implications. The diversity of policy options and their political implications is one reason why labour market policy is such a contested field of government action and an exciting object of cross-national comparative research. What makes labour market policy a particularly intriguing policy area is the fact that its prominence – both as a domain of government action and as an object of research – increased overtime across the second half of the 20th century and into the 21st as a function of the growing complexity of contemporary labour markets. And its prominence has only been further accentuated by the profound economic shocks that have marked the first decades of the new millennium, most recently the COVID-19 pandemic. To contextualise the chapters that follow, in the following section we first provide a schematic overview of the growing diversity of public policy interventions in labour markets over time. In the light of that, we then clarify the particular – and relatively expansive – definition of labour market policy that we have employed in putting together this handbook. The third section of our introduction discusses the disciplinary orientation of this volume, which intends to showcase recent scholarship on labour market policy in the closely connected fields of comparative social policy and comparative political economy. The final section provides a brief overview of the organisation of the remainder of the handbook.

1.1 THE DEVELOPMENT OF LABOUR MARKET POLICY OVER TIME Stylised reconstructions of long periods of policy development across a diverse set of countries and contexts carry inevitable risks of over-simplification. It is nonetheless helpful in 1

2  Handbook of labour market policy in advanced democracies

our view to illustrate in a broad-brush way how government intervention in labour markets has evolved, and in many respects become more multifaceted, across advanced democracies over time. Though Eurocentrism is a somewhat problematic feature of contemporary labour market policy research that this handbook seeks to partly redress (see Part VI), the account that follows is not only stylised but also draws mainly on our knowledge of developments in Western European countries. For illustrative purposes we limit our discussion to the period since World War II, though the origins of labour market policies in many cases date further back. Readers should consult other chapters in the handbook for more detailed accounts of developments in specific policy areas and other regions of the world. In most European democracies it could be argued that the labour market policy landscape was relatively simple during the immediate post-1945 decades, what in comparative social policy has come to be known as the ‘Golden Age’ of the welfare state. High rates of economic growth and governments’ political commitment to full employment in line with the Keynesian zeitgeist of the time meant that (long-term) unemployment was a rather marginal and limited risk across high-income countries (Eichengreen, 2008; Hall, 2020). In this context, the labour market policy toolkit of governments was centred on a few key policy instruments, typically entailing income protection against instances of short-term, frictional unemployment provided through unemployment insurance (UI), on the one hand, and publicly provided labour market intermediation in the form of public employment services (PES), on the other (Clegg, 2015a). In the European context the case of Sweden was an outlier, where an alternative economic strategy to the Keynesian mainstream was pursued from the 1950s via the so-called RehnMeidner model, an integrated economic policy framework targeting full employment, wage equality and economic modernisation. The first true active labour market policies (ALMPs) were conceived as part of this model, to retrain displaced workers for positions in expanding productive sectors (Anxo and Niklassen, 2006). Into the 1960s governments in some other countries began experimenting with similar schemes, partly also to support economic modernisation objectives but also to combat labour shortages which were widespread in this period (Bonoli, 2011). The renovation of existing vocational training institutions in this period had similar objectives. From the late 1970s and early 1980s labour markets underwent major changes: spiralling inflation, growing unemployment rates and a renewed macro-economic consensus and related demise of the pursuit of full employment by governments made (long-term) unemployment a much more widespread phenomenon. In this context, the toolkit of labour market policy mobilised by governments started to expand to embrace policies targeting the two ends of the age distribution where the need for government intervention seemed stronger: early retirement of older cohorts of workers and direct job creation programmes targeting young adults, as well as the long-term unemployed (Ebbinghaus, 2006; Weishaupt, 2011). The labour market turbulence of this period was also the context in which governments in some countries legislated, under the pressure of trade union demands, for sharp increases in legal protections some workers enjoyed against redundancy and dismissal (Emmenegger, 2014). These measures had barely been implemented when the intellectual tide began to turn against them, however. As the 1980s advanced and unemployment remained stubbornly high in many countries, a debate at the intersection of academic and policy circles pointed ever more forcefully at the negative effects of certain labour market institutions (e.g. dismissal protection, but also centralised/coordinated collective bargaining systems and high minimum wages) and policies (e.g. generous unemployment benefits and early retirement) on

Introduction 

3

economic performance, chiefly in the form of hampering employment growth (Siebert, 1997). This moment was famously crystallised in the 1994 OECD Jobs Study (OECD, 1994), which inspired a wave of deregulatory reforms across advanced democracies. The ascendency of straightforwardly neoliberal policy ideas in this field was, however, relatively short-lived. In both academic and policy circles there was soon acknowledgement of a more complex reality in which the alleged relationship between labour market ‘rigidities’ and economic performance was at best weak, if not outright missing (Nickell, 1997; Layard et  al., 2005). Academic research challenged the inherent superiority of a model of capitalism – broadly represented by the Anglo-Saxon countries – characterised by highly deregulated labour markets and residual social policies (Hall and Soskice, 2001). It pointed instead at the reality of different forms of capitalism, undergirded by very different institutions and policies in multiple fields including the labour market, being able to deliver strong economic performance (Wood, 2001; Martin, 2005; Hancké et al., 2007). In the policy sphere, the OCED took stock of the evidence underpinning its 1994 policy recommendations and came to the conclusion – barely more than a decade later – that there is ‘no single golden road to better labour market performance’ (OECD, 2006: 13). In line with this renewed appreciation of complexity, since the 2000s the debate on labour market policy has moved beyond a single focal point encapsulated in the regulation vs. deregulation debate to incorporate policies and approaches that do not fall squarely on either side. The concept of ‘flexicurity’ is perhaps the clearest example in this respect. Building on the (rather different) experiences of Danish and Dutch labour market policies, the notion of flexicurity has been popularised by European institutions that attempted to replicate these countries’ ‘employment miracles’ across Europe (Visser and Hemerijck, 1997; Madsen, 2004). Flexicurity cuts across the debate that characterised labour market policy in the late 1980s and early 1990s because it offers a policy approach that does not invoke a return to Keynesianstyle management of the economy, while not favouring wholly deregulatory principles either. Instead, it calls for various combinations of deregulated employment contracts with generous out-of-work benefits and state-backed efforts to ease workers’ transitions between jobs, e.g. in the form of activation, training programmes and measures to ‘make work pay’ (Viebrock and Clasen, 2009; Wilthagen and Tros, 2004). The need to think outside of the de/regulation box for labour market policy-makers has been further heightened by structural changes that are reshaping contemporary capitalist labour markets. Technological change is perhaps the most vivid example here, impacting both the high and low ends of the labour market. Technology contributes to the creation of well-remunerated employment opportunities for highly-educated individuals in socio-cultural professions that are ‘complementary’ to technology (the so-called ‘knowledge economy’) (Iversen and Soskice, 2020), while through its algorithms simultaneously facilitating hyper-precarity at the opposite end of the spectrum (the ‘gig economy’) (Stewart and Stanford, 2017). These changes in the structure of the labour market reconfigure labour market risks, for example by increasing the importance of skills (Durazzi and Geyer, 2020; Durazzi, 2019; Martin and Knudsen, 2010) or by making it more difficult for ‘traditional’ systems of income protection, such as UI, to provide income security for workers in various forms of marginal or atypical employment, triggering debates around alternative and imaginative solutions (e.g. in-work benefits or a Universal Basic Income) (Chrisp and Martinelli, 2022; Martinelli, 2020; Clegg, 2015b; Clasen, 2020). At the same time, the 2008–9 global financial crisis and more recently the COVID-19 pandemic was a reminder that alongside slower-moving structural

4  Handbook of labour market policy in advanced democracies

transformations, workers’ jobs and incomes remain vulnerable and need support in the face of sudden and unexpected shocks to the economy (Clasen et al., 2012; Moreira and Hick, 2021). The history of labour market policy in the last decades has thus been characterised by a number of distinct phases, each with its specific preoccupations and policy orientations. What strikes us as particularly noteworthy, however, is one general trend across the period. As societies have moved across major structural changes and macro-economic consensuses have evolved, states have for no extended period retreated from policy intervention in labour markets in any straightforward way. While governments have certainly changed the ways in which they address labour market risks, we witness more of a reconfiguration and complexification of policy tools and approaches than a demise of public policy interventionism (Cronert, 2022).

1.2 ACKNOWLEDGING COMPLEXITY AND NEW LABOUR MARKET RISKS THROUGH AN EXPANSIVE DEFINITION OF LABOUR MARKET POLICY At this point, some discussion of the question of what exactly ‘counts’ as labour market policy is in order. We first briefly summarise how the question has been answered in the past, before discussing why we propose a somewhat modified – and more expansive – definition of labour market policy for the purposes of this volume. Defining labour market policy is not an easy task. If one were to think of labour market policy as encompassing all interventions that affect the supply or demand sides of the labour market, the end result would probably be a catch-all definition encompassing effectively nearly every public policy (e.g. general economic policies would also be labour market policies). At the other end of the spectrum are the very restrictive approaches employed by those who manage statistics (on public expenditure and participants) on labour market policies. For the purposes of its labour market policy database (LMP database),1 the European Commission (2018: 7) accordingly defines labour market policy as ‘public interventions in the labour market aimed at reaching its efficient functioning and correcting disequilibria and which can be distinguished from other general employment policy interventions in that they act selectively to favour particular groups in the labour market’. These policies are then subdivided into ‘services’, ‘measures’ or ‘supports’. Services refer to the public intermediation between labour market demand and supply that takes place through the PES. Measures are interventions aimed at easing employment for particular groups, e.g. through training, direct job creation in the public sector or subsidies for the private sector firms who recruit disadvantaged groups. Supports come in the form of cash transfers, encompassing for example unemployment benefits but also early retirement programmes. The OECD cooperates with the European Commission on the LMP database and fixes the boundaries of labour market policies in a similar way. Within this it has however traditionally favoured a simpler bi-partite distinction between ‘active’ and ‘passive’ labour market policies. The former maps onto the Commission’s services and measures, while the latter coincides with supports. Though uncritically used in much contemporary academic and policy debate, the active-passive distinction can however be challenged on both normative and analytical grounds. It implicitly assigns different ‘value’ to different labour market policies, while also neglecting that all policy instruments have multiple different functions. Supposedly passive

Introduction 

5

income protection policies thus also perform more active functions, for example preserving human capital by allowing the unemployed to turn down job offers below certain qualification levels (Clegg, 2015a). These relatively restrictive approaches are helpful in that they avoid falling into catch-all definitions of labour market policy. They do, however, also seem overly narrow and somewhat dated in at least two ways. Firstly, as we have seen from the discussion of flexicurity above, contemporary debates about labour market policy often concern recalibrating the balance between general regulatory (e.g. employment protection) and targeted expenditure measures (e.g. unemployment benefits and/or ALMPs), which interact and are to some extent ‘functionally equivalent’ (cf. Bonoli, 2003). Secondly, because of changes in contemporary labour markets the boundaries between different labour market states (employment, unemployment, inactivity) are becoming increasingly blurred (Clasen and Clegg, 2011), while once marginal forms of ‘difficulty in the labour market’ have become more salient – in-work poverty, for example. It is in part for this reason that some labour market policies are increasingly targeted not at labour market disadvantage as measured by status (e.g. unemployment benefits) but instead as measured by income (e.g. means-tested in-work benefits). Other policies that are defined precisely by their lack of targeting (e.g. Universal Basic Income) are advocated in large part because they are seen by some as better adapted to contemporary patterns of risk in labour markets. In recognition of the above, we therefore propose an expansive understanding of labour market policy that refers to government/policy interventions that explicitly aim to shape the labour market risks confronting workers. In other words, we shift the emphasis relatively towards outputs (what policies try to achieve) rather than privileging particular inputs (how policies are targeted). This allows us to encompass general regulatory measures in our definition, going beyond the common distinction between labour market policies and labour market institutions. Alongside expenditure policies targeted to those in conventional states of labour market difficulty (e.g. the unemployed), it also allows us to include universal and incometargeted expenditure measures that count risks related to the operation of labour markets as one of their prime motivations, thereby problematising the conventional distinction between labour market and social policies. At the same time, our focus on labour market risks as an explicit policy objective allows us to avoid an unhelpfully catch-all definition. Trade policy, to give an example of general economic policy, no doubt has implications for labour market outcomes, but is a highly indirect way of impacting these. Our working definition of the field seeks to capture policies whose effects on the labour market are instead an explicit, first-order objective, and for which the causal chain between policy reform and labour market outcomes is relatively short. This definition is of course not totally cut-and-dried, and there are policies that might reasonably be subsumed under it that are not covered in this handbook – childcare and more generally family policies might be an example, to the extent they are increasingly explicitly seen as ‘active social policy’ and focused on facilitating parental employment (‘work-family reconciliation’) (cf. Bonoli, 2013; Fleckenstein and Seeleeib-Kaiser, 2011).2 Meanwhile, there are also some policies that would fall under a narrower, more conventional definition of labour market policy – short-time work/partial unemployment policies and measures to support those with work-limiting disabilities or health conditions in the labour market are two examples – that could not be covered in this handbook for practical reasons. Nonetheless, the encompassing policy coverage of this volume and the extended definition of labour market policy on

6  Handbook of labour market policy in advanced democracies

which it rests seems to us justified in recognition of the increased complexity of labour market risks and the broader policy toolkit that governments today deploy or consider to address them. Redrawing the boundaries of what are thought of as labour market policies is a first innovation this handbook introduces.

1.3 BEYOND (THE EVALUATION OF) POLICIES: CONCEPTS, AGENCY AND CONTEXTS IN LABOUR MARKET POLICY A second innovation relates to the disciplinary anchoring of the handbook and its general approach to the study of labour market policy. With the exception of unemployment insurance, which has long been well integrated in comparative welfare state analysis (e.g. Alber, 1981; Esping-Andersen, 1990), research on labour market policy has traditionally been primarily conducted within labour market economics and labour market sociology. These disciplines take a largely evaluative approach, concerned to understand the effect of labour market policies on micro and macro outcomes. The empirical focus in this context is on the role of policies for individual transitions into and out of employment and for national economic performance. In the micro-economic literature, evaluations are typically conducted at the level of individual programmes. The disciplinary approaches that feature primarily in this volume are, instead, those of comparative social policy and comparative political economy, reflecting the growing importance of these two areas in scholarship on labour market policy since the mid-1990s. These fields of scholarship have much more macro-level concerns and are animated primarily by the investigation of the nature and determinants of cross-national variations in the design of individual labour market policies and in the overall mix of policy interventions in labour markets, as well as their distributional and political implications. A crucial bridge between the narrow evaluative scholarship on labour market policy and the research reported in many of the chapters that follow was provided by this handbook’s direct predecessor, the International Handbook of Labour Market Policy and Evaluation edited by Günther Schmid, Jacqueline O’Reilly and Klaus Schömann in 1996. With the concept of ‘target-oriented policy evaluation’ as an organising device, this collection sought to bring a more actor- and system-focused perspective to bear on our understanding of this field and to enrich conventional evaluative approaches with hitherto neglected questions of policy formation/choice and policy implementation (Schmid et al., 1996). While a focus on evaluative concerns remained, as reflected in the title, this broader perspective shifted the focus to institutional environments, policy regimes and more generally the ‘contextual determination of labour market policy impacts and labour market outcomes’ (ibid: 17). In line with these objectives, many of the chapters adopted an international comparative approach, a considerable innovation in this field at the time. The research on labour market policy in comparative social policy and comparative political economy that is showcased in this handbook has built on these insights, in part by freeing itself of the evaluative concern of ‘what works’. While impacts and outcomes are of course of interest for comparative labour market policy scholars, understanding the very fact of crossnational policy variation is a major research objective in its own right. With a cross-national comparative lens, labour market policy is seen less from the perspective of optimal policy design and more as a reflection of fundamental socio-political processes, the institutionalised

Introduction 

7

mediation between capitalism and democracy in one of the areas where the tensions in their coexistence are frequently most visible. There have been notable theoretical and conceptual advances in the comparative analysis of labour market policies in recent years. The comparative social policy literature, for example, has provided compelling analyses around the changing nature of social problems that have underpinned the transformation of contemporary labour markets, creating a rich theoretical apparatus to make sense of policy responses to the shift from ‘old’ to ‘new’ social risks (Bonoli, 2005). It has also produced theoretically informed critical assessments of labour market policy concepts that are often portrayed as inherently desirable and value-neutral, highlighting for example that the same ‘activation’ label subsumes radically different policy options, ranging from ‘workfarist’ to investment-oriented policies (e.g. Bonoli, 2010; Clasen and Mascaró, 2022). The comparative political economy literature, for its part, has provided ever more sophisticated theorisations of the political determinants of labour market policy and of the coalitional dynamics that underpin policy choices in this field. In line with the two approaches that more generally dominate comparative political economy, partisan and producer group politics explanations of labour market policy continuity and change have come to the fore (Martin and Swank, 2004; Beramendi et al., 2015; Thelen, 2014; Zohlnhöfer and Voigt, 2021). In addition, comparative political economists have provided a toolkit of concepts – such as liberalisation and dualisation – that allow us to make sense of different trajectories of institutional change across affluent countries’ labour markets and their associated distributional implications (e.g. Rueda, 2005; Emmenegger et al., 2012; Diessner et al., 2022; Baccaro and Howell, 2017). Research in comparative social policy and comparative political economy has also been particularly attentive to the changing contexts within which contemporary labour market policy evolves. These include macro-structural and societal transformations (e.g. de-industrialisation; technological change; mass migration; transformed gender relations) as well as more territorially rooted institutional settings shaping certain patterns of labour market policy continuity and change between and within macro-regions (Busemeyer et al., 2022; Afonso and Devitt, 2016; Iversen and Rosenbluth, 2008; Garritzmann et  al., 2022a, 2022b; Hassel and Palier, 2021). Taken together, the two approaches have produced theories and concepts that allow us to situate labour market policy as an eminently political field of research, one in which crucial questions must be asked about the political-economic dynamics that determine policy choices and their associated distributional implications.

1.4 INTRODUCING THE STRUCTURE OF THE HANDBOOK The 35 chapters that follow are organised across seven sections. Part I collects critical discussions of common but often contested concepts for analysts of labour market policy. The first two chapters in this section focus on concepts of labour market (dis)advantage. In Chapter 2, Jérôme Gautié explains how unemployment became the key organising concept for state intervention in labour markets in the 20th century and explores its continuing fit with contemporary labour market realities. Hanna Schwander (Chapter 3) discusses the idea that labour markets are increasingly segmented between insiders and outsiders, a terminology that has its origins in labour market economics but is today widely used in comparative political economy to capture the role of labour market policies in shaping social divisions. The following two

8  Handbook of labour market policy in advanced democracies

chapters deal with relatively new policy concepts in the labour market policy debate. Jochen Clasen and Clara Mascaró retrace the intellectual career of the ambiguous notion of activation in Chapter 4, while in Chapter 5 Sonja Bekker and Janine Leschke elaborate on the concept of flexicurity introduced above. Finally, in Chapter 6, Emanuele Ferragina, Federico Danilo Filetti and Alessandro Arrigoni provide an analysis structured around some of the concepts that researchers have increasingly used to characterise broad trends in contemporary labour market policy, including liberalisation, dualisation and, once again, flexicurity. Part II deals with a number of contextual changes that provide a backdrop to the operation of labour market policies in advanced democracies. In Chapter 7, Bob Hancké and Toon Van Overbeke explore how the relationship between macroeconomics and labour market policy has evolved over time. Chapters 8 and 9 focus on two significant shifts in the composition of the populations addressed by labour market policy, with Sonja Avlijaš considering the impact of labour market policies in the context of rising female labour market participation and Gemma Scalise exploring the intersection between labour market policy and migration policy. The final two chapters in this section deal with different dimensions of technological change. David Weisstanner (Chapter 10) makes an original contribution to the debate on the implications of technological change for labour market policy preferences at the micro level, while Alessio Bertolini, Matt Cole and Shelly Steward (Chapter 11) look at regulatory responses to the rise of platform work. The focus of the chapters in Part III are the different actors that shape the development of labour market policy. In Chapter 12 Reimut Zohlnhöfer and Linda Voigt review the main competing theories and rich empirical literature on the relationship between political parties and labour market policy development. The following two chapters discuss the role of representatives of labour and business in the development of labour market policy, in each case with a particular focus on the twin themes of policy preferences and power. In Chapter 13 Joshua Gordon and Dennie Oude Nijhuis analyse trade unions, while in Chapter 14 Sabrina Colombo, David Natali and Emmanuele Pavolini consider organised employers. Chapter 15 turns to the international level, with Vicente Silva discussing the evolution of the labour market policy agendas of the most influential international organisations. In Chapter 16 Vincenzo Maccarrone, Roland Erne and Darragh Golden focus on the particular case of the European Union, which has become an increasingly important influence on labour market policy in EU member states in recent decades. Parts IV and V form the labour market policy core of this handbook. Collectively, the chapters in Part IV provide a comprehensive overview of the comparative development of policies focused primarily on the job and income security of workers. Georg Picot, in Chapter 17, provides a novel comparative analysis of the development of wage setting institutions in advanced democracies. In Chapter 18, Agnieszka Piasna discusses academic and policy debates over employment protection legislation and its recent evolution. Three of the remaining chapters in the section analyse very differently institutionalised forms of cash transfer schemes in the context of labour market policy. Daniel Clegg and Larissa Nenning (Chapter 19) consider the past and future of unemployment insurance, which has been a central pillar of labour market policy in advanced democracies for many decades. Joan Abbas and Ewan Robertson (Chapter 20) stake out the much more novel, and in many respects still emergent, field of inwork benefits. Chapter 21 by Bernhard Ebbinghaus and Kun Lee analyses how the combination of labour market policy and pension reforms are affecting outcomes for older workers in the labour market. Finally, Leire Rincon and Tim Vlandas (Chapter 22) discuss the political economy of the yet-to-be-implemented policy of providing citizens with a Universal Basic Income, with potentially important implications for the labour market.

Introduction 

9

Part V turns to policies oriented to direct employment promotion and support. In Chapter 23 Donato Di Carlo and Niccolo Durazzi consider the evolving relationship between national models of skill formation and labour market policy, while in Chapter 24 Axel Cronert provides a critical review of recent comparative research into active labour market policies. In Chapter 25 J. Timo Weishaupt discusses the recent evolution of public employment services in advanced democracies, a contribution complemented by the overview of recent research into the changing role of front-line employment advisors by Rik van Berkel (Chapter 26). The final chapter of this section (Chapter 27) returns in a different way to the theme of technological change, with John Körtner and Giuliano Bonoli offering a critical discussion of the development of predictive algorithms as tools of labour market intermediation. As mentioned above, comparative scholarship on labour market policy (as on the welfare state) has always suffered from a certain Eurocentrism, or more accurately an empirical bias to the countries of North-Western Europe. To partly correct this, Part VI of the handbook contains a series of chapters that provide an overview of the development and specificities of labour market policies in other advanced democracies. Chapters in this section focus on Australia and New Zealand (Chapter 28, Shaun Wilson), on East Asian democracies (Chapter 29, Ijin Hong, Chung-Yang Yeh and Jaewook Nahm), Canada and the USA (Chapter 30, Daniel Béland, Shannon Dinan and Alex Waddan), the Visegrad countries of Central and Eastern Europe (Chapter 31, Michał Polakowski) and finally Southern Europe (Chapter 32, Arianna Tassinari, Fabio Bulfone and Angie Gago). All provide rich reconstructions of the particular dynamics and consequences of the development of labour market policies in these regions. The chapters in Part VII look at some of the many impacts of labour market policies. We consciously eschew the more traditional macro- and micro-level evaluative concerns of conventional labour market policy analysis. Chapter 33, by Thomas Biegert, looks at the role of labour market policies in structuring inequalities in labour outcomes across social groups, developing some of the themes introduced in Chapter 3. In Chapter 34 Rod Hick and Ive Marx consider the increasingly salient issue of in-work poverty, exploring how far and in what ways labour market policies can play a role in addressing it. Combining insights from comparative welfare state research and the literature on the social determinants of health, Chapter 35 by Elke Heins explores the impact of labour market policy on wellbeing. Finally, in Chapter 36, Paul Marx critically reviews existing scholarship on the relationship between labour market experience and political integration and identifies some promising avenues for future research.

NOTES 1. https://webgate​.ec​.europa​.eu​/empl​/redisstat​/databrowser​/explore​/all​/all​_themes. 2. Though there is no dedicated chapter on such policies, see Chapter 8 for a more contextual discussion.

REFERENCES Afonso, A. and Devitt, C. (2016) Comparative political economy and international migration. SocioEconomic Review 14(3): 591–613. Alber, J. (1981) Government responses to the challenge of unemployment: The development of unemployment insurance in Western Europe. In: P. Flora and A. Heidenheimer (eds.) The Development of Welfare States in Europe and America. New Brunswick, NJ: Transaction Publishers, pp. 151–186.

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Anxo, D. and Niklasson, H. (2006) The Swedish model in turbulent times: Decline or renaissance. International Labour Review 145: 339–371. Baccaro, L. and Howell, C. (2017) Trajectories of Neoliberal Transformation: European Industrial Relations Since the 1970s. New York: Cambridge University Press. Beramendi, P., Häusermann, S., Kitschelt, H. and Kriesi, H. (eds.) (2015) The Politics of Advanced Capitalism. New York: Cambridge University Press. Bonoli, G. (2003) Social policy through labor markets: Understanding national differences in the provision of economic security to wage earners. Comparative Political Studies 36(9): 1007–1030. Bonoli, G. (2005) The politics of the new social policies: Providing coverage against new social risks in mature welfare states. Policy & Politics 33(3): 431–449. Bonoli, G. (2010) The political economy of active labour market policy. Politics & Society 38(4): 435–457. Bonoli, G. (2011) Active labour market policy and social investment: A changing relationship. In: N. Morel, B. Palier and J. Palme (eds.) Towards a Social Investment Welfare State?: Ideas, Policies and Challenges. Bristol: Policy Press. Bonoli, G. (2013) The Origins of Active Social Policy: Labour Market and Childcare Policies in Comparative Perspective. Oxford: Oxford University Press. Busemeyer, M.R., Kemmerling, A., Van Kersbergen, K. and Marx, P. (eds.) (2022) Digitalization and the Welfare State. New York: Oxford University Press. Chrisp, J. and Martinelli, L. (2022) The case for a basic income in the emergent digitalized economy. In: M.R. Busemeyer, A. Kemmerling, K. Van Kersbergen and P. Marx (eds.) Digitalization and the Welfare State. New York: Oxford University Press. Clasen, J. (2020) Subsidizing wages or supplementing transfers? The politics and ambiguity of in‑work benefits. Social Policy & Administration 54(1): 1–13. Clasen, J. and Clegg, D. (eds.) (2011) Regulating the Risk of Unemployment: National Adaptations to Post-Industrial Labour Markets in Europe. Oxford: Oxford University Press. Clasen, J., Clegg, D. and Kvist, J. (2012) European Labour Market Policies in (the) Crisis. ETUI Working Papers. Clasen, J. and Mascaró, C. (2022) Activation: A thematic and conceptual review. Journal of European Social Policy 32: 484–494. Clegg, D. (2015a) Labor market policy. In: International Encyclopaedia of the Social & Behavioral Sciences (2nd ed., pp. 183–189). Clegg, D. (2015b) The demise of tax credits. The Political Quarterly 86(4): 493–499. Cronert, A. (2022) Towards a Swiss Army Knife State? The changing face of economic interventionism in advanced democracies, 1980–2015. Review of International Political Economy 29(2): 477–501. Diessner, S., Durazzi, N. and Hope, D. (2022) Skill-biased liberalization: Germany’s transition to the knowledge economy. Politics & Society 50(1): 117–155. Durazzi, N. (2019) The political economy of high skills: Higher education in knowledge-based labour markets. Journal of European Public Policy 26(12): 1799–1817. Durazzi, N. and Geyer, L. (2020) Social inclusion in the knowledge economy: Unions’ strategies and institutional change in the Austrian and German training systems. Socio-Economic Review 18(1): 103–124. Ebbinghaus, B. (2006) Reforming Early Retirement in Europe, Japan and the USA. New York: Oxford University Press. Eichengreen, B. (2008) The European Economy Since 1945. Princeton, NJ: Princeton University Press. Emmenegger, P. (2014) The Power to Dismiss: Trade Unions and the Regulation of Job Security in Western Europe. New York: Oxford University Press. Emmenegger, P., Häusermann, S., Palier, B. and Seeleib-Kaiser, M. (eds.) (2012) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. New York: Oxford University Press. Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press. European Commission. (2018) Labour Market Policy Statistics: Methodology 2018. Luxembourg: Publications Office of the European Union. Fleckenstein, T. and Seeleib-Kaiser, M. (2011) Business, skills and the welfare state: The political economy of employment-oriented family policy in Britain and Germany. Journal of European Social Policy 21(2): 136–149.

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Garritzmann, J.L., Häusermann, S. and Palier, B. (eds.) (2022a) The World Politics of Social Investment: Volume I: Welfare States in the Knowledge Economy. New York: Oxford University Press. Garritzmann, J.L., Häusermann, S. and Palier, B. (eds.) (2022b) The World Politics of Social Investment: Volume II: Political Dynamics of Reform. New York: Oxford University Press. Hall, P.A. (2020) The electoral politics of growth regimes. Perspectives on Politics 18(1): 185–199. Hall, P.A. and Soskice, D. (eds.) (2001) Varieties of Capitalism. New York: Oxford University Press. Hancké, B., Rhodes, M. and Thatcher, M. (Eds.). (2007) Beyond Varieties of Capitalism. New York: Oxford University Press. Hassel, A. and Palier, B. (eds.) (2021) Growth and Welfare in Advanced Capitalist Economies: How Have Growth Regimes Evolved? New York: Oxford University Press. Iversen, T. and Rosenbluth, F. (2008) Work and power: The connection between female labor force participation and female political representation. Annual Review of Political Science 11: 479–495. Iversen, T. and Soskice, D. (2020) Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century. Princeton, NJ: Princeton University Press. Layard, R., Nickell, S. and Jackman, R. (2005) Unemployment: Macroeconomic Performance and the Labour Market. New York: Oxford University Press. Madsen, P.K. (2004) The Danish model of ‘flexicurity’: Experiences and lessons. Transfer: European Review of Labour and Research 10(2): 187–207. Martin, C.J. (2005) Corporatism from the firm perspective: employers and social policy in Denmark and Britain. British Journal of Political Science 35(1): 127–148. Martin, C.J. and Knudsen, J.S. (2010) Scenes from a mall: Retail training and the social exclusion of low-skilled workers. Regulation & Governance 4(3): 345–364. Martin, C.J. and Swank, D. (2004) Does the organization of capital matter? Employers and active labor market policy at the national and firm levels.  American Political Science Review  98(4): 593–611. Martinelli, L. (2020) A basic income trilemma: Affordability, adequacy, and the advantages of radically simplified welfare. Journal of Social Policy 49(3): 461–482. Moreira, A. and Hick, R. (2021) COVID‑19, the great recession and social policy: Is this time different? Social Policy & Administration 55(2): 261–279. Nickell, S. (1997) Unemployment and labor market rigidities: Europe versus North America. Journal of Economic Perspectives 11(3): 55–74. OECD. (1994) The OECD Jobs Study: Facts, Analysis, Strategies. Paris: Organisation for Economic Co-operation and Development. OECD. (2006) Employment Outlook 2006: Boosting Jobs and Income. Paris: Organisation for Economic Co-operation and Development. Rueda, D. (2005) Insider–outsider politics in industrialized democracies: The challenge to social democratic parties. American Political Science Review 99(1): 61–74. Schmid, G., O’Reilly, J. and Schömann, K. (1996) Theory and methodology of labour market policy evaluation: An introduction. In: G. Schmid, J. O’Reilly and K. Schömann (eds.) International Handbook of Labour Market Policy and Evaluation. Cheltenham: Edward Elgar, pp. 1–36. Siebert, H. (1997) Labor market rigidities: At the root of unemployment in Europe. Journal of Economic Perspectives 11(3): 37–54. Stewart, A. and Stanford, J. (2017) Regulating work in the gig economy: What are the options? The Economic and Labour Relations Review 28(3): 420–437. Thelen, K. (2014) Varieties of Liberalization and the New Politics of Social Solidarity. New York: Cambridge University Press. Viebrock, E. and Clasen, J. (2009) Flexicurity and welfare reform: A review. Socio-Economic Review 7(2): 305–331. Visser, J. and Hemerijck, A. (1997) A Dutch Miracle: Job Growth, Welfare Reform and Corporatism in the Netherlands. Amsterdam: Amsterdam University Press. Weishaupt, J.T. (2011) From the Manpower Revolution to the Activation Paradigm: Explaining Institutional Continuity and Change in an Integrating Europe. Amsterdam: Amsterdam University Press. Wilthagen, T. and Tros, F. (2004) The concept of ‘flexicurity’: A new approach to regulating employment and labour markets. Transfer: European Review of Labour and Research 10(2): 166–186.

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Wood, S. (2001) Business, government and patterns of labour market policy in Britain and the Federal Republic of Germany. In: P.A. Hall and D. Soskice (eds.) Varieties of Capitalism. New York: Oxford University Press. Zohlnhöfer, R. and Voigt, L. (2021) The partisan politics of employment protection legislation: Social democrats, Christian democrats, and the conditioning effect of unemployment. European Political Science Review 13(3): 331–350.

PART I CORE CONCEPTS

2. The rise and demise of unemployment Jérôme Gautié

INTRODUCTION Unemployment has been considered as a great – if not the greatest – economic and social evil in advanced democracies since the beginning of the 20th century. William Beveridge begins his seminal 1909 book on the subject stating that ‘The problem of unemployment lies, in a very special sense, at the root of most other social problems. Society is built up on labour; it lays upon its members responsibilities which, in the vast majority of cases, can be met only from the reward of labour’ (Beveridge, 1909: 1). We will not scrutinise here the economic and social reality of unemployment – its level and evolution, its composition, the living experience of the unemployed, and so on. We will rather deal with unemployment as a concept – i.e., both a cognitive and public policy category. The aim of this chapter is to show how the concept of unemployment was built to become a category of representation and public intervention, how it became a key economic issue and policy target, and how it is nowadays questioned as a relevant category. Unemployment as an economic and social phenomenon is a social construction that was initiated in the advanced democracies at the end of the 19th century; it means the concept did not simply reflect an emerging reality but rather contributed to shape it (Section 2.1). Unemployment became a key issue and public policy concern during the interwar period, the economic theory and expertise playing an increasing role, becoming overwhelming dominant after WWII (Section 2.2). Since the 1990s, there has been raising criticism of the relevance of unemployment as an indicator of labour market slack, and beyond, more profoundly, a questioning of its political salience (Section 2.3).

2.1 UNEMPLOYMENT AS A SOCIAL CONSTRUCTION AND A STATISTICAL ARTEFACT The public issue salience of out-of-work people living in poverty is not a recent phenomenon in the history of the Western World. Before the late 19th century, able-bodied idle paupers were generally morally condemned and could receive support from the central or local state on punitive terms, if at all. But from the 1870s, it became increasingly evident that among the latter, a large percentage was out-of-work for reasons beyond their control. The term ‘unemployment’, though not new, acquired its modern meaning of involuntary idleness. Unemployment has not emerged as a social reality that social scientists and/or policymakers discovered. It was constructed by social reformers, before being operationalised, through statistical indicators, to become a category of both representation and public action. 2.1.1 The Emergence of the Modern Category of Unemployment The emergence of unemployment was clearly associated with the intensification of industrialisation and urbanisation. Unemployment became an important social concern when the 14

The rise and demise of unemployment  15

decline of rural industries and urban artisanal craft, as well as the redundancies in the agricultural sector due to increasing productivity, freed workers from the proximity ties but also from the social supports that sustained them out of wage labour (Castel, 2003). In a monograph on Massachusetts, Keyssar (1986) showed that the effects of unemployment were relatively mild during the early industrial revolution because many workers were engaged in cottage industry and the loss of manufacturing work during down-turns of economic activity could be compensated at least partially by shifting to domestic activities and agricultural work. This was much less the case from the 1870s, as many workers had by then moved into urban centres, in particular to join factories or become labourers in construction or the docks, and lacked local alternatives and/or social support in periods of slack. This narrative may suggest that unemployment was ‘discovered’ (Garraty, 1978: chap. 6) as a consequence of the industrial revolution. But many scholars have insisted on the fact that, as a category both of analysis and practice (for public policy), unemployment was constructed or invented by social reformers at the end of the 19th century (Salais et al., 1986; Topalov, 1994; Walters, 1994; Whiteside, 2007, 2014; Lagneau-Ymonet and Reynaud, 2020). An important step was the identification and categorisation of the ‘unemployed’ as a specific group among paupers. In the United Kingdom, Charles Booth, in his remarkable field survey on the Labour and Life of the People (London: Macmillan and Co., 1889–1891), made a distinction among the latter between the class of loafers, ‘vicious and criminals’ (class ‘A’), on the one hand, and the very poor of casual earnings (class ‘B’) and the poor of intermittent earnings (class ‘C’), ‘who are, more than any others the victims of competition, and on them falls with peculiar severity the weight of recurrent depressions of trade’ on the other hand. Many unemployed were clearly conceived as the victims of very casual work due to employers hiring practices – keeping a pool of available labour from which they could draw workers on a daily (or even sometimes hourly) basis. The term ‘reserve’ was widely used at that time to label this pool (Keyssar, 1987), and not only by the Marxists who referred to the ‘industrial reserve army’. Others were perceived as the victims of seasonal or cyclical fluctuations of economic activity. But the main analytical innovation consisted not in identifying and classifying the unemployed, but rather in transforming the social problem of the unemployed into the macroeconomic problem of unemployment. In France, Max Lazard in 1909 released the first comprehensive statistical French monograph on the issue. The same year, William Beveridge (1909) published what can be considered as the first systematic analysis of unemployment as an economic phenomenon much beyond the control of the unemployed, a ‘problem of industry’ resulting mainly from casualisation and fluctuations in business conditions. But for social reformers, unemployment was not only a category of analysis to identify and formulate the social problem. It was also a category of practice – i.e., a concrete entity on which public action could rely to tackle the problem. This required the social construction of the modern labour market – the supply, the demand and the matching process. On the supply side, the bona fide unemployed had to be isolated from those unemployable for reasons of personal physical or moral deficiencies, and defined as both willing to work and socially enabled to do so. The ideal figure of the unemployed was the male breadwinner: ‘Society is built up on labour […] its ideal unit is a household of man, wife and children maintained by the earnings of the first alone’ (Beveridge, 1909: 1). On the demand side, it required some degree of formalisation and stabilisation (‘decasualisation’) of the employment relationship, breaking with the widespread practice of informal hiring on hourly or daily basis. The matching process had to be organised by specific institutions collecting job offers. Unemployment could then be conceived as an insurable risk. Public labour exchanges and unemployment benefit

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systems participated in the institutionalisation of unemployment. Overall, as emphasised by Whiteside (2007: 44), ‘far from seeking to destroy the problem of unemployment … policy was designed to create it’. The United Kingdom, the most industrialised and urbanised European country before WWI, was the frontrunner in this process, with its Labour Exchanges Act 1909, and then the National Insurance Act in 1911 which introduced compulsory unemployment insurance covering the construction sector and some key manufacturing industries. In the other industrialised countries, the process was slower, and unemployment remained a problem for longer, tackled at a municipal rather than national level. 2.1.2 Measurement Issues: Unemployment Statistics The establishment of criteria to identify the unemployed and measure their number, and further elaborate statistical indicators (notably the unemployment rate), was a key element of the process of social construction of unemployment as both a cognitive and administrative category. It was also a long process with a different pace and paths across countries, though after WWII there was a progressive and relative convergence driven by the International Labour Organisation (ILO). In the United Kingdom, from 1888 to 1922 the Board of Trade published the proportion of members of the skilled trade unions who received out-of-work benefits. But this headcount was far from perfect, as beneficiaries were not only involuntarily unemployed and looking for work, but also people were out-of-work because of sickness and invalidity, or for voluntary reasons (strikes, refusal of jobs paying below the trade-union tariff). From 1920, with the general extension of unemployment insurance, statistics were based on the number of beneficiaries of unemployment allowance (Beveridge, 1960: 47). The attempt to measure unemployment (the sum of ‘out-of-work’ persons) through the census came relatively late, in 1931 (LagneauYmonet and Reynaud, 2020). In the United States, as early as 1880, all those aged ten and over who reported a ‘profession, occupation or trade’ were asked the number of weeks they had been unemployed during the year (Card, 2011). In Germany, a national definition of unemployment based on the criteria of economic dependence on waged work was addressed in the 1895 census, which asked male and female manual employees, servants, journeymen and other workers, subcontractors and home-based workers whether or not they were in employment (Zimmerman, 2006). France adopted a more restrictive definition in its 1896 census, based on a legal criterion, as only those who were previously working in an establishment under the direct supervision of their employer were counted as ‘out-of-work’. This definition proved problematic in a still highly rural society where craft and agricultural work was widespread, and the distinctions between employed, self-employed and/or homeworker often blurred (Salais et al., 1986; Whiteside, 2014). In most countries, as the definitions and criteria were often changed from one census to another, the attempt to base an unemployment statistical series on survey data remained inconclusive up to the adoption of labour force surveys (or equivalent) many years later. For decades, the counting of the number of unemployed remained based mainly on administrative sources. The promotion of reliable and internationally comparable statistics among member countries was publicised as a priority by the ILO as soon as it was created in 1919. The process of harmonisation and convergence towards a stabilised and widely accepted definition, which was promoted by the periodical International Conferences of Labour Statisticians, took

The rise and demise of unemployment  17

decades. The ‘Resolution concerning statistics of the economically active population, employment, unemployment and underemployment’, adopted by the 13th International Conference of Labour Statisticians held in 1982, and updated in 2013 (19th conference) introduced the up to now widely used definitions of employment and unemployment: Persons in employment are defined as all those of working age who, during a short reference period, were engaged in any activity to produce goods or provide services for pay or profit. They comprise: (a) employed persons ‘at work’, i.e. who worked in a job for at least one hour; (b) employed persons ‘not at work’ due to temporary absence from a job, or to working-time arrangements (such as shift work, flexitime and compensatory leave for overtime) […] Persons in unemployment are defined as all those of working age who were not in employment, carried out activities to seek employment during a specified recent period and were currently available to take up employment given a job opportunity. (ILO, 2013: 6–10)

This definition relies on a very extensive conception of employment, as it includes all forms of self-employment, whatever its degree of formalisation, even concerning an activity of only one hour in the reference period. Even if ILO resolutions provide detailed indications to operationalise these general definitions with precise criteria, they still leave some room for interpretation and/or choice across countries when these criteria are translated into questions in the surveys used to identify the unemployed and estimate their number.1 In many countries, though, the national public debate often refers to other sources of statistics than the official reference survey based on the ILO criteria (such as the Labour Force Surveys in Europe, or the Current Population Survey in the United States). These are most often administrative sources, such as the jobseekers registered at the Public Employment Service (e.g., in France), or the persons claiming unemployment benefits (e.g., in the United States), which are more frequently available (i.e., on a monthly or even weekly basis) than the survey data. But national unemployment figures may not only be different from the ones based on the standardised ILO concept. The two types of data may even trend in different directions at times. This can generate fierce public debates over the ‘right’ number of unemployed – with an ever-present suspicion of political manipulation of statistics. As remarked by Julius Shiskin, Commissioner of Labour Statistics in the United States in the 1970s, ‘no single way of measuring unemployment can satisfy all analytical or ideological interests’.

2.2 UNEMPLOYMENT AS AN ECONOMIC ISSUE: ECONOMIC EXPERTISE AND POLICY PARADIGMS If the social and/or individual impact of unemployment has been a long-standing concern of social reformers and social scientists, it has tended to be eclipsed by the ‘economising’ of the issue of unemployment i.e., ‘its appropriation by the economics profession’ (Keyssar, 1987: 215–216), that started during the interwar period, and became overwhelmingly dominant from the 1950s.2 The social problem has turned into an economic issue to be tackled by national governments, and social reformers have been replaced by economic experts, from academies, research institutions, national administrations but also international organisations – such as the Organisation for Economic Co-operation and Development (OECD), which played an increasingly influential role from the 1980s. The way unemployment is conceived as an economic issue must be understood in the framework of a given policy paradigm i.e., according

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to Peter Hall’s definition, a ‘framework of ideas and standards that specifies not only the goals of policy and the kind of instruments that can be used to attain them, but also the very nature of the problems they are meant to be addressing’. The successive dominant paradigms, relying increasingly on economic theories, were largely common to the advanced democracies. 2.2.1 From the Great Depression to Full Employment: The Beveridge-Keynesian Paradigm (1930–1975) When Beveridge wrote his 1909 book there was almost no specific economic theory of unemployment. The first significant contribution was made by Pigou (1913), who stipulated that, in the framework of the neoclassical economic theory, if labour were perfectly mobile, if there were free competition among workers for jobs, and if wages were perfectly flexible, there would be no unemployment. After WWI, during the 1920s, the excessive level of wages was blamed by Pigou (1927, 1933) for the persistence of a high level of unemployment, most particularly in the United Kingdom where the unemployment rate never fell below 10% during the period. The Great Depression induced a dramatic rise in unemployment rates to unprecedented levels in all the advanced democracies – between 20% and 25% in the United States, Germany, the United Kingdom, or Sweden.3 The persistence of high unemployment rates through the 1930s in spite of attempts in some countries to lower wages pointed to the failure of the orthodox economic view. John Maynard Keynes (1936), a colleague of Pigou at Cambridge, brought a new theory breaking with ‘classical economics’. According to the latter, unemployment could only result from a malfunction of the labour market due to the refusal of workers, at individual or collective level (i.e., because of legislation and/or collective bargaining practices) to accept a compensation equal to the value of their marginal productivity for the employer – what Keynes labelled as the ‘voluntary unemployment’ theory. For Keynes, by contrast, there could be ‘involuntary unemployment’ resulting from insufficient effective demand (of goods and services) at a macroeconomic level that could be tackled only by adequate budgetary and/ or monetary policy. The Keynesian theory became a pillar of the dominant policy paradigm from the end of WWII to the early seventies, which was best enunciated by Beveridge (1960) in his 1944 report on ‘Full Employment’. The author recalled that his 1909 book was mainly dedicated to what was now called ‘frictional unemployment’,4 resulting from ‘the labour supply not being completely interchangeable and mobile units, so that, though there is an unsatisfied demand for labour, the unemployed workers are not of the right sort or in the right place to meet that demand’ (1960: 408–409). Unemployment could be considered as only frictional if the number of unemployed equalled the number of vacant jobs. It could result from mere ‘frictions’ – the inevitable delay to find a job – but also from more structural factors generating geographical or skill mismatch between supply and demand – the label of ‘structural unemployment’ being more adequate to designate this share of ‘frictional unemployment’ widely defined. If the number of job vacancies is lower than the number of job seekers, this points to other sources of unemployment. The first one is ‘classical’ or ‘voluntary’ unemployment as defined above. The second may be ‘technological unemployment’ – i.e., the deficit in labour demand due to workers being replaced by machines. The third is what would be labelled later Keynesian unemployment – i.e., the deficit of effective demand in the economy. Full employment was defined by Beveridge as a state where frictional unemployment was kept to its minimum while

The rise and demise of unemployment  19

‘having always more vacant jobs than unemployed men’ (1960: 18), and was estimated to be about 3% in the United Kingdom (ibid.). In what we could label the ‘Beveridge-Keynesian’ policy paradigm, the focus was placed primarily on frictional and ‘Keynesian’ unemployment. The threat of ‘technological unemployment’ had attracted much attention in the interwar period, both in the academic and public debates, most particularly in the United States – see in particular Douglas (1930) and Hansen (1931). Keynes himself had noted in 1930 in a press article: ‘We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’. He immediately added, however, that ‘this is only a temporary phase of maladjustment’ (Keynes, 1963). This conjecture was confirmed during the post-war period at least up to the 1970s, as the unemployment rate was kept at a quite low level in spite of intense technological progress. Even if the recommendations to keep frictional unemployment (including its structural component due to geographical and/or skill mismatch) had been made by Beveridge before WWI, many public measures to rationalise and make the labour market fluid were taken only after WWII. In continental Europe, in particular, the increased competition for firms induced by the adoption of the ‘common market’ (Treaty of Rome, 1957) was expected to accelerate reallocations of labour between firms and sectors. The need to facilitate these reallocations, by extending unemployment benefits and providing job search assistance, became obvious. In France, for instance, it is only in 1958 and 1967 that were adopted respectively a national Unemployment Insurance System and a national Public Employment Service. In the aftermath of WWII, in most of the advanced democracies, governments committed themselves to promote full employment,5 adopting the Keynesian principles of sustaining effective demand by active macroeconomic policy. In comparison to the interwar period, this strategy was quite successful, as the levels of unemployment during the 1950–1975 period were on average very low (5% or lower). But it created inflationary pressures.6 The trade-off between inflation and unemployment was publicised under the form of the Phillips curve,7 and gave ground to ‘stop-and-go policies’. The increasing rate of inflation in the United States led Milton Friedman, in his 1967 American Economic Association presidential address, to introduce the concept of ‘natural rate of unemployment’. The basic intuition was that in any given economy there was a level of unemployment that was incompressible in the long run, and that could be lowered in the short run only by continuously increasing inflation. The concept was soon operationalised (to be empirically measured) as the ‘Non-Accelerating Inflation Rate of Unemployment’ (the NAIRU). 2.2.2 The Rise of the Neoliberal Policy Paradigm and Its Relative Decline The parallel increase in inflation and unemployment from the mid-1970s (‘stagflation’) in spite of countercyclical Keynesian macroeconomic policies, and the persistence of high levels of unemployment in the 1980s and 1990s, in particular in continental Europe (‘Eurosclerosis’) led to the emergence of a new political paradigm. This shift could build on important changes in the theory of unemployment. Getting back to the neoclassical basic framework, new theories intended to analyse microeconomic behaviour (both of workers and employers) that could account for the macroeconomic outcomes in

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terms of the level and evolution of unemployment. The ‘job search theory’, introduced at the very beginning of the 1970s (Phelps, 1970), conceives job seeking as a rational investment in a context where information on the wage and other attributes of vacant jobs is imperfect. The job seeker determines their optimal duration of unemployment (and symmetrically, their reservation wage – i.e., the wage below which they refuse a job offer) by taking into account both their current out-of-work financial resources and the present value of a higher probability of finding a better-paid job. The resulting voluntary ‘wait unemployment’ is all the higher when unemployment benefits are generous, and/or when wage dispersion for similar occupations across firms or sectors is high. This is particularly the case in dual labour markets where some jobs pay better – but are consequently rationed. In these jobs, incumbent workers (the ‘insiders’) manage to extract a rent from their employer, thanks to their unions, and/or employment protection legislation, at the expense of the ‘outsiders’, who are forced into unemployment or into lower paid and precarious jobs (Lindbeck and Snower, 1988). These theories gave new grounds to the old classical theory of voluntary unemployment, blaming individuals and/or institutions. Among the latter, in addition to the minimum wage, unemployment benefit, and employment protection (which is also supposed to impinge negatively on hiring by increasing firing costs), the tax wedge, in particular due to social contributions to fund the welfare state, also contribute to generating unemployment, if not compensated by lower wages. While not rejecting these arguments, other economists claimed that unemployment did not result (only) from job seekers’ excessive wage aspirations or the refusal by incumbent workers of lower wages. High wages and downward wage rigidity inducing job rationing may be (also) a consequence of the employers’ optimising behaviour. According to ‘efficiency wage’ theory, wage cuts at firm level may impinge negatively on productivity, in particular by decreasing motivation or by inducing the best workers to quit, and may also increase labour turnover and associated costs. The resulting unemployment may be considered ‘involuntary’ as it is not generated (directly) by workers’ decisions (Akerlof and Yellen, 1986). Beyond specific models that focus on peculiar mechanisms, some economists have proposed more comprehensive frameworks that take into account the optimising behaviours of both workers and firms and their interactions – the most influential being the ‘wage setting/ price setting’ model introduced by Layard et al. (1991), and the ‘search and matching’ model developed by Mortensen and Pissarides.8 The implication of these models is that any factor that increases the unit labour cost (i.e., the labour cost to produce one unit of output) while there is excess labour supply, or that impacts negatively the matching process between job seekers and job vacancies, increases unemployment. All these analytical developments have given a more rigorous theoretical basis to the notion of a ‘natural rate of unemployment’ – leading to the label ‘equilibrium unemployment’ often being adopted instead. It is usually associated with the notion of ‘structural’ unemployment – notably because it depends heavily on institutions and other structural features – as opposed to ‘cyclical’ unemployment that can be dealt with by short-term macroeconomic policy. Equilibrium unemployment is not directly observable, only actual unemployment is. But it can be estimated by looking at changes in inflation: decreasing inflation is likely to reflect that the actual unemployment rate is above the equilibrium rate while increasing inflation reflects the reverse.9 The OECD played a crucial role in the diffusion of new theories and their operationalisation, by providing indicators of the key institutions in member countries (e.g., the tax wedge, the generosity of the unemployment benefit system, the stringency of employment protection

The rise and demise of unemployment  21

legislation, etc.) and by carrying out empirical studies and providing policy recommendations. Mandated by the member countries at the beginning of the 1990s to explore the causes of unemployment and appropriate solutions, it published two influential reports in 1994 – the OECD Jobs Study and the OECD Jobs Strategy. These reports outlined in particular the role of institutions in the persistence of high unemployment rates in many (mainly European) member countries, and recommended to make wage and labour costs more flexible by removing restrictions that prevent wages from reflecting local conditions and individual skill levels, in particular of younger workers; […] to reform employment security provisions that inhibit the expansion of employment in the private sector; […] to reform unemployment and related benefit systems – and their interaction with the tax system – such that societies’ fundamental equity goals are achieved in ways that impinge far less on the efficient functioning of labour markets. (OECD, 1996: 6)

If the persistence of high unemployment rates in continental Europe during the 1980s and 1990s made the so-called ‘labour market rigidities’ serious suspects – all the more that the new theories provided explanations of the potential underlying mechanisms at play – proving the crime by empirical tests revealed quite complex, as the results depend on the data, the indicators of institutions, and the estimation method. If there is a relative consensus on the fact that institutions may have played a role, which institutions were the villains, and what role they precisely played have been heavily debated (Blanchard and Wolfers, 2000; Nickell et al., 2005; Howell et al., 2007). This is all the more the case that there are institutional complementarities – meaning that the combination of institutions may be more important than each institution taken separately in the determination of a country’s performance in terms of unemployment – as is well illustrated by the Danish flexicurity model praised by the OECD since the mid-2000s. The OECD has developed since the beginning of the 2000s a much more balanced discourse concerning the flexibilisation of labour markets, a symptom of the relative erosion of the neoliberal paradigm.

2.3 BEYOND UNEMPLOYMENT? In addition to the measurement issues mentioned above (Section 2.1), the relevance of unemployment as a good indicator of the labour market slack has been more and more debated, leading to the adoption of complementary indicators. More profoundly, one may wonder if the evolution of labour markets and policies since the 1980s has not induced progressively a process of social deconstruction of unemployment as a category, and the decline of its political salience. 2.3.1 From Unemployment to Labour Market Slack To what extent measured (‘open’) unemployment really captures the reality of the labour market slack is an important issue. While focusing on the difference between the United States and European countries, the OECD noted in its 1994 Jobs Study the amazing remarkably low and stable unemployment rate in Japan, pointing to an important ‘underemployment’ resulting from labour hoarding practices and withdrawals, especially of women, from the labour

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force. But the problem was not new. As early as the 1950s, the ILO had tried to standardise the concept of ‘underemployment’ or ‘disguised unemployment’, mainly to better fit the economic and social reality of developing countries where the standard concept of unemployment was of limited relevance because of the high share of self-employed and the low degree of formalisation of the employment relationship (Benanav, 2019). The more encompassing concept of ‘labour underutilisation’ has been adopted more recently to include, in addition to standard unemployment, ‘“time-related underemployment”, (when the working time of persons in employment is insufficient in relation to alternative employment situations in which they are willing and available to engage)’ and ‘“the potential labour force”, referring to persons not in employment who express an interest in this form of work but for whom existing conditions limit their active job search and/or their availability’ (ILO, 2013: 9). In the same vein, in the United States, the Bureau of Labour Statistics has since 1976 developed a battery of alternative unemployment indicators – seven (U-1 through U-7, U3 being the official – ILO – unemployment rate), reduced to six since the mid-1990s. These intend to better consider the persons who are classified according to the ILO criteria as ‘inactive’ (i.e., outside the labour force) or ‘employed’, but who would like to work or to work more – discouraged workers and other ‘marginally attached’ workers,10 and persons employed part-time for economic reasons. Other categories and associated indicators have also appeared since the mid-2000s, such as the ‘Not in Employment Education or Training’ (NEET), which has been increasingly used in OECD countries to complement, or even substitute, the standard youth unemployment rate indicator. Note that unlike more neutral alternative unemployment indicators produced by Statistical Offices, the NEET category, which was soon adopted and publicised by policy advisers or makers – starting with the UK government and the OECD – carries the implicit normative view that being voluntarily out-of-work or education/training is not a socially acceptable option for young people. The interest in alternative indicators has increased in the aftermath of the 2008–2009 ‘Great Recession’, during which the number of workers declaring they wanted more hours, and/or the number of persons withdrawing from the labour force increased notably. The fact that there was no wage pressure when the unemployment rate decreased sharply to come back to its initial low level in particular in the United Kingdom and the United States (5% and less from 2016 to 2019), was an indication that unemployment was no longer the most relevant indicator of labour market slack (Bell and Blanchflower, 2021). Eurostat publishes quarterly statistics of the ‘labour market slack’ defined as the ‘unmet need for employment’, and which includes four groups: (1) unemployed people according to the ILO definition, (2) underemployed part-time workers (i.e., part-time workers who wish to work more), (3) people who are available to work but not searching for it, and (4) people who are searching for work but are not available for it. 2.3.2 The Social Deconstruction of Unemployment: Back to the Pre-Beveridgian Era? The rising interest in alternative indicators is correlated with global economic and social changes in advanced democracies, in a context of increasing tertiarisation of the economy and feminisation of the labour market, breaking with the model of blue-collar male breadwinner full-time workers for whom the institutions of unemployment (labour market exchanges and unemployment benefits) had been built and full employment policies conceived.

The rise and demise of unemployment  23

The increasing casualisation and de-standardisation of the employment relationship has once again blurred the distinction between employment and unemployment, whereas, as noted above, Beveridge (1909) insisted that ‘decasualisation’ was a precondition for identifying and appropriately supporting the unemployed. The share of temporary (as opposed to ‘permanent’) employment in total dependent employment has increased by about 20% in OECD over the 1990–2020 period,11 but remains low (about 12% in 2020, but with high cross-country heterogeneity). Moreover, in some countries, the share among total annual hires of very short duration contracts has increased dramatically, inducing a significant increase in total labour turnover.12 Involuntary part-time employment (‘underemployed part-time workers’ in Eurostat terminology) has reached high levels in some countries – on average, over the period 2010– 2020, about 4% of total employment in the United Kingdom, 5% in Japan, 7% in France, and even 11% in Italy. The distinction between employment and unemployment becomes even more problematic with the rise of specific employment contracts such as the ‘zero hours contract’ – primarily used in the United Kingdom13 – or the growing number of self-employed micro-entrepreneurs substituted to waged employees, reflecting also the ‘uberisation’ of an increasing share of the service economy. We have emphasised above (Section 2.1) that unemployment was a historical social construction. Adopting the same perspective, we may analyse recent trends as the opposite process of social deconstruction (Walters, 1996; Gautié, 2002). New institutions – or the changing use of existing institutions – and social and labour market policies have played a key role in this process. Traditional out-of-work benefits other than unemployment allowance – in relation to sickness, invalidity, or retirement – have always been used, by government, and/or individuals, to disguise more or less openly unemployment situations. But the phenomenon reached unprecedented levels in the 1980s and 1990s – with for instance the record high number of beneficiaries of invalidity benefits (e.g., in the United Kingdom and the Netherlands), and/or of early retirement schemes (e.g., in Denmark, France, and Italy) (Erlinghagen and Knuth, 2009).14 But such a strategy is not easily sustainable in the long term, and was clearly reversed with the retrenchment – more or less effective across countries – of the welfare state, supported by the neoliberal paradigm. In countries such as the United Kingdom, but to a lesser extent also Germany, the parallel trends of re-casualisation and of the increasing share of low-wage work have been fostered by labour market deregulation policies and/or the ‘work first’ conception of activation considering that any job (including self-employment) was better than unemployment. In other countries, such as France, where open unemployment remains higher and the share of low-wage work is lower, the blurring boundaries of unemployment also resulted from some institutionalisation of hybrid statuses combining employment and unemployment to cope with increasing casualisation, in particular by using or even extending the unemployment benefit system.15 Overall, in spite of some common trends, the deconstruction of unemployment is mediated by labour market and social protection institutions and takes distinct forms in different countries. The growing concern, in public debates, of ‘precariousness’ and/or ‘working poverty’, raises the question of whether the political salience of ‘unemployment’ is declining. One may find a symptom in the fact that, since 2010, popular discontent with socioeconomic conditions has manifested itself, sometimes even violently, in countries with low and/or declining unemployment rates (e.g., in the United Kingdom with Brexit, in the United States with the election of Donald Trump, in France with the ‘Yellow Vests’ social movement). The increasing gap between the low average level of unemployment and the high level of economic and

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social distress is maybe the highest in the United States – the latter being evidenced by the marked increase in mortality along with self-reported declines in health, mental health, and the rising inability to work of the middle-aged white non-Hispanic population since the end of the 1990s, most particularly among the poorly educated (Case and Deaton, 2020). However, unemployment remains a key short-term indicator for public policy: during the ‘Great Recession’ of 2008–2009, and even more during the COVID-19 crisis of 2020– 2021, when unemployment rates threatened to reach record high levels, governments implemented huge counter-cyclical Keynesian policies. But in the long term, and in contrast with Beveridge’s hopes, full employment – i.e., unemployment reduced to its incompressible frictional component – is no more the symptom of prosperity and general well-being – if it has ever been.

NOTES 1.

2.

3.

4. 5.

6. 7.

8. 9.

In the European Union, this margin has been reduced drastically for purpose of harmonisation by the adoption of common rules for the formulation of the questions in the Labour Force Surveys of member countries – see the Commission Regulation (EC) No 1897/2000 of 7 September 2000 implementing Council Regulation (EC) No 577/98 on ‘the organisation of a labour force sample survey in the Community concerning the operational definition of unemployment’. In his 1909 book, William Beveridge hardly referred to economic theory – only in the chapter on economic fluctuations. Thirty-five years later, in his no less seminal report Full Employment in a Free Society (Beveridge, 1960), he dedicated an entire 18-page section to ‘theories of unemployment’. According to the official statistics, France was an exception, as the unemployment rate kept under 10%. This was partly due to measurement issues – as women who had lost their jobs and jobless youth were often unrecorded. But it was also a symptom of France’s backwardness in terms of urbanisation, industrialisation, and firm concentration: waged labour represented only about 50% of total employment, the share of very small firms (fewer than 10 employees) remained very high (about 30% of employees), often located in rural areas (where workers could shift back to alternative economic activities including home production), and with employers often reluctant to dismiss their employees because of personal links (Salais et al., 1986; Whiteside, 2014). The concept was introduced by Keynes (1936) and distinguished from both voluntary and involuntary unemployment. This commitment was highly encouraged by the ILO, which proclaimed, in its Declaration of Philadelphia in 1944, its ‘solemn obligation to further programmes among the nations of the world which will […] promote full employment […]’. Such commitment was made explicit in some rich countries such as the United Kingdom (with the publication of the Government White Paper on Employment Policy in 1944), and in the United States, with the adoption of the Employment Act in 1946. Beveridge, in his 1944 report, had mentioned the threat of inflation induced by full employment, and recalled in the preface of its 1960 new edition that ‘Keynes was even more afraid of full employment leading to inflation than I was’ (1960: 3). Economist A.W. Phillips had established in 1958 an empirical negative correlation between the annual unemployment rate and the annual rate of change of nominal wages in the United Kingdom for the period 1860–1957. It was soon interpreted as a universal inverse and stable relationship between not only wage but also price inflation and unemployment. Mortensen was among the pioneers of the job search theory. The two authors were awarded the Central Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 2010 for their contribution to the ‘equilibrium unemployment theory’ (see Pissarides, 2000). Overall, since the end of the 1990s, the concepts of ‘natural rate of unemployment’, ‘NAIRU’, ‘equilibrium unemployment’, and ‘structural unemployment’ have been used as synonyms by most economists.

The rise and demise of unemployment  25

10. ‘Marginally attached workers’ are persons who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the four weeks preceding the survey. 11. The increase is probably much higher if we start from 1980, but available OECD comparative data are not available before 1990. 12. In France, for instance, from the beginning of the 2000s to 2017, the average duration of fixedterm contracts has decreased by about 60% – the share among fixed-term contracts, of contracts of one-day duration, jumping from 8% to 30%. The average labour turnover rate increased by almost 140% over the period. 13. Within ‘zero-hours contract’ employment relationship the employer is not obliged to provide any minimum number of working hours to the employee. In the United Kingdom, the number of employees on such contracts has jumped from 225,000 in 2000 to 990,000 in 2020 – i.e., to about 3% of the total employed workforce – to be compared with about 1.5 million persons unemployed the same year. 14. The very high rate of incarceration in the United States may be considered as another – more coercive – way of disguising unemployment, or at least a functional equivalent (Freeman, 1995). 15. The activité réduite scheme is a good illustration. It refers to registered job seekers who may accumulate, to a certain extent, unemployment benefits with short-term and/or low-duration work activity. Another illustration is the specific unemployment benefit rules for intermittent artists. But the two schemes are accused of subsidising precarious employment, and therefore, of fostering casualisation rather than protecting from it.

REFERENCES Akerlof, G. and Yellen, J. (eds.) (1986) Efficiency Wage Models of the Labor Market. Cambridge: Cambridge University Press. Bell, D.N. and Blanchflower, D.G. (2021) Underemployment in the United States and Europe. ILR Review 74(1): 56–94. Benanav, A. (2019) The origins of informality: The ILO at the limit of the concept of unemployment. Journal of Global History 14(1): 107–125. Beveridge, W.H. (1909) Unemployment: A Problem of Industry. London: Longmans, Green & Co. Beveridge, W.H. (1960) [First Published 1944] Full Employment in a Free Society. London: Georges Allen and Unwin Ltd. Blanchard, O. and Wolfers, J. (2000) The role of shocks and institutions in the rise of European unemployment: The aggregate evidence. Economic Journal 110: C1–C33. Card, D. (2011) Origins of the unemployment rate: The lasting legacy of measurement without theory. American Economic Review 101(3): 552–557. Case, A. and Deaton, A. (2020) Deaths of Despair and the Future of Capitalism. Princeton, NJ: Princeton University Press. Castel, R. (2003) From Manual Workers to Wage Laborers: Transformation of the Social Question. New Brunswick, NJ: Transaction. Douglas, P.H. (1930) Technological Unemployment. American Federationist, August. Erlinghagen, M. and Knuth, M. (2009) Unemployment as an institutional construct? Structural differences in non-employment between selected European countries and the United States. Journal of Social Policy 39(1): 71–94. Freeman, R.B. (1995) The limits of wage flexibility to curing unemployment. Oxford Review of Economic Policy 11(1): 63–72. Garraty, J.A. (1978) Unemployment in History: Economic Thought and Public Policy. New York: Harper & Row. Gautié, J. (2002) De l’invention du chômage à sa déconstruction. Genèses 46(March): 60–76. Hansen, A. (1931) Institutional frictions and technological unemployment. The Quarterly Journal of Economics 45: 684–698. Howell, D.R., Baker, D., Glyn, A. and Schmitt, J. (2007) Are protective labor market institutions at the root of unemployment? A critical review of the evidence. Capitalism and Society 2(1): 1–71.

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ILO (International Labor Organization) (1982) Resolution concerning statistics of the economically active population, employment, unemployment and underemployment. Adopted by the 13th International Conference of Labour Statisticians. Geneva: ILO. ILO (International Labor Organization) (2013) Resolution concerning statistics of work, employment and labour underutilization adopted by the 19th International Conference of Labour Statisticians. Geneva: ILO. Keynes, J.M. (1936) The General Theory of Employment, Interest and Money. London: Macmillan. Keynes, J.M. (1963) [1930 1st publication] Economic possibilities for our grandchildren. In: J.M. Keynes (ed.) Essays in Persuasion. New York: W.W. Norton & Co., pp. 358–373. Keyssar, A. (1986) Out of Work: The First Century of Unemployment in Massachusetts. New York: Cambridge University Press. Keyssar, A. (1987) Unemployment before and after the great depression. Social Research 54(2): 201–221. Lagneau-Ymonet, P. and Reynaud, B. (2020) The making of a category of economic understanding in Great Britain (1880–1931): ‘The unemployed’. Cambridge Journal of Economics 44(6): 1181–1196. Layard, R., Nickell, S. and Jackman, R. (1991) Unemployment: Macroeconomic Performance and the Labour Market. Oxford: Oxford University Press. Lazard, M. (1909) Le Chômage et la profession, contribution à l'étude statistique du chômage et de son coefficient professionnel. Paris: Félix Alcan. Lindbeck, A. and Snower, D. (1988) The Insider Outsider Theory of Employment and Unemployment. Cambridge, MA: MIT Press. Nickell, S., Nunziatta, L. and Ochel, J. (2005) Unemployment in the OECD since the 1960s. What do we know? Economic Journal 115: 1–27. OECD (1996) The OECD Jobs Strategy. Pushing Ahead with the Strategy. Paris: OECD Publications. Phelps, E. (ed.) (1970) Microeconomic Foundations of Employment and Inflation Theory. New York: W.W. Norton. Pigou, A.C. (1913) Unemployment. London: Williams & Norgate. Pigou, A.C. (1927) Wage policy and unemployment. The Economic Journal 37: 355–368. Pigou, A.C. (1933) The Theory of Unemployment. London: Williams & Norgate. Pissarides C. (2000) Equilibrium Unemployment Theory. Cambridge, MA: MIT Press. Salais, R., Baverez, N. and Reynaud, B. (1986) L'invention du chômage. Paris: Presses Universitaires de France. Topalov, C. (1994) Naissance du chômeur, 1888–1910. Paris: Albin Michel. Walters, W. (1994) The discovery of ‘unemployment’: New forms for the government of poverty. Economy and Society 23(3): 265–290. Walters, W. (1996) The demise of unemployment. Politics and Society 24(3): 197–219. Whiteside, N. (2007) Unemployment revisited in comparative perspective: Labour market policy in Strasbourg and Liverpool, 1890–1914. IRSH 52: 35–56. Whiteside, N. (2014) Constructing unemployment: Britain and France in historical perspective. Social Policy & Administration 48(1): 68–85. Zimmerman, B. (2006) Arbeitslosigkeit in Deutschland. Zur Entstehung einer sozialen Kategorie. Frankfurt am Main: Campus Verlag.

3. Insider–outsider divides in advanced democracies: labour market policies, new inequalities and attitudes Hanna Schwander

INTRODUCTION Just when labour markets in advanced democracies finally seemed to have recovered from the havoc the global financial crisis and the following Great Recession wreaked, labour market prospects went downhill again. When the global health crisis unfolded in March 2020, global supply chains collapsed and the individual national protective measures in the form of lockdowns and social distancing requirements put economic activities globally on hold. The impact on jobs in advanced democracies was ten times bigger than that of the Great Recession (OECD, 2020b). The result was a staggering number of 14 million more inactive people in 2021 than in 2019 (OECD, 2021). The International Labour Organization (ILO) estimates that the reduction of global working hours in the second quarter of 2020 was equivalent to the loss of 400 million full-time jobs relative to the last pre-crisis quarter (ILO, 2020). And this is despite unprecedented levels of public assistance that in particular countries provided for their economies through job retention schemes and additional income support schemes, which saved up to 21 million jobs (OECD, 2021). We know that the COVID-19 pandemic has deepened already existing social and economic divides, between those with high and low skills, between generations, between those with good jobs and those with precarious jobs or no jobs at all. For instance, working hours and income were dropping particularly strongly for young and lower skilled workers and those working in part-time, temporary and self-employment who make up 40–50% of the workforce in hard-hit sectors (OECD, 2020b). Unemployed people also tend to remain out of employment for longer periods than before the pandemic (ILO, 2021; OECD, 2021). This pattern of unequal exposure to labour market risks is a familiar pattern to those studying labour market dynamics. The transition to a knowledge-intense, service-oriented economy, the related bifurcation of skill profiles and the feminization of the workforce changed employment patterns making the industrial blueprint of stable, full time and fully insured employment, often for the same company, the employment reality of ever fewer people. As a result of these structural changes and of deliberate policy choices to selectively deregulate and flexibilize labour markets (Emmenegger et al., 2012; Eichhorst and Marx, 2012; Regini, 2000), post-industrial labour markets in Europe grew increasingly dualized, dividing the labour force into labour market insiders with good, stable and fully insured jobs and labour market outsiders with atypical jobs,1 outside the realm of or with limited social protection. One of the reasons for the insider–outsider divide is the stratifiying effect of labour market policies. Labour market policies to protect workers from market fluctuations affect different segments of the working population unequally thus exacerbating labour market inequalities. 27

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This chapter discusses systematically how labour market policies, defined as “regulative policies that influence the interaction between labour supply and demand […]” (ILO, 2021) enhance labour market inequalities such as the divide between labour market insiders and labour market outsiders. With an eye on both general structural trends and variation between the dominant political economy models within the club of advanced democracies, the chapter thus not only introduces scholars of labour market policies to the concept of insiders and outsiders but also provides evidence for Esping-Andersen’s proposition that public policies act as stratifying institutions (Esping-Andersen, 1990). The divide between labour market insiders and labour market outsiders is a striking example of how labour market policies induce new forms of inequality. The chapter is structured as follows. I first introduce the argument that more flexible, instable labour markets lead to a stronger dualization of today’s labour force. The next section critically discusses the concept of insider–outsiders with a focus on the two conceptualizations the literature has developed. The following section demonstrates how different labour market policies play unequally to the interest of insiders and outsiders, respectively. Section 4 examines the translation of these labour market divides on the macro-level into individual-level preference divides. It also presents the socio-economic characteristics of insiders and outsiders in the four political economy models in Western Europe, answering the question of who the outsiders are. The final section concludes.

3.1 STRUCTURAL AND POLICY CHANGES DRIVING THE DEVELOPMENT OF INSIDER–OUTSIDER DIVIDES No doubt, post-industrial labour markets differ substantially from the labour markets in the “trente glorieuse” of the post-war period offering stable full-time employment to the largest part of the male population. After the oil shock in the early 1970s, unemployment reappeared on labour market statistics making the fight against unemployment one of the most pressing economic and political issue since. Figure 1 shows the cyclical nature of unemployment including a long period of declining unemployment in the mid-1990s until the Great Recession in 2008. Peaking in 2012, unemployment in advanced democracies receded again until the COVID-19 crisis in early 2020. In contrast to previous crises, women’s employment is at greater risk than men’s in the COVID-19 crisis, particularly owing to the impact of the downturn on the service sector and the stronger care burdening by closed schools, childcare institutions and distanced relatives.2 As a second worrisome trend in post-industrial labour markets, unemployment was no longer mainly frictional but became long-term for some, mainly low-skilled workers. While long-term unemployment moves in parallel to unemployment in general, it remains particularly high in the countries affected by the sovereign debt crisis in the aftermath of the Great Recession with long-term unemployment rates above 10% of the labour force in Greece and Spain (Düll et al., 2016). With a 60% increase, long-term unemployment also increased significantly during the COVID-19 pandemic (OECD, 2021).3 Post-industrial employment has also become more atypical. Figure 3.1 shows the rise of atypical employment, exemplified by part-time employment and temporary employment as the two most important forms of atypical employment. In the European Union (EU 27), part-time employment encompasses a significant share of the labour force (15.1%). Similarly, the share of

Insider–outsider divides in advanced democracies  29

Source:  Own elaboration from OECD Employment Outlook 2020 (OECD, 2020b).

Figure 3.1  Share of atypical employment (part-time and temporary employment) and unemployment (long-term unemployment and unemployment) in EU 15, 1980–2018 employees with non-permanent contracts has risen in most advanced democracies, representing 13.1% of total employment in the EU 27, albeit with substantial cross-national variation. The reasons for the growth of atypical employment are to be found both in structural changes and in concrete policy reforms to foster employment growth (see the chapter on dualization in this volume). The twin processes of de-industrialization and an increasing service- and knowledge-oriented economy play leading roles. Across the universe of advanced democracies, the industrial sector, once the economic backbone of these societies, has shrunk both in terms of share of employment and national economic output. The literature attributes that shift to a number of structural factors, such as the growing affluence in advanced democracies coupled with an increasing demand for services rather than produced goods (D’Agostino et al., 2006) or the educational revolution (Oesch, 2006). Most important for the topic of this chapter, these service jobs are characterized by a greater heterogeneity of work conditions than jobs in the industrial sector. At the same time, tertiarization increases risk of long-term unemployment among specialized older workers, who have a more difficult time finding work with comparable wages in the service sector. When the educational attainment of younger cohorts increased, firms adapted their production strategies to the abundant supply of highly skilled professionals and semi-professionals and offered jobs in the expanding sectors of health, education and social services but also in business and financial services (Wren et  al., 2013; Ansell and Gingrich, 2018). Many of these new jobs were taken by women, a trend that has accelerated since the 1990s despite some cross-national variation in the precise timing of women’s entry in the labour market (Esping-Andersen, 2009; Estévez-Abe, 2006).

30  Handbook of labour market policy in advanced democracies

The feminization of the workforce not only contributed substantially to the upgrading of the employment structure (Oesch, 2015) but also propelled the service sector expansion. Women’s labour market integration also intensified demand for services, both as an income and a substitution effect of the choice between home and paid work. Most importantly for us, however, female employment is typically atypical employment (Esping-Andersen, 1999b), in particular in Continental and Southern Europe (Schwander, 2019; Kroos and Gottschall, 2012). Since women tend to bear the brunt of unpaid care work, atypical employment, in particular parttime employment, offers then a possibility to combine paid and care work.4 In addition to these structural trends, shorter business cycles in a globalized world increase employer demands for a more flexible and cheaper labour force leading to the facilitated use of temporary employment prior to the 2000s or exemptions of part-time work from social contributions (Eichhorst and Marx, 2012). Policy reforms aimed at liberalizing labour markets have, however, tended towards doing so “selectively” “at the margins” – thus facilitating the emergence of atypical employment while leaving the privileges of core insiders untouched (Toharia and Malo, 2000; Regini, 2000). Consequently, labour market risks are not distributed equally across the working population but affect specific social groups systematically more than others in accordance with their economic political and social resources (Emmenegger et al., 2012). But how strongly are labour markets dualized? Within the club of advanced democracies, scholars largely agree that dualization is most pronounced in Continental and – most of all – Southern Europe (Häusermann and Schwander, 2012). The high non-wage labour costs induced by their social insurance-based welfare state increased pressure to create cheaper jobs outside the realm of social protection as these labour costs effectively act as reservation wages (Scharpf, 1997). The milder form of dualization in Continental Europe is largely the outcome of cross-class alliances between unions, employers and the state to save the industrial core production in the recessions of the 1980s and 1990s (Palier and Thelen, 2010). Trade unions – as representatives of insider labour – thus traded employment security in favour of economic productivity, allowing for the emergence of a secondary labour market that consisted mainly of cheap and atypical employment (Palier and Thelen, 2010; Rueda, 2007).5 In Southern Europe, labour market dualization is the result of the political appeasement of strong and radical unions with higher wages and strong employment protection for their members (Rueda et al., 2015; Manow et al., 2018).

3.2 CRITICAL DISCUSSION OF THE INSIDER–OUTSIDER CONCEPT To get at the divide between insiders and outsiders, the literature has developed two different conceptualizations of insiders and outsiders, related to a different understanding of the drivers of insider–outsider differences but also on account of different research foci (for extensive discussions of this question see Rovny and Rovny, 2017; Schwander and Häusermann, 2013; Schwander, 2018; Marx and Picot, 2019). The following section discusses the two conceptualizations and their theoretical underpinning in turn. Based on the economic insider–outsider theory by Lindbeck and Snower (1988); Saint-Paul (2002), the labour market status approach sees the dividing line within the working population based on their employment contract. Labour market insiders hold permanent and full-time contracts while outsiders are those being “unemployed or hold[ing] jobs characterized by low

Insider–outsider divides in advanced democracies  31

salaries and low levels of protection, employment rights, benefits, and social security privileges” (Rueda, 2005: 62). As such, insiders enjoy higher bargaining power vis-à-vis employers while outsiders act as employment buffers. This dichotomous conceptualization is most often used in macro-level oriented work on policy-making and regulation (Busemeyer and Kemmerling, 2020) as policies tend to sharply distinguish between citizens qualifying for entitlement and those not. Yet, the contractual status has been based on the idea that labour market risks vary between but are homogeneous within occupational groups (see Pahontu (2021) for a critical discussion). Specifically, the approach considers individuals as outsiders depending on their current employment status and has been criticized for overstating differences between insiders and outsiders. For one, the boundaries between insiders and outsiders are often blurrier than the literature originally assumed. As a result, insiders often feel like outsiders because eventually even holders of stable contracts might experience job loss and fear status decline in the case of employment loss (Busemeyer and Kemmerling, 2020; Schwander and Manow, 2018). The dichotomous distinction also disregards differences within both groups, for instance regarding mobility prospects or gender, age and skills (Emmenegger, 2009; see also Häusermann et al., 2013). Importantly, the status approach is argued to be too volatile to affect political preferences and shape political behaviour by those interested in the politics of insider–outsider divides (Schwander and Häusermann, 2012; Emmenegger et al., 2015). As a response, a more individual-level oriented literature interested in the politics of insider– outsider divides developed more fine-grained conceptualizations of insiders and outsiders, based on the prospective labour market risk exposure of individuals (Rehm, 2009; Schwander and Häusermann, 2013). These measures are based on groups with an over-proportional risk of vulnerable employment or unemployment. These occupational reference groups should be reasonably homogeneous in the labour market conditions their members are exposed to. At the same time, the reference groups should be defined by salient social characteristics, for individuals to be reasonably expected to compare themselves to this group and formulate grievances based on the collective disadvantage (Schwander and Häusermann, 2013). An important advantage of the risk-based measurements is their ability to account for the considerable heterogeneity within the outsider group, both with regard to the risks they are exposed to as well as the extent to which these risks affect them (Schwander, 2019). Importantly, the approach allows the identification of different degrees of “outsiderness”, differentiating between degrees of risk exposure. This is important because not all outsiders are equally “out”, just as not all insiders are equally “in”. Indeed, recent work on support for right-wing populist parties has found that insiders in fear of status decline are most likely to be appealed by right-wing populist parties’ evocation of a “nostalgic past” (Häusermann, 2019; Kurer, 2020; Schwander and Manow, 2018; Manow and Schwander, 2022).

3.3 INSIDER–OUTSIDER DIVIDES ON LABOUR MARKET PROTECTION This section discusses the stratifying effect of labour market policies on insider–outsider divides: employment protection, passive and active labour market policies as the three paradigmatic examples of labour market policies and job retention schemes (JRS) as a policy that gained a lot of traction in the last two decades. Consequently, I will use the contractual

32  Handbook of labour market policy in advanced democracies

conceptualization to discuss the effect of labour market policies on inequalities. Differentiating insiders and outsiders based on their contractual status, it seems obvious that employment protection legislation (EPL) protects insiders much more strongly than outsiders, given that atypical employment forms were introduced with the very idea of allowing employers more internal and external flexibility in hiring and firing in otherwise rigid labour markets. Yet, the protective effect of employment regulation extends to some outsiders too. The part-time employed are often covered by employment protection to a similar extent as full-time employed insiders, granting employers internal but not external flexibility. Outsiders on a temporary contract, by contrast, and the unemployed do not benefit from employment protection regulation. Quite in contrast, these regulations hinder the (re-)entry in the primary labour market and act as an institutional barrier between insiders and outsiders (Emmenegger, 2009). Actually, the literature often uses the level of statutory employment legislation as a measurement of the extent of dualization (Vlandas, 2013; Rueda, 2012; Eichhorst and Marx, 2012). Active labour market policies (ALMP), by contrast, should help individuals without work to find sustainable jobs, by promoting directly or indirectly the creation of jobs, improving qualifications and productivity of individuals and facilitating links between the unemployed and employers. As such, they are the clearest examples of labour market policies targeted at labour market outsiders. Insiders, by contrast, do not benefit from ALMP, in particular in countries where high employment protection is shielding them effectively from the risk of unemployment, but have to finance active labour market policies (Rueda, 2006). Yet, while outsiders clearly are the target group of active labour market policies, some ALMP play more clearly to their interest than others depending on the relative importance of demanding or enabling policies focusing on training and skill formation (Bonoli, 2013). While the punitive, “work first” approach is historically associated with the Anglo-Saxon countries and the enabling one with Scandinavia, claiming unemployment benefits is now conditional upon a “demonstrated willingness to work” and co‑operation with the local public employment service in almost all advanced democracies (Clasen and Clegg, 2012; Lodemel and Moreira, 2014), a trend that clearly discriminates outsiders. The case is less clear-cut when it comes to passive labour market policies (PLMP) such as unemployment compensation schemes. Depending on how strongly one conceptualizes insiders to be shielded from unemployment, only outsiders benefit from generous unemployment compensation (see Rueda, 2006). In reality, even insiders are not entirely shielded from the risk of job loss and hence might benefit from such policies as well. The strong insider protests in Germany against the dismantling of unemployment compensation in the mid-2000s are a case in point (Schwander and Manow, 2017). The Hartz reforms are telling for another reason: they point to relevance of coverage as a second dimension in the institutional configuration of unemployment compensation schemes. By tightening the distinction between social contribution-financed, earning-related unemployment benefits for which mainly insiders qualify and tax-financed, means-tested social assistance benefits for outsiders, countries draw a sharper line between insiders and outsiders (Palier and Thelen, 2010). Lastly, job retention schemes are a clear example of insider policies as their goal is to protect existing jobs in a temporary dip of labour demand. JRS were employed in large numbers in the first year of the Great Recession and, to an even larger extent, during the COVID-19 pandemic. One distinguishes two major schemes: short-hour work schemes subsidize directly hours not-worked and have been the traditional instrument to foster job retention during economic downturns such as the early phases of the Great Recession. The second form of JRS,

Insider–outsider divides in advanced democracies  33

a temporary wage subsidy, mainly subsidizes hours worked but can also be used to complement earnings of workers on reduced hours. Both types of schemes have in common that their access is limited to insiders; that is, workers whose qualification record qualifies them for unemployment benefits or workers with a permanent contract. These requirements are consistent with the logic of JRS to safe jobs with firm-specific knowledge and jobs that are expected to last in the absence of the temporary shock (OECD, 2021). As such, they tend to benefit insiders with permanent contracts more than outsiders on temporary contracts (see also Hijzen and Venn, 2011). This applies less to those schemes that were newly set up during the pandemic. Almost all countries have now JRS that cover workers on temporary contracts as well and in a number of countries JRS even cover certain categories of self-employed, typically without minimum contribution requirements (OECD, 2021). Nevertheless, formal eligibility does not equate to access, which is still unequal and reduced demand for labour resulted for most temporary workers in job destruction (OECD, 2021: 106).6 Hence, considering the unequal access to JRS and the higher replacement rates in JRS than in unemployment compensation systems (OECD, 2021), JRS might exacerbate inequalities in the labour market. These arguments clearly make the case that labour market policies can not only reduce inequalities but might also exacerbate inequalities by providing protection to some social groups but excluding others. The subsequent question is whether this unequal treatment by labour market policies translates into divergent attitudes which is a necessary step for such divides to become politicized. This is the subject of the next section. As argued above, the risk-based measurement is more suited to study the politics of insider–outsider divides. Individuals form their preferences and political attitudes on the basis of stable and long-term experiences such as their general exposure to labour market risks rather than the potentially changing labour market status.

3.4 INSIDERS’ AND OUTSIDERS’ DIVERGENT PREFERENCES FOR LABOUR MARKET POLICIES From a rational choice perspective, the discussion on the divergent effects of labour market policies on insiders and outsiders leads one to expect that labour market outsiders support active and passive labour market policies more strongly than insiders while insiders should be more supportive of job retention programs than outsiders. Formulating expectations regarding employment protection is more difficult: while insiders clearly enjoy more job security, it is difficult to argue whether insiders also want more employment than outsiders. Quite in contrast, given that their situation is characterized by instability and insecurity, it is understandable that outsiders might value employment protection even more than insiders. Indeed, research on attitudes towards job security (Emmenegger, 2009) suggests precisely this. The political protests against the reduction of employment protection in Italy (2014) and France (2005), when young labour market outsiders fiercely demanded they keep employment protection legislation intact, also point in that direction. Outsiders clearly did not consider EPL as an insider-protecting barrier but were hoping to benefit from stable and protected jobs themselves in the future. For this reason, I refrain from investigating preferences towards employment protection. The main independent variable of this section is a risk-based measure of labour market vulnerability developed in earlier work which calculates an individual risk for vulnerable

34  Handbook of labour market policy in advanced democracies

employment based on the incidence of atypical/unemployment in an individual’s occupational reference group (Schwander and Häusermann, 2013). These reference groups are based on the most important socio-structural determinants of unemployment and atypical employment: class, gender and age, which are all strong predictors of labour market chances (Esping-Andersen, 1999a; Oesch, 2006; Ranci, 2010). Based on data from the EU-SILC, we then calculate group-specific rates of atypical employment and unemployment and use the standardized deviation of this group-specific rate from the national average as expression of individual labour market risk, which we call labour market vulnerability. Please consult the appendix for a more extensive discussion of the labour market vulnerability index. Before examining labour market policy preferences of insiders and outsiders, let me first illustrate the distribution of labour market risks. Figure 3.2 displays the share of individuals with an above average labour market vulnerability based on the dichotomized labour market vulnerability indicator that codes outsiders as individuals with an over-proportional exposure to labour market risks, that is a labour market vulnerability > 0. Apart from confirming the findings of labour market sociology that women, young and low-skilled7 workers are particularly likely to be in a vulnerable position (Esping-Andersen, 1999a; Oesch, 2006; Ranci, 2010), Figure 3.2 also shows that a sizable portion of higher skilled8 individuals find themselves in occupational groups vulnerable to labour market risks. This is related to the high risks for atypical employment of high-skilled women and young graduates whereas unemployment is of less concern for these groups (Schwander, 2019). Overall, 58% of the labour force is strongly exposed to labour market risks (not shown).

Source:  Own elaboration from EU-SILC.

Figure 3.2  Variation in labour market exposure in Western European regions, 2017

Insider–outsider divides in advanced democracies  35

Turning to cross-regime variation, we find that labour market vulnerability is particularly widespread in the liberal (United Kingdom and Ireland) and Mediterranean countries (Spain, Italy, Portugal), followed by the conservative countries (France, the Netherlands, Austria, Belgium, Switzerland). In the Scandinavian social democratic countries (Denmark, Sweden, Norway, Iceland), labour market vulnerability affects not only a lower share of individuals; it is also distributed more equally across the different social groups. We also find that the main drivers for a vulnerable labour market position on the individual level vary between political economy regimes. In the liberal regimes, women and low-skilled individuals are particularly exposed to labour market vulnerability, whereas women are particularly likely to be among outsiders in conservative regimes and young adults show the highest share of outsiders in the Mediterranean regimes. Let us now return to the question of individual-level preference divides between insiders and outsiders. As dependent variables, I measure preferences for PLMP with two questions from the eighth wave of the European Social Survey (ESS): a first question asks respondents whether they agree that it is the government’s responsibility to provide for the unemployed. The second question measures preferences for conditional benefit receipt by asking whether an unemployed who turns down a job offer because of lower pay than the previous job should lose their unemployment benefit. Data on preferences for ALMP and public measures to maintain existing jobs (unfortunately, no question explicitly asks about job retention schemes during economic recessions) are from the International Social Security Programme (ISSP) Role of Government module V. Preferences for ALMP are measured with a question on respondents’ opinion whether it is the government’s responsibility to provide a job for everyone who wants one. While not focusing on training, the variable clearly focuses on employment rather than compensation of income loss capturing an important idea of ALMP. Attitudes towards governmental support of declining industries to protect jobs is my indicator of support for job retention programs. This is not an ideal measurement as it does not refer to an exogeneous and temporary shock in demand for labour. However, it refers to governmental intervention to protect existing jobs which is one of the defining features of JPS.9 As method of analysis, I use Ordinary Least Squares (OLS) and ordered logit regressions, as the number of countries in both datasets (13 in the ESS, 14 in the ISSP) is too small to properly run multilevel analyses (Stegmueller, 2013). Instead, I employ country-fixed effects to control for the nested data structure and country-clustered standard errors to correct for the withincountry correlation of errors. All models control for age, gender, education, union membership, church attendance, if an individual lives in a couple household and public employment. To reiterate, the expectations outlined above expect a positive effect of labour market vulnerability on PLMP and ALMP but a negative effect on making PLMP conditional on accepting a lower-paid job and on governmental support for declining industries. The determinants of labour market policy preferences are displayed in Table 3.1. The estimates present clear evidence that labour market vulnerability is associated with stronger support for passive and active labour market policies (see Models 1 and 3) and a greater reservation against making unemployment benefits conditional (see Model 2). This is not only in line with the expectations but also with the literature that finds similar results regardless of the measurement approach (see for instance Schwander and Häusermann (2013) for risk-based findings, see Rueda (2005), Marx and Picot (2013) for findings based on the contractual approach). In contrast to the expectations, however, those in a vulnerable position are more likely to demand public support for declining industries. Considering that outsiders

36  Handbook of labour market policy in advanced democracies

Table 3.1  Determinants of labour market policy preferences M1

M2

M3

Gov: provide for unemployed

Reduce benefits if job turned down

Gov: provide job Gov: support for everyone declining industries

0.206***

–0.197**

0.346***

0.194***

(0.044)

(0.079)

(0.11)

(0.06)

–0.015

–0.067***

–0.324***

–0.337***

(0.022)

(0.026)

(0.04)

(0.05)

–0.099

0.091

0.142**

0.134**

(0.099)

(0.109)

(0.06)

(0.06)

0.006**

–0.004

0.002

–0.010***

(0.003)

(0.003)

(0.00)

(0.00)

Public Employment

0.208***

0.020

0.122*

0.090

(0.057)

(0.175)

(0.07)

(0.06)

Union membership

0.122*

0.006

0.097

0.050

(0.063)

(0.134)

(0.06)

(0.06)

National citizen

–0.233

0.472***

–0.999***

–0.718***

(0.162)

(0.181)

(0.11)

(0.18)

Church attendance

–0.019

0.143***

–0.017

0.035**

(0.019)

(0.025)

(0.03)

(0.02)

Country fixed effects

yes

yes

yes

yes

Outsiderness Education Female Age

M4

(Pseudo) R2

0.111

0.040

0.053

0.029

N

24824

6063

4973

4995

Log likelihood

–53210.5

–3629.7

–6162.1

–6797.6

Notes:   Values in parentheses are standard errors; OLS regression for M1, ordered logistic regression for M2 to M4, regressions with clustered standard errors and country dummies; country dummies not shown due to space restrictions. *Significant at the 0.1 level, **significant at the 0.05 level, ***significant at the 0.01 level. Source:   ESS 8 (2016) for M1 and M2, ISSP Work Orientations V (2016) for M3 and M4.

are more vulnerable to job loss this stands to reason from a rational choice perspective. The findings can also be read as hinting that the question about public support for declining industries might not tap attitudes towards job retention schemes specifically but rather relate to attitudes towards job protection in general which is less clearly insider or outsider biased. In summary, the section suggests that labour market policies clearly have a stratifying effect on the labour force and that this divide is reflected in citizens’ preferences towards labour market policies.

CONCLUSIONS The chapter advances the argument that labour market policies not only protect individuals from the vagaries of markets but also induce new forms of inequalities within the working

Insider–outsider divides in advanced democracies  37

population. I discuss this argument for the divide between labour market insiders and outsiders as one of the most striking examples of such divides. The chapter thus not only introduces scholars of labour market policies to the concept of insiders and outsiders but also provides evidence for Esping-Andersen’s (1990) proposition that public policies have stratifying effects on their societies. I first explain how structural changes and deliberate policy choices result in the growth of a segment of labour market outsiders that are employed in atypical employment or find themselves in structural unemployment. Standard employment with full access to social and legal protection is increasingly concentrated in specific insider groups. I also outline reasons why insider–outsider divides are strongest in Southern Europe followed by Continental Europe. I then critically discuss the concept of insiders and outsiders that comes in two variants: an approach based on the current labour market status of individuals and an approach focusing on individuals’ exposure to labour market risks. While the contractual status is often (but not exclusively) employed in discussions about the implications of concrete policy reforms for inequality or unemployment, the risk-based literature’s focus lies on studying the translation of structural labour market divides into political divides in terms of policy preferences and political behaviour. I evaluate how public policies might induce social inequality for four exemplarily labour market policies (employment protection legislation, active labour market policies, passive labour market policies and job retention schemes) based on individuals’ current labour market status. Individuals are generally well aware of the stratifying effects of labour market divides as an analysis of their preferences towards these policies confirms. One of the central contributions of the risk-based literature is to demonstrate that more attention should be paid to differences in the distribution of labour market risk as a determinant of political dynamics rather than to income or education alone. Regardless of the precise measurement, the literature clearly shows that different parts of the working class have increasingly diverged in their economic situation and in their political demands. This makes it more difficult for political parties to mobilize “the working class” with a coherent redistributive program (Häusermann et al., 2019). Lastly, the chapter shows the socio-structural composition of outsiders in the four political economy regimes of Western Europe. I find that women are most likely to be in vulnerable employment in the conservative regime and in the liberal regime where low-skill endowment also represents a strong risk factor. Labour market risks are also shaped by age, with young adults facing a considerably high risk in Southern Europe. The socio-structural foundation of insider–outsider divides matters for the translation of the divides into politics. If labour market vulnerability is strongly gender-biased, the question arises as to how the household composition, that is female outsiders living with male insiders, might affect the politicization of insider–outsider divides. However, we have evidence that for the large majority of respondents, it is their individual labour market position that matters for preferences formation. Only in some conservative countries such as Switzerland or Germany does a notable share of outsiders base their policy preferences on the household situation (Häusermann et al., 2016). Hence, household effects are unlikely to dampen the salience of insider–outsider divides, at least on the level of policy preferences. Low-skilled citizens, by contrast, tend to abstain from the political process, in particular if the political system does not offer a second left-wing party that explicitly mobilizes the lower-skilled voters (Anderson and Beramendi, 2012). Accordingly, it is not surprising that the insider–outsider gap in electoral participation is particularly high in liberal regimes with their majoritarian electoral systems (Häusermann and Schwander, 2012). Young adults are also known to shy away from participation in elections. In any case, parties face a dilemma between the interests of insiders

38  Handbook of labour market policy in advanced democracies

and outsiders and most scholars agree that outsiders never were of or have lost electoral relevance (Häusermann et al., 2019; Lindvall and Rueda, 2014; Iversen and Soskice, 2015; Rueda, 2005). Yet, a number of protest movements formed during the Great Recession heavily mobilized young outsiders in the crises-ridden Southern European countries. It is here where we find the clearest translation of the insider–outsider conflict into politics: the social movements and related political parties such as the M5S in Italy or Podemos in Spain transformed the political space in a conflict over economic austerity and political renewal (Hutter et al., 2018). We are just coming out of one of the greatest health crises in modern history. COVID-19 has not only taken a high toll on human lives and questioned much of what we have taken for granted in terms of civic freedom, but turned upside down advanced democracies’ labour markets. And although different sectors were affected than during the Great Recession, the pandemic has again increased existing inequalities in the labour market, aggravating divides between labour market insiders and labour market outsiders. But the pandemic also demonstrated that states can adapt existing policies to go beyond the protection of labour market insiders such as new job retention schemes and a prolonged duration of unemployment benefits. Future research will tell whether these measures helped to close the gap between insiders and outsiders in terms of job security and labour market chances or were only a flash in the pan.

NOTES 1. 2. 3. 4.

5. 6.

7. 8. 9. 10.

Atypical (also called irregular or non-standard) employment denotes all forms of employment that deviate from the standard employment relation of dependent full-time and permanent employment, such as fixed-term work, part-time employment but also “false” self-employment. At the same time, women account for a large proportion of workers in frontline occupations, especially in the health and social care sectors, increasing their risk of mental health issues. While long-term unemployment usually refers to unemployment spells that last longer than 12 months, the OECD refer here to unemployment lasting longer than 6 months. While part of the flexibilization of employment forms is welcomed by workers, such periods of unemployment and forms of involuntary atypical employment arguably have clear negative implications for individuals in terms of wages, working conditions, access to vocational training and social rights (Eichhorst and Marx, 2012; Häusermann and Schwander, 2012; OECD, 2014) but also with regard to the risk of being trapped in unstable and precarious employment and even poverty (Oesch, 2006; Tomlinson and Walker, 2012). Recent work has increasingly come to challenge this view of trade unions as mere representatives of insider workers; see Benassi and Vlandas (2016); Durazzi et al. (2018); Durazzi (2017); Rathgeb (2018); Thelen (2014). In addition, most newly implemented schemes can only be used for jobs whose working hours are put to zero. By restricting support only to jobs that are fully suspended, however, they exclude the possibility of sharing the costs of adjustment across the workforce through broad-based working time reductions (OECD, 2020a), again exacerbating labour market inequalities. Low skill levels being defined as having secondary education as the highest completed degree. High skill levels being defined as having a tertiary degree as the highest completed degree. All variables are recoded, so that higher values reflect higher preferences for the specific labour market policy. The class scheme contains of five occupational classes: (i) high-skilled managers, self-employed, and technical experts (which they call capital accumulators); (ii) high-skilled professionals in the public and private service sector (socio-cultural professionals); (iii) unskilled and skilled workers mostly in industry (blue-collar workers); (iv) unskilled and skilled employees in interpersonal services (low service functionaries); and (v) routine and skilled clerks (mixed service functionaries). Using the version with 5 instead of 8 or 16 classes allows to implement the labour market measurement in almost any mass level survey.

Insider–outsider divides in advanced democracies  39

REFERENCES Anderson, C.J. and Beramendi, P. (2012) Left parties, poor voters and electoral participation in advanced industrial societies. Comparative Political Studies 45(6): 714–846. Ansell, B. and Gingrich, J. (2018) Skills in demand? Higher education and social investment in Europe. In: B. Palier, P. Manow and H. Schwander (eds.) Welfare Democracies and Party Politics: Explaining Electoral Dynamics in Times of Changing Welfare Capitalism. Oxford: Oxford University Press, pp. 225–253. Benassi, C. and Vlandas, T. (2016) Union inclusiveness and temporary agency workers: The role of power resources and union ideology. European Journal of Industrial Relations 22(1): 5–22. Bonoli, G. (2013) Origins of Active Social Policy: Labour Market and Childcare Policies in a Comparative Perspective. Oxford: Oxford University Press. Busemeyer, M. and Kemmerling, A. (2020) Dualization, stratification, liberalization, or what? An attempt to clarify the conceptual underpinnings of the dualization debate. Political Science Research and Methods 8(2): 375–379. Clasen, J. and Clegg, D. (2012) Adapting labour market policy to a transformed employment structure: The politics of ‘triple integration’. In: G. Bonoli and D. Natali (eds.) The Politics of the New Welfare State. Oxford: Oxford University Press. D’Agostino, A., Serafini, R. and Ward-Warmedinger, M. (2006) Sectoral explanations of employment in Europe. The role of services. European Central Bank Working Paper Series. No. 625, May 2006. Düll, N., Thurau, L. and Vetter, T. (2016) Long-term unemployment in the EU. Trends and Policies. Bertelsmann Stiftung. Durazzi, N. (2017) Inclusive unions in a dualized labour market? The challenge of organizing labour market policy and social protection for labour market outsiders. Social Policy & Administration 51(2): 265–285. Durazzi, N., Fleckenstein, T. and Lee, S.C. (2018) Social solidarity for all? Trade union strategies, labor market dualization, and the welfare state in Italy and South Korea. Politics & Society 46(2): 205–233. Eichhorst, W. and Marx, P. (2012) Whatever works: Dualization and the service economy in Bismarckian welfare states. In: P. Emmenegger, S. Häusermann, B. Palier and M. Seeleib-Kaiser (eds.) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. New York and Oxford: Oxford University Press, pp. 73–99. Emmenegger, P. (2009) Barriers to entry: Insider/outsider politics and the determinants of job security regulations. Journal of European Social Policy 19(2): 131–146. Emmenegger, P., Häusermann, S., Palier, B. and Seeleib-Kaiser, M. (2012) How we grow unequal. In: P. Emmenegger, S. Häusermann, B. Palier and M. Seeleib-Kaiser (eds.) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. New York and Oxford: Oxford University Press, pp. 3–26. Emmenegger, P., Marx, P. and Schraff, D. (2015) Labour market disadvantage, political orientations and voting: How adverse labour market experiences translate into electoral behaviour. Socio-Economic Review 13(2): 189–213. Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism. Princeton: Princeton University Press. Esping-Andersen, G. (1999a) Politics without class: Postindustrial cleavages in Europe and America. In: H. Kitschelt, P. Lange, G. Marks and J.D. Stephens (eds.) Continuity and Change in Contemporary Capitalism. New York: Cambridge University Press, pp. 293–316. Esping-Andersen, G. (1999b) Social Foundations of Postindustrial Economies. Esping-Andersen, G. (2009) The Incomplete Revolution: Adapting Welfare States to Women’s New Roles. Cambridge: Polity Press. Estévez-Abe, M. (2006) Gendering the varieties of capitalism: A study of occupational segregation by sex in advanced industrial societies. World Politics 59(1): 142–175. Häusermann, S. (2019) Dualization and electoral realignment. Political Science Research and Methods, advance online publication 12 November, doi: 10.1017/psrm.2018.48. Häusermann, S., Kemmerling, A. and Rueda, D. (2019) How labor market inequality transforms mass politics. Political Science Research and Methods, advance online publication 12 November, doi: 10.1017/psrm.2018.64.

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Häusermann, S., Kurer, T. and Schwander, H. (2013) Explaining welfare preferences in dualized societies: Determinants of insider-outsider divides in Europe. Paper Presented at the ECPR Joint Sessions of Workshops 2013, March 2013, Mainz, Germany. Häusermann, S., Kurer, T. and Schwander, H. (2016) Sharing the risk? Households, labor market vulnerability and social policy preferences in western Europe. Journal of Politics 78(4): 1045–1060. Häusermann, S. and Schwander, H. (2012) Varieties of dualization? Labor market segmentation and insider-outsider divides across regimes. In: P. Emmenegger, S. Häusermann, B. Palier and M. Seeleib-Kaiser (eds.) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. Oxford and New York: Oxford University Press, pp. 27–51. Hijzen, A. and Venn, D. (2011) The role of short-time work schemes during the 2008–09 recession, doi: 10.1787/5kgkd0bbwvxp-en. Hutter, S., Kriesi, H. and Vidal, G. (2018) Old versus new politics: The political spaces in southern Europe in times of crises. Party Politics 24(1): 10–22. ILO. (2020) COVID-19 and the world of work. Updated Estimates and Analysis. Fifth Edition. ILO Monitor. ILO. (2021) COVID-19 and the world of work. Updated Estimates and Analysis. Eighth edition. ILO Monitor. Iversen, T. and Soskice, D. (2015) Democratic limits to redistribution: Inclusionary versus exclusionary coalitions in the knowledge economy. World Politics 67(2): 185–225. Kitschelt, H. and Rehm, P. (2006) New social risk and political preferences. In: K. Armingeon and G. Bonoli (eds.) The Politics of Post-Industrial Welfare States: Adapting Post-War Social Policies to New Social Risks. London: Routledge. Kroos, D. and Gottschall, K. (2012) Dualization and gender in social services: The role of the state in Germany and France. In: P. Emmenegger, S. Häusermann, B. Palier and M. Seeleib-Kaiser (eds.) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. New York and Oxford: Oxford University Press, pp. 100–123. Kurer, T. (2020) The declining middle: Occupational change, social status, and the populist right. Comparative Political Studies 53(10–11): 1798–1835. Lindbeck, A. and Snower, D.J. (1988) The Insider-Outsider Theory of Employment and Unemployment. Cambridge, MA: MIT Press. Lindvall, J. and Rueda, D. (2014) The insider–outsider dilemma. British Journal of Political Science 44(2): 460–475. Lodemel, I. and Moreira, A. (2014) Activation or Workfare? Governance and the Neo-Liberal Convergence. Oxford: Oxford University Press. Manow, P., Palier, B. and Schwander, H. (2018) Introduction: Welfare democracies and party politics – Explaining electoral dynamics in times of changing welfare capitalism. In: P. Manow, B. Palier and H. Schwander (eds.) Welfare Democracies and Party Politics Explaining Electoral Dynamics in Times of Changing Welfare Capitalism. Oxford: Oxford University Press, pp. 1–26. Manow, P. and Schwander, H. (2022) Eine differenzierte Erklärung für den Erfolg der AfD in West- und Ostdeutschland. In: H.U. Brinkmann and K.-H. Reuband (eds.) Rechtspopulismus in Deutschland. Wahlverhalten in Zeiten politischer Polarisierun. Wiesbaden: Springer, pp. XVIII, 448. Marx, P. and Picot, G. (2013) The party preferences of atypical workers in Germany. Journal of European Social Policy 23: 164–178. Marx, P. and Picot, G. (2019) Three approaches to labor-market vulnerability and political preferences. Political Science Research and Methods, advance online publication 12 November, doi: 10.1017/ psrm.2018.29. OECD. (2014) Employment Outlook 2014. Paris: OECD. OECD. (2020a) Job Retention Schemes During the COVID-19 Lockdown and Beyond”, OECD Policy Responses to Coronavirus (COVID-19). Paris: OECD Publishing, doi: 10.1787/0853ba1d-en. OECD. (2020b) OECD Employment Outlook 2020: Worker Security and the COVID-19 Crisis. Paris: OECD Publishing. OECD. (2021) OECD Employment Outlook 2021: Navigating the Covid-19 Crisis and Recovery. Paris: OECD. Oesch, D. (2006) Redrawing the Class Map: Stratification and Institutions in Britain, Germany, Sweden and Switzerland. Basingstoke: Palgrave Macmillan.

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Oesch, D. (2015) Occupational structure and labour market change in western Europe since 1990. In: P. Beramendi, S. Häusermann, H. Kitschelt and K. Hanspeter (eds.) The Politics of Advanced Capitalism. Cambridge: Cambridge University Press, pp. 112–132. Pahontu, R.L. (2021) Divisive jobs: Three facets of risk, precarity, and redistribution. Political Science Research and Methods, advance online publication 28 July, doi: 10.1017/psrm.2021.45. Palier, B. and Thelen, K.A. (2010) Institutionalizing dualism: Complementaries and change in France and Germany. Politics & Societies 38(1): 119–148. Ranci, C. (2010) Social Vulnerability in Europe: The New Configuration of Social Risks. Basingstoke: Palgrave Macmillan. Rathgeb, P. (2018) Strong Governance, Precarious Workers. Ithaca, NY: Cornell University Press. Regini, M. (2000) Between deregulation and social pacts: The responses of European economies to globalization. Politics & Society 28(1): 5–33. Rehm, P. (2009) Risks and redistribution. Comparative Political Studies 42(7): 855–881. Rehm, P. (2011) Risk inequality and the polarized American electorate. British Journal of Political Science 41(2): 363–387. Rovny, J. and Rovny, A.E. (2017) Outsiders at the ballot box: Operationalizations and political consequences of the insider-outsider dualism. Socio-Economic Review, advance online publication 10 January. Rueda, D. (2005) Insider-outsider politics in industrialized democracies: The challenge to social democratic parties. American Political Science Review 99(1): 61–74. Rueda, D. (2006) Social democracy and active labour-market policies: Insiders, outsiders and the politics of employment protection. British Journal of Political Science 36: 385–406. Rueda, D. (2007) Social Democracy Inside Out: Partisanship and Labor Market Policy in Industrialized Democracies. Oxford: Oxford University Press. Rueda, D. (2012) West European welfare states in times of crisis. In: N. Bermeo and J. Pontusson (eds.) Coping With Crisis: Government Reactions to the Great Recession. New York: Russell Sage Foundation, pp. 361–398. Rueda, D., Wibbels, E. and Altamirano, M. (2015) The origins of dualisation. In: P. Beramendi, S. Häusermann, H. Kitschelt and K. Hanspeter (eds.) The Politics of Advanced Capitalism. Cambridge: Cambridge University Press. Saint-Paul, G. (2002) The political economy of employment protection. Journal of Political Economy 110(3): 672–704. Scharpf, F. (1997) Employment and the Welfare State: A Continental Dilemma. MPIfG Working Paper 97/7, Juli 1997. Schwander, H. (2018) Labor market dualization and insider–outsider divides: Why this new conflict matters. Political Studies Review 17(1): 14–29. Schwander, H. (2019) Labor market insecurity among the middle class: A cross-pressured group. Political Science Research and Methods, advance online publication 12 April, doi: 10.1017/psrm.2019.11. Schwander, H. and Häusermann, S. (2013) Who’s in and who’s out? A risk-based conceptualisation of insiders and outsiders. Journal of European Social Policy 23(3): 248–269. Schwander, H. and Manow, P. (2017) ‘Modernize and die’? German social democracy and the electoral consequences of the agenda 2010. Socio-Economic Review 15(1): 117–134. Schwander, H. and Manow, P. (2018) A labor market explanation for right-wing populism – Explaining the electoral success of the AFD in Germany. Unpublished Manuscript. Stegmueller, D. (2013) How many countries for multilevel modeling? A comparison of frequentist and Bayesian approaches. American Journal of Political Science 57(3): 748–761. Thelen, K. (2014) Varieties of Liberalization: The New Politics of Social Solidarity. New York: Cambridge University Press. Toharia, L. and Malo, M.A. (2000) The Spanish experiment: Pros and cons of flexibility at the margin. In: G. Esping-Andersen and M. Regini (eds.) Why Deregulate Labour Markets? Oxford and New York: Oxford University Press, pp. 307–335. Tomlinson, M. and Walker, R. (2012) Labour market disadvantage and the experience of recurrent poverty. In: P. Emmenegger, S. Häusermann, B. Palier and M. Seeleib-Kaiser (eds.) The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. Oxford and New York: Oxford University Press, pp. 52–72.

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Vlandas, T. (2013) Mixing apples with oranges? Partisanship and active labour market policies in Europe. Journal of European Social Policy 23(1): 3–20. Wren, A., Fodor, M. and Theodoropoulou, S. (2013) The trilemma revisited: Institutions, inequality, and employment creation in an era of ICT-intensive service expansion. In: A. Wren (ed.) The Political Economy of the Service Transition. Oxford: Oxford University Press, pp. 108–146.

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APPENDIX A.1 The labour market vulnerability index The index measures the risk for each individual of being unemployed or/and in atypical employment on the basis of the frequency of unemployment and atypical employment within their occupational group, as an individual’s risk depends on the incidence of atypical employment and unemployment in that person’s occupational group. As in all risk-based measures (Rehm, 2011; Rehm, 2009; Kurer, 2020), it is crucial to choose theoretically relevant reference groups. Reference groups should not only be reasonably homogeneous in labour market conditions but also be defined by salient social characteristics, because we would like to define groups in a way that the individuals can be expected to compare themselves to this group and derive information about their own risk from the occurrence of a grievance in this very reference group. Consequently, the occupational reference groups are constructed on the basis of the most important socio-structural determinants of unemployment and atypical employment which we consider to be class, gender and age. The measurement of class is based on the class schema by Oesch (2006) in the collapsed five-class version of Kitschelt and Rehm (2006).10 Disaggregating these five classes further according to gender and age (above/below the age of 40) results in 20 occupational groups as the basis of the measurement. We compute the rates of unemployment, involuntary part-time, or temporary employment for each occupational group and the average workforce in every country with data from the Survey of Living Standards and Income (2017). The average rate of the workforce is then subtracted from the group-specific rates in each country, in order to obtain the group-specific deviations in unemployment, involuntary part-time, and temporary employment. The average of these three standardized deviations results in a continuous measure of labour market vulnerability, which is specific to an occupational group in a country. I then attribute the value to each respondent in the two datasets that allows us to examine preferences for labour market policies.

4. Activation: a research topic in its own right? Jochen Clasen and Clara Mascaró

INTRODUCTION Older handbooks on labour market policy (e.g. Schmid et al., 1996) do not feature chapters on activation. This is unsurprising as the topic hardly existed in social and labour market policy research prior to the late 1990s. And yet, the two principal components of activation – unemployment protection on the one hand and active labour market policy (ALMP) on the other – have featured in relevant books well before that time, and continue to do so, as other chapters in this volume demonstrate. Readers may thus reasonably ask whether there is a need for a separate chapter on activation. One admittedly somewhat glib response is the fact that, unlike three decades ago, there is now a sizeable body of academic literature on the topic. Indeed, since the late 1990s, social policy research on activation has produced a steady stream of publications, which does not show any signs of drying up. A more reflective answer would require some discussion on the nature of activation, its origin as a research topic in social and labour market policy, and an idea of the ways in which it has been researched and debated. This is what our chapter aims to provide. We briefly discuss ways of defining activation, followed by a reflection on how the topic emerged within academic debate in the 1990s. We then review the development and landscape of relevant publications since then in terms of themes, objectives and trends. In the concluding section, we revisit the question as to whether a separate chapter on activation is justified in a handbook on labour market policy.

4.1 WHAT IS ACTIVATION? Almost 20 years ago, Halverson and Jensen (2004) pointed out that there was no consensus on what the term activation actually means and, having reviewed the sizeable body of literature on the topic, we find that this continues to be the case today. Different authors have adopted different definitions while often implicitly assuming that there is a widely accepted meaning of activation. Of course, at a general level there is a fairly consensual definition, i.e. that activation is about unemployment benefit systems becoming more ‘employment oriented’, or about policies which make entitlement to unemployment protection more conditional on those activities deemed to improve the chances of labour market integration. Another broad definition is a shifting of the balance between benefit rights towards an obligation to engage more in activities aimed at entry into paid work. However, more concrete and explicit definitions demonstrate considerable variation in academic research, e.g. from very narrow to wide. The former may analyse conditionality criteria in unemployment insurance systems and labour market entry only, or focus on certain target groups amongst the unemployed (e.g. Kowalewska, 2017). Broader definitions include types of benefits for working-age people other than unemployment protection, and as well as policies aimed not only at labour market entry but also at making labour market exit less attractive (e.g. modifying or abolishing 44

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early retirement systems), or extending the concept to other ‘push and pull’ factors, such as benefit disincentives, minimum wages or childcare provision (e.g. Weishaupt, 2013; Knijn et al., 2007). However, it is not only the notion of activation in a narrower or wider sense which makes the literature on the topic incoherent. Other factors include the absence of an explicit elaboration and delineation between activation on the one hand and neighbouring concepts on the other (such as ‘active society’, ‘active welfare state’, ‘active line’, ‘work first’ etc). For example, there is considerable inconsistency as to whether activation should be regarded as synonymous with workfare, i.e. ‘work-for-benefit’ programmes. Some authors have considered (European) activation as equivalent to US-style workfare (Lødemel and Trickey, 2001; Lind and Møller, 2006; Brodkin and Marston, 2013). Others have identified some versions of activation as essentially the same as workfare, in contrast to other (‘human capital’ or ‘enabling’) versions (Eichhorst et al., 2008). A third group perceive activation as clearly distinct from workfare (e.g. Larsen, 2005). Similar boundary problems exist between activation and active labour market policy (ALMP). For some, there is little difference between the two. Activation has simply been operationalised and measured as governments devoting more spending on ALMP (Vis, 2009; Danforth, 2014), or equated with particular ALMP schemes (Wroblewski, 2004; Tang and Cheung, 2007; Breidal and Clement, 2010; Maron and Helman, 2017). More common are researchers who make a distinction between the two concepts but acknowledge an overlap, albeit in contrasting ways. While some regard activation as one element within national ALMP portfolios (Strandh, 2001; Jørgensen, 2009), others portray ALMP as a sub-section of activation (Lødemel and Moreira, 2014; Goul Andersen and Guillemard, 2005; Barbier, 2005). These examples illustrate that the definition of activation has remained ambiguous across much of the academic literature. As discussed in more detail elsewhere (Clasen and Mascaró, 2022) for analytical purposes we would argue in favour of a mid-range concept of activation based on a clear articulation between unemployment protection and ALMP. This would allow both differentiation, i.e. descending Satori’s ‘ladder of abstraction’ (1970, 1984), as well as distinction from, but connection with, hierarchically higher-ranked concepts, such as ‘active social policy’ (van Aershot, 2003; Bonoli, 2013). It would deliberately exclude some policies, such as minimum wages or early retirement reforms. Both may well be aimed at, or lead to, increases in labour market participation, but this applies to many other policies too and rather than incorporating such policies into a very broad definition of activation, both examples seem to deserve separate analyses of policy cause and effect. At the other end of the spectrum of what has been portrayed as studies of activation are analyses of particular types of ALMP without any or at the very least rather tenuous links to unemployment protection. Again, ALMP research has a long history in its own right and there does not seem to be any need to declare such studies as research under the banner of activation. The centre of a more parsimonious conceptualisation of activation, as we suggest above, is a tighter connection between entitlement to income protection and participation in active labour market policy measures. Thus, neither benefit retrenchment nor modification in the rules or portfolio of ALMP on their own should be considered as activation. Instead, a mid-range or ‘root concept’ emphasises the linkage between both policy fields. This notion of activation is fairly close to the understanding of activation as perceived in the early academic literature on Nordic countries (e.g. Rosdahl and Weise, 2001) which not only have a long tradition of active labour market policy, but were also where the academic discussion on activation began.

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4.2 ORIGINS The origin of activation as a topic in academic social and labour market policy research can be traced back to the second half of the 1990s. Of course, employment integration and elements of activation (intensified job search obligations, more employment-focused benefit entitlement) had been applied for decades before, especially in Nordic countries (Johansson, 2001), but also elsewhere in Europe (Barbier, 2014). However, Danish policy development in particular can be regarded as having triggered an international debate on activation and its rapid expansion, both in terms of academic discourse, as well as EU-level policy interest (Casey, 2004). Briefly, by international standards, unemployment in Denmark during the 1980s was not only high and rising (to 12% by 1993) but increasingly deemed as having become ‘structural’ in nature, i.e. no longer affected by the business cycle, with any attempt of reducing it faced with the risk of accelerating inflation. Against this background, the newly elected centre-left government introduced a series of labour market policy changes in the early 1990s, aimed not least at addressing the problem of skill deterioration amongst the long-term unemployed (for details, see PLS Consult and Jensen, 1997; Goul Andersen, 2002). These policies signified a change in direction. Prior to 1994 the Danish unemployment insurance system was regarded as close to a form of guaranteed income (Goul Andersen, 1996, 2002). A key policy had been the objective of keeping those out of work within its remit. Ever since the late 1970s this had meant that claimants of unemployment insurance coming to the end of their ‘benefit period’ (of 2.5 years) had a right to a subsidised ‘job offer’ paid at regular wages and of sufficient duration to requalify for unemployment benefit. In the mid-1980s, a second job (or, alternatively, education) offer was introduced, which effectively provided a maximum benefit entitlement period of approximately nine years. This practice came to an end in the early 1990s, when the term ‘job offer’ was replaced with ‘activation’ and ‘social rights’ became ‘rights and duties’ (Goul Andersen, 2002). Concretely, the benefit requalifying rule was abolished, the total duration of benefit entitlement was successively curtailed, individual action plans for labour market integration introduced, and the possibility of earlier activation (i.e. transfer to training or education programmes) made possible, with different rules and obligations applying to different groups of unemployed (e.g. younger claimants and those on social assistance). Together with other employment policies implemented at the time, activation policies were portrayed by some as having contributed to a significant decline of unemployment and growth of employment in Denmark during the second half of the 1990s. While others have questioned whether this outcome had anything to do with activation policies (Albrekt Larsen, 2002; PLS Consult and Jensen, 1997), the European Commission at the time was eager to incorporate activation as one element in its response to the high rates of unemployment faced by many member states in the early 1990s. Just as in Denmark, the European Commission portrayed ‘structural unemployment’ as a key problem (Casey, 2004) and its subsequent reduction as a sign of success of its employment policy recommendations, as formulated most notably in the context of the European Employment Strategy in 1997. For example, the European Commission set ‘activation targets’, i.e. a certain percentage of unemployed persons in each member state should be enrolled in education or training (Casey, 2004). Within academia, the change in direction in Danish labour market policy in the early 1990s triggered a debate as to how to interpret activation. Halversen and Jensen (2004) refer to parallel discourses at the time. A political debate centred on combatting unemployment, with

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connections to a ‘reintegration’ discourse, revolving around market exclusion of people out of work, not only for reasons of lack of skills but social and personal problems. From this perspective, activation was portrayed as potentially preventing social marginalisation and labour market exclusion. However, more typical within academic social policy debates was a perspective which saw activation as a ‘problematic break’ with universal rights, leading to a possible shift towards workfare (Siim, 1998). Indeed, for some groups (e.g. younger unemployed, social assistance claimants), activation was seen as a form of workfare (e.g. Lødemel and Trickey, 2001). More generally, policies implemented since the early 1990s, both in Denmark and beyond, were interpreted as signifying a redefinition of social citizenship (Goul Andersen and Guillemard, 2005; Clarke, 2005; Serrano Pascual and Magnusson, 2007; Evers and Guillemard, 2012). Despite some (often implicit) acknowledgement that participation may actually help some job seekers, from a sociological perspective, the emphasis on obligations and conditional benefit entitlement was considered as curtailing individual autonomy (Bothfeld and Betzelt, 2011), shifting risks from the collective to the individual (Eversberg, 2016), or simply a manifestation of neo-liberalism (Whitworth, 2016). From the perspective of the welfare state, activation was identified as a turn from hitherto expanding social rights towards a new state–citizen relationship (LudwigMayerhofer et  al., 2014) based on maintaining employability as the principal duty on the part of working-age people.

4.3 RESEARCHING ACTIVATION – DIVERSE OBJECTIVES The diversity of meanings associated with the term activation in the academic literature is striking and in part perhaps attributable to the range of different analytical objectives pursued by those who have published on the topic. Indeed, the critical assessment and normative interpretation of activation at macro-societal level referred to above has constituted merely one of several aims for research and publication on the topic. Two other early objectives were the identification of national variants of activation, and also the discussion of policy origins, trajectories and, to a lesser extent, political determination of the introduction and expansion of activation policies. Early research concentrated on categorising national variants of activation and, at times, suggesting typologies. An example is Torfing’s (1999) depiction of the Danish activation policy as an ‘offensive’ strategy of labour market policy, which involved a right and a duty to education, training, skills and qualifications, which should thus be regarded as different from American or British neo-liberal workfare, aimed at driving down wages. Subsequent classifications emphasised contrasting orientations and approaches of activation, generating dichotomous labels such as ‘liberal’ versus ‘universalistic’ (Barbier and Ludwig-Mayerhofer, 2004), ‘work first’ versus ‘human capital oriented’ (Larsen, 2005), or ‘narrow’ versus ‘wide’ (Lind and Møller, 2006). While categorising activation policies has remained an academic preoccupation, subsequent contributions progressed in two ways. On the one hand there was a growing recognition that both ‘enabling’ and ‘demanding’ forms of activation may be found within the same country (e.g. Eichhorst et al., 2008; Nybom, 2013), or even the same policy programme (e.g. van Berkel et al., 2018). On the other, recent research has either incorporated activation into broader typologies of welfare states (Danforth, 2014; Marchal and Mechelen, 2017), or – alternatively – offered typologies which are more fine-grained (e.g. Aurich, 2011)

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or focus on particular dimensions of activation policy, such as sanctions (Knotz, 2019) or incentives (Dinan, 2019). Another early strand of research examined the origins and development of national activation policies. Initially, some edited collections discussed policy trajectories in a range of countries (e.g. Lødemel and Trickey, 2000; Gilbert and van Voorhis, 2001), soon to be followed by comparisons of two or more cases in more depth (e.g. van Oorschot and Abrahamson, 2003; Barbier and Ludwig-Mayerhofer, 2004; Serrano Pascual, 2004). Denmark (e.g. Jørgensen, 2009), the Nordic countries more generally (e.g. Johansson and Hvinden, 2007), but also the Netherlands (e.g. van Oorschot, 2002), featured prominently. Tracing national policy developments has remained a distinctive part of the literature (e.g. Bifulco et al., 2008; Lødemel and Moreira, 2014), at times placing activation trajectories within wider transformations of national labour market policy (e.g. Clasen and Clegg, 2011). Exploring reasons for the introduction and expansion activation policies is another research objective, albeit one which is less prominent than it once was. Analytical interests have focused on national policy developments on the one hand (e.g. Lind and Møller, 2006) and the adoption of activation policy by supra-national organisations, particularly the EU (e.g. Casey, 2004; Weishaupt, 2011), on the other. Perhaps more common however have been comparative analyses, with authors aiming to identify causes for cross-national variation in the timing and pace of policy implementation, emphasising the impact of factors such as unemployment and economic pressures (Lindsay and Mailand, 2004), institutional frameworks (Clasen and Clegg, 2003), prevailing ideologies (Weishaupt, 2011), class politics (Wiggan, 2015) or public opinion (Vis, 2009). Rather than examining causes for policy formation, a separate body of research has aimed to assess whether activation policies actually matter, and if so, in which ways. Two variants may be distinguished: evaluations with a focus on labour market integration as key criterion, and those which go beyond employment. Some of the former have adopted a macro-level perspective, i.e. establishing the (net) impact of activation policy on the labour market (e.g. van Oorschot and Abrahamson, 2003; Larsen, 2005). More recent contributions have assessed the impact on employment for particular groups, such as social assistance claimants (Nybom, 2013), young people (Grimmer and Hobbins, 2014) or families and/or lone parents (Millar and Crosse, 2018). Other evaluations have assessed the impact of a range of schemes at regional level (Trivellato et al., 2017; Colleto and Guglielmy, 2018) or focused on the effects of a single programme on particular target groups (Ohls, 2017). The boundary between some of these studies and evaluations of ALMP schemes is somewhat blurred. A second strand of evaluative literature has examined the influence of activation policy on participants beyond labour market integration. Disregarding early exceptions (e.g. Strandh, 2001), these studies became more prominent only after the first wave of activation literature. Examples include research on particular groups, such as people with disabilities (Etherington and Ingold, 2012) or the long-term sick (Hetzler, 2009), with a focus not so much on employment entry but on mental health (Williams, 2021) or well-being (Carter and Whitworth, 2017). More recently, there have been analyses of activation programmes both from a participant perspective (e.g. Giradi et al., 2019), and from that of those tasked with implementing policy, such as caseworkers (e.g. Senghaas, 2020). Yet another body of publications illustrates how the topic of activation has stimulated research beyond a narrow focus on policy determination and impact. Activation is about connecting benefit provision with participation in labour market schemes, and thus about joining

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cash support with employment services. In this context, certain aspects, such as the implementation of ‘individual action plans’ for job seekers, have expanded the room for discretionary decisions by public employment staff, or required more coordination between agencies at local level, e.g. between labour market and other support services. More generally, activation has been accompanied by trends such as decentralisation and, in some cases, marketisation of employment and social services. In other words, activation has provided a fertile context for research on aspects such as the governance of employment support (van Berkel and Borghi, 2007; Minas et al., 2018), the coordination of benefit delivery and labour market measures (Heidenreich and Rice, 2016), decentralisation of service provision (van Berkel et al., 2012) or the impact of street-level organisations (Brodkin and Marston, 2013). Under an even broader umbrella of activation, research has focused on marketisation (Benish, 2014), outsourcing (Finn, 2010) and service integration (Champion and Bonoli, 2011). All of the above studies have been portrayed as research on (aspects of) activation, although their actual analytical focus may have been elsewhere. In other words, it could be argued that activation has essentially served as a policy field for illustrative purposes. In principle, policies other than activation may have been available, but potentially less instructive or illuminating than activation. This then separates the studies above from yet another body of publications in which activation has functioned primarily as a backdrop or context for analyses on, for example, public attitudes towards unemployed people (e.g. Taylor-Gooby, 2001), the rights and obligations imposed on benefit claimants (Achterberg et al., 2014; Laenen and Meuleman, 2019) or the notion of ‘deservingness’ (Senghaas, 2020). In sum, activation can be said to have served as an ‘umbrella term’ (Mair, 2008) for a wide range of research, in pursuit of rather separate analytical objectives. The academic literature on activation thus displays both conceptual ambiguity, as discussed earlier, and a diversity of research aims. This does not imply that the latter explains the former. There is inconsistency within the whole body of literature on the subject, as well as within individual strands in pursuit of the same objective.

CONCLUSION Research on activation has not diminished over the years. Judging by the number of papers published annually in relevant peer-reviewed academic journals, the topic continues to attract a considerable level of interest, is thematically diverse and driven by a multitude of research aims. This does not mean that there has been no change in salient analytical interests. As discussed, some trends are clearly identifiable. For example, once a preoccupation, developing typologies of national activation regimes has become rare, or given way to more fine-grained categorisations of particular features of activation policy. Similarly, identifying reasons for cross-national policy variation is much less prevalent now than it once was, possibly reflecting a more general trend of waning interest in analysing causes for policy trajectories in social policy research. In contrast, there seems to be growing concern about the effects of activation, both in terms of labour market participation and in a wider sense of personal well-being or social inclusion. In the introduction we asked whether trends in research, and the continuing analytical interest in the topic, justify a separate entry on activation in handbooks on labour market policy. The answer, we suggest, depends on the way in which activation is being conceptualised.

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It is worth reiterating here that much of the social policy literature on activation lacks an explicit engagement with the meaning of the term. And yet, the academic arena requires widely shared concepts in order to allow effective intellectual communication and analytical progress (Mair, 2008). By contrast, within policy worlds a broader notion of activation may actually be preferable (Jenson, 2015). The policy discourse at EU level, for example, displays a high level of conceptual ambiguity, possibly linked to a reformulation of policy objectives over time, prompting diversifications of the term (e.g. ‘social activation’, ‘sustainable activation’). By contrast, while acknowledging that it is a rather different type of supra-national organisation, the OECD has consistently used a concept of activation which has centred on the connection between policies affecting working-age benefit recipients and their participation in programmes aimed at promoting employment (Employment Outlook, 2005 and subsequent years). Elsewhere we have argued in favour of the use of a similar mid-range concept also in academic research (Clasen and Mascaró, 2022). Of course, one consequence of adopting a more tightly defined meaning of the term would be a considerably smaller body of relevant literature. Moreover, it would be smaller yet if all of those articles, monographs and edited collections were excluded which, as discussed above, merely use activation as context, illustration or backdrop for analyses in which the actual focus is elsewhere. Nevertheless, we would argue that the use of a more demarcated concept would make activation more likely to feature in future handbooks on labour market policy.

REFERENCES Achterberg, P., van der Veen, R. and Raven, J. (2014) The ideological roots of the support for welfare state reform: Support for distributive and commodifying reform in The Netherlands. International Journal of Social Welfare 23(2): 215–226. Albrekt Larsen, C. (2002) Policy paradigms and cross-national policy (mis)learning from the Danish employment miracle. Journal of European Public Policy 9(5): 715–735. Aurich, P. (2011) Activating the unemployed – Directions and divisions in Europe. European Journal of Social Security 13(3): 294–316. Barbier, J.C. (2005) Citizenship and the activation of social protection: A comparative approach. In: J. Goul Andersen and A.M. Guillemard (eds.) The Changing Face of Welfare: Consequences and Outcomes from a Citizenship Perspective. Bristol: Policy Press, pp. 113–134. Barbier, J.C. (2014) Languages of ‘social policy’ at ‘the EU level’. In: D. Béland and K. Petersen (eds.) Analysing Social Policy Concepts and Language: Comparative and Transnational Perspectives. Bristol: Policy Press, pp. 59–79. Barbier, J.C. and Ludwig-Mayerhofer, W. (2004) Introduction: The many worlds of activation. European Societies 6(4): 423–436. Benish, A. (2014) The public accountability of privatized activation – The case of Israel. Social Policy and Administration 48(2): 262–277. Bifulco, L., Bricocoli, M. and Monteleone, R. (2008) Activation and local welfare in Italy: Trends and issues. Social Policy and Administration 42(2): 143–159. Bonoli, G. (2013) The Origins of Active Social Policy: Labour Market and Childcare Policies in a Comparative Perspective. Oxford: Oxford University Press. Bothfeld, S. and Betzelt, S. (2011) Activation and labour market reforms in Europe: Challenges to social citizenship—Introduction. In: S. Betzelt and S. Bothfeld (eds.) Activation and Labour Market Reforms in Europe: Challenges to Social Citizenship. London: Palgrave Macmillan, pp. 3–14. Breidahl, K.N. and Clement, S.L. (2010) Does active labour market policy have an impact on social marginalization? Social Policy and Administration 44(7): 845–864.

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Brodkin, E.Z. and Marston, G. (eds.) (2013) Work and the Welfare State: Street-Level Organizations and Workfare Politics. Georgetown, WA: Georgetown University Press. Carter, E. and Whitworth, A. (2017) Work activation regimes and well‐being of unemployed people: Rhetoric, risk and reality of quasi‐marketization in the UK Work Programme. Social Policy and Administration 51(5): 796–816. Casey, B. (2004) The OECD jobs strategy and the European employment strategy: Two views of the labour market and the welfare state. European Journal of Industrial Relations 10(3): 329–352. Champion, C. and Bonoli, G. (2011) Institutional fragmentation and coordination initiatives in western European welfare states. Journal of European Social Policy 21(4): 323–334. Clarke, J. (2005) New labour’s citizens: Activated, empowered, responsibilized, abandoned? Critical Social Policy 25(4): 447–463. Clasen, J. and Clegg, D. (2003) Unemployment protection and labour market reform in France and Great Britain in the 1990s: Solidarity versus activation? Journal of Social Policy 32(3): 361–381. Clasen, J. and Clegg, D. (eds.) (2011) Regulating the Risk of Unemployment: National Adaptations to Post-Industrial Labour Markets in Europe. Oxford: Oxford University Press. Clasen, J. and Mascaró, C. (2022) Activation – A conceptual review. Journal of European Social Policy 32/4: 484–494. Coletto, D. and Guglielmi, S. (2018) Activation policies in action: Unemployed people and public officers in face of the economic crisis. International Journal of Sociology and Social Policy 38(3–4): 329–344. Danforth, B. (2014) Worlds of welfare in time: A historical reassessment of the three-world typology. Journal of European Social Policy 24(2): 164–182. Dinan, S. (2019) A typology of activation incentives. Social Policy and Administration 53(1): 1–15. Eichhorst, W., Kaufmann, O. and Konle-Seidl, R. (eds.) (2008) Bringing the Jobless into Work? Experiences with Activation Schemes in Europe and the US. Springer Science and Business Media. Etherington, D. and Ingold, J. (2012) Welfare to work and the inclusive labour market: A comparative study of activation policies for disability and long-term sickness benefit claimants in the UK and Denmark. Journal of European Social Policy 22(1): 30–44. Evers, A. and Guillemard, A.M. (eds.) (2012) Social Policy and Citizenship: The Changing Landscape. Oxford: Oxford University Press. Eversberg, D. (2016) Beyond individualisation: The German ‘activation toolbox’. Critical Social Policy 36(2): 167–186. Finn, D. (2010) Outsourcing employment programmes: Contract design and differential prices. European Journal of Social Security 12(4): 289–302. Gilbert, N. and Van Voorhis, R.A. (eds.) (2001) Activating the Unemployed: A Comparative Appraisal of Work-Oriented Policies (Vol. 3). Piscataway, NJ: Transaction Publishers. Girardi, S., Pulignano, V. and Maas, R. (2019) Activated and included? The social inclusion of social assistance beneficiaries engaged in ‘public works’. International Journal of Sociology and Social Policy 39(9/10): 738–751. Goul Andersen, J. (1996) Marginalization, citizenship and the economy: The capacities of the universalist welfare state in Denmark. In: E.O. Eriksen and J. Loftager (eds.) The Rationality of the Welfare State. Oslo: Scandinavian University Press, pp. 155–202. Goul Andersen, J. (2002) Work and citizenship: Unemployment and unemployment policies in Denmark, 1980–2000. In: J. Goul Andersen and P. Jensen (eds.) Changing Labour Markets, Welfare Policies and Citizenship. Bristol: Policy Press, pp. 59–84. Goul Andersen, J. and Guillemard, A.M. (eds.) (2005) The Changing Face of Welfare: Consequences and Outcomes From a Citizenship Perspective. Bristol: Policy Press. Grimmer, B. and Hobbins, J. (2014) Active entrepreneurs and blue-collar workers: Cultural understandings mirrored in European youth unemployment policies. International Journal of Sociology and Social Policy 34(7/8): 559–576. Halversen, R. and Jensen, P. (2004) Activation in Scandinavian welfare policy: Denmark and Norway in a comparative perspective. European Societies 6(4): 461–483. Heidenreich, M. and Rice, D. (2016) Integrating Social and Employment Policies in Europe: Active Inclusion and Challenges for Local Welfare Governance. Cheltenham: Edward Elgar.

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Hetzler, A. (2009) Labour market activation policies for the long-term ill – A sick idea? European Journal of Social Security 11(4): 369–401. Jenson, J. (2015) Review of: D. Béland and K. Petersen (Eds.), Analysing Social Policy Concepts and Language: Comparative and Transnational Perspectives. Bristol: Policy Press. Journal of Social Policy 44(4): 830–833. Johansson, H. (2001) Activation policies in the Nordic countries: Social democratic universalism under pressure. Journal of European Area Studies 9(1): 63–77. Johansson, H. and Hvinden, B. (2007) Re‐activating the Nordic welfare states: Do we find a distinct universalistic model? International Journal of Sociology and Social Policy 27(7/8): 334–346. Jørgensen, H. (2009) From a beautiful swan to an ugly duckling: The renewal of Danish activation policy since 2003. European Journal of Social Security 11(4): 337–367. Knijn, T., Martin, C. and Millar, J. (2007) Activation as a common framework for social policies towards lone parents. Social Policy and Administration 41(6): 638–652. Knotz, C. (2019) Why countries ‘get tough on the work-shy’: The role of adverse economic conditions. Journal of Social Policy 48(3): 615–634. Kowalewska, H. (2017) Beyond the ‘train-first’/‘work-first’ dichotomy: How welfare states help or hinder maternal employment. Journal of European Social Policy 27(1): 3–24. Laenen, T. and Meuleman, B. (2019) Public support for the social rights and social obligations of the unemployed: Two sides of the same coin? International Journal of Social Welfare 28(4): 454–467. Larsen, J.E. (2005) The active society and activation policy: Ideologies, contexts and effects. In: J. Goul Andersen and A.M. Guillemard (eds.) The Changing Face of Welfare: Consequences and Outcomes From a Citizenship Perspective. Bristol: Policy Press, pp. 135–150. Lind, J. and Møller, I.H. (2006) Activation for what purpose? Lessons from Denmark. International Journal of Sociology and Social Policy 26(1/2): 5–19. Lindsay, C. and Mailand, M. (2004) Different routes, common directions? Activation policies for young people in Denmark and the UK. International Journal of Social Welfare 13(3): 195–207. Lødemel, I. and Moreira, A. (eds.) (2014) Activation or Workfare? Governance and the Neo-Liberal Convergence. Oxford: Oxford University Press. Lødemel, I. and Trickey, H. (eds.) (2001) ‘An Offer You Can’t Refuse’: Workfare in International Perspective. Bristol: Policy Press. Ludwig‐Mayerhofer, W., Behrend, O. and Sondermann, A. (2014) Activation, public employment services and their clients: The role of social class in a continental welfare state. Social Policy and Administration 48(5): 594–612. Mair, P. (2008) Concepts and concept formation. In: D. Della Porta and M. Keating (eds.) Approaches and Methodologies in the Social Sciences. Cambridge: Cambridge University Press, pp. 177–197. Marchal, S. and Van Mechelen, N. (2017) A new kid in town? Active inclusion elements in European minimum income schemes. Social Policy and Administration 51(1): 171–194. Maron, A. and Helman, S. (2017) Unravelling the politics of activation reforms: Exploring the unusual Israeli trajectory. Social Policy and Administration 51(3): 405–423. Millar, M. and Crosse, R. (2018) Lone parent activation in Ireland: Putting the cart before the horses? Social Policy and Administration 52(1): 111–129. Minas, R., Jakobsen, V., Kauppinen, T., Korpi, T. and Lorentzen, T. (2018) The governance of poverty: Welfare reform, activation policies, and social assistance benefits and caseloads in Nordic countries. Journal of European Social Policy 28(5): 487–500. Nybom, J. (2013) Activation and ‘coercion’ among Swedish social assistance claimants with different work barriers and socio‐demographic characteristics: What is the logic? International Journal of Social Welfare 22(1): 45–57. Ohls, C. (2017) A qualitative study exploring matters of ill-being and well-being in Norwegian activation policy. Social Policy and Society 16(4): 593–606. PLS Consult and Jensen, P. (1997) Labour Market Studies – Denmark, European Commission, Employment and Social Affairs. Luxembourg: Office for Official Publications of the European Communities. Rosdahl, A. and Weise, H. (2001) When all must be active–workfare in Denmark. In: I. Lødemel and H. Trickey (eds.) ‘An Offer You Can’t Refuse’: Workfare in International Perspective. Bristol: Policy Press, pp. 159–180.

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Sartori, G. (1970) Concept misformation in comparative politics. American Political Science Review 64(4): 1033–1053. Sartori, G. (1984) Guidelines for concept analysis. In: G. Sartori (ed.) Social Science Concepts: A Systematic Analysis. Beverly Hills, CA: Beverly Hills Publishing, pp. 15–85. Schmid, G., O’Reilly, J. and Schömann, K. (1996) International Handbook of Labour Market Policy and Evaluation. Cheltenham: Edward Elgar. Senghaas, M. (2020) Street-level judgements about welfare deservingness: How Jobcentre advisors decide about the individual mix of ‘support’ and ‘demand’ in the delivery of activation policies. Social Policy and Society, pp. 1–15. Serrano Pascual, A. (ed.) (2004) Are Activation Policies Converging in Europe? The European Employment Strategy for Young People. Brussels: ETUI. Serrano Pascual, A. and Magnusson, L. (eds.) (2007) Reshaping Welfare States and Activation Regimes in Europe. Brussels: Peter Lang. Siim, B. (1998) Vocabularies of citizenship and gender: Denmark. Critical Social Policy 18(56): 375–396. Strandh, M. (2001) State intervention and mental well-being among the unemployed. Journal of Social Policy 30(1): 57–80. Tang, K.L., and Cheung, C.K. (2007) Programme effectiveness in activating welfare recipients to work: The case of Hong Kong. Social Policy & Administration 41(7): 747–767. Taylor-Gooby, P. (2001) Sustaining state welfare in hard times: Who will foot the bill? Journal of European Social Policy 11(2): 133–147. Torfing, J. (1999) Workfare with welfare: Recent reforms of the Danish welfare state. Journal of European Social Policy 9(1): 5–28. Trivellato, B., Bassoli, M. and Catalano, S.L. (2017) Can quasi‐market and multi‐level governance co‐exist? Insights from the case of Lombardy’s employment services system. Social Policy and Administration 51(5): 697–718. Van Aerschot, P. (2003) Some aspects of the application of legal safeguards to active social policy in Denmark, Finland and Sweden. European Journal of Social Security 5(3): 230–248. Van Berkel, R. and Borghi, V. (2007) New modes of governance in activation policies. International Journal of Sociology and Social Policy 27(9/10): 413–424. Van Berkel, R., de Graaf, W. and Sirovátka, T. (2012) Governance of the activation policies in Europe: Introduction. International Journal of Sociology and Social Policy 32(5/6): 260–272. Van Berkel, R., Larsen, F. and Caswell, D. (2018) Introduction: Frontline delivery of welfare‐to‐work in different European contexts. International Social Security Review 71(4): 3–11. Van Oorschot, W. (2002) Miracle or nightmare? A critical review of Dutch activation policies and their outcomes. Journal of Social Policy 31(3): 399–420. Van Oorschot, W. and Abrahamson, P. (2003) The Dutch and Danish miracles revisited: A critical discussion of activation policies in two small welfare states. Social Policy and Administration 37(3): 288–304. Vis, B. (2009) The importance of socio-economic and political losses and gains in welfare state reform. Journal of European Social Policy 19(5): 395–407. Weishaupt, J.T. (2011) From the Manpower Revolution to the Activation Paradigm: Explaining Institutional Continuity and Change in an Integrating Europe. Amsterdam: Amsterdam University Press. Weishaupt, J.T. (2013) Origin and genesis of activation policies in ‘old’ Europe: A balanced approach? In: I. Marx and K. Nelson (eds.) Minimum Income Protection in Flux. Palgrave, pp. 190–216. Whitworth, A. (2016) Neoliberal paternalism and paradoxical subjects: Confusion and contradiction in UK activation policy. Critical Social Policy 36(3): 412–431. Wiggan, J. (2015) Reading active labour market policy politically: An autonomist analysis of Britain’s Work Programme and Mandatory Work Activity. Critical Social Policy 35(3): 369–392. Williams, E. (2021) Unemployment, sanctions and mental health: The relationship between benefit sanctions and antidepressant prescribing. Journal of Social Policy 50(1): 1–20. Wroblewski, A. (2004) More activation—More chances for the unemployed? Changes in Austria’s active labour market policy after accessing the European Union. European Journal of Social Security 6(1): 60–82.

5. The academic and policy roots of flexicurity and its pathways Sonja Bekker and Janine Leschke

INTRODUCTION Flexicurity denotes a combination of different forms of labour market flexibility and security that transcends the simple trade-off between flexibility and security as exclusive interest of the employer and, in turn, the employee (European Commission, 2006). Inspired by Danish and Dutch labour market models that combine both elements, though in distinctive ways (Bekker and Mailand, 2019), the flexicurity concept was developed in the mid-2000s in parallel and close exchange by academics and policy-makers at the European Union (EU) level, where it was turned into a key policy concept (Mailand, 2010). Although the economic and financial crisis and the subsequent emphasis on austerity measures limited options for the further advancement of the concept, it never fully disappeared from the EU agenda. The 2017 proclamation of the European Pillar of Social Rights, for example, includes principles on secure and adaptable employment and thus emphasizes core elements of flexicurity (European Parliament, the Council and the Commission, 2017). These elements include the flexibility for employers to adapt swiftly to changes in the economic context, the prevention of abuse of atypical contracts and access to social protection and training independent of the employment relationship. This chapter provides an account of the academic and policy roots of flexicurity drawing mainly on sociological and political science literature and focusing on Europe. It outlines the original ideas on the concept and how it has been translated into the EU policy sphere. The focus on EU policy developments around flexicurity is important as the academic debates and the policy application of the concept were strongly intertwined. The chapter also provides insights into critical reviews of the concept including its ambiguity and proneness to political capture, neglect of collective bargaining and lack of focus on more vulnerable groups. When discussing the academic conceptualization of flexicurity, we emphasize the link with the theory of transitional labour markets (TLM) as both have been developed in parallel, have inspired each other, and may thus be seen as complementary (Wilthagen, 1998). Flexicurity has also taken inspiration in academic debates around labour market segmentation (e.g. Rubery, 1978) and the flexible firm model as coined by Atkinson (1984). It also has some commonalities with labour market dualization and insider–outsider accounts addressed in other chapters in this handbook. The chapter proceeds as follows. In Section 5.1 we discuss academic approaches to flexicurity, including its origins with reference to the Danish and Dutch case. We also show the link between flexicurity and the transitional labour markets approach. Section 5.2 discusses the political origins of flexicurity and how they intertwined with academic approaches. Section 5.3 reflects on the critics towards the academic and EU-level flexicurity discourse before we conclude with some thoughts about future pathways. 54

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5.1 ACADEMIC APPROACHES TO FLEXICURITY The origins of flexicurity can be traced back to the early 1990s and the concept advanced steadily both through academic and EU-policy-level discussions during the 2000s (Barbier, 2015). In the 1990s, flexibility for workers and companies was seen as a way to deal with great challenges such as globalization and technological innovation, and the perceived need to react more rapidly to market demands. From a workers’ perspective, the increased focus on flexibility could be perceived as a threat to both job and social security (for an organizational perspective drawing also on labour market segmentation approaches see Marchington, 2004). Against this background, the notion of flexicurity was able to meet the double demand of rendering the labour market and work organization more flexible, while at the same time emphasizing different forms of security to (vulnerable) workers and thereby preserving social cohesion in societies (Wilthagen and Tros, 2004). The development of flexicurity as a European policy concept went hand in hand with the development of an academic concept, notably by a group of European scholars (e.g. see Jepsen and Klammer, 2004; Jørgensen and Madsen, 2007; Viebrock and Clasen, 2009). 5.1.1 Defining Flexicurity and Its Elements The academic and policy debates were closely connected and intertwined, with academics strongly contributing to policy debates just as policy examples fed ideas back into academic conceptualizations. The following academic definition of flexicurity (Wilthagen and Tros, 2004: 169) gained a lot of traction: flexicurity is a policy strategy that attempts, synchronically and in a deliberate way, to enhance the flexibility of labour markets, the work organisation and labour relations on the one hand, and to enhance security – employment security and social security – notably for weaker groups in and outside the labour market on the other hand.

This definition was first put forward by Wilthagen and Rogowski (2002) in a contribution to an edited volume on Transitional Labour Markets which highlights the interconnection between flexicurity and the transitional labour markets approach. The above definition contains some key elements including the ambitions of ‘synchronization’, ‘coordination’ and serving ‘weaker groups’. These are also the domains which sparked criticism of the concept (see Section 5.3). Flexicurity attracted attention beyond Europe including in the US (e.g. Schulze-Cleven, 2015) and Australia (e.g. Belchamber, 2010). Wilthagen and Tros (2004) created a famous matrix with forms of flexibility on the vertical and forms of security on the horizontal axis. This was meant to serve as a heuristic tool to empirically trace flexicurity policies and interconnections between different types of flexibility and security (for applications of the matrix see for example chapters in Jørgensen and Madsen, 2007; Chung, 2012). For the flexibility components, this matrix draws in parts from Atkinson’s flexible firm model (1984). Taking inspiration from Wilthagen and Tros (2004) and Keller and Seifert (2004) and combining flexicurity definitions with Schmid and Gazier’s (2002) vision of transitional labour markets, Leschke et al. (2007) propose a dynamic view of flexicurity and point to trade-offs, virtuous and vicious relationships between flexibility and security.

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Taking this dynamic view, the four elements of flexibility are defined as follows: 1. External numerical flexibility refers to the ability of employers to hire and fire, or to use temporary layoff, fixed-term contracts, temp-agency work, casual work or marginal employment. 2. Internal numerical flexibility deals with flexibility in working time, including overtime, short-time work, part-time work. 3. Internal functional flexibility means that employees have multiple skills, or organizations have a flexible work organization, as well as on-the-job learning and variable pay. 4. External functional flexibility may be achieved through off-the-job learning, out-sourcing, wage flexibility, payrolling practices. Such forms of flexibility may be supported or complemented by different forms of security: 1. Job security is the certainty of keeping a specific job with a specific employer. 2. Employment or employability security refers to the certainty of remaining in work, albeit not necessarily with the same employer. 3. Income security is the protection of income in case paid work ceases, for instance, through dismissal, or chronic illness, disability, accidents at work or retirement. 4. Option security is the assurance of having various employment options that consider work-life balance; for instance the possibility to combine paid work with unpaid work, the entitlement to continuous education or training, or the right to intermediate working time reduction. Different combinations of flexibility and security may result in trade-offs where more flexibility is traded for less security or vice versa. On the other hand, flexibility and security may also be complementary and thus mutually supportive (virtuous relationship) or mutually deteriorative (vicious relationship) (Figure 5.1, taken from Leschke et al., 2007). A virtuous relationship can come about by providing reasonably high job security that is likely to render employees more loyal to the employer and encouraging both parties to invest in firm-specific human capital, which increases internal functional flexibility and leads to a high-skilled labour force, an important precondition for firm innovation. Conversely, a vicious circle can

Source:  Leschke et al. (2007), p. 343.

Figure 5.1  Combinations of flexibility and security

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arise when external numerical flexibility is increased by way of making it easier to use certain types of non-standard contracts in a context where flexible workers are less likely than standard workers to have access to income security (see also Spasova et al., 2021). Given the different combinations of flexibility and security, four strategies emerge located on a continuum between low and high flexibility and, respectively, security (Figure 5.2): negotiated flexibility, negotiated security, protected flexibility and minimum standards. To provide some examples, ‘protected flexibility’ would foster a virtuous circle between flexibility and security and could be achieved by an exchange of job security for high income and employability security which encourages job mobility as evident in the example of the Danish Golden Triangle (Leschke et  al., 2007). Vicious circle relationships could be overcome by way of minimum standards such as statutory or collectively agreed minimum wages (for additional examples see Leschke et al., 2007). The fears and at times evidence that flexicurity would lead to vicious rather than virtuous cycles were predominant in the critique of the concept, both in academic and societal discussions. Additionally, some authors have emphasized the importance of the life-course perspective inherent in the flexicurity concept. In this regard Klammer (2004) suggests the following focal points for labour law and social security: support for continuity in working life (avoiding involuntary discontinuities), enabling desired flexibility and discontinuity, support for transitions, the reallocation of cash benefits and other forms of financial support. This research agenda is at least partly reflected in option securities as outlined above and also has strong commonalities with the transitional labour markets approach, which we discuss in the next section. 5.1.2 Transitional Labour Markets Approach Protected flexibility is a cornerstone of transitional labour markets, a theoretical framework coined by Schmid (1998). TLM provides normative and analytical directions for securing and empowering individuals who make labour market transitions across the life-course. Such transitions can also be coined risky life events and they encompass school-to-work transitions, transitions to and from unemployment/inactivity, transitions between different forms of employment, care and household-related transitions and transitions to retirement. Schmid and Gazier (2002) argue that the increasing variability of employment relationships requires

Source:   Leschke et al. (2007), p. 343.

Figure 5.2  Strategies for managing the balance between flexibility and security

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more diverse and adaptable institutions supporting workers in their transitions. A prominent idea of TLM is to extend the principles of social insurance beyond unemployment, covering volatile income risks connected with other critical events over the life course (Schmid, 1998). The underlying idea is that securing transitions through social risk management (Schmid, 2006) increases the resilience of employees and economies, as it may enable people to move to new and – potentially – better jobs. Fair risk-sharing and an enhanced employability concept which provides empowerment and active securities by way of including notions of job quality are central to TLM. Fair risk-sharing between employees, employers and the state can come about through negotiated flexibility and security (Schmid, 2015). The enhanced employability concept comprises sustainable employability (prevent, mitigate, or cope with repeated disruption of employment careers among others), functioning employability (targeting individual life plans and allowing for transitions between various kinds of employment) and embedded employability (opportunity structures to allow decent employment over the life course) (Schmid, 2006). Embedded employability, in this reading, goes beyond employment or employability security which was often a focal point in critical reflections on the flexicurity concept, as it also carries traits of income and option or combination security. 5.1.3 The Danish and Dutch Flexicurity Models The Danish and Dutch flexicurity models informed both the academic and the policy debates, although they were and still are quite different models (Bekker and Mailand, 2019). The Danish flexicurity model is the outcome of a long evolution of historical compromises, involving the social partners, the development of the welfare state and, in particular, its activation component (Madsen, 2002). Danish flexicurity is often illustrated by the so-called Golden Triangle, first used in a 1999 report from the Ministry of Labour (Arbejdsministeriet, 1999). The three components of this triangle are a low level of employment protection making it relatively easy to hire and fire workers, and thus promoting comparatively high external numerical flexibility. At the same time, however, a generous social security system that provides citizens with income security and extensive active labour market programmes ensures employability security during periods of unemployment but also contains the obligation to find a new job (Madsen, 2004). The Danish flexicurity model thereby incorporates a vision of dynamic labour markets with people flowing in and out of employment; and, indeed, labour turnover is very high which can at least partly be attributed to flexicurity (Holck and Paunova, 2021). The Danish flexicurity model is not without challenges, which have been exacerbated by the weakening of its security component in recent reforms (see e.g. Hansen and Leschke, 2022; Rathgeb, 2019). The Dutch flexicurity model had a different objective than the Danish model, as it originally aimed to normalize non-standard work (Bovenberg et al., 2008). This aim was codified in the Flexibility and Security Act, which was implemented in 1999, and later on inspired EU-level flexicurity debates. A main feature of the Act was increasing the options of hiring workers on flexible employment contracts, while at the same time increasing the security of those workers – though very much indirectly – given the assumption of over-time transitions into standard employment. To illustrate this, the so-called ‘3*3*3’ rule allowed employers to hire workers on three consecutive temporary contracts adding up to a maximum period of three years to be followed by an open-ended employment contract. A new chain of temporary contracts with the same employer could only be started after a three-month break in

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employment. The stepping-stone or upward transition idea (indirect security component) was only partially successful given examples of both stepping-stones and traps (Bekker and Pop, 2020). In response, the Flexibility and Security Act has been updated several times so as to find a more suitable balance between flexibility and security (see e.g. Bekker and Mailand, 2019). Despite these rebalancing attempts, the Netherlands has the most flexible labour market in the EU, with a share of standard full-time and open-ended employment at about 35% in 2018 (Eurofound, 2020). A Dutch committee advising the government (Borstlap, 2020), as well as the Tripartite Social and Economic Council (SER, 2021), have recently recommended to limit the use of temporary or very flexible employment, arguing that the current ‘Dutch design’ of regulation of work not only is morally wrong, but also harms economic, social and societal development. Still, around the early 2000s, and in an EU context of dealing with challenges such as globalization and technological innovation, the Dutch model was a source of inspiration.

5.2 EU-LEVEL POLICY APPROACHES TO FLEXICURITY The academic and EU-level policy approaches are strongly intertwined given that several of the academics who worked on flexicurity and related concepts such as transitional labour markets were called in to provide expertise to the European Commission (Bekker, 2012; Mailand, 2006). Examples are the so-called Kok-report which marked a new start for the European Employment Strategy (European Commission, 2004), and the pathways to flexicurity (European Commission, 2007). At the EU level, origins and traces of flexicurity can be found both in legislative (hard law) and non-legislative (soft law) initiatives. EU policy deliberations in the early 1990s, addressing social policies and employment in light of Europe’s high and – according to the mainstream interpretation – structural unemployment, already carried the notion of flexicurity, though without using this specific term. The Green Paper on European Social Policy (published in 1993), for example, highlighted the need to develop labour standards and working conditions meeting ‘the new forms of flexibility that enterprises need, whilst at the same time giving necessary protection to workers’ (European Commission, 1993). In hindsight, the framework agreements on fixed-term work (1999) and part-time work (1997) could be labelled as the first ‘flexicurity deals’ at the EU level (Goetschy, 2009). These framework agreements were concluded by the European Social partners and subsequently converted into legally binding directives. Both directives contain elements of supporting and promoting forms of flexible work while providing a certain degree of protection to workers on these jobs (Falkner et al., 2005). Both specify certain groups that may be excluded from the application of the directive such as those working on a casual basis or workers undergoing initial vocational training. Soft law instruments, such as the European Employment Strategy (EES), established in 1997, also included initiatives seeking to balance flexibility and security. For instance, under its adaptability pillar the EES articulated the goal of achieving ‘the required balance between flexibility and security’ and thus made reference to flexicurity, though more indirectly at the start (Bekker et al., 2008). The European-level social partners were invited to take an active role in attaining this goal. They were asked to negotiate and implement agreements to modernize the organization of work, including flexible working arrangements, with the aim of making undertakings productive, competitive, and adaptable to industrial change, and achieving the required balance between flexibility and security.

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Balancing flexibility and security was emphasized more strongly when the Lisbon Strategy was created (2000), and particularly after its mid-term review which was inspired by the Kokreport ‘Jobs, jobs, jobs’ (European Commission, 2004). The Lisbon Strategy’s ambition was to make the EU into the world’s most competitive and dynamic knowledge-based economy, capable of sustainable economic growth with more and better jobs and greater social cohesion. The mid-term evaluation of the strategy explicitly addressed the dynamic interrelationship between flexibility and security and its different combinations (Mailand, 2006) and the revision of the EES resulted in guideline 21 promoting flexibility combined with employment security and reducing labour market segmentation, having due regard to the role of the social partners (European Council, 2005). It also introduced the notion of employment or employability security that pertains that ‘security does not just mean employment protection, but encompasses the capacity to remain and progress in work’ (European Commission, 2004). This idea was later mainstreamed in the European Commission’s reform agenda on flexicurity (Smith et al., 2019). From 2006 onwards the term ‘flexicurity’ was being explicitly used at the EU level. And in line with the academic debates, flexicurity was aiming to transcend the simple trade-off between flexibility and security, where the former is seen to be in the exclusive interest of the employer and the latter in the interest of the employee (European Commission, 2006). The agreement on common principles of flexicurity (European Commission, 2007) was the highest status the concept reached at the EU level (Mailand, 2010). Inspired by the ongoing academic debates on flexicurity and the Danish and Dutch policies, these principles explicitly highlighted the deliberate combination of: • • • •

Flexible and reliable contractual arrangements. Comprehensive lifelong learning. Effective active labour market policies. Modern social protection systems.

Flexicurity, according to these principles, was to promote good work, inclusive labour markets, overcoming segmentation as well as supporting gender equality all within financially sustainable budgets. Both the tailoring of the concept to the specific institutional configuration, challenges and preferences of the member states and the importance of involving social partners was stressed. A tailored view of flexicurity is also evident in the flexicurity pathways, as developed by a European Expert Group on Flexicurity (European Commission, 2007), consisting of academics, with EU social partner representatives as advisors and the European Commission as a chair. Their final report was published on the same day as the Commission’s communication on the flexicurity principles. Also, in view of getting broad support from member states and strengthening the scope of policy learning as an important part of the EES, it rejected a one-size-fits-all approach, and instead identified four flexicurity pathways corresponding to specific labour market challenges, without making explicit which Member States would match which pathway. Rather, the idea was that Member States should decide for themselves which challenge is most urgent, and possibly draw on more than one pathway for inspiration on how to improve a balance between flexibility and security. Pathway 1 addressed the reduction of asymmetries between non-standard and standard employment

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by integrating non-standard contracts fully into labour law, collective agreements, social security and lifelong learning, and considered making employment in standard contracts more attractive to firms. Pathway 2 sought to enhance companies’ and workers’ adaptability by developing and strengthening transition security, for instance by improving active labour market policies. Pathway 3 tackled opportunity and skills gaps among the workforce by broadening and deepening investments in skills. Lastly, pathway 4 addressed enhancing employment opportunities for benefit recipients, preventing long-term welfare dependence, regularizing informal work and building up more institutional capacity for change. For more details on the pathways see European Expert Group on Flexicurity (European Commission, 2007) and Viebrock and Clasen (2009). Soon after the agreement on common principles of flexicurity the Great Financial Crisis started (about 2008–2013), and this impacted the flexicurity concept as well as its academic and policy use. While increased public expenditure was used as stimulus in the first phase (European Economic Recovery Plan), austerity measures soon kicked in, lowering the fiscal space of countries. While many countries expanded income security by way of improving unemployment benefits in the first phase of the crisis, in view of a lack of coverage of more vulnerable groups such as atypical workers or youth, in the latter phase these reforms were reversed and benefits were cut, thus meeting austerity demands (Leschke and Finn, 2019; OECD, 2018). Simultaneously, structural reforms in many countries enhanced external flexibility for example by way of reducing employment protection legislation and thereby rendering it easier to use flexible contracts (for country studies see Lehndorff, 2015; Theodoropoulou, 2018). At the same time, short-time working measures, a policy that enhances internal flexibility, were used extensively (Leschke and Finn, 2019) and it was widely acknowledged that they played an important role in keeping people attached to their jobs during the Great Financial Crisis (Arpaia et al., 2010). The Great Financial Crisis thereby impacted the flexibility-security interface (Barbier, 2015; Heyes, 2013) and contributed to shifting emphasis along the flexibility-security dimensions. In the first instance, austerity measures decreased options for countries to develop income security. Yet elements of flexicurity remained part of EU socioeconomic policy coordination in the aftermath of the Great Financial Crisis, for instance within the EES (Bekker, 2018). Later on, EU policy documents increasingly focused on internal numerical flexibility due to the success of short-time working and increased income security for non-standard workers. An example of supporting short-time work is the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) (Council Regulation, 2020). Secure and adaptable employment continues to be a core aspect of the 2017 Pillar of Social Rights, which also incorporates ideas on sustainable labour market transitions. The Pillar acts as a compass under which binding and non-binding EU social policy initiatives are put forward (for details on these initiatives see European Commission, 2021). The Pillar of Social Rights encourages fair and equal treatment of workers regarding their working conditions, access to social protection and training. The type and duration of the employment relationship should not matter in this respect. Moreover, the Pillar aims to foster transitions towards open-ended forms of employment. At the same time, employers should be able to keep the necessary flexibility for their businesses. Still, the ‘vicious cycles’ should be avoided as much as possible, as the Pillar suggests that precarious working conditions should be prevented, including a prohibition of the abuse of atypical contracts.

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5.3 CRITIQUE OF THE CONCEPT The EU flexicurity concept, as adopted by the Council (2007), received a good deal of criticism, mainly from academic and trade union circles (see Mailand, 2010). Many critics pointed to the ambiguity of the concept (e.g. Keune, 2008; Burroni and Keune, 2011). While its flexibility allowed different actors to read different goals and policies into it and thereby made the concept widely acceptable, this also meant that policies evolving from the concept often remained vague and had limited bite. Moreover, flexicurity was defined both as a labour market condition and a policy which added further to the ambiguity of the concept (Viebrok and Clasen, 2009). The Commission’s focus – inspired by the academic debates on employability – on moving from job security to employment security (from ‘old’ to ‘new’ types of securities), as a way to counteract labour market segmentation, raised criticism among several member states and trade unions, especially from Southern Europe but also the European Trade Union Confederation (ETUC) (Bekker and Mailand, 2019). Criticisms not only dealt with the norms constituting flexicurity and its (in)ability to lead to balanced practices, but also with (hidden) political agendas (Auer, 2010). The promise of a balanced perspective on flexibility and security was particularly contentious in cases where the concept was used to justify specific policy reforms (Keune and Jepsen, 2007; Veille and Bovin, 2008; Viebrock and Clasen, 2009). Another line of criticism was that the flexicurity concept had not yet matured into an elaborated theory. It lacked a solid foundation to convert ideas into balanced practices (Auer, 2010; Bredgaard et al., 2008; Burroni and Keune, 2011; Keune and Serrano, 2014). In response, a number of papers proposed and used indicators to measure the components of flexicurity across European countries (e.g. European Commission, 2006; Chung, 2012; Russell et  al., 2020; Viebrock and Clasen, 2009). Others assessed national reforms on the degree of having a balanced approach to flexibility and security and they often highlighted a balance in favour of flexibility (Andersen, 2012; Gwiazda, 2011; Heyes, 2011; Madsen, 2013). Burchell (2009) explicitly tested the claimed positive effect of flexicurity as a moderator of job insecurity on psychological well-being and could not find any support for this which led him to question the uncritical acceptance of implied positive effects of flexicurity. The broad base of the concept as evident in the flexicurity matrix (Wilthagen and Tros, 2004) not only rendered it difficult to develop a concise theory but also meant that there were many potential indicators that would allow the capturing and measuring of the phenomenon and, in turn, formulating policies. There were additional academic critiques towards the concept. These included a neglect of acknowledging the role of social partners and collective bargaining as an important instrument for balancing flexibility and security particularly with reference to the Danish flexicurity model (e.g. Ibsen and Mailand, 2011; Ibsen, 2011). The specific role of social dialogue in flexicurity approaches beyond Denmark has been assessed in more detail in later studies (e.g. Pulignano et al., 2016). Another point of critique was a lack of focus of the concept on more vulnerable groups such as women and youth (e.g. Lewis and Plomien, 2009; Smith et  al., 2019). Moreover, the EU flexicurity agenda of the early years (mid-2000s) was also blamed for overshadowing other important debates including the EU job quality agenda (e.g. Bothfeld and Leschke, 2012) with flexicurity only addressing a very limited set of job quality dimensions. The more recent EU initiatives as outlined in the Action Plan for Implementing the Social Pillar (published in 2021) seem to take a more balanced approach to integrating flexicurity notions with job quality or decent work. This is for example evident in the legislative proposal on improving the working conditions of digital platform workers from December

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2021 or the 2019 Directive on transparent and predictable working conditions in the European Union (European Commission, 2019, 2021).

CONCLUSIONS This chapter set out to trace the academic and (EU) policy definitions and use of flexicurity and to analyze how the academic and policy agendas on flexicurity informed and cross-fertilized each other. The debates did not go one way from academia to policy; instead, there was a constant exchange between academics and policymakers. Several academics were formally or informally involved in shaping the EU and national agendas on flexicurity, while others carried new ideas into the policy arena via EU-funded projects and through research institutes with close links to the EU policy scene. At the same time, their academic research was impacted by the use, application, and further development of the concept at the EU and partly national level. The strong policy interest in the concept can be explained by its ambiguity which made it compatible with employers’ and employees’ views as well as different needs and agendas of member states regarding labour market and social policy. At the same time, the ambiguity of the concept was also one of the issues frequently highlighted by critics. The chapter also discussed how flexicurity and transitional labour markets (TLM) theory interlink. TLM stresses the role of institutions and policies to facilitate transitions across the life course. This includes transitions in and out of employment caused by unemployment but also other critical events connected with risks such as those arising from family or private needs or transitions between different types of employment. We highlighted that securing transitions through social risk management strategies with a focus on fair risk-sharing, enhanced employability, empowerment, and active securities has many commonalities with the flexicurity strategy as conceived in academia and applied in the EU policy context. The specific focus of flexicurity and TLM on securing transitions between different lifecourse domains and the notion of empowerment are key components when considering the changing nature of work as evident in recent labour market trends (Eichhorst et al., 2019). These trends encompass digitalization and the challenges it poses to flexible and secure labour market transitions (Schmid, 2016), workers in fragmented labour markets combining non-standard employment with low wages or combining several forms of non-standard employment (Bekker and Leschke, 2021; Chung, 2022), or situations where social security is unable to support workers who repeatedly move between unemployment and temporary jobs (Spasova et al., 2021). As evident from the most recent EU policy developments as part of the Pillar of Social Rights the spirit of the flexicurity concept – at least – is alive and kicking. And – in contrast to earlier EU-level use of the concept – the current notions seem to tilt more towards security rather than predominantly flexibility and also encompass a stronger focus on job quality, thereby responding to some of the earlier critics as highlighted above. This can be exemplified by the most recent legislative initiative on improving the working conditions of platform workers. It emphasizes among others the importance of the correct classification of platform workers implying that more platform workers should enjoy labour and social security rights (European Commission, 2021). Moreover, in the drive to recover from the COVID-19 crisis, the EU seems to pursue not only policies that are green and digital, but also inclusive as illustrated by strategies – also actively promoted by the EU – to improve inclusion of flexible and atypical workers in unemployment benefits and short-time working schemes (Fernandes and Vandenbroucke, 2020).

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European Commission. (1993) Green Paper on European Social Policy – Options for the Union, Commission of the European Communities, C0M(93) 551 Final. Luxembourg: Office for Official Publications of the European Communities. European Commission. (2004) Jobs, Jobs, Jobs – Creating More Employment in Europe. Luxembourg: Office for Official Publications of the European Communities. European Commission. (2006) Employment in Europe. Luxembourg: Office for Official Publications of the European Communities. European Commission. (2007) Towards common principles of flexicurity: More and better jobs through flexibility and security, COM (2007)359 final, Brussels: 27.6.2007. European Commission. (2019) Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union. Official Journal of the European Union 186(105). European Commission. (2021a) Proposal for a Directive on Improving Working Conditions in Platform Work. COM(2021) 762 Final. Brussels, Belgium: European Commission. European Commission. (2021b) The European Pillar of Social Rights Action Plan, Employment, Social Affairs and Inclusion. Luxembourg: Office for Official Publications of the European Communities. European Council (2005) Council Decision 2005/600/EC of 12 July 2005 on guidelines for the employment policies of the Member States. Falkner, G., Treib, O., Hartlapp, M. and Leiber, S. (2005) Complying With Europe EU Harmonisation and Soft Law in the Member States. Cambridge: Cambridge University Press. Fernandes, S. and Vandenbroucke, F. (2020) SURE: A Welcome Lynchpin for a European Unemployment Re-Insurance. Notre Europe Institut Jacques Delors. Policy Paper no. 251. Goetschy, J. (2009) The Lisbon Strategy and social Europe: Two closely linked destinies. In: M.J. Rodrigues (ed.) Europe, Globalization and the Lisbon Agenda. Cheltenham/Northampton: Edward Elgar, pp. 74–90. Gwiazda, A. (2011) The europeanization of flexicurity: The Lisbon Strategy’s impact on employment policies in Italy and Poland. Journal of European Public Policy 18(4): 546–565. Hansen, M.P. and Leschke, J. (2022) Reforming the ideal(ised) model(s) of Danish Labour Market policies. In: A.H. Krogh, A. Agger and P. Triantafillou (eds.) Public Governance in Denmark: Meeting the Global Mega-Challenges of the 21st Century? Bingley: Emerald Publishing Limited. Heyes, J. (2011) Flexicurity, employment protection and the jobs crisis. Work, Employment and Society 25(4): 642–657. Heyes, J. (2013) Flexicurity in crisis: European labour market policies in a time of austerity. European Journal of Industrial Relations 19(1): 71–86. Holck, L. and Paunova, M. (2021) Turnover in Denmark between ‘flexicurity’ and collective voice. In: D.G. Allen and J.M. Vardaman (eds.) Global Talent Retention: Understanding Employee Turnover Around the World. Bingley: Emerald Publishing, pp. 191–212. Ibsen, C.L. (2011) Teacher’s pet in trouble—A review of Danish policies during crisis. Nordiques 2010(23): 9–26. Ibsen, C.L. and Mailand, M. (2011) Striking a balance? Flexibility and security in collective bargaining. Economic and Industrial Democracy 32(2): 161–180. Jepsen, M. and Klammer, U. (2004) Editorial to special issue on flexicurity. Transfer: European Review of Labour and Research 10(2): 157–159. Jorgensen, H. and Madsen, P.K. (eds.) (2007) Flexicurity and Beyond: Finding a New Agenda for the European Social Model. Copenhagen: DJØF Pub. Keller, B. and Seifert, H. (2000) Flexicurity – Das Konzept für merh soziale Sicherkeit flexibler Beschäftigung. WSI-Mitteilungen 53(5): 291–300. Keune, M. (2008) Flexicurity: The new cure for Europe's labour market problems? In: C. Degryse and P. Pochet (eds.) Social Developments in Europe. Brussels: ETUI/OSE, pp. 92–98. Keune, M. and Jepsen, M. (2007) Not Balanced and Hardly New: The European Commission’s Quest for Flexicurity. Brussels: ETUI. ETUI‑REHS no. 214, p. 189. Keune, M. and Serrano, A. (2014) Deconstructing Flexicurity and Developing Alternative Approaches: Towards New Concepts and Approaches for Employment and Social Policy. London: Routledge. Klammer, U. (2004) Flexicurity in a life-course perspective. Transfer: European Review of Labour and Research 10(2): 282–299.

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Lehndorff, S. (ed.). (2015) Divisive Integration: The Triumph of Failed Ideas in Europe – Revisited. Brussels: European Trade Union Institute. Leschke, J. and Finn, M. (2019) Labor market flexibility and income security: Changes for European youth during the Great Recession. In: J. O’Reilly, J. Leschke, R. Ortlieb, M. Seeleib-Kaiser and P. Villa (eds.) Youth Labor in Transition: Inequalities, Mobility and Policies in Europe. Oxford: Oxford University Press. Leschke, J., Schmid, G. and Griga, D. (2007) On the marriage of flexibility and security: Lessons from the Hartz-reforms in Germany. In: H. Jørgensen and P. Madsen (eds.) Flexicurity and Beyond: Finding a New Agenda for the European Social Model. Copenhagen: DJØF Publishing, pp. 335–364. Lewis, J. and Plomien, A. (2009) ‘Flexicurity’ as a policy strategy: The implications for gender equality. Economy and Society 38(3): 433–459. Madsen, P.K. (2002) The Danish model of flexicurity: A paradise – With some snakes. In: H. Sarfati and G. Bonoli (eds.) Labour Market and Social Protection Reforms in International Perspective: Parallel or Converging Tracks? Farnham: Ashgate, pp. 243–265. Madsen, P.K. (2004) The Danish model of ‘flexicurity’: Experiences and lessons. Transfer: European Review of Labour and Research 10(2): 187–207. Madsen, P.K. (2013) Shelter from the storm? Danish flexicurity and the crisis. IZA Journal of European Labor Studies 2(6): 1–19. Mailand, M. (2006) Coalitions and Policy Coordination: Revision and Impact of the European Employment Strategy. Copenhagen: DJØF Publishing. Mailand, M. (2010) The common European flexicurity principles: How a fragile consensus was reached. European Journal of Industrial Relations 16(3): 241–257. Marchington, M., Grimshaw, D., Rubery, J. and Wilmott, H. (2004) Fragmenting Work: Blurring Organizational Boundaries and Disordering Hierarchies. Oxford: Oxford University Press. OECD (2018) Unemployment-Benefit Coverage: Recent Trends and Their Drivers. Paris: OECD. OECD Employment Outlook Chapter 5. Pulignano, V., Doerflinger, N. and De Franceschi, F. (2016) Flexibility and security within European labor markets: The role of local bargaining and the ‘trade-offs’ within multinationals’ subsidiaries in Belgium, Britain, and Germany. ILR Review 69(3): 605–630. Rathgeb, P. (2019) No flexicurity without trade unions: The Danish experience. Comparative European Politics 17(1): 1–21. Rubery, J. (1978) Structured labour markets, worker organization and low pay. Cambridge Journal of Economics 2(1): 17–37. Russell, H., Leschke, J. and Smith, M. (2020) Balancing flexibility and security in Europe? The impact of unemployment on young peoples’ subjective well-being. European Journal of Industrial Relations 26(3): 243–261. Schmid, G. (1998) Transitional Labour Markets: A New European Employment Strategy. Berlin: Wissenschaftszentrum Berlin für Sozialforschung (WZB). WZB Discussion Paper no. FS I, pp. 98–206. Schmid, G. (2006) Social risk management through transitional labour markets. Socio-Economic Review 4(1): 1–33. Schmid, G. (2015) Sharing risks of labour market transitions: Towards a system of employment insurance. British Journal of Industrial Relations 53(1): 70–93. Schmid, G. (2016) Flexible and secure labour market transitions: Towards institutional capacity building in the digital economy. IZA Policy Paper no. 116. Schmid, G. and Gazier, B. (eds.). (2002) The Dynamics of Full Employment: Social Integration Through Transitional Labour Markets. Cheltenham: Edward Elgar. Schulze-Cleven, T. (2015) Chapter 5: Labor market policy: Toward a ‘flexicurity’ model in the United States? In: R. Daniel Kelemen (ed.) Lessons from Europe?: What Americans Can Learn from European Public Policies. Washington, DC: CQ Press. SER (2021) Sociaal-economisch beleid 2021–2025 – Zekerheid voor mensen, een wendbare economie en herstel van de samenleving [Socioeconomic policy 2021-2025 – Security for people, a resilient economy and recovery for the society]. Advice to the Dutch government from the Dutch Social and Economic Council no. 8.

The academic and policy roots of flexicurity and its pathways  67

Smith, M., Leschke, J., Russell, H. and Villa, P. (2019) Stressed economies, distressed policies, and distraught young people: European policies and outcomes from a youth perspective. In: J. O’Reilly, J. Leschke, R. Ortlieb, M. Seeleib-Kaiser and P. Villa (eds.) Youth Labor in Transition: Inequalities, Mobility and Policies in Europe. Oxford: Oxford University Press. Spasova, S., Ghailani, D., Sabato, S., Coster, S., Fronteddu, B. and Vanhercke, B. (2021) Non-Standard Workers and the Self-Employed in the EU: Social Protection During the Covid-19 Pandemic. Brussels: ETUI. ETUI Research Report no. 2. European Parliament, the Council and the Commission. (2017) European Pillar of Social Rights. Luxembourg: Office for Official Publications of the European Communities. Theodoropoulou, S. (2018) Labour Market Policies in the Era of Pervasive Austerity: A European Perspective. Bristol: Policy Press. Veille, P. and Bovin J.M. (2008) Putting security at the heart of the European social pact. Proposals to make flexicurity more balanced. Transfer 14(3): 419433. Viebrock, E. and Clasen, J. (2009) Flexicurity and welfare reform: A review. Socio-Economic Review 7(2): 305–331. Wilthagen, T. (1998) Flexicurity: A New Paradigm for Labour Market Policy Reform? Berlin: Wissenschaftszentrum Berlin für Sozialforschung (WZB). WZB Discussion Paper no. FS I, pp. 98–202. Wilthagen, T. and Rogowski, R. (2002) Legal regulation of transitional labour markets. In: G. Schmid and B. Gazier (eds.) The Dynamics of Full Employment: Social Integration Through Transitional Labour Markets. Cheltenham: Edward Elgar, pp. 233–273. Wilthagen, T. and Tros, F. (2004) The concept of ‘flexicurity’: A new approach to regulating employment and labour markets. Transfer: European Review of Labour and Research 10(2): 166–186.

LEGAL TEXTS Fixed-term work directive: Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP. Part-time work directive: Council Directive 1997/81/EC – the Framework Agreement on part-time working concluded by UNICE, CEEP and the ETUC (trade unions).

6. Assessing labour market policy change Emanuele Ferragina, Federico Danilo Filetti and Alessandro Arrigoni

INTRODUCTION1 Labour market policy in high-income countries underwent considerable processes of change. Scholars qualified these processes from different analytical standpoints, considering – among other evolutions – the reduction of employment protection, the recalibration and re-commodification of unemployment benefits and income assistance programs, and the reduction of compensatory policies in favour of active programmes. Most of these processes were underway in Anglo-Saxon countries during the 1980s; they started to take place in Western Europe a decade later. There was a lively debate in comparative political economy and comparative social policy that explored the direction and intensity of contemporary labour market policy change, its underlying political drivers, as well as the methodological and interpretative challenges related to the understanding of this change. Some scholars highlighted the existence of convergent pressures towards greater liberalization (Hay, 2004; Baccaro and Howell, 2017), while others speculated on the divergent, asymmetric and selective nature of this liberalization processes (Hall and Soskice 2001; Ferragina and Arrigoni, 2021; Ferragina and Filetti, 2022). Again this backdrop, Thelen (2012, 2014) suggested that countries’ labour market liberalization trajectories were rooted in classic regime varieties (Esping-Andersen, 1990; EstevezAbe et al., 2001; Hall and Soskice, 2001; for a review Ferragina and Seeleib-Kaiser, 2011) and could be categorized in accordance to three macro-analytical concepts previously developed in the literature, i.e. deregulation, dualization, embedded flexibilization. In this chapter we extend her seminal work with a systematic quantitative analysis of labour market policy trajectories of change. In addition, we employ the Italian case to illustrate that trajectories can be dynamic; hence a country can shift from one trajectory to another over time. From a methodological standpoint, we construct a multidimensional indicator of labour market protection to systematically disentangle the trajectories of change across 15 Coordinated Market Economies (CMEs) since the 1990s. We measure labour market protection holistically across four institutional domains (employment protection, unemployment protection, income maintenance, and activation) and consider also changes in the workforce composition (unemployment rates, and share of permanent, temporary and involuntary part-time contracts). We find that CMEs labour market trajectories of change do not necessarily conform to classic regime varieties and appear more varied than previously suggested in the literature. For this reason, we propose a fivefold taxonomy of countries’ trajectories, i.e. liberalization, dualization, flexicurity, de-dualization and higher protection. Moreover, we illustrate through a qualitative case study how some trajectories of labour market protection can evolve over time. We suggest that in the Italian case, dualization constituted a transitional phase towards a more general process of liberalization. 68

Assessing labour market policy change  69

The remainder proceeds as follows. First, we contextualize how the chapter fits into previous literature and introduce the methodological approach, then, we discuss our findings and their implications for future research.

6.1 CONCEPTUALIZING LABOUR MARKET CHANGE AND ITS VARIETIES Labour market policy change has been extensively studied across disciplines. A consistent body of literature focused on the investigation of the direction and intensity of this change, and the political conditions under which this change takes place. This chapter builds on this literature and in particular on The Three Worlds of Welfare Capitalism (WoW), Varieties of Capitalism (VoC) (Esping-Andersen, 1990; Estevez-Abe et al., 2001; Hall and Soskice, 2001; for a review Ferragina and Seeleib-Kaiser, 2011; for an integration of both frameworks, see Schröder, 2009, 2013) and Varieties of Liberalization (Thelen, 2012, 2014; see also Ferragina and Filetti, 2022) to provide a measurement, a taxonomy and an interpretation of labour market policy change.2 VoC classified high-income countries in CMEs and LMEs, and connected the national competitive advantage to the prevalent mode of coordination between firms and various institutions (Hall and Soskice, 2001; Thelen, 2012, 2014). Accordingly, market forces did not lead countries to convergence, rather the interplay between firms and institutions produced two different varieties of capitalism: in CMEs there is a high degree of cooperation between firms and institutions, while in LMEs we observe low power-sharing relations and a lack of coordination between firms and institutional actors. Estevez-Abe et al. (2001) connected VoC to labour market protection reflecting on the skills formation process. This process, they argue, contributes to the national competitive advantage in the long run, as employees’ decision of skills investment relates to levels of labour market protection (employment, unemployment and wage protection). In CMEs, where firms mostly base their competitive advantage on the presence of (industry/firm) specific skills, workers require higher employment and/or unemployment protection to safeguard their investment in specific skills. In contrast, in LMEs, where firms mostly base their economic competitive advantage on general skills, employment and unemployment protection are less generous. In sum, the interaction between the national competitive advantage, that is the coordination between firms and institutions and individual incentives to invest in certain skills, shape considerably labour market protection. WoW suggests that welfare states in high-income countries cluster in three varieties – liberal, Christian-democratic and social democratic – and are grounded in the long-standing outcome of class conflict. Esping-Andersen employed the notion of decommodification – i.e. the capacity of pension, sickness and unemployment benefits to guarantee individuals and families with ‘a socially acceptable standard of living independently of market participation’ (Esping-Andersen, 1990: 37) – and the ability of welfare states to reduce social stratification as measures of welfare state generosity. In the social democratic world universalism is prevalent and countries within it are characterized by a high decommodification capacity and low social stratification. In the Christian democratic world, social insurance is prevalent and countries within it are characterized by a medium decommodification capacity and high social stratification. In the liberal world, social assistance is prevalent and countries within it are characterized by a low decommodification capacity and high social stratification. For the sake

70  Handbook of labour market policy in advanced democracies

of our analysis – which also includes Greece, Spain and Portugal – we note that scholars theorized the existence of a Mediterranean cluster (Leibfried, 1992; Ferrera, 1996) distinguished from the Christian democratic world because of lower solidarity levels, persistent clientelism and inadequate income assistance. WoW and VoC frameworks heavily influenced the scholarly debate on the macro-interpretative categories developed to understand the generosity of labour market protection at the comparative level. However, a varietal approach – as discussed in the literature3 – is too prone to stability. This inability to capture change adequately is a structural feature; the willingness to understand how countries differ and cluster into groups undermines the analytical capacity to capture change (for a detailed discussion see Ferragina and Filetti, 2022). We suggest that this issue has influenced comparative enquiries about labour market protection change and contributed to underestimating the effect of substantial processes of reform. Over the last decades, the idea that deregulated labour markets adjust better to exogenous shocks – supporting employment levels and enhancing systemic performance – became widespread in academia and among international organizations (see OECD, 1994). This fostered a wave of reforms aimed at reducing employment protection and decentralizing wage bargaining in a context of steady decline of union power (Harvey, 2007; Esping-Andersen and Regini, 2000). Moreover, increased pressure on public budgets (Pierson, 2001; Starke, 2006) stimulated the re-commodification and recalibration of unemployment benefits and minimum income schemes (Neyer and Seeleib-Kaiser, 1995; Seeleib-Kaiser, 2002). Overall, we witnessed a consistent shift from compensatory protection to activation policies (Bonoli, 2010; Ferragina, 2022; Van Vliet and Koster, 2011). While the literature indicates unanimously that Anglo-Saxon countries already pursued labour market liberalization in the 1980s (Reagan and Thatcher reforms served as the blueprint), there is disagreement about the direction and intensity of labour market policy change in other countries, and especially in CMEs. We signal two main strands of research in this regard. The first argues for a ‘convergence’ among LMEs and CMEs towards greater labour market liberalization. In Europe, in particular, it has been pointed out that globalization and the European integration reinforced the liberal trajectory and fostered processes of ‘contingent convergence’ (Streeck, 1998; Hay, 2004; Baccaro and Howell, 2017; Fleckenstein and Lee, 2017; Kinderman, 2017). The second strand instead developed a ‘divergence’ hypothesis, according to which countries are undergoing heterogeneous paths of labour market policy change. Different trajectories of change are the result of alternative political and class coalitions sustaining the reforms, and thus of different degrees of cooperation between institutional actors. VoC and the ‘dual convergence hypothesis’ are nested within this second strand. Thelen (2012, 2014) associated VoC and WoW insights and accounts of change, analysing labour market policy through the degrees of coordinating capacities between employers and employees, and the levels of equality (or coverage) that labour market policy helps to attain. She argued that liberal countries (e.g. the US) pursued a ‘deregulation’ strategy. Deregulation is a concept initially employed in the debate on the persistence of high unemployment rates (Lazear, 1990; Siebert, 1997; see also Heyes and Lewis, 2014). It is a form of liberalization entailing a reduction of the Employment Protection Legislation (EPL), the dismantlement of collective bargaining institutions, the weakening of trade unions and the re-commodification of unemployment benefits and minimum income schemes. Christian democratic countries (e.g. Germany) followed a dualization strategy4. Dualization is a concept developed to indicate the maintaining of strong protection and coordination levels for labour market insiders

Assessing labour market policy change  71

and the unloading of liberalization costs on labour market outsiders’ shoulders (Reich et al., 1973; Berger and Piore, 1980; Blanchard and Summers, 1986; Lindbeck and Snower, 1988, 2001; Saint-Paul, 1996; Rueda, 2005; Emmenegger et al., 2012; see Davidsson and Naczyk, 2009 for a review). This in turn entails the deregulation of EPL for temporary workers, the decentralization of wage bargaining, while keeping unemployment benefit generosity high for insiders and increasing the conditionality of minimum income schemes. Finally, social democratic countries (e.g. Denmark) pursued an embedded flexibilization strategy. Embedded flexibilization leads to an adaptation to liberalization based on ‘supply side solidarity’, and the collectivization of ‘risk by focusing resources on enabling society’s most vulnerable to get and keep a job’ (Thelen, 2014: 15). This idea is grounded in the concept of flexicurity, an approach to labour market relations that suggests the necessity to strike a balance between the objectives of increasing competitiveness (mainly through the decrease of EPL) and keeping social cohesion (European Commission, 1997; Wilthagen, 1998; Wilthagen and Tros, 2004; Keune and Jepsen, 2007; for a review see Viebrock and Clasen, 2009). This is achieved through collective bargaining institutions, providing generous monetary benefits and investing in activation policies. Building on Thelen’s work, We expand the analysis of labour market policy change to a broader sample of countries than used by Thelen, who analysed the United States, Germany, the Netherlands, Denmark and Sweden, and employ a more comprehensive selection of indicators than customary. Moreover, trajectories of change might be dynamic, with countries shifting from one type of trajectory to another over time. The persistence of institutional varieties might not necessarily mean that countries’ trajectories of change are always and stably rooted within them (see Ferragina and Filetti, 2022).

6.2 MEASURING LABOUR MARKET POLICY CHANGE 6.2.1 Data Our measure includes 13 indicators and mixes insights developed in social policy and political economy to describe labour market protection change – deregulation, re-commodification, the shift from compensatory to active policies, dualization, and new social risks. To account for this change, we include four dimensions of labour market protection – employment protection, unemployment protection, income maintenance and activation – and account also for changes in the workforce composition in two time periods (1990 and 2015). Moreover, we selected a sample of 15 CMEs across different welfare regimes: Denmark, Finland, Norway and Sweden as the social democratic group; Austria, Belgium, France, Germany, Japan5, the Netherlands and Switzerland as the Christian democratic group; Greece, Italy, Portugal and Spain as the Mediterranean group. For the process-tracing analysis, we focus on the Italian case, and rely on primary and secondary sources to develop a holistic appraisal of the main labour market reforms that took place from the 1990s onwards. We capture trends towards employment protection deregulation using the Employment Protection Legislation (EPL) index for permanent and temporary contracts, the percentage of workers covered by collective bargaining agreements and union density. We measure the level of unemployment protection with unemployment benefit replacement rates (as a share of the APW’s previous wage), public spending for unemployment benefits and severance pay.

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We suggest that decommodification relates also to income maintenance, which is targeted to people who might not be eligible for unemployment benefits like the Average Production Worker (APW), e.g. atypical workers, long-term unemployed, people below the poverty line. We capture income maintenance with the adequacy of guaranteed minimum income benefits and public spending for income maintenance schemes. For the activation dimension we include a measure of public spending for Active Labour Market Programmes (ALMPs). We integrate institutional dimensions and outcome indicators (the unemployment rates, the share of workers holding a permanent or temporary contract, and the share of workers involuntarily employed with a part-time contract – a proxy for bad quality jobs) to account for changes in the workforce composition since the 1990s. The addition of the workforce composition to the institutional dimensions helps us to mitigate the unrealistic Average Production Worker (APW) assumption (Clasen and Siegel, 2007). The APW assumption underplays the importance of significant societal changes, e.g. the growing divide between labour market ‘insiders’ and ‘outsiders’ (Emmenegger et al., 2012; Rueda, 2005) and the rise of new social risks (NSRs) (Bonoli, 2005; Taylor-Gooby, 2004). Outcome indicators have been already employed in the regime debate (Ferragina et al., 2015). For full details on indicators and sources see Ferragina and Filetti (2022).6 6.2.2 Methods7 We construct a Labour Market Policy Change (LMPC) score to evaluate depth and characteristics of countries’ trajectories of all 15 countries in our sample. We measure and characterize countries’ trajectories in four steps. First, we calculate for each indicator the distance – measured as the number of relative standard deviations – between the country values in 1990 and 2015 and the value of the US in 1990. We employ labour market protection in the US as a benchmark, because it was among the first countries that liberalized labour market protection and, for this reason, it displayed the lowest level of protection in 1990. This benchmark allows us to standardize the variation of different indicators. Second, we calculate the difference between each relative distance in 2015 and in 1990, obtaining a series of sub-scores. If the variation of the relative distance is positive, the country observed an increase in the labour market protection dimension in 2015. Conversely, if the country displays a negative score, the generosity of the labour market protection dimension diminished. Since our dimensions8 include multiple indicators, we average the values for the indicators contained in each dimension to calculate the sub-scores (Table 6.1). However, when defining the trajectories, we consider also every indicator (Table 6.1A). For example, comparing the change in the EPL for permanent and temporary workers allows us to distinguish between liberalization and dualization. We then construct the sub-scores for our outcome indicators computing the simple relative deviation for each indicator between 1990 and 2015. A negative score depicts an overall deterioration of labour market outcomes (e.g. a reduction in the share of permanent contracts and an increase in the share of temporary and involuntary part-time contracts, and unemployed), while a positive score describes an improvement. In a third step, we average the sub-scores to compute the composite score. Finally, we define a series of trajectories in accordance with the different scores and expanding previous literature.

0.11 0.94

0.57

0.99

–2.20

–3.01

Belgium

Italy

0.89

0.62

–1.77

France

Mean 0.86

3.12

0.70

1.30

1.61

0.34

1.41

6.35

0.83

2.01

1.86

–0.84

–2.04

0.43

1.39

–1.71

–1.74

–1.10

0.37

–0.81

–1.37

Activation

–0.47

–0.20

–0.29

1.06 –0.26

–0.34 –0.90

1.03

0.63

0.49

0.31

0.02

–0.79

–0.87

–2.64

–0.41

–1.10 –0.36

–0.47

–0.65

–0.74

–0.78

–0.99

–1.19

–1.44

LMPC score

–1.84

–0.17

0.31

–1.12

–1.68

–1.82

–0.89

Workforce composition

Higher Protection

Flexicurity

De-dualization

De-dualization

Flexicurity

Liberalization

Liberalization

Liberalization

Dualization

Dualization

Liberalization

Dualization

Liberalization

Liberalization

Liberalization

Trajectory

Christian democratic

Social democratic

Social democratic

Christian democratic

Christian democratic

Hybrid

Christian democratic

Mediterranean

Mediterranean

Christian democratic

Social democratic

Christian democratic

Mediterranean

Mediterranean

Social democratic

Welfare regime

Note:   The indicators displaying negative (sub-)scores are in bold. Values for the four labour market protection dimensions are expressed as number of standard deviations from the value of the United States in 1990; values for the workforce composition are expressed as the relative deviation of each country from 1990; data for minimum income spending for Greece is missing, the LMPC score for the Income maintenance dimension is computed on the replacement rate only. Source:   Ferragina and Filetti (2022); Authors’ elaboration from OECD (2019a, 2019b), Scruggs et al. (2017).

0.16

0.47

2.12

–0.11

–0.32

–1.82

Finland

Denmark

0.40

–0.72

Austria

1.54

1.12

–0.15

0.87

–1.40

–0.10

Japan

Switzerland

2.11

0.88

–1.07

–3.48

–0.67

Portugal

Netherlands

0.23

–1.28

0.10

–0.73

–2.66

–0.27

Germany

Norway

0.21

0.79

–1.34

0.12

–2.78

–3.95

Spain

Greece

–0.52

–0.70

–3.73

Sweden

Income maintenance

Unemployment protection

Employment protection

Country

Table 6.1  Labour Market Protection Change (LMPC) score

Assessing labour market policy change  73

74  Handbook of labour market policy in advanced democracies

6.3 FIVE TRAJECTORIES OF LABOUR MARKET POLICY CHANGE Overall the composite score portrays a shift towards liberalization in CMEs between 1990 and 2015 (Table 6.1; Table 6.1A). There are important cross-national differences in these shifts that call for an extension of the taxonomy Thelen has developed. CMEs are closer to the US in 2015 than 1990, largely because they deregulated their employment protection. EPL declined in most countries, a drop that is three times higher for temporary contracts. The decline of collective bargaining agreements and the decrease in union density is less severe than EPL, although – especially in the case of union density – highly generalized. In addition, labour market outcomes worsened almost everywhere because the share of unemployment, temporary and (especially) involuntary part-time contracts have increased; in contrast, unemployment protection, income maintenance and activation have been slightly expanded. However, all that glitters is not gold. The scores for unemployment protection and income maintenance are positive because spending has increased, while replacement rates have remained stable. Hence, generosity levels did not averagely expand, but rather the deterioration of labour outcomes has translated into higher spending levels. But if we exclude Denmark – an outlier with a significant spending increase – activation spending averagely has declined across CMEs. We observe five trajectories of change in labour market protection, characterized by negative (liberalization and dualization) and positive (flexicurity, de-dualization, higher protection) composite scores. Ten CMEs followed liberalization and dualization trajectories. In these countries labour market protection in 2015 was lower than in 1990. The three other trajectories – flexicurity, de-dualization and higher protection – concerned only five CMEs. These countries strengthened their labour market protection during the last three decades (Table 6.1; Table 6.1A). Hence, among the five trajectories, three (liberalization, dualization and flexicurity) retrace Thelen’s taxonomy, while two (de-dualization and higher protection) complement and expand her contribution. A liberalization trajectory entails a deregulation in employment protection and a reduction in protection due to a decline of some other dimension. We employ the notion of liberalization instead of deregulation (Thelen, 2014), because we observe a deeper process of change than the simple reduction of EPL. A dualization trajectory indicates a deregulation of temporary contracts stronger than the deregulation of permanent contracts. Dualization is associated also with an increase in temporary and involuntary part-time contracts (Rueda, 2005). A flexicurity trajectory encompasses a deregulation of employment protection, stability for unemployment protection and income maintenance; or when these two dimensions are in decline, a symmetric increase in spending for activation can be seen. We do not use the notion of ‘embedded flexicurity’ (Thelen, 2014) because the flexicurity trajectory can be applied also to a country that does not belong to the social democratic tradition. To account for the observed increase in labour market protection, we add two new trajectories to the three previously defined in the literature – de-dualization (the opposite of dualization) and higher protection (the opposite of liberalization). A de-dualization trajectory is similar to flexicurity but the reduction in EPL is stronger for permanent than temporary contracts. A higher protection trajectory, entails a re-regulation of employment protection, an increase in decommodification and higher spending for activation. Moreover, we observe that in some countries labour market protection changed independently from old institutional varieties. Among the ‘liberalizers’ we find social democratic

Assessing labour market policy change  75

countries (Norway and Sweden), countries with a Christian democratic tradition (Netherlands), Mediterranean countries (Greece, Portugal and Spain) and hybrids (Japan). Among them, we can identify two slightly different liberalization modalities. Portugal and Spain underwent a linear liberalization trajectory that took place without substantial difference for temporary and permanent contracts in a previously highly dualized labour market (Prosser, 2016; Picot and Tassinari, 2017; Cardoso and Branco, 2018; Cárdenas and Villanueva, 2021). Norway pursued a classic liberalization trajectory, although to a lesser extent than Portugal and Spain. Moreover, Norway (also Denmark) experienced an improvement in labour market outcomes, differently from all other countries in the sample. Sweden, Greece, Netherlands and Japan followed a liberalization trajectory with a tendency towards dualization.9 Sweden, the CME that liberalized the most, underwent a generalized retrenchment of labour market protection (cf. Anderson, 2001; Lindbom, 2001); this confirmed a decline in its coordinating capacity and social solidarity (cf. Fleckenstein and Lee, 2017). The Great Recession and subsequent austerity measures boosted the Greek liberalization trajectory (Matsaganis, 2012; Prosser, 2016) through the deregulation of EPL – the deepest of all CMEs – driven mostly by a reduction of the employment protection for temporary contracts. Greece experienced also a steep increase in unemployment rate and share of involuntary part-time contracts. In the Netherlands liberalization took place through a reduction of all labour market protection dimensions, with the exception of income maintenance; we note a deregulation of temporary contracts and their exceptional numerical increase also (the second highest in the sample after Italy). In Japan the liberalization trajectory hit mostly labour market outsiders in a context of worsening labour market outcomes (cf. Coe et al., 2011). The liberalization trajectory is underpinned by a deregulation of EPL, a decentralization of wage bargaining agreements, and a reduction of unemployment protection and spending for activation policies. Germany, Italy and Belgium followed a dualization trajectory. Our findings confirm that Germany is a prototypical case of dualization (Seeleib-Keiser and Fleckenstein, 2007; Eichhorst and Marx, 2011; Emmenegger et al., 2012; Thelen, 2014; see also Diessner et al., 2021 on ‘skill-biased liberalization’ in Germany) and that Italy followed a similar path (Berton et al., 2012; Emmenegger, 2014). However, it is important to note that the LMPC score for Italy does not capture the 2015 labour market reform (the so-called ‘Jobs Act’, see below for a detailed discussion). Other than the strong deregulation of EPL for temporary contracts, we witness a slight increase (Belgium and Germany) or decrease (Italy) of protection for permanent contracts in a context of labour market outcomes deterioration. Unemployment protection and income maintenance increased slightly, because of a spending increase related to worsening labour market outcomes chiefly. Italy still does not provide a national minimum income maintenance scheme (Natili, 2018), although recently a conditional income maintenance program has been introduced. Spending on activation policies decreased both in Germany and Belgium, yet it increased in Italy. However, spending for activation in Italy remained much lower than in the other two countries. Denmark and Switzerland followed a flexicurity trajectory; the results are in line with previous research contributions (cf. Andersen, 2012; Fossati, 2018; Thelen, 2014). If we compare the two countries, we see that Denmark’s trajectory was grounded in ‘embedded flexibility’ (Thelen, 2014); it reformed labour market protection in continuity with the social democratic model. Switzerland followed a more liberal pathway, starting to expand a previously meagre generosity level. The Danish flexicurity strategy was engaged by deregulating EPL for

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temporary contracts, safeguarding unemployment protection and income maintenance, and expanding activation spending at the highest level among OECD countries (Green-Pedersen et al., 2001). Switzerland had an already deregulated EPL in 1990 and increased its active and compensatory forms of labour market protection. Austria and Finland – a Christian democratic and a social democratic country – followed a de-dualization trajectory, deregulating EPL for permanent contracts while maintaining (Austria, see Rathgeb, 2017 on ‘smoothed dualization’) or increasing (Finland) EPL for temporary contracts. Moreover, unemployment, income maintenance and activation were expanded to counter the deterioration of labour market outcomes. Finally, France, despite a further deterioration of labour market outcomes (especially for young people, see Chevalier, 2016); it is the only CME that displayed positive sub-scores for all institutional dimensions. Our findings need to be considered cum grano salis and in relation to the classic issue of ‘quality’ and ‘quantity’ in welfare state change accounts (for a more extensive discussion of this point see Ferragina Forthcoming). They enable us to observe major tendencies but do not account for every significant policy change. As argued by Castles (1994, 2002), large-N quantitative investigations of welfare state change tell us only one part of the story. Qualitative case studies are an irreplaceable component of the debate not only in their own right but also for their capacity to generate data and interpretations that sharpen conclusions based on quantitative findings. Taylor-Gooby (2002) illustrated that qualitative case studies are more prone to show change than quantitative analyses, because of their empirical design. For this reason, we briefly consider here an example in which a qualitative policy analysis reveals changes from one trajectory to another over time. The reform of employment protection in Italy has been a long-term reform process which started from the margins in the 1990s and then affected a large part of the population two decades later. A process tracing policy analysis allows us to show institutional change in more detail than the quantitative analysis (Table 6.2 summarizes the main reforms that took place in the country, for a more extended discussion see Ferragina and Arrigoni, 2021). From a methodological perspective, this qualitative appraisal demonstrates that trajectories of change might not be static and countries can move through different phases, and these phases might not be rooted in classic regime varieties. This dynamic aspect might be better captured and sequenced by historical and qualitative analyses than quantitative comparative appraisals. The Labour market liberalization process began in Italy10 in 1997 with the Pacchetto Treu; this introduced temporary agencies and fixed-term contracts and was accelerated in 2003 with the Legge Biagi (Table 6.2, Reforms 1, 2, 3, 4 and 6). The Legge Biagi increased the variety of atypical contractual typologies. These reforms smoothed labour market access by a reduction of its rigidity. In doing so, they created up to 46 typologies of atypical contracts (according to CGIL, 2012) which did not grant the same legal entitlements of a permanent contract. After the 2008 crisis, the subsequent legislative changes further promoted the possibility of employing atypical workers, extending the maximum temporal length of fixed-term contracts and reducing workers’ legal capacity to contest their illicit application (Table 6.2, Reforms 9, 10 and 11). Overall these reforms constituted a clear process of dualization as captured by our quantitative trajectory. However, the Jobs Act in 2015 restricted incrementally the lay-off protection for permanent workers in the private sector (established originally with the Statuto dei Lavoratori11 in 1970) rather than replacing the variety of atypical contracts that had been introduced and increasingly deregulated during the two previous decades (Table 6.2, Reform 12).

Reforms (Decree, Law or Agreement)

Accordo per il Lavoro

Pacchetto Treu (Law 196/1997)

Law 449/1997

Patto Sociale per lo Sviluppo e l’Occupazione

Patto per l’Italia

N

1

2

3

4

5

2002

1998

1997

1997

1996

Year

Berlusconi II

D’Alema I

Prodi I

Prodi I

Prodi I

Government

Centre-right

Centre-left

Centre-left

Centre-left

Centre-left

Political orientation

Table 6.2  Main labour market reforms in Italy since the 1990s

(Continued)

This tripartite agreement recognized that wage regulation is a fundamental tool of economic stability and growth (see Reform 8). Building on the Lisbon Agenda (2000), the pact recognized the need to promote welfare to work (see Reform 17). Moreover, the agreement allowed to by-pass in particular circumstances (not counting new hired workers as part of the staff) the norms established with the workers’ statute for the companies with more than 15 employees (see Reform 1). CISL and UIL accepted it, while the CGIL did not sign the agreement.

This tripartite agreement restated the objectives to control inflation and public deficits (see Reform 8), following the requirements of the special Luxemburg European Council on unemployment (1997).

The law promoted part-time work in the public administration and introduced stricter requirements for civil servants old age pension access. It also partially reformed the pension system for self-employed.

This law introduced temporary agencies and fixed-term contracts (see Reform 10) and revised the apprenticeship system.

This tripartite agreement restated the compliance to the Maastricht treaty objectives. The main unions agreed to the introduction of temporary agency work and the promotion of part-time work (see Reform 11).

Description of the Reforms in accordance to the notion of ‘selective neoliberalism’

Assessing labour market policy change  77

Reforms (Decree, Law or Agreement)

Legge Biagi (Law 30/2003)

Law 247/2007

Collegato Lavoro (Law 183/2010)

Riforma Fornero (Law 92/2012)

Law 99/2013

N

6

7

8

9

10

Table 6.2  (Continued)

2013

2012

2010

2007

2003

Year

Letta

Monti

Berlusconi IV

Prodi II

Berlusconi II

Government

Grosse coalition (centre-left and centre-right)

Technical government

Centre-right

Centre-left

Centre-right

Political orientation

The law introduced the possibility to renew an ‘a-casual’ fixedterm contract, but maintained the overall limit to 12 months. It also introduced a monetary incentive for 18 months to employ workers with permanent contracts (see Reform 24).

The law liberalized the use of vouchers to hire casual workers (introduced with the Reform 17), revised the right of reinstatement for workers with permanent contracts unlawfully dismissed (reforming the article 18 of the 1970, see Reform 1), limited the maximum length of fixed-term contracts to 12 months but removed the need for ‘a lawful cause’ to hire a worker with a fixed-term contract (see Reforms 17 and 20). It introduced also moderated welfare provisions for atypical workers, such as the ASPI and MINI ASPI.

The law introduced a 60-day limit to appeal against the unlawful use of an atypical contract.

The law limited the maximum duration of consecutive fixed-term contracts with the same employer to three years and abolished the stuff leasing (reintroduced with the law 191/2009 and incentives by the Jobs Act in 2015, see Reform 27). The law introduced a new system to calculate the retirement age: workers needed to reach ‘quota 95’ adding up the age of retirement and the number of years of contribution.

This law, in continuity with the Pacchetto Treu (see Reform 11), increased the variety of atypical contractual typologies (among them introduced the possibility of staff leasing for open ended contracts that was explicitly prohibited by the law 1369/1960) but their application required a specific justification from employers – ‘a lawful cause’.

Description of the Reforms in accordance to the notion of ‘selective neoliberalism’

78  Handbook of labour market policy in advanced democracies

Jobs Act (Law 183/2014, Decrees: 22, 23, 80, 81, 148, 149, 150 & 151/2015)

Decreto Dignitá (Law 96/2018)

12

13

Conte I

Renzi

2015

2018

Renzi

2014

Source:   Authors’ elaboration on Ferragina and Arrigoni (2021).

Decreto Poletti (Law 34/2014)

11

M5S & Lega

Centre-left

Centre-left

The law reintroduced the 12-month limit for the use of ‘a-casual’ fixed-term contract and limited the employment of staff leasing (see Reforms 26 and 27).

The Jobs Act introduced an open-ended contract (183/2014) restricting the lay-off protection for permanent workers established with the art. 18 (see Reform 1) and maintained the variety of fixed-term contracts introduced over the previous two decades (see Reforms 11 and 17). Among other measures it also: introduced the NASPI (replacing ASPI and MINI ASPI) DISCOLL, ASDI (22/2015); regulated work from home (80/2015); opened to the possibility to control workers remotely (151/2015); increased the possibility to employ atypical contracts (81/2015); and promoted activation policies (150/2015).

The law expanded the possibility to stipulate ‘a-casual’ fixed-term contract for 36 months (see Reforms 24 and 25).

Assessing labour market policy change  79

80  Handbook of labour market policy in advanced democracies

By observing this overall process, we suggest that entitlements for the workforce in the private sector were nearly harmonized over two decades and argue that an initial dualization of employment protection – that is what is captured by our quantitative analysis – turned progressively into liberalization. Labour market reforms affected mostly the outsiders at first (atypical workers), for trade unions employed their residual power resources to protect the insiders (about the political implications of our argument see Ferragina, 2013; Ferragina and Arrigoni, 2014, 2021; for a different appraisal of trade unions’ role in this process see Durazzi, 2017; Durazzi et al., 2018). In 2015 the jobs act signed a shift from a dualization to a liberalization logic.

CONCLUSION In this chapter we measured quantitatively labour market policy trajectories of change across 15 CMEs and over three decades (1990-2015), considering four institutional dimensions (employment protection, unemployment protection, income maintenance and activation) and changes in the workforce composition. We complemented and expanded the insights from this quantitative analysis tracing employment protection reforms implemented in Italy over the same period of time. Thelen’s work helps to define the trajectories of a certain number of countries (i.e. Denmark, Belgium, Germany and all liberal countries). However, trajectories of change appear to be more numerous than the three she formulated, suggesting the development of a fivefold taxonomy. Three of these trajectories closely resemble those Thelen has conceptualized, i.e. liberalization, dualization and flexicurity. It is important to note that we replaced deregulation with liberalization, to indicate a more encompassing process of labour market protection decline; and we substitute embedded flexicurity with flexicurity, as the trajectory involves also a country outside the social democratic regime. In addition, we have conceptualized two further trajectories to refine our taxonomy. The first is de-dualization – characterized by a reduction of EPL, though stronger for permanent rather than temporary contracts; the second is higher protection – a generalized re-regulation of labour market protection across all dimensions. Further, the trajectories of CMEs are not always rooted in classic varieties. Among Social democratic countries, we find flexicurity in Denmark only; in Sweden and Norway our indicator reveals a trajectory of liberalization, and in Finland a trajectory of de-dualization. Among Christian democratic countries, we see dualization in Belgium and Germany, while we see liberalization in the Netherlands, de-dualization in Austria, and higher protection in France. Finally, Mediterranean countries seem to have undergone a trajectory of liberalization, with the exception of the Italian trajectory, that our composite indicator seems to depict as dualization. In this respect, a qualitative analysis of employment protection reforms shows that the Italian trajectory of reform was dynamic and moved from dualization to liberalization over time. While external pressures required government to increase employment flexibility, trade unions followed a particularistic, rather than universalistic, strategy (Ferragina and Arrigoni, 2021; for an alternative approach see Durazzi, 2017). They focused on the protection of labour market insiders, while sustaining – or at least not opposing – the deregulation of the periphery of the labour market during the 1990s and the first decade of the 2000s. This contributed to avoiding the deregulation of employment protection for the whole workforce, thus delaying an

Assessing labour market policy change  81

overall liberalization. Dualization moved to overall liberalization with the implementation of the Jobs Act in 2015, when the resistance of trade unions weakened and employment protection was finally deregulated also for permanent workers (in the private sector). In conclusion, it is important to scrutinize systematically and refine conceptually how labour market countries’ trajectories of change evolve over time, and this consideration should also be applied to other policy domains (on family policy, see Daly and Ferragina, 2018). Moreover, despite the persistent distinction between CMEs and LMEs in levels of labour market protection, CMEs are becoming more similar to LMEs. It is for scholars of the future to determine whether this process in the long run will undermine the validity of VoC, as some commentators have argued. Substantial institutional change can be hidden from sight if we take for granted the immutability of typologies or consider that new trajectories are always inscribed within classic varieties.

NOTES 1. This work partially draws and collated the insights developed in articles recently published by the authors (Ferragina Forthcoming; Ferragina and Arrigoni 2021; Ferragina and Filetti 2022; Ferragina et al., 2022). 2. We leave aside politics and political coalitions that contributed to this change in our discussion as comparative political economy literature has discussed the issue in great detail (e.g. Rueda 2005; Thelen 2012, 2014). 3. On the issue of immobility in VoC, see Bruff and Horn (2012), Crouch (2005), Hanckè et  al. (2007) Schneider and Paunescu (2012); for a response to this critique, see Hall and Thelen (2008). Concerning WoW, see Hay and Wincott (2012). 4. The German trajectory is usually considered the prototype of a dualization path. However, recent studies show that changes in the German labour market should rather be considered as ‘skillbiased liberalization’ (Diessner and Durazzi 2022). 5. Japan is a hybrid case (Christian-Democratic/Liberal, see Esping-Andersen 1997). However, following Estevez-Abe et al. (2001), we consider Japan among the CMEs. 6. Missing data are imputed using the value of the closest year. For more details about each indicator used for the two different time periods see the supplementary material from Ferragina and Filetti (2022). 7. For further technical information regarding the construction of the composite score, see Ferragina and Filetti (2022). 8. With the exception of activation. 9. However, the difference between the reduction of EPL for permanent and temporary contracts is much smaller than that displayed by countries undertaking a dualization trajectory. 10. Although a limited use of part-time contracts was allowed since 1984. 11. The law protected workers’ freedom of expression (no firing for political reasons). Moreover, the Art. 18 instituted the right of reinstatement for workers fired without justified reasons in companies with more than 15 employees.

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Natili, M. (2018) Explaining different trajectories of minimum income schemes: Groups, parties and political exchange in Italy and Spain. Journal of European Social Policy 28(2): 116–129. Neyer, J. and Seeleib-Kaiser, M. (1995) Bringing the economy back in: economic globalization and the re-commodification of the workforce. Zentrum für Sozialpolitik. Bremen. WP No. 16. OECD. (1994) The OECD Jobs Study. Paris: OECD. OECD. (2019a) Employment and labour statistics. https://www​.oecd​.org​/employment​/ labour​-stats/. OECD. (2019b) Social expenditure statistics (SOCX). https://www​.oecd​.org​/social​/expenditure​.htm. Picot, G. and Tassinari, A. (2017) All of one kind? Labour market reforms under austerity in Italy and Spain. Socio-Economic Review 15(2): 461–482. Pierson, P. (2001) The New Politics of the Welfare State. Oxford: Oxford University Press. Prosser, T. (2016) Dualization or liberalization? Investigating precarious work in eight European countries. Work, Employment and Society 30(6): 949–965. Rathgeb, P. (2017) Relying on weak governments: Austrian trade unions and the politics of smoothed dualization. OZP: Austrian Journal of Political Science 45(3): 45–55. Reich, M., Gordon, D.M. and Edwards, R.C. (1973) A theory of labor market segmentation. The American Economic Review 63(2): 359–365. Rueda, D. (2005) Insider–outsider politics in industrialized democracies: The challenge to social democratic parties. American Political Science Review 99(1): 61–74. Saint-Paul, G. (1996) Dual Labor Markets: A Macroeconomic Perspective. Cambridge, MA: MIT Press. Schneider, M.R. and Paunescu, M. (2012) Changing varieties of capitalism and revealed comparative advantages from 1990 to 2005. Socio-Economic Review 10(4): 731–753. Schröder, M. (2009) Integrating welfare and production typologies: How refinements of the varieties of capitalism approach call for a combination of welfare typologies. Journal of Social Policy 38(1): 19–43. Schröder, M. (2013) Integrating Varieties of Capitalism and Welfare State Research: A Unified Typology of Capitalisms. London: Palgrave. Scruggs, L., Detlef, J. and Kati, K. (2017) Comparative Welfare Entitlements Dataset 2. Version 201709. University of Connecticut & University of Greifswald. Seeleib-Kaiser, M. (2002) A dual transformation of the German welfare state? West European Politics 25(4): 25–48. Seeleib-Kaiser, M. and Fleckenstein, T. (2007) Discourse, learning and welfare state change: The case of German labour market reforms. Social Policy & Administration 41(5): 427–448. Siebert, H. (1997) Labour market rigidities: At the root of unemployment in Europe. Journal of Economic Perspectives 11(3): 37–55. Starke, P. (2006) The politics of welfare state retrenchment: A literature review. Social Policy & Administration 40(1): 104–120. Streeck, W. (1998) The internationalization of industrial relations in Europe: Prospects and problems. Politics & Society 26(4): 429–459. Taylor-Gooby, P. (2002) The silver age of the welfare state: Perspectives on resilience. Journal of Social Policy 31(4): 597–621. Taylor-Gooby, P. (2004) New Risks, New Welfare. Oxford: Oxford University Press. Thelen, K. (2012) Varieties of capitalism: Trajectories of liberalization and the new politics of social solidarity. Annual Review of Political Science 15(1): 137–159. Thelen, K. (2014) Varieties of Liberalization and the New Politics of Social Solidarity. Cambridge: Cambridge University Press. Van Vliet, O. and Koster, F. (2011) Europeanization and the political economy of active labour market policies. European Union Politics 12(2): 217–239. Viebrock, E. and Clasen, J. (2009) Flexicurity and welfare reform: A review. Socio-Economic Review 7(2): 305–331. Wilthagen, T. (1998) Flexicurity: A New Paradigm for Labour Market Policy Reform? Berlin: WZB DP FS I: 98-202. Wilthagen, T. and Tros, F. (2004) The concept of ‘flexicurity’. Transfer, European Review of Labor Research 10(2): 166–186.

85

–6.25

–1.75

–3.25

Netherlands –0.86

–1.30

Portugal

Switzerland 0

0

–11.50

–0.32

–6.42

Italy

Japan

–9.00

0.19

–0.43

–0.50

0

Norway

Belgium

–0.97

–0.48

0.07

–0.49

0.41

–0.32

0

0

–0.55

–0.49

–0.94

–0.21

0.02

–0.16

–1.55

–2.47

0.05

0.04

0.04

0

0.63

0.01

–0.02

–0.01

0.10

1.69

–0.33

–2.18

1.75

1.35

1.13

–1.44

0.21

0.14

–0.41

0.14

–0.03

–0.28

0

0.03

–0.28

0.21

0.21

3.49

2.09

4.26

2.15

0.23

0.43

–2.28

1.58

—

1.86

–0.84

–2.04

0.43

1.39

–1.71

–1.74

–1.10

0.37

1.67

0.61

–0.07

1.71

0.04

0.18

–0.19

–0.04

2.56

0.38

–0.67

–0.81

–0.03

–0.03

–0.14

–0.04

–0.09

–0.04

0.06

–0.03

0.06

0.07

0.20

0.29

1.66

0.20

1.69

0.70

–0.38

0.24

–0.28

–0.16

8.65

–0.12

–0.28

2.47

5.53

–0.25

–0.62

4.24

4.51

7.12

0.23

–8.50

1.69

0.18

–10.00

–0.10

–0.03

0.37

–2.49

–1.37

–2.66

–0.20

–0.66

Germany

–0.55

–0.38

Greece

0.04

–0.99

–4.75

–0.40

–5.84

–0.05

Spain

–1.04

3.13

Workforce composition

–13.08

Activation

–0.74

Income maintenance

Sweden

Unemployment protection Unemployment % % % Involuntary Rate Permanent Temporary part-time

Employment protection

EPL EPL Union Collective UB UB MI MI ALMP Permanent Temporary density bargaining Replacement Spending Replacement Spending Spending rate rate

Country

Table 6.1A  Labour Market Protection Change (LMPC) score for each indicator

APPENDIX​

0.31

–0.29

–0.41

–0.47

–0.47

–0.65

–0.74

–0.78

–0.99

–1.19

–1.44

(Continued)

Christian democratic

Christian democratic

Christian democratic

Mediterranean

Mediterranean

Christian democratic

Social democratic

Christian democratic

Mediterranean

Mediterranean

Social democratic

LMPC Welfare regime score

86

0.20

–0.14

–1.42

Mean

–0.54

–0.30 0

–0.07 0.33

1.01 –0.01

0.45

0.07

1.84

5.80

1.32

0.34

1.41

6.35

0.83

0.13

–0.26

–0.02

–0.07

0.02

0.04

0.34

0.59

–0.20

–0.16

2.41

0.59

0.41

1.33

–0.26

1.06

1.03

0.63

0.49

Christian democratic

Social democratic

Social democratic

Christian democratic

LMPC Welfare regime score

Notes:   EPL Permanent = Employment protection index for permanent contracts; EPL Temporary = Employment protection index for temporary contracts; Union density = Union density; Collective bargaining = Percentage of the workforce protected by a collective bargaining agreement; UB Replacement rate = Unemployment benefit (average replacement rate of single and families); UB Spending = Unemployment benefit spending (unemployment compensation/severance pay); MI Replacement rate = Minimum income (average replacement rate of single and families); MI Spending = Minimum income spending as a % of the GDP; ALMP Spending = Active labour market policy spending as a % of the GDP; Unemployment rate = Unemployment rate; % Permanent = Percentage of the workforce holding a permanent contract; % Temporary = Percentage of the workforce holding a temporary contract; % involuntary part-time = Workers holding an involuntary part-time contract. The indicators displaying negative (sub-)scores are in bold, and positive sub-scores for unemployment rate, share of temporary and involuntary part-time contracts. Values for the four labour market protection dimensions are expressed as number of standard deviations from the value of the United States in 1990; values for the workforce composition are expressed as the relative deviation of each country from 1990; Data for minimum income spending for Greece is missing, the LMPC score for the Income maintenance dimension is computed on the replacement rate only. Source:   Authors’ elaboration from OECD (2019a, 2019b) and Scruggs et al. (2017).

–4.81

2.25

0.17

0

2.02

France

–0.22

0.83

2.31

0.07

2.85

0.51

–0.43

–0.24

–0.03

–7.00

4.30

2.01

0.06

–0.07

2.81

Denmark

0.35

0.41

–0.45

0.73

1.25

0.07

–2.41

0

Finland

–1.38

0.64

Workforce composition

0

Activation

–1.48

Income maintenance

Austria

Unemployment protection Unemployment % % % Involuntary Rate Permanent Temporary part-time

Employment protection

ALMP EPL EPL Union Collective UB UB MI MI Permanent Temporary density bargaining Replacement Spending Replacement Spending Spending rate rate

Country

Table 6.1A   (Continued)

PART II CHANGING CONTEXTS

7. Macroeconomic regimes and labour market policies Bob Hancké and Toon Van Overbeke

INTRODUCTION This chapter provides a review of labour market policies (LMPs) under changing macroeconomic regimes over the past century, broadly since the interbellum but with emphasis on Keynesian macroeconomics, the monetarist and related neo-liberal reactions, and our current uneasy mixture, which we characterise as New Keynesian. Our basic point is that the target groups, effects, and fundamental logic of LMPs change in line with the broader macroeconomic paradigm. This is related to the place that wages and employment play in the underlying macroeconomic theory: ranging from no active role in laissez-faire, over an outcome rather than a variable in Keynesian macroeconomics, to the key lever for adjustment in the ‘real’ economy under monetarism. Studying LMP thus also means, necessarily, understanding their – often forgotten or ignored – links with macroeconomics. Adopting the conceptual framework that informs this volume, we concentrate on three basic types of employment and labour market policies, and – at least in part – examine the way they interact and substitute for each other: employment promotion and support, job security, and income security. We will start this analytical review with the institutionalisation of key elements of LMPs in the interwar years as a relatively chaotic, and therefore open period, which led to what became the Keynesian welfare state. After an examination of that period and the generalised shift to ‘monetarist’ neo-liberalism in the 1980s, which inverted the relation, we will end with the current flux in both macro and LM policies, again emphasising the contingent character of the choices (see Baccaro and Pontusson, 2016; Hassel and Palier, 2021) Depending on the place of the labour market in the macroeconomic regime,1 primarily because of the institutionalised bargaining power of labour, both passive and active LMP reflect the interests of the working class within capitalism. When the governance problem shifts to one centred on the interests of capital, however, LMP changed in nature as well, with less permissive policies towards labour – weaker employment protection, more individualised training, a ‘weaker’ welfare state that concentrates on preparing workers for re-entering the labour market instead of shielding them, such as activation policies, and wider areas of what has become known as social investment (Hemerijck, 2018). While we are conscious of the coalitional and bureaucratic politics of paradigm changes (Hall, 1989, 1993), we will leave this examination of the political origins of shifts in macroeconomic and LMP regimes for another analysis and concentrate here on the ‘operational’, functional relations between macroeconomic and labour market policies. We start this chapter by situating our analysis in a simple theoretical framework, and then examine the formative interbellum years and the post-war Keynesian welfare state (ca 1945 to mid-1970s), before moving on to the monetarist reaction (1980s to early 2000s). The postmonetarist New Keynesian regime concludes our analytical review. Our review in this chapter 88

Macroeconomic regimes and labour market policies  89

is not just historical in the narrow sense but also analytical: it offers a comparison of different (and not just consecutive) macroeconomic regimes and their effects on the targets and instruments of LMP in those different economic policy regimes. Over the course of this chapter, we will discuss how changing visions of the macroeconomy shaped the rise of keynesian state intervention in labour markets, its retreat under monetarism as well as the more recent reemergence of state action in the knowledge economy.

7.1 MACROECONOMIC REGIMES AND LMP: A FRAMEWORK FOR ANALYSIS The starting point for our analysis is simple. Capitalism always faces a fundamental wage problem: it needs to ensure that wages grow at a rate that guarantees both growing investment through profits, and growing demand through private (mass) consumption (Hall, 2007). Stable growth requires coordinating these two imperatives; failure will lead to time inconsistency, producing inflation, stagflation, or depression. Labour market policy is one of a series of policy domains that seeks to help coordinate these two. It does so by addressing three underlying problems. One, how do individuals find a job? This question of employment promotion and support directs the focus to education and training policies, which guarantee entry and re-entry into the labour market. In this area, the policy orientation has shifted over time from an emphasis on citizenship and productivity to employability. Two, what happens when they are in a job? The issue of job security draws attention to wages, employment protection policies (EPL), legislation and parallel regulations, which protect those in the labour market. In this case, the broad shift over time is from stable jobs to an emphasis on structural reforms reducing the demands on employers. And three, what happens when they are out of a job? Income security is addressed through wage-setting systems and welfare policies writ large: collective bargaining for those in jobs; unemployment policies for those who are (temporarily) leaving the labour market; and retraining policies. Here the shift over time is from a general regime of ‘decommodification’ of labour to a recommodification, making labour adapted to market conditions, through unemployment and welfare reform, and active labour market policies. How government prioritises these underlying problems and the range of solutions it formulates to them is to a large extent related to the prevailing macroeconomic policy framework. Even though different ‘varieties of capitalism’ have developed different approaches to each of the problems (Hall, 2007), we will concentrate here on the similarities between the underlying problems and repertoires of solutions in the advanced capitalist world (Hall, 2021). That said, understanding the reflection of shifts in macroeconomic regimes in each of these areas of LMP is an exercise in political analysis. Since LMP ultimately determine life chances in capitalism, their articulation with macroeconomic regimes is shaped by the power constellations of labour and capital and their shifts over time. And here the diversity of arrangements in capitalism plays a much more important role. While all advanced capitalist systems and their labour markets have seen a certain degree of liberalisation and deregulation since the late 1970s, the organisational form of this process and its effects varied significantly (Iversen and Soskice, 2019). Neo-liberal monetarism, for example, was accompanied by deep labour market deregulation in the UK and the US, including the dismantling of labour relations and the marginalisation of trade unions in vast parts of the economy (Baldwin, 2003;

90  Handbook of labour market policy in advanced democracies

Rosenfeld, 2014). In north-western Europe, however, the onset of competition resulting from the macroeconomic shift heralded a more decentralised but also more cooperative industrial relations model that internalised the cooperative gains while socialising the costs of adjustment onto less skilled and less protected groups in the labour market (Baccaro, 2014). In sum, we will examine how the different political economies of advanced capitalism influenced the emerging functional complementarities between macroeconomic regimes and policies that governed the labour market

7.2 THE GOLDEN AGE OF CAPITALISM AND THE LABOUR MARKET The period 1920–1945 witnessed the first important steps in a redefinition of the link between macroeconomic regimes and labour market governance. The economic and political crises of the 1930s, the war economy and post-war reconstruction reflected the collapse of the laissezfaire regime, in which the economy, including the labour markets, was seen as tending towards equilibrium and deviations were the result of rigidities. Political struggles over ‘managed capitalism’, against the background of a patchwork of labour market governance systems after WWI and an embryonic private-public welfare state (concentrating on unemployment, health, and existing old-age pensions), were streamlined after 1945 into what became known as the ‘post-war settlement’ (Gourevitch et  al., 1984). This involved a series of tacit and explicit understandings between capital and labour, often under the aegis of the state, that left much of the micro-level of the economy to the former in exchange for social and economic benefits for labour. It also involved the political recognition of labour unions and social democratic parties (Crouch and Pizzorno, 1978) or, when the settlement excluded organised labour as in Italy and France, a centre-Right policy equivalent (Gourevitch et al., 1984). The war and post-war decades saw, in the European and American economies at the centre of the capitalist world, an unprecedented flurry of activity in macroeconomics, industrial policy, labour markets and welfare policies. The outcomes are instructive. In the 1920s, government spending typically accounted for about 15% of GDP; by 1950 this had doubled or more. Before the 1930s, unemployment was seen as a sign of high wages that priced labour out of the market, not of low demand as it became in the post-war era; economic policy was mercantilist and protectionist for the economy as a whole, and purely supply-side-oriented for business. By the 1960s, pushed by the Bretton Woods regime and European integration, a new economic model was emerging (Shonfield, 1965), which combined free international trade and domestic government intervention (Rodrik, 2011). This regime shift from laissez-faire to a Keynesian ‘mixed’ economy was spawned by experiences in the war economy, both in the Axis and the Allied powers, which became the handmaiden of the move to a new conception of policy in the economy. It demonstrated the beneficial effects of government control of the economy, cooperation between labour and capital, and the planned production of skills. While not everything went as smoothly as optimistic interpretations of the war economy suggested (Barnett, 1986), economic planning, Keynesian aggregate demand management, enhanced labour rights, and an extensive welfare state became the key elements of the post-war regime. In addition to labour market and social policies, mass education was extended, vocational and technical training reorganised to meet some of the requirements of industry under joint administration by the state, organised labour,

Macroeconomic regimes and labour market policies  91

and organised business (Crouch, 1993). Finally, to counterbalance the inflationary pressures of full-employment policies, central wage-setting and other income policies were introduced. Employment promotion in this New Keynesian regime was a direct consequence of the underlying economic philosophy of full employment as its central goal. Through macro-level aggregate demand management, governments aimed at keeping output at a level that absorbed all available labour and used a significantly expanded education system as a means of increasing labour productivity. This, in turn, translated into non-inflationary higher real wages, which completed the cycle: rising real wages meant that demand had an upward trajectory, business investment rose on the back of that, and full employment would be the structural outcome. In contrast to the laissez-faire regime that preceded it, and the ‘neo-liberal’ regime that followed, the economy’s supply side, and the labour market in particular, played almost no role in the process. Full employment may have been the goal of economic policy, but that was seen as the result of processes in financial and product markets. In fact, most government policy in labour-market-related areas balanced passive measures with the expansion of new possibilities. Job security was protected through increased legal employment protection (EPL), policed by the law or by trade unions. At the end of the 1970s, EPL scores were at their peak everywhere – even in countries without strong trade unions. But governments also relied on training and retraining as tools in labour market policy that would foster adjustment – in fact, the more Keynesian the orientation, the more the government relied on them, as in Sweden. In that country, which ran an almost permanent full employment regime with a highly centralised wage bargaining system from 1950 to 1990, companies were, as it were, expected to fail: setting one wage for all companies implied that those with weak productivity would be unable to pay the high centrally set wages and thus raise their game or go bankrupt (Gourevitch et al., 1984); unwilling to let workers suffer because of the perceived lack of dynamism of employers, however, the government retrained them, at almost full wage, to allow them to take up a job in growing companies or sectors. The welfare state and complex wage-setting regimes played two very different (though complementary) roles in this stylised Keynesian model. In one respect they were key elements in income protection. Trade unions – or a statutory (minimum) wage policy where unions were weak – guaranteed rising real wages for all. The expanding welfare state, in turn, guaranteed a decent replacement income to tide unemployed workers over during a period of inactivity between jobs. Following the Keynesian logic that the state of the labour market was the outcome of economic policy and not the means of adjustment, health and other benefits were relatively generous, covering a high share of the last wage, and for a long period, to allow workers to search for well-suited jobs. But unions and the welfare state also became active components in the wider aggregate demand management regimes, even in countries such as France and the UK which had, for a variety of historical reasons, failed to develop the tripartite or bipartite neo-corporatist structures that prevailed in the northwest of Europe, and which therefore depended much more on government policies to steer aggregate demand. In other words, the fundamental principles at the basis of economic policy in this period relied almost organically on their articulation with the three areas of LMP. High wages secured high demand, but potentially at the expense of profits, which would endanger steady investment. The need for labour productivity increases was therefore doubly important: as a substitute for modest capital accumulation and as a means of securing profits to invest. The unions that negotiated wage increases were part of the governance regime, because they had to balance rising wages against employment: since in the short run high wages forced companies to

92  Handbook of labour market policy in advanced democracies

reduce employment or investment (i.e. future employment), they imposed a wage floor set by inflation and a ceiling by labour productivity to secure profits and avoid inflation. Education, leading to skills that raised the productivity frontier, thus became a crucial component of the pressures on business that Keynesian aggregate demand management produced. Between the mid-1950s and the mid-1970s, the rich West witnessed the consolidation of this model of economic governance in the ‘Keynesian welfare state’, in which wages and aggregate demand had become active components of macroeconomic steering, with productivity as the lynchpin of the system.

7.3 THE ‘MONETARIST’ REACTION By the early 1970s, this Keynesian model began to run into its limits when a combination of exogenous and endogenous factors pushed much of the industrialised world into a new ‘monetarist’ macroeconomic paradigm. Firstly, for most industrialised economies the post-war model of extensive growth, relying on reconstruction and the shift from primary to secondary sectors, ran out of steam (Eichengreen, 2006). Against this background of flatlining productivity, two decades of full employment and uninterrupted growth of unions allowed labour to steadily increase its share of value-added. This had several direct consequences: rapidly rising wages and prices, falling competitiveness and overall reduced incentives for capital to invest (Crouch and Pizzorno, 1978; Goldthorpe, 1978). Put together, these trends created a mismatch between wages and productivity growth, which was ultimately put into overdrive when the 1973 oil shock caused sharp increases in the price of oil and other commodities. Keynesianism soon found itself confronted with unemployment and inflation, a combination of problems to which the dominant model of demand management had no antidote. Under the logic of the Phillips curve (Phillips, 1958), any expansion in employment would necessarily lead to rising inflation and vice versa. Recurrent attempts by European governments to stabilise the economy therefore only aided in ramping up painful wage-price spirals and cementing stagflation. In the context of Keynesianism’s faltering policy mix, a new macroeconomic doctrine gained the upper hand, according to which active intervention in the macroeconomy could never be the solution; government was the problem (Friedman, 1993). Building on the idea of rational expectations and perfectly competitive markets (Friedman, 1968; Lucas, 1977), monetarists punctured the notion that government could affect employment in anything but the short term (Iversen and Soskice, 2006). Since democratic governments seeking re-election would prioritise a high-employment over a low-inflation equilibrium on the Phillips curve, long-term commitments to low inflation could never be deemed credible. Markets would simply internalise future inflation, nullifying any expansionary action on behalf of the government. Keynesian demand management had, under this logic, only one possible outcome: further inflation and dragging unemployment. The key to reaching full employment (or better: the NAIRU, i.e. the unemployment rate at which inflation would not accelerate – the key economic policy target by then) in a monetarist regime was therefore to constrain government – and particularly its role in aggregate-demand management. Macroeconomic theory prescribed two mechanisms to do this. The first and most obvious one was fiscal consolidation, or in other words, decrease government spending. The British government, for example, cut its spending as part of gross national product from

Macroeconomic regimes and labour market policies  93

more than 40% annually in the mid-1970s to around 30% a decade later. High-deficit countries such as Belgium and Italy, meanwhile, were forced through a painful fiscal adjustment during the 1990s as a prerequisite to join the Euro. Where governments stepped away, central banks emerged as the new orchestraters of the macroeconomy. Economic policy was, according to monetarist thinking, in essence a search for low, and ideally zero, inflation; this was accomplished through conservative, independent central banks with a clear mandate of price stability. In short, the first step to cure labour markets, and reduce unemployment, for the new paradigm was to stabilise the macroeconomy. Central banks and markets should impose the economy’s speed, not politicians. With both macroeconomic levers ‘frozen’, monetarist labour market policy was free to focus on what really mattered in its eyes: the supply-side and the microeconomy. This premise that markets are the most efficient mechanism to allocate resources, underlying the shift in macroeconomic policy, left a big footprint on labour market protection across advanced economies. For monetarists, the only sustainable way toward full employment was to let prices and wages adjust and reflect market clearing. Failure to reach such an equilibrium (i.e. the persistence of unemployment), then, came down to structural rigidities, typically stemming from ‘excessive’ regulation. Government had to get out of the way – or better, pursue labour market policies that take the form of deregulatory ‘structural reforms’, aimed at ironing out any wrinkles in the market. This was especially true in a globalised world, where unemployment as well as workers’ purchasing power increasingly depended on the external competitiveness of the domestic economy. With access to the twin levers of Keynesian macroeconomic policy (monetary and fiscal policy) cut off, governments under the monetarist paradigm were left with only structural reforms such as flexibilisation and wage constraint to push through real-exchange rate adjustment. Labour markets, in short, became one of the key areas of monetarist engagement in a pursuit to most efficiently allocate human capital in the economy. Labour under the monetarist paradigm, therefore, was a residual factor, bearing all the burden of economic adjustment. So, what might qualify as rigidities worth ‘adjusting’? On the whole neo-liberalism (the political project built on monetarist economics) aimed to dismantle two key tenets of Keynesian labour market policy. Firstly, organised labour came under severe pressure for its role in pushing wages towards monopolistic rather than efficient market levels. Thatcher and Reagan famously led the way by breaking the British miners’ strike and the American Air Traffic Controllers’ strike in the 1980s. However, as Hall (2021) has pointed out, liberal economies were not the only ones pressuring unions. In most continental European economies, too, governments broke the peak bargaining power of organised labour and shifted much of its influence to the firm or plant level (Pontussen and Swenson, 1996; Thelen, 1993). The centralised wage bargaining model that had characterised Sweden during the post-war period was slowly dismantled during the eighties and ultimately abandoned when the peak employers’ organisation (SAF) dissolved its own centralised bargaining unit in 1990. It is important to note that these changes were not all the direct result of monetarist theory. For one, elevated levels of unemployment across the industrialised world weakened labour’s hand. The advent of ICT, at the same time, fostered a labour market in which rising productivity was increasingly concentrated among a new class of skilled professionals (Goldin and Katz, 2010), which eroded political cohesion within labour as well (Iversen and Soskice, 2015). In some countries, the challenge to organised labour has gone hand in hand with attacks on the minimum wage. In the US, for example, the federal inflation-adjusted minimal wage has declined

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since the late sixties: the nominal minimum wage increased over time, yet those increases have not kept up with inflation and productivity and it has become cheaper for employers to hire workers in many States. For monetarist policymakers this simply means there has been less interference in markets to ‘correctly’ price labour. In terms of job quality and employment security, in short, the rise of the monetarist paradigm proved a rough wake-up call for many segments of the labour market across most advanced economies. Labour market regulations were not the only issue standing between monetarist and market-clearing wages. Monetarism also prescribed the dismantling of the Keynesian welfare state and the broad income security it provided. Between the 1970s and 1990s, most European governments substantially cut programmes such as unemployment benefits, paid sick leave, and accident insurance. (Korpi and Palme, 2003). This welfare spending, previously heralded as a means to blunt capitalism’s sharp edges, was now seen as a key source of distortion (Hemerijck, 2015). Employers and workers under welfarist regimes could not simply contract under market conditions, since the latter would hold always out for wages that exceeded the income provided by social security, whilst cumbersome health and safety regulations rather than the market dictated working conditions, and the administration of the welfare state required taxation levels that sapped entrepreneurial incentive. For monetarists, in other words, the (welfare) state was not a safety net, but a burden that artificially boosted reservation wages and gave rise to harmful regulation and excessive taxation. As Pierson (1994: 105) pointed out, the Thatcher government was very critical of ideas such as income support, claiming benefits raised the ‘Why work?’ question while the racialised notion of ‘welfare queens’ made headway in the United States. Taxing benefits and phasing out earnings supplements therefore became important tools in labour market policies. Income replacement rates for the unemployed thus declined significantly across most of the OECD, from around 65% to 55% (Korpi and Palme, 2003). At the same time, labour market deregulation led to a proliferation of temporary contracts and non-standard forms of employment, which rose from about 10% of the labour force in the 1980s to more than 13% in 2000 among the OECD14 (OECD, 2019). In terms of the three dimensions of labour market policy that guide this volume, employment promotion and support, job security, and income security, it becomes obvious that for monetarists these questions were intimately linked. The central argument for monetarists was that Keynesian answers to the final two questions were the primary source of problems regarding the first. That is to say, unemployment and poor allocation of human capital stemmed from excessive labour regulation, centralised bargaining, and distorting welfare state provisions. Without a government disrupting market prices and incentives, labour markets would surely reach equilibrium, and any remaining unemployment would prove frictional (workers moving from one job to the next) rather than structural. In what Okun (1975) dubbed the trade-off between equality and efficiency, governments were therefore confronted with a choice between a stable economy that created jobs and efficiently allocated resources, or one where unions bargained for fairer wages and improved working conditions while welfare programmes soaked up social problems. For monetarists, the former would always be superior, because the latter implied a suspension of the market, including the labour market, which was an axiomatic cornerstone of the policy regime. The guiding principles of most labour market reform from the 1980s onwards was therefore deregulation and limiting the role of the state and unions; labour markets would reach their own equilibrium as part of a general equilibrium.

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7.4 THE NEW KEYNESIAN CONSENSUS Despite these ambitious propositions, monetarism received major pushback. On the one hand, welfare retrenchment and the stripping of labour protections have proved to be politically unpopular (see Pierson, 1994), leaving many voters to wake up to the ruthlessness of the ‘unfettered’ markets. This is particularly true in the context of rising ICTs (Brynjolffson and McAfee, 2014) and global value chains (Dicken, 2015) which have caused a shift towards increasingly polarised labour markets in industrialised economies. In a world where firms can efficiently substitute (often medium-skilled) workers with technology and/or benefit from a system of international labour market arbitrage to offshore parts of production to cheaper parts of the world, European labour markets have become a more precarious place (Baldwin, 2016, 2019). At the same time, these markets have exposed themselves to be somewhat less perfect than proposed by monetarist theory. In recent decades recurrent (financial) crises demonstrated that they are neither perfectly rational nor efficient. This has opened the door for ‘New Keynesianism’ to reintroduce parts of the government as an actor in economic policy. What does this so-called ‘New Keynesian’ macroeconomic paradigm entail? Like neoclassical economics, New Keynesianism is built on the idea of rational expectations and a depoliticised monetary policy that counteracts excessive wage claims and disproportionate fiscal impulses from the government (Iversen and Soskice, 2006). However, in contrast to monetarism, this new approach is grounded in a belief in ‘market failures’: when left to their own devices, markets are neither rational nor perfectly competitive (Akerlof, 1978; Carlin and Soskice, 2006). This has two important implications for labour market policy. Firstly, it prepares the ground for the idea that rigidities are normal, and that prices and wages rarely reflect market forces but tend to be sticky (Iversen and Soskice, 2006). Secondly, if there always is slack in the system and markets or agents are not perfectly rational, then there is little reason to believe supply and demand for skills and jobs will endogenously reach an optimal equilibrium. For New Keynesians, this means the door towards more active government intervention in the labour market has creaked open once again. Governments are increasingly aware of the positive role they can play to increase employment, both through investment and reform. We have therefore witnessed the (slow) re-emergence of the state in the labour market through the development of the social investment paradigm and associated active labour market agendas. Let us start by understanding how this shift has affected employment promotion policies. Here, changes in thinking and the evolving structure of the knowledge economy have induced governments to invest in citizens and their long-term employability. As indicated before, the New Keynesian paradigm no longer assumes all unemployment will be frictional under competitive market conditions. At the same time the shift from a primarily goods-based to information-based economy has in many OECD countries intensified the pace of technological change and paved the way for a continuously shifting labour market (see Thelen, 2019; Diessner et al., 2021; Autor et al., 2021). In this context it has become morally and politically unrealistic to shift the burden of adjustment to individuals, and governments increasingly take an active interest in investing in the ‘stock’ of human capital (Hemerijck, 2018). In general, this has meant that rather than letting the market come up with solutions by itself, governments have pursued active policies of higher education expansion and differentiation to provide citizens with the tools to cope with labour market changes. For example, in 2015 the UK introduced an apprenticeship system to its higher education market which blends on-the-job and academic training. The introduction of this ‘dual’ higher education track in the UK is

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specifically aimed at narrowing the mismatch between the educational offer by universities and the increased demands for more technical skill profiles by employers. The EU, meanwhile, has actively pushed a lifelong learning programme to ensure that at least 60% of its active population engages with (re)training by 2030. In a world of ubiquitous innovation and changing skill demands, education is therefore increasingly seen as the key source of labour market resilience for workers in the ‘race between education and technology’ (Goldin and Katz, 2010). Employment promotion policies have therefore shifted to ensure employability through a social investment logic. This shift towards investing in human capital, likewise, has some important implications for how thinking on labour protections has evolved – or indeed has not. While a slightly more flexible stance on spending, as investment, has offered governments some room to manoeuvre, in the new paradigm, labour is still seen as a residual factor tasked with bearing much of the burden of economic adjustment, within a paradigm that predominantly focuses on microeconomic rigidities. For example, during and after the 2008 financial and sovereign debt crises, internal devaluation through wage restraint and labour market flexibility have remained core tenets of the policy mix. To that end, troika recommendations to debtor countries such as Greece, Portugal, and Ireland have included further bargaining decentralisation and labour market deregulation. As a result, collective bargaining has become even more decentralised throughout the OECD (Visser, 2019) in the wake of the 2008 financial crisis, while union membership has continued to dwindle as well (Visser, 2009; Vandaele, 2019). Interestingly though, New Keynesianism does not a priori dismiss collective bargaining as a source of macroeconomic problems. Instead, it insists that both highly centralised and decentralised bargaining systems can produce wage settlements that reflect what employers can pay without passing costs to consumers (Calmfors and Driffil, 1988; Layard et al., 1991). In general, however, policy has tended to favour flexibilisation because it is seen as a complement to the demands of the knowledge economy. Shifting skill demands have led many academics and policymakers to consider protection of careers over jobs, by promoting flexible labour markets which provide firms with the freedom to manoeuvre while ensuring ample opportunities for individual workers to re-skill and be re-inserted into the labour market. Finally, what does the New Keynesian logic of flexibility and investment mean for income security in advanced economies? The new paradigm has tried to tweak the approach to unemployment benefits through the introduction of the so-called ‘flexicurity model’ based on the Danish success story. Like monetarist policy, flexicurity tries to foster a ‘transaction-friendly’ labour market (Bekker and Mailand, 2019) of limited employment protection in which firms are relatively free to hire and fire, while at the same time ensuring income replacement for workers that are made redundant. However, in contrast to the passive Keynesian welfare state this flexicurity model revolves around a broad range of so-called activation policies which are aimed at preventing frictional unemployment turning into structural unemployment. Benefit recipients are increasingly monitored over the course of their period of inactivity. This includes regular check-ins regarding job searches and the creation of individual action plans by employment counsellors. In addition, benefits often become limited and/or lower over time (OECD, 2021). This activation logic is seen as complementing the social investment logic found in other areas of labour market policy. Many governments have taken active steps to incentivise the hiring of unemployment recipients (particularly younger ones) and to roll out vocational training programmes or retraining voucher schemes to re-skill and upskill workers (see ILO, 2019 for more on this). The Macron government’s 2019 overhaul of French labour

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markets, for example, did not just include a reform of apprenticeships and vocational training but also explicitly aimed at gradually reducing benefits over time while also setting stricter rules about the initial level of benefits. Italy’s 2015 Job Act, meanwhile, introduced a national agency called ANPAL (Agenzia Nazionale Politiche Attive del Lavoro), to administer these so-called ‘active labour market policies’ (ALMs) aimed at incentivising employment and easing labour market (re)entry. Regarding labour market policy, New Keynesianism therefore seems to have followed monetarism in the sense that policy ought to focus on maximising the chances that citizens find jobs (but not on the wings of an expansive government-led aggregate demand management regime) and has accepted monetarism’s premise that to do so means limiting some of the labour protections for those who are employed. The guiding principle here is to lower barriers to labour market (re)entry and to ensure a smooth job-matching process considering evolving skill requirements. However, the emergence of the social investment state and ALMPs have nevertheless signalled a significant shift regarding what happens when people find themselves without a job. Put together this suggests that New Keynesian labour market policy lies somewhere between the monetarist market-based approach and a whole new way of thinking. On the one hand it remains fully grounded in a supply-side paradigm that focuses on eliminating rigidities from the market. In contrast to monetarism, though, New Keynesianism sees the government as the solution to rather than the source of many microeconomic rigidities. Governments have therefore become increasingly ‘hands-on’, particularly in their approach to developing human capital. To do so, they have also become increasingly active in fiscal terms, not least since training-based ALMPs can be quite expensive. However, this spending is functionally different from the expansive macroeconomic policies under Keynesianism. Rather than aiming to manage aggregate demand, New Keynesians subscribe to the ‘golden rule’ of government spending: borrowing is only justified in terms of investment. In short, while New Keynesianism has brought the government back into the labour market, it has done so largely on monetarist terms.​

CONCLUSION: LOOKING AHEAD Macroeconomic regimes and LMP are tightly linked into mutually articulated and mutually reinforcing configurations. Both paleo- and neo-liberalism fixed all other levers of economic policy and thus used the labour market as the main means of adjustment – by defining unemployment as a mismatch between wages and labour demand in the first, and as a combination of that and activation policies in the second. The Keynesian interlude between 1945 and 1985, in contrast, saw demand as the ultimate driver of economic growth and employment; in that framework, LMP offered opportunities for the equalisation of life chances through education, job protection, and passive welfare measures to mitigate the negative effects of business cycles. In comparative political economy, such tight links between elements in an institutional and policy framework are called ‘complementarities’: two individually potentially suboptimal elements have positive joint effects that are considerably more than their sum. We think something similar went on in the historical links between macro-regimes and labour market governance. The key driver of the articulation between macroeconomics and labour markets is the endemic distributive conflict in capitalism over productivity gains between profits (investment)

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Table 7.1  Summary of macroeconomic paradigms and their labour market prescriptions Vision of the macroeconomy

Employment promotion and support

Job security

Income protection

Keynesianism

State-led aggregate demand management

Active fiscal policy aimed at promoting full employment

Broad EPL and active role for unions

Broad and passive welfare state provision

Monetarism

Belief in efficiency of markets under stable macroeconomic conditions

Combination of limiting role of government in macroeconomy and structural reforms

Limiting EPL and role of unions

Welfare state retrenchment

State investment into employability

Limiting EPL

Income security linked to reactivation policies

New Keynesianism Limited government investment to solve market failures

and wages, which oscillated over time (Gingerich and Häusermann, 2015): to the benefit of capital before WWII and after the victory of neo-liberalism in the 1980s, and more balanced during the Golden Age of capitalism. The exact nature of the link between macroeconomics and LMP is, therefore, fundamentally a political problem, covering struggles over the organisation of labour market regulation, the definition of interests in the regimes, and the institutional arrangements to moderate conflict. Productivity, especially labour productivity, is a key element in the development of capitalism. Rising productivity alleviates the distributive conflict by enlarging the pie, and as a central component of unit labour costs (the cost in wages of producing one unit of a good or service), which is at the heart of many of the neo-mercantilist, export-led regimes in much of the OECD today. That centrality, however, produces two insurmountable paradoxes. One is the well-known beggar-thy-neighbour problem: one economy needs to absorb adjustment shocks by importing from the other(s). While the USA played that role for much of the postwar world economy, Germany is reluctant to do so for Europe and the eurozone. In fact, some of the dominant interpretations of the EMU crisis of 2010 revolved around the country’s stubborn insistence on domestic internal devaluations (Hancké, 2013; Baccaro and Tober, 2021). The second paradox is of direct interest to us here: the neo-mercantilist model simultaneously requires a deregulation of wages and working conditions and more coordination regarding training to increase productivity. The first is, in the standard textbook analyses, necessary to make businesses more competitive; the second because skills remain one of the key ingredients for any productivity drive. Since markets underproduce collective goods such as skills, and individual companies would adopt short-sighted, self-serving training policies, the private sector is not well-placed for the task. Governments are relatively poorly equipped to understand private sector skills needs as well, in large measure because of the deep information asymmetries that surround anything beyond general education (where governments do play a central role). More coordination in training policies to increase their efficiency is hard to produce without relying on associations

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that overcome these information problems – employers’ associations – and trade unions that police the quality and transferability of skills. In other words, precisely the actors that require dismantling in the competitive strategy are necessary to improve competitiveness, and a large part of the economic uncertainty, dynamism, and experimentation over the last three decades reflects that paradox. How can these insights become part of future research agendas? The interest of research into the linkages between macro paradigms and LMP lies in the macro-level constraints and possibilities that policymakers face. It makes no sense to develop an ‘expansive’ labour market policy if the macroeconomics are fundamentally restrictive. Low demand will not create more and better jobs – not even when LMP are fundamentally repressive, as they have been in the UK and the US since the 1980s. The results of such policies are insecure jobs, working poor, and falling real wages. While small countries can to some extent circumvent the macroeconomic constraints because their implicit beggar-thy-neighbour economic policies raise domestic demand in net terms, larger economies are unable to do so, and restrictive policies there ultimately have negative spillovers, possibly even for many of their smaller neighbours. Developing a better understanding of the links between macroeconomic regime and the labour market policy regime is therefore of more than academic interest. That, inevitably, brings us to the future. The combination of the Great Recession following the financial crisis and the COVID-shock in the space of one decade has raised serious question marks about the new macroeconomic regime. If central banks are pushing for easy money (at least until the 2022–23 inflation scare), conservative finance ministers are clamouring for higher wages, the OECD and IMF are relaxed about fiscal expansion, and the WEF meetings in Davos spend time discussing inequality and the climate crisis, something is unfolding for which we do not have words – or at least not yet. But if this heralds a new macroeconomic regime, then the underlying approach to labour market policies will change as well. We see two basic scenarios in that regard. The first one we call the Grand Arc. The main driver is the continuing atomisation of the labour market, with increasingly more people drawn into gig-type jobs, and stable jobs falling in numbers (e.g. because of outsourcing in the public sector) and automation putting downward pressures on wages. For many, especially the low-skilled jobs with abundant labour supply, this will mean lower incomes and more precarious working conditions. All other things equal, this would ask for a reduction of EPL-type regulations and an extension of passive LMP. Ironically such a lighter regulatory framework could actually benefit those in higher-skilled jobs in the knowledge economy, who can command higher wages against a background of semi-private welfare arrangements and labour market policies, such as pensions, education, training and retraining, etc.). Their chances of precarious employment are very low, and as a result, their interests will pull in the direction of relatively lower social protection (Iversen and Soskice, 2019). That divergence in the fate of the top and bottom of the labour market will quickly direct us to a new version of the Gilded Age and Depression economics. We know where that ended. Alternatively, we can think of it as the Short Arc: the political economy of LMP produces a return to labour market governance along the lines of what we knew in the Keynesian Golden Age. While aggregate demand management is more active in this new era, it keeps a closer eye on inflation and debt sustainability (as Keynes originally suggested). Since high demand equals low unemployment, this regime stabilises the basic employment risks, and it is not impossible to imagine a world in which this co-exists with active LMP and post-COVID

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patterns of work to produce an LMP ecology that produces a significant convergence of life chances. Which one of these scenarios will prevail is a result of political struggles – over the meaning of the problems and where to look for solutions. Ideas are important in these struggles, but not without coalitions that are the social-political bearer of these new ideas. And here the problem is simple yet large: the constituent groups of the progressive ‘rainbow’ coalitions have vastly different conceptions of economic policy priorities (Iversen and Soskice, 2019). Some of them legitimately favour a return to the classical full-time contract, with passive LMP in an expanded welfare state as a fallback position. Others will, equally legitimately, request more flexibility, either for personal or professional reasons: both working mothers (in the domestic status quo) and highly skilled gig workers such as specialised consultants and architects, benefit from less rigid labour markets with their roots in industrial societies. Since squaring that circle will not be easy, the monetarist-inspired labour market policies may simply live on by default.

NOTE 1. In this chapter, we will refer to regime’ and ‘governance’ as, respectively, the relatively stable, highly institutionally embedded bundles of policies with regard to economics and the labour market; and to policies as the individual, usually short- and medium-term-oriented individual legal and administrative instruments. Regimes and governance can therefore survive changes in individual policies (though likely not in constitutive ones).

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Calmfors, L. and Driffil, J. (1988) Bargaining structure, corporatism and macroeconomic performance. Economic Policy 3(6): 13–61. Carlin, W. and Soskice, D. (2006) Macroeconomics: Imperfections, Institutions, and Policies. Oxford: Oxford University Press. Crouch, C. (1993) Industrial Relations and the State. Oxford: Oxford University Press. Crouch, C. and Pizzorno, A. (eds.) (1978) The Resurgence of Class Conflict in Europe Since 1968, Vol II: Comparative Studies. New York: Holmes and Meier. Dicken, P. (2015) Global Shift. New York: Guilford Press. Diessner, S., Durazzi, N. and Hope, D. (2021) Skill-Biased Liberalization: Germany’s Transition to the Knowledge Economy. Politics and Society: Firstview. Eichengreen, B. (2006) Introduction to the European Economy Since 1945: Coordinated Capitalism and Beyond. Princeton, NJ: Princeton University Press. Friedman, M. (1968) The role of monetary policy. American Economic Review 58(1): 1–17. Friedman, M. (1993) Why Government is the Problem. Stanford, CA: Essays in Public Policy No. 39. Gingrich, J. and Häusermann, S. (2015) The decline of the working-class vote, the reconfiguration of the welfare support coalition and consequences for the welfare state. Journal of European Social Policy 25(1): 50–75. Goldin, C. and Katz, L. (2010) The Race Between Education and Technology. Cambridge, MA: Harvard University Press. Goldthorpe, J. (1978) The current inflation: Towards a sociological account. In: F. Hirsh and J. Goldthorpe (eds.) The Political Economy of Inflation. Cambridge, MA: Harvard University Press. Gourevitch, Peter A., Martin A., Ross, G., Allen, C., Bornstein, S. and Markovits, A. (1984) Unions and Economic Crisis: Britain, West Germany and Sweden. London: Allen & Unwin. Hall, P. (1989) The Political Power of Economic Ideas: Keynesianism Across Nations. Princeton, NJ: Princeton University Press. Hall, P. (1993) Policy paradigms, social learning and the state: The case of economic policy-making in Britain. Comparative Politics 25(3): 275–296. Hall, P. (2007) The evolution of varieties of capitalism. In: B. Hancké, M. Rhodes and M. Thatcher (eds.) Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy. Oxford: Oxford University Press. Hall, P. (2021) How growth strategies evolve in developed democracies. In: A. Hassel and B. Palier (eds.) Growth and Welfare in Advanced Capitalist Economies: Have Growth Regimes Evolved? Oxford: Oxford University Press. Hancké, R. (2013) Unions, Central Banks and, EMU: Labour Market Institutions and Monetary Integration in Europe. Oxford: Oxford University Press Hassel, A. and Palier, B. (2021) Growth and Welfare in Advanced Capitalist Economies: Have Growth Regimes Evolved? Oxford: Oxford University Press. Hemerijck, A. (2015) The quiet paradigm revolution of social investment. Social Politics 22(2): 242–256. Hemerijck, A. (2018) Social investment as a policy paradigm. Journal of European Public Policy 25(6): 810–827. ILO. (2019) What Works: Promoting Pathways to Decent Work. Geneva, Switzerland: ILO Studies on Growth With Equity. Iversen, T. and Soskice, D. (2006) New macroeconomics and political science. Annual Review for Political Science 9: 425–453. Iversen, T. and Soskice, D. (2015) Democratic limits to redistribution: Inclusionary versus exclusionary coalitions in the knowledge economy. World Politics 67(2): 185–225. Iversen, T. and Soskice, D. (2019) Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century. Princeton, NJ: Princeton University Press. Korpi, W. and Palme, J. (2003) New politics and class politics in the context of austerity and globalization: Welfare state regress in 18 countries, 1975–1995. American Political Science Review 97(3): 425–446. Layard, R., Nickell, S. and Jackman, R. (1991) Unemployment: Macroeconomic Performance and the Labour Market. Oxford: Oxford University Press. Lucas, R. (1977) Understanding business cycles. Carnegie-Rochester Conference Series on Public Policy 5(1): 7–29. OECD. (2019) OECD Employment Outlook 2019: The Future of Work. Paris, France: OECD.

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OECD. (2021) Institutional Set-Up of Active Labour Market Policy Provision in OECD and EU Countries: Organisational Set-Up, Regulation and Capacity. Paris, France: OECD Social, Employment and Migration Working Papers No. 262. Okun, A. (1975) Equality and Efficiency, the Big Tradeoff. New York: Brookings Institute. Philips, A. (1958) The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861–1957. Economica 25(100): 283–299. Pierson, P. (1994) Dismantling the Welfare State: Reagan, Thatcher and the Politics of Retrenchment. Cambridge, MA: Harvard University Press. Pontussen, J. and Swenson, P. (1996) Labor market, production strategies, and wage bargaining institutions: The Swedish employer offensive in comparative perspective. Comparative Political Studies 29(2): 223–250. Rodrik, D. (2011) The Globalization Paradox: Democracy and the Future of the World Economy. New York and London: Norton. Rosenfeld, J. (2014) What Unions No Longer Do. Cambridge, MA; Harvard University Press. Shonfield, A. (1965) Modern Capitalism: The Changing Balance Between Public and Private Power. Oxford: Oxford University Press. Thelen, K. (1993) West European labor in transition: Sweden and Germany compared. World Politics 46(1): 23–49. Thelen, K. (2019) The transition to the knowledge economy in Germany, Sweden and the Netherlands. Comparative Politics 51(2): 295–315. Vandaele. (2019) Bleak Prospects: Mapping Trade Union Membership in Europe Since 2000. Brussels, Belgium: ETUI Publications. Visser, J. (2009) Union membership statistics in 24 countries. Monthly Labour Review January 2006: 38–49. Visser, J. (2019) What happened to collective bargaining during the great recession? IZA Journal of Labor Policy 5: 9.

8. Women, work, and labour market policy Sonja Avlijaš

INTRODUCTION1 Labour market policy (LMP) responds to labour market risk. What types of labour market risks do women in Europe face? Are women’s labour market risks different from those that are faced by men? How have these risks evolved since the 1980s, during which time we have witnessed the great economic restructuring towards trade liberalization, post-industrialization, expansion of the knowledge economy, and information and communication technology (ICT)led growth? Can LMP assist women when it comes to managing their labour market risk, and which specific LMP areas seem to be more relevant for women? How do LMPs interact with countries’ different institutional arrangements and economic structures to produce genderspecific effects? Contemporary economics, political economy, and social policy scholarship, especially within the feminist tradition, has abundantly examined how employment-supporting public policies, such as provision of childcare, maternity leaves, educational opportunities for women, child benefits, and other government programmes within the realm of family policy, affect female work opportunities. Much less attention, however, has been paid to the specific role of LMPs. This is an important literature gap since women have supposedly benefited from the era of liberalization and transition to the service economy. These secular shifts and the policy and institutional reforms which underpinned them have created more employment opportunities for them. At the same time, women still earn less than men and they tend to have more precarious and unstable attachments to the labour market, even in the more advanced welfare states of the European Union (EU), which likely makes them more dependent on the supportive role of LMP. Women are also disproportionately impacted by labour market shocks and crises. Most recently, the COVID-19 pandemic has hit women much harder due to the types of jobs, occupations, and sectors within which they work (they are over-represented among ‘essential’ workers), and due to their greater responsibility for social reproduction (Jepsen, 2021). Their employment recovery is also lagging behind men’s (ILO, 2021). Class, race, immigration status, and geographic location, all of which are drivers of labour market discrimination, have especially strong interaction effects with gender. Finally, since European growth regimes have immensely benefited from greater female entry into the labour force over the past decades (Klasen and Minasyan, 2017), understanding how LMP supports female work is not only a matter of social justice, but is also an important input for how public policy can mitigate the relationship between social inclusion and growth. Multiple stakeholders can thus benefit from an improved understanding of how LMP affects women’s relationship to the labour market. The chapter starts with an overview of rising female labour force participation since the 1980s and identification of policy challenges that have come with the changing nature of work and its impact on women. The second section examines the gender dimension of LMPs that 103

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are primarily concerned with boosting the quantity of work, and which can broadly be classified as employment promotion and support policies. A variety of European country cases are covered to illustrate how very similar LMPs can have a very different impact depending on the institutional and economic context within which they are being implemented. The third section offers a similar analysis of job and income security policies. The final section summarizes the key findings and maps avenues for future research.

8.1 THE RISE OF FEMALE WORK AND ASSOCIATED POLICY CHALLENGES: GENERAL TRENDS Women’s paid labour market activity has substantially expanded over the decades since World War II. By the late 1980s, it had even doubled in some advanced democracies (OECD, 1992). There are several drivers of growing female labour force participation, which range from supply side factors such as the availability of contraception and expansion of female educational attainment, to demand side ones, most notably de-industrialization and the rise of the service economy (Goldin, 1995, 2006). The rise of the service economy coincided with the era of global economic liberalization, and the context of rising inflation, economic stagnation, and unemployment across the European continent following the oil crises of the 1970s (Hall, 2021). As labour market failure was blamed for the rising unemployment, policies which aimed to liberalize and deregulate labour markets across Europe were introduced, with an idea that easier allocation of workers to jobs through the market mechanism would boost productivity and economic growth, while also widening the fiscal base for economies which were struggling with the growing fiscal problems of the post-Keynesian era and demographic ageing (Hall, 2021: 68). Given the still significant gender gap in employment, stimulating entry of women into the labour force was recognized as an important policy goal to achieve both higher overall employment and greater allocative efficiency in the labour market (Klasen and Minasyan, 2017). Therefore, a productivist rationale has driven policymakers’ interest in female employment since the onset of the liberal era, and not only concerns for gender justice. Labour market liberalization policies which were meant to fix the problem of rising unemployment were not at all concerned with job quality. Alongside these liberalization efforts, throughout the 1990s we saw a proliferation of workfare-oriented initiatives to cut welfare receipts, with an aim to push those who did not work into low-wage jobs and precarious employment, predominantly in the service economy, as this is where most new job opportunities arose (Hall, 2021: 69). At the European level, the policy focus on getting people into employment was reflected in the 2000 Lisbon strategy which was the first document to formally adopt EU level employment rate targets for both men and women that the member states were nudged to achieve. These targets were exclusively focusing on head counts, without any interest in working time and the types of jobs that were generated (Rubery et al., 2001: 44). Such a policy design assumed that any job was better than no job. Several EU countries achieved the Lisbon strategy and then also Europe 2020 targets on female employment (European Commission, 2010; Boll and Lagemann, 2019). Yet, this has only partially taken place due to the growing availability of more flexible working arrangements, especially part-time work. On the one hand, the overall de-standardization of employment has benefited women in terms of providing labour market opportunities to those whose

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full-time work would be constrained due to family responsibilities. Almost 30% of women in the EU work part-time today, compared to 8.4% of men, and they are much more likely to stop work to take care of children and relatives (European Parliament, 2022). On the other hand, the greater presence of women in non-standard jobs has led to increases in gender pay gaps at all levels of education (Rubery and Grimshaw, 2011). According to the 2005 European Working Conditions Survey, men employed full-time were most likely to have earnings in the medium-to-high or highest segment of the earnings distribution, with 70% having a high income. Women employed full-time were much less likely to have earnings in the highest income bracket, with just 47% having a high income (Burchell et al., 2008). A detailed analysis of the EU 2014 Labour Force Survey microdata by gender shows that out of all employees aged 15–64, 27% of women and 15% of men across the EU worked in precarious jobs (EIGE, 2017: 21–22). Precarious jobs are defined as those connected with at least one of these three working conditions: (i) very low pay: take-home pay from the main job is below the first quintile; (ii) very short working hours: fewer than 10 hours per week (also referred to as mini-jobs); (iii) low job security which might entail that employees have: (a) a temporary contract which covers 12 months or less; or (b) a permanent contract, but are looking for another job due to the risk or certainty of loss or termination of present job. Women with low and medium qualifications held most of these jobs. Yet, women with high qualifications also held more of these jobs than both men with medium and men with high qualifications (EIGE, 2017: 22). The rise of ICT and the knowledge-based economy since 2000 continued to reshape the policy space and its relationship to female work. The growingly important knowledge component of jobs, and the fact that women have closed, and even reversed, the education gap with men in most advanced democracies, while their ‘soft’ skills are sought after in the service economy, generated much optimism that the knowledge economy would prove especially beneficial for women (Wren et al., 2013). Yet, the knowledge economy did not eliminate occupational and sectoral segregation of women. As Walby (2011) shows, while women in the United Kingdom (UK) may have benefited from the knowledge economy, their wages as knowledge workers still lag behind those of men, because men tend to be concentrated in the more capital-intensive and profitable sectors of the knowledge economy. Moreover, on average in 2020, women held 34% of managerial positions in the EU and 41% of positions in the science and engineering sectors (European Parliament, 2022). Therefore, even educated women continue to find themselves on the lower end of the wage distribution due to the longstanding gender segregation by sectors and occupations (EIGE, 2017; Avlijaš, 2020b). Moreover, destandardization of employment relations away from typical wage work has produced other forms of precariousness, such as poor access to social benefits and housing due to absence of regular income. This form of insecurity has also increasingly spilled over into the more educated segments of the workforce, and especially women (Häusermann et al., 2015). Feminist scholars have also been urging us to deconstruct the category of gender (Barker, 2005). Stratification economics, which analyzes how institutions interact with class and gender inequality, examines how the emergence of low-wage services performed by women from the lower classes and often from migrant backgrounds, such as cleaning, cooking, and minding children, have ‘freed’ the better-educated women with higher earning potential from household labour and allowed them to enter the paid labour market (Weeden and Grusky, 2005; Mandel and Shalev, 2009). These studies imply that greater female labour force participation comes at a cost of increasing social stratification among women and that analyses of gender

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differences need to also consider within-group class differences that are being exacerbated by rising income inequality. This is a topic of growing importance, given the escalating crisis of care in the western world (Dowling, 2021; Avlijaš, 2021). Geography also matters. While feminist contributions have mainly focused on low-wage exploitation of women from the global South that generate competitiveness for national economies (Seguino, 2000) and global value chains (Eisenstein, 2009), the issue of core-periphery divergence in economic opportunities for women is growing in importance even within the context of the EU. Minimum wages (Guzi, 2021) and social security benefits (Avlijaš, 2019) are generally inadequate in Eastern Europe, while returns on skills are also much lower in the region (Drahokoupil and Piasna, 2017). Gender aspects of this EU core-periphery discrepancy should therefore be explored in future research. Understanding the characteristics of female labour market risk in the EU requires us to adopt an intersectional approach, where we consider class, race, and immigration status of working women, but also their geographic location, in order to understand which segments of the working age female population have benefited from greater female access to paid employment, and where better policy interventions may be needed. We can only partially rely on statistical indicators which show average differences between women’s and men’s labour market performance to understand the true extent of labour market disadvantages that are reinforced by gender. More nuanced and complex analyses of statistical data should be encouraged, and they should also be supplemented by qualitative research.

8.2 EMPLOYMENT PROMOTION AND SUPPORT POLICIES AND FEMALE WORK: COUNTRY CASES Parallel to labour market liberalization efforts, the EU policy space has also been evolving to support and counterbalance some of these unequalizing tendencies. Endorsement of female employment-supporting public policies was influenced by feminists’ ground-breaking insights that female preferences were not individual but depended on their household circumstances and care responsibilities (see Daly, 2011 for an overview) and by the growing amount of empirical evidence on the relationship between family policy and women’s employment (see Ferragina, 2020 for an overview of empirical evidence). Policy design was also influenced by changes in electoral politics, as working women started demanding better childcare facilities and other forms of welfare and care support which could accommodate their working lives (Morgan, 2003; Hall, 2021). These developments have led to a consensus among European-level policymakers that a broad policy mix (which includes family policies, education and training, and work-life reconciliation policies) is needed to stimulate female entry into the labour force. These ideas have, in interaction with the productivist rationale of employment expansion and the rise of the ICT-driven knowledge economy, influenced the development of the social investment-oriented social protection paradigm, which was formally launched at the European level in the early 2000s, through the Lisbon strategy (Hemerjick, 2012; Morel et al., 2012). ‘Social investment’ is an umbrella term for a new type of social policies which pay attention to children, women, prevention, skills and capabilities, and reconciliation of work and family lives (Palier et al., 2022: 3). They often, and increasingly, include LMPs given the proliferation of labour market risks that are associated with digitalization. The

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social investment paradigm re-conceptualized social policy as an important tool that underpins countries’ growth strategies, rather than a tool that shields workers from the market (Avlijaš et al., 2021). The Nordic countries and their flexicurity model of labour market management have been ‘the poster child’ of the social investment paradigm, because flexicurity allows for high labour mobility across occupations and locations via low employment protection, while also providing generous unemployment benefits. There is abundant empirical evidence that social investment has a positive effect on both quantity and quality of women’s employment. Thelen (2012, 2014) draws on Scandinavian countries to show that some of the social investment-oriented institutional developments that have come hand in hand with economic liberalism, including state provision of education, training, and active labour market policies (ALMPs), can reduce gender inequalities. Nelson and Stephens (2011: 205) show that public social investment, measured as educational attainment, educational spending, ALMPs and day care spending, creates high-quality jobs from both the perspective of remuneration and quality of work. Nelson and Stephens (2013) show evidence that the social investment path of labour market management is particularly beneficial for women, while Avlijaš (2020b) shows that economic restructuring which is underpinned by social investment policies boosts female employment. Bonoli (2010), however, suggests that ALMPs can have very different origins and take different shape depending on the context, and urges us to distinguish between them. The supportive type can be found in the Nordic countries, where the key objective of ALMPs is to improve the match between demand and supply of labour by providing extensive training and education to the workforce. Continuous training and lifelong learning are deemed to be a necessary policy intervention due to the rapidly changing economy (Bonoli, 2010: 439). Anglo-Saxon countries, on the other hand, have a much ‘leaner’ version of social investment, with a more coercive, workfare-oriented approach of getting people into the labour force, with moderate support for training and education and income security. ALMPs adopted in the UK consisted of time limits on recipiency, benefit reductions, and the use of sanctions (Bonoli, 2010: 439). The highly flexible UK labour market has also seen a boom over the last few years in the most precarious forms of private sector employment such as zero-hour contracts (contracts without guaranteed hours) and agency work, jobs that have predominantly been taken up by women (Avlijaš et al., 2021: 404). Given the more precarious position of women in the labour force, this approach to labour market management can boost levels of female participation, but it does not perform as well when it comes to their job quality. Manufacturing-oriented European countries have lagged on the adoption of the social investment paradigm, with greater ALMP focus on vocational training and preservation of competitive advantages in the manufacturing sector, which favours men. As Estevez-Abe (2005) showed, women benefit from different education and training policies than men. Women tend to specialize in general skills more than in specific ones. General skills are mobile across firms and sectors, and they are the foundation of liberal market economies such as the UK, while specific skills are not easily transferable across firms and sectors, and they are typical of coordinated market economies such as Germany. Interruptions from work are not as desirable in a specific skills regime as in a general skills regime because turnover is costlier for employers who invest in firm-specific training. Since women’s interruptions from work are more predictable than men’s, due to childbearing and family reasons, employers rationally discriminate against women in hiring, training, and promotion. In response to this

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discrimination, women do not have the incentive to invest in specific skills, so they specialize in household and family work. This mechanism can explain why we traditionally see a greater presence of women in the workforce in liberal market economies which are based on general skill regimes, such as the UK, as opposed to the coordinated market economies such as Germany. Economies driven by manufacturing exports have, however, also been impacted by economic liberalization and expansion of the service economy, especially since the 2000s. Thelen (2012, 2014) showed that the preservation of wage coordination, labour market regulation, and vocational training, with the aim of preventing economic liberalization, has led to increased ‘dualization’ of the labour market in a number of Western European countries, most notably Germany. As Hall (2021: 82) explains, Germany increased the flexibility of the labour market with growing temporary contracts agency employment and part-time work, following Hartz reforms of the early 2000s. They also reduced the duration of unemployment benefits to push people into work. In 2010 about seven million people held marginal jobs and many of them were women. While this has resulted in the growth of female employment in the service economy, it has also led to a growing inequality between insiders who benefit from welfare institutions (more often men) and outsiders who do not (more often women). Therefore, the gender gap in employment in Germany has been shrinking at the expense of creating a large secondary labour market with precarious employment. The labour market activation toolbox has included stricter monitoring of job searches, profiling of jobless people, reintegration contracts and wage subsidies (Bonoli, 2010: 439). Training of the workforce has not been a LMP focus (Hall, 2021: 82), while the country’s specific skills oriented educational system favours male workers. While employment-supporting family policy reforms of the late 2000s represented an ideational and policy turn away from Germany’s male breadwinner trajectory (Fleckenstein, 2011), they seemingly had mixed results regrading gender inequality. Recruitment subsidies in Eastern European countries such as Poland, Hungary, Czechia, and Slovakia have been offered to foreign direct investors to support the upgrading of industries which primarily employed male labour, while female labour dominated industries decayed (Avlijaš, 2020b). Moreover, women who worked in socialist industries often held auxiliary jobs which were reduced and outsourced as part of the effort to restructure the newly privatised enterprises and reduce their labour costs (Avlijaš, 2020b). These policies were combined with liberalization and the deregulation of labour protection legislation to grapple with high unemployment following the collapse of socialism. While these countries faced similar challenges to Germany when it came to female labour force participation, one should also consider that the Eastern European newly jobless working class women began to migrate to get jobs in the precarious care economy in countries such as Germany and the UK. Labour market dualization is therefore not as pronounced in Eastern Europe as in Germany. As discussed by Thelen (2021: 219), Netherlands saw a very significant influx of women into the paid workforce within a single generation, following the removal of some discriminatory policies (e.g. in the tax code) which were discouraging female employment during the 1980s. The general skills training in secondary school that women favoured over the vocational track also reinforced demand for female labour in the rapidly expanding service economy. Although a lot of women worked part-time because of the absence of day care facilities, this turned out to be a good fit with the requirements of the more flexible service economy that was rising, leading to relatively high levels of female employment. To this day, the Netherlands has maintained its leader status when it comes to incorporation of women into the labour force, with

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the female employment rate of 77.8% in 2020 being among the highest in the EU. On the other hand, a large majority of women are in part-time employment, which means that they make substantially less money than men (Thelen, 2021: 219–220). In Italy, comprehensive labour market reforms were adopted on multiple occasions (1997, 2003, and 2012), which essentially led to a strong labour market dualization that is particularly pronounced between the still cushioned older workers and youth (Avlijaš et al., 2021: 408). Failures to concurrently implement social investment policies, including those related to education and training, indicate that the country has been struggling to capture labour market gains from the knowledge economy. It is also important to note that employment supporting LMPs also affect women through their strong interaction with the demand side of the economy, i.e. the types of jobs that are available. For example, alongside flexicurity as their token LMP, Nordic countries also relied on the expansion of public employment in education, healthcare, and social services already from the late 1970s as a tool to create good quality jobs in services, with a particularly positive impact on female employment (Hall, 2021: 69; Wren, 2021: 281). While female employment in the Baltic countries was primarily boosted by labour market liberalization, public sector employment also played an important role (Avlijaš, 2020b). However, due to fiscal and ideological constraints, the Baltic countries could not match Nordics when it came to income security policies. For example, public sector wages were hard hit by austerity following the 2008 crisis, which substantially impacted women (Avlijaš, 2020a). This indicates that demand side interventions are not enough and need to be combined with income support policies (see Section 8.3). Finally, we have seen growing policy experimentation with job retention and short-time work schemes across many different countries, especially in the context of the coronavirus pandemic. These policy interventions have made an important difference in the context of the disproportionate impact of the pandemic on women. Women’s job losses were relatively lower in countries where policies like job retention schemes were put in place to minimize the loss of employment during the pandemic (ILO, 2021). This illustrates that women are particularly dependent on LMPs to support their labour market positions, especially in times of crisis.

8.3 JOB AND INCOME SECURITY POLICIES AND FEMALE WORK: COUNTRY CASES AND NEW POLICY DIRECTIONS All European countries have policies that focus on job and income security, but access to and adequacy of these policies vary. The Nordic countries’ flexicurity model has had a strong income security component from the onset of the liberalization era, with generally universal access to social security benefits four different types of workers, including those in more precarious jobs (Avlijaš, 2019). In the UK, already in the late 1990s the government launched some income protecting policies for the more precarious portions of the workforce, including educational investment in low-performing regions, introduction of the national minimum wage (in 1998), subsidized childcare, and expansion of means-tested welfare and means-tested tax credits for those on low incomes (Avlijaš et  al., 2021: 402). Following the austerity-driven agenda of the Tory government which came to office in 2010, the government attempted to mitigate the negative impact of their financialization-driven growth strategy on consumption capacities of low

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earners via income tax credits on earnings and basic pension. This type of income support was done in the cheapest possible way, in order to preserve the liberal and workfare-oriented features of its LMP while stimulating aggregate demand enough so as not to harm growth (Avlijaš et al., 2021: 401). There is also evidence that the introduction of the national minimum wage did not close the gender pay gap due to the lack of compliance of employers, although the same intervention was successful in Ireland (Bargain et al., 2019). LMP in France has been characterized by a generous wage policy, and in particular the minimum wage one which is used as a tool to raise consumption of the lower income groups. Reform efforts have mostly revolved around pressures to reduce labour costs, and political resistance to such efforts. The outcome has been continuing protection for the core workers while activating those at the periphery of the labour market into more precarious jobs. Such reforms have contributed to a pronounced dualization of the labour market, while the country remains trapped in a low growth, low employment, low skill, and high public expenditure circle, with modest employment gains for women (Avlijaš et al., 2021: 410–412). In Germany, strong social security programmes for skilled industrial workers are reinforced by the generosity of subsidies to firms who want to avoid laying off skilled workers (Thelen, 2021: 210–211). Labour market outsiders remain generally underprotected, except for the self-employed who have universal and inclusive access to social security under minimal income conditions (Avlijaš, 2020c). Given that men are more dominant among the selfemployed, while women are overrepresented among part-time and temporary employees, this selective generosity of social security for non-standard workers reinforces the already strong gender-unequalizing effect of job and income support for industrial workers. In the Netherlands, part-time workers, most of which are women, have accesss to social benefits. Yet, employment-supporting policies which are geared towards subsidising female employment are not serving all employed women equally. The 2007 regulation on domestic work, by which a private person can hire another private person without having to pay taxes and social security benefits for them, leaves (typically migrant) women who are employed in the private care economy without access to social security (Morel, 2015: 183). While Southern European countries have faced substantial fiscal challenges over the past two decades, including EU-level pressures that pushed them towards the so-called competitive impoverishment through the enforced reduction of labour costs (Avlijaš et al., 2021), we can also observe the emergence of some creative policy initiatives which have eased access to social security benefits for non-standard workers, most notably in Italy and Spain (see Avlijaš, 2020c). The gender effects of these emerging policies should be examined. Despite differences in the educational, family policy, and ALMP components of social investment in the Baltic and the Visegrad region, when it comes to job and income security policies, all Eastern European member states have pursued international competitiveness by offering flexible low-wage high-skill labour to foreign investors, along with austerity-driven economic adjustment programmes to demonstrate commitment to macroeconomic stability (Avlijaš et al., 2021). This has left little room for them to introduce more generous job and income security policies, with Slovenia being an exception to this model. Job and income security policies are also continually evolving with the changing demands of the labour market. Even ‘success stories’ like Sweden have been increasingly struggling to manage their labour markets, due to the growing division between white-collar and bluecollar workers, and a failure to integrate a large number of immigrants into the labour market (Hall, 2021: 81). The issue of adequate access to social security for labour market outsiders

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and discussions on what constitutes a living wage have gained a lot more prominence due to growing income inequalities, privatization and deterioration of public services (Avlijaš, 2021), the escalating crisis of care, especially in the aftermath of the pandemic, and the rising political significance of populism. During the 2010s, efforts picked up among EU and some national policymakers to improve access to and the adequacy of social security benefits for non-standard workers, which include those with temporary and part-time jobs, as well as the self-employed. We also saw greater acknowledgement that tax and benefit regimes may be important policy tools for fixing some of the growing labour market disbalance between men and women, and that job and income security policies which are extended towards labour market outsiders are better placed to serve the goals of gender justice than those which are only targeting the protected parts of the workforce. There is, however, also mounting empirical evidence that universal access to social security may not be sufficient and that benefit adequacy is also crucial. For example, in a comprehensive analysis of access to social security for the self-employed, Avlijaš (2020c) shows that even some member states which offer universal access to benefits can be exclusionary since their social security systems are characterized by weak or non-existent benefit floors and inadequate benefit levels for low earners and those with shorter contributions records, which are more frequently women. Therefore, formal access to income security policies does not mean that these benefits fulfil their intended purpose. Policy discussions are also increasingly concerned with the income adequacy of the minimum wage. Guzi (2021) shows that in many EU countries, and particularly in Eastern Europe, the national minimum wage is grossly insufficient to cover the essential needs even of an individual living alone without dependent children (Bulgaria, Slovakia, Poland), while in others, legal minimum wages may be adequate for a single person but not for a family (Belgium, Cyprus, Greece). This issue is likely to disproportionately affect women in the periphery and should be explored in greater detail. Moreover, compliance has also been a concern. A recent evaluation of the national minimum wage policy in Ireland and the UK shows a significant reduction of the gender gap at low wages is observed after the introduction of the minimum wage in Ireland, and hardly any change in the UK, due to the issue of employers’ non-compliance (Bargain et al., 2019). Rubery and Grimshaw (2011) also show that minimum wages are not very effective in providing protection to female low-pay workers who work in the care sector in contexts such as Italy where care work is informal and often provided by migrant workers. Furthermore, they acknowledge that full coordinated wage setting institutions with high coverage remain more influential than the minimum wage when it comes to gender pay gaps (Rubery and Grimshaw, 2011). One should therefore be careful not to replace an already existing collective bargaining system with the national minimum wage, although it can be a good policy tool for contexts where comprehensive collective bargaining is not feasible. Therefore, the national minimum wage can in some contexts (e.g. Ireland) still act as a policy tool that counters the negative impact of family, welfare, and labour market institutions on women, especially those at the lower end of the earnings distribution (Rubery and Grimshaw, 2011). Finally, interest in universal basic income (UBI) has also risen in the context of discussions on living wages and the crisis of care. Bidadandure (2019: 492–494) argues that UBI can act as a tool to correct gender inequalities, through proper remuneration of care work and because it would allow all of us – whether employed or not – to dedicate more time to care work that

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we want to do. UBI is more suitable for such an ambition, rather than a caregiver’s allowance, she argues, because access to a conditional allowance would depend on criteria which may pressure women to abandon paid work, in order to access the allowance. Unconditional cash transfers, on the other hand, would allow anyone to participate in caregiving to the extent that it suits them (e.g. even extended family members), which would allow people more freedom to organize their lives as they wish. Such proposals are still considered radical because they are not compatible with the productivist mindset that is embedded in many of the already existing LMPs, and which presuppose that paid work is privileged over family work. UBI cannot be an all-encompassing solution for gender injustices, or for the problems of the care economy. It is important to empirically analyze how such a policy affects government spending on social services (childcare, education, housing, social work), and how it interacts with the institutional and economic context within which it is embedded. UBI’s compatibility with existing LMPs should also be examined, especially those which focus on employment promotion. Moreover, the key question should be how UBI affects the situation of the most vulnerable women. These questions set an important empirical research agenda for those experimenting with UBI throughout the world. At the same time, one should also continue to consider alternative and less radical policy designs (including tax arrangements and parental leave) that would incentivise men to provide more care work.

CONCLUSION The rise of female labour force participation has generated new demands on LMPs because of the new risks that women are exposed to more often than men. Gender gaps in employment and earnings persist, and are driven by the greater precarity of jobs, occupations, and sectors that women work in. In other words, women work in more insecure and lower-paid jobs than men. Women are also harder hit by crises and austerity-driven macroeconomic adjustments. Since the 1980s we have seen a shift in LMP discourse from a purely productivist focus on getting as many people (including women) as possible into employment (during the 1990s and 2000s) towards a growing concern for a broader package of family and work-life reconciliation policies that are deemed as supportive for female entry into the labour force, under the auspices of the social investment agenda (since the 2000s). These efforts have undoubtedly helped women, but they have not been consistently implemented across all EU countries, jobs, sectors, and occupations, which has resulted in increasing gaps between some women and others. Emphasis on social investment as a tool for activation of women has also led to a neglect of the earnings part of the women’s labour market experience, although we know that devaluation of female work and segregation of women into lower wage sectors are longstanding features of the labour market. During the 2010s, we have seen a rising policy interest in job and income security, within which there are also concerns over the extent to which women can capture value added that stems from their greater involvement in paid work. While policies that focus on job quality are helping the more vulnerable working women, there are again important discrepancies in how different European countries are approaching this issue, and whether these policies are reaching working class women whose precarity is compounded by their race and/or immigration status. The coronavirus pandemic has shown that job and income security-oriented LMPs can play an important role in rebalancing some of

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the gender-unequalizing effects of economic crises. Yet, efforts to support women during the pandemic have also varied across different countries, sectors, and occupations. While the evolution of the LMP narrative has seemingly followed a unified logic at the level of the EU, member states play an important role in mitigating and translating supranational LMP narratives into regime-specific institutional and economic contexts. We see a variety of LMP strategies across the EU, which can be associated with different female labour market outcomes. Improvement of women’s labour market circumstances cannot only rely on (supply side) LMPs. These policies are embedded in a broader ‘preventative strategy’ which takes into consideration an entire package of mutually reinforcing social policies, including family policy, education and training, and work-life reconciliation. Macroeconomic conditions within which LMP is getting implemented also matter. Different country-level economic strategies require different worker profiles and different types of welfare state support. Not all EU countries have the same fiscal capacities to implement more generous social security policies. There are important discrepancies between the EU core and the periphery, and the gender dynamics of this discrepancy should be examined in future research, given that women are more dependent on supportive LMP than men are. Since gender interacts with race and immigration status, we also need to keep in mind that average gains for women within a country do not automatically translate into gains for all women. For example, remuneration and social protection of migrant women who work in the care economy across the EU is an important subject that merits further policy attention. It is also becoming increasingly clear that top-down legislative change towards more universal access to work-related benefits is not enough without solidaristic and collective bottomup solutions that stem from the inclusion of workers (including women) in the design of these policies. This is the only way to ensure the legitimacy, effectiveness, and fairness of LMP for all workers. Conversations about the minimum wage, collective bargaining, living wages, and UBI make part of these efforts to transform LMP towards greater inclusivity.

NOTE 1.

In addition to the editors’ and anonymous reviewers’ most helpful feedback, I would like to thank Robin Huguenot-Noël for his generous comments on a draft version of this chapter.

REFERENCES Avlijaš, S. (2019) The Dynamism of the New Economy: Non-Standard Employment and Access to Social Security in EU-28. London: London School of Economics and Political Science. LSE ‘Europe in Question’ Discussion Paper No. 141. Avlijaš, S. (2020a) Beyond Neoliberalism? Revisiting the Welfare State in the Baltic States. EuropeAsia Studies 72(4): 614–643. Avlijaš, S. (2020b) Growth Models and Female Labor in Post-socialist Eastern Europe. Social Politics: International Studies in Gender, State & Society 27(3): 534–561. Avlijaš, S. (2020c) Social Situation Monitor: Comparing Social Protection Schemes for the SelfEmployed Across EU-27 – Focus on Sickness, Accidents at Work and Occupational Diseases, and Unemployment Benefits. Brussels: European Commission – Directorate-General for Employment, Social Affairs and Inclusion.

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Avlijaš, S. (2021) Security for whom? Inequality and Human Dignity in Times of the Pandemic. In: G. Delanty (ed.) Pandemics, Society and Politics: Critical Reflections on Covid-19. Berlin: De Gruyter. Avlijaš, S., Hassel, A. and Palier, B. (2021) Growth Strategies and Welfare Reforms in Europe. In: B. Palier and A. Hassel (eds.) Growth & Welfare in Advanced Capitalist Economies. How Have Growth Regimes Evolved? Oxford: Oxford University Press. Bargain, O., Doorley, K. and Van Kerm, P. (2019) Minimum Wages and the Gender GAP in Pay: New Evidence from the United Kingdom and Ireland. The Review of Income and Wealth 65(3): 514–539. Barker, D.K. (2005) Beyond Women and Economics: Rereading “Women’s Work” Signs: Journal of Women in Culture and Society 30(4): 2189–2209. Bidadandure, J.U. (2019) The Political Theory of Universal Basic Income. Annual Review of Political Science 22: 481–501. Boll, C. and Lagemann, A. (2019) The Gender Pay Gap in EU countries – New Evidence Based on EU-SES 2014 Data. Intereconomics 54(2): 101–105. Bonoli, G. (2010) The Political Economy of Active Labor-Market Policy. Politics & Society 38(4): 435–457. Burchell, B., Fagan, C., O’Brien, C. and Smith, M. (2008) Working Conditions in the European Union: The Gender Perspective. Luxembourg: European Foundation for the Improvement of Living and Working Conditions and Office for Official Publications of the European Communities. Daly, M. (2011) What Adult Worker Model? A Critical Look at Recent Social Policy Reform in Europe from a Gender and fFmily Perspective. Social Politics: International Studies in Gender, State & Society 18(1): 1–23. Dowling, E. (2021) The Care Crisis: What Caused It and How Can We End It? London: Verso Books. Drahokoupil, J. and Piasna, A. (2017) What Drives Wage Gaps in Europe? Brussels: The European Trade Union Institute. ETUI Research Paper – Working Paper 2017.04. EIGE. (2017) Gender, Skills and Precarious Work in the EU. Vilnius: European Institute for Gender Equality. Research Note. Eisenstein, H. (2009) Feminism Seduced. How Global Elites Use Women’s Labor and Ideas to Exploit the World. Abingdon, UK: Routledge. Estevez-Abe, M. (2005) Gender Bias in Skills and Social Policies: The Varieties of Capitalism Perspective on Sex Segregation. Social Politics: International Studies in Gender, State & Society 12(2): 180–215. European Commission. (2010) Employment in Europe 2010. Brussels: European Commission. European Parliament. (2022) Gender Pay Gap in Europe: Facts and Figures (Infographic). Brussels: EU Monitor. Ferragina, E. (2020) Family policy and women’s employment outcomes in 45 high-income countries: A systematic qualitative review of 238 comparative and national studies. Social Policy & Administration 54(7): 1016–1066. Fleckenstein, T. (2011) The Politics of Ideas in Welfare State Transformation: Christian Democracy and the Reform of Family Policy in Germany. Social Politics: International Studies in Gender, State & Society 18(4): 543–571. Goldin, C. (1995) The U-Shaped Female Labor Force Function in Economic Development and Economic History. In: T.P. Schultz (ed.) Investment in Women’s Human Capital. Chicago, IL: University of Chicago Press. Goldin, C. (2006) The Quiet Revolution That Transformed Women’s Employment, Education, and Family. Cambridge, MA: National Bureau of Economic Research. NBER Working Paper 11953. Guzi, M. (2021) Cost of Living, Living Wages, and Minimum Wages in EU-27 Countries. Bratislava: CELSI. Hall, P.A. (2021) How Growth Strategies Evolve in the Developed Democracies. In: B. Palier and A. Hassel (eds.) Growth & Welfare in Advanced Capitalist Economies. How Have Growth Regimes Evolved? Oxford: Oxford University Press. Häusermann, S., Kurer, T. and Schwander, H. (2015) High-skilled outsiders? Labor market vulnerability, education and welfare state preferences. Socio-Economic Review 13(2): 235–258. Hemerijck, A. (2012) Changing Welfare States. Oxford: Oxford University Press.

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ILO. (2021) An Uneven and Gender-Unequal COVID-19 Recovery: Update on Gender and Employment Trends 2021. Geneva: International Labour Organization. Policy Brief. Jepsen, M. (2021) Living, working and COVID-19: Impact on gender equality. Presentation of Eurofound’s forthcoming report at the European Economic and Social Committee (EESC), 11 March, virtual meeting. Klasen, S. and Minasyan, A. (2017) Gender Inequality and Growth in Europe. Intereconomics 52(1): 17–23. Mandel, H. and Shalev, M. (2009) Gender, Class, and Varieties of Capitalism. Social Politics: International Studies in Gender, State & Society 16(2): 161–181. Morel, N. (2015). Servants for the Knowledge-Based Economy? The Political Economy of Domestic Services in Europe. Social Politics: International Studies in Gender, State & Society 22(2): 170–192. Morel, N., Palme, J. and Palier, B. (2012) Towards a Social Investment Welfare State? Ideas, Policies and Challenges. Bristol: Policy Press. Morgan, K.J. (2003) The Politics of Mothers’ Employment: France in Comparative Perspective. World Politics 55(2): 259–289. Nelson, M. and Stephens, J.D. (2011) Do social investment policies produce more and better jobs? In: N. Morel, B. Palier and J. Palme (eds.) Towards a Social Investment Welfare State? Ideas, Policies and Challenges. Bristol: Policy Press. Nelson, M. and Stephens, J.D. (2013) The Service Transition and Women’s Employment. In: A. Wren (ed.) The Political Economy of the Service Transition. Oxford: Oxford University Press. OECD. (1992) Economic Outlook No. 52. Paris: OECD Publishing. Palier, B., Garritzmann, J. and Häusermann, S. (2022) Toward a Worldwide View on the Politics of Social Investment. In: J.L. Garritzmann, S. Häusermann and B. Palier (eds.) The World Politics of Social Investment. Volume I: Welfare States in the Knowledge Economy. Oxford: Oxford University Press. Rubery, J. and Grimshaw, D. (2011) Gender and the Minimum Wage. In: S. Lee and D. McCann (eds.) Regulating for Decent Work. New Directions in Labour Market Regulation. SpringerLink. Rubery, J., Smith, M., Anxo, D. and Flood, L. (2001) The Future European Labor Supply: The Critical Role of the Family. Feminist Economics 7(3): 33–69. Seguino, S. (2000) Gender Inequality and Economic Growth: A Cross-country Analysis. World Development 28(1): 1211–1230. Thelen, K. (2012) Varieties of Capitalism: Trajectories of Liberalization and the New Politics of Social Solidarity. Annual Review of Political Science 15(1): 137–159. Thelen, K. (2014) Varieties of Liberalization and the New Politics of Social Solidarity. Cambridge; New York, NY: Cambridge University Press. Thelen, K. (2021) Transitions to the Knowledge Economy in Germany, Sweden, and the Netherlands. In: B. Palier and A. Hassel (eds.) Growth & Welfare in Advanced Capitalist Economies. How Have Growth Regimes Evolved? Oxford: Oxford University Press. Walby, S. (2011) Is the Knowledge Society Gendered? Gender, Work & Organization 18(1): 1–29. Weeden, K.A. and Grusky, D.B. (2005) The case for a New Class Map. American Journal of Sociology 111(1): 141–212. Wren, A. (2021) Strategies for Growth and Employment Creation in a Services-Based Economy: Skill formation, Equality, and the Welfare State. In: B. Palier and A. Hassel (eds.) Growth & Welfare in Advanced Capitalist Economies. How Have Growth Regimes Evolved? Oxford: Oxford University Press. Wren, A., Fodor, M. and Theodoropoulou, S. (2013) The Trilemma Revisited: Institutions, Inequality, and Employment Creation in an Era of ICT-Intensive Service Expansion. In: A. Wren (ed.) The Political Economy of the Service Transition. Oxford: Oxford University Press.

9. Labour market policy in the era of mass migration: perspectives on Europe Gemma Scalise

INTRODUCTION Migration is one of the most important and pressing global issues of our time and has relevant implications in terms of labour market functioning and regulation. In the last decades, we are observing the largest population movement and displacement since the end of World War II, record-high inflows have been documented in many countries and populations of migrants, and native-born children of migrants have grown virtually everywhere (OECD, 2020). Today, migrants’ contribution to developed economies has become vital: they fill labour shortages, promote entrepreneurship, contribute to the sustainability of the welfare state, and help meet specific demand for skills (e.g., in emerging high technology industries).1 International migration is not uniform across the world and is often driven by the search for better livelihoods and new opportunities, but it is ever more prevalent as a result of geopolitical events – as shown by the refugee crises caused by the recent war in Ukraine and by the economic and political instability in the Middle East over the last decade – and as a result of climate change and weather-related disasters, as occurred in recent floods across South Asian countries, such as Afghanistan, India and Pakistan. Such events can represent ‘critical junctures’ which trigger changes in labour market and inclusion governance, as well as in public discourse and sentiment (McAuliffe and Triandafyllidou, 2022). This has been visible in the welcoming attitude across Central and Eastern European countries exhibited in February 2022 to millions of Ukrainian refugees, after that in 2015 the same countries strongly opposed the European Commission’s plans to relocate asylum applicants throughout the EU and vowed to keep their borders closed to refugees. Thanks to the unanimous vote of European Union (EU) members to activate the Temporary Protection Directive – for the very first time since it was agreed in 2001 – people fleeing the war in Ukraine have been immediately granted protection in the EU, meaning entitlement to a residence permit, access to education and to the labour market. This large-scale humanitarian crisis has occurred while countries are still recovering from the legacy of the COVID-19 pandemic, which especially during its first waves long compromised people’s mobility prospects and asylum seekers’ chances to access their right to protection. At the same time, the pandemic has put the spotlight on the critical role migrants play in advanced democracies. They are largely overrepresented in essential economic sectors, such as hospitality, transport, security, retail trade, personal and domestic care, and among the self-employed, all of which were hard hit during the lockdowns (OECD, 2020). Due to high concentration in unstable employment, undeclared work, and in jobs where physical distancing is difficult, migrants’ risk of infection is particularly high, but their access to health support, sickness and unemployment compensation has remained very often elusive (Fasano and Mazza, 2020). 116

Figure 9.1  International migrants increase by region of residence (1990, 2000, and 2020, millions)

Source:   UN Migration (IOM), 2022.

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This chapter looks at the intersection between migration and labour market policies and at the mutual relationship and influence between policy choices in the realm of migration and labour market regulation. It provides a perspective on how migration impacts labour markets and traces what policy responses have been adopted in Europe from the 1950s onwards to regulate influxes and migrant labour market inclusion. Europe is of particular interest in this respect given the high inflow to the continent, the substantial heterogeneity in country of origin and skills of migrants, the different national immigration laws applied to non-EU citizens, and the diverse labour market and welfare regulations across countries. The chapter adopts the ‘regime’ perspective advanced by the comparative political economy and welfare state literatures (Amable, 2003; Esping-Andersen, 1999) to emphasize the different trajectories of European countries and highlight both structural factors and the agency of the state and labour market actors in the governance of migrant integration. The next section puts in context the topic and the major strands of research which have addressed it. Section 9.2 explores how the regulatory frameworks governing the admission of foreign nationals have evolved and shaped migrants’ labour market participation in the last decades, by controlling the size and characteristics of the inflows and increasing the pool of workers in certain sectors of the economy. Section 9.3 investigates how international migration responds to labour market signals and structural changes in the economy, and is conditioned by institutional and policy regimes. Finally, Section 9.4 focuses on the role played by labour market actors in this field and the conclusion discusses future implications and challenges of increased migration for labour market policies.

9.1 MIGRATION: A SALIENT AND CRITICAL SUBJECT The United Nations (UN) estimates that in 2020 there were about 281 million international migrants in the world, which equates to 3.6% of the global population. Migration increased over the past decades in all continents: migrants are today about 128 million more than in 1990 (153 million) and over three times the estimated number in 1970 (84 million, 2.3% of the world’s population). Europe is currently the largest destination for international migrants, with more than 86 million incomings (31% of total international migrant population), followed by the 85 million migrants living in Asia (30%), and 58 million in North America (20%). Nearly two-thirds of them live in high-income countries, 31% live in middle-income nations, and around 4% in low-income ones. However, low- and middle-income countries host 80% of the world’s refugees, who account for 12% of all international migrants. Europe also accounts for the highest share of intra-regional migration: 70% of migrants born in Europe reside in another European country (UN, 2021).​ As international migration shapes the allocation of the labour force across the globe and has significant socio-economic consequences in both sending and receiving countries, it has become a salient issue in international research, a critical subject in public debate and a prominent feature on the political agenda for governments, at all territorial levels, everywhere. While in sending countries the discussion focuses on the trade-off between benefits and costs of diaspora – the former associated with development through remittances and unemployment alleviation, the latter linked to brain drain and loss of human capital accumulation – in receiving countries migration is one of the most contentious subjects and is inescapable in

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contemporary electoral politics (Dustmann et  al., 2019; Hooghe and Marks, 2018). This is particularly evident in Europe, where, especially since the 2008 recession, anti-immigration campaigns by right-wing populist parties have spread to all countries, giving a progressive rise in arguments based on welfare chauvinism, depicting migrants as least deserving of public provision compared to natives; representing them as a threat to social cohesion, cultural unity and native-population employment, despite research showing very modest consequence on these issues (Dustmann et al., 2005; Fingleton et al., 2019; Ford and Sobolewska, 2016; Reeskens and van Oorschot, 2012). On the contrary, when the working-age population is declining and immigration flows are the most significant component of the continent’s population growth, like in Europe, it is facilitating the inclusion of the incoming workforce in the host society and improving their job matching that governments increase labour markets functioning and welfare sustainability, and guarantee social cohesion and growth. To this aim, international organizations, such as the UN, the OECD, and the European Commission have put out calls to national governments to pursue immigration and labour market reforms to better coordinating and managing inflows and migrant access to formal and decent jobs (UN, 2021). A vast amount of literature has highlighted the challenges migrants face in the labour market, showing ethnic occupational segregation, forms of penalty and underperformance (among others Dustmann et al., 2013; Muenz and Fassman, 2004; Reyneri and Fullin, 2011; Zimmermann, 2005). Worldwide migrants and ethnic minorities often undergo a process of segmented assimilation (Zhou, 1997) and tend to be characterized by poor working conditions and lack of social protection, facing human rights violations, exploitation, and mistreatment (Ruhs, 2013; Hennebry, 2014). To understand the origins of migrants’ social and labour condition, it is crucial to recognize the institutional embeddedness of migration and comprehend the interaction between the policy regimes which govern migration and labour market integration (Reitz, 2003; Kogan, 2007). The relationship between migration and labour market policies is inextricably intertwined with different strands of research. In the classical debate on migratory phenomena, two major theoretical approaches have long dominated. On the one hand, the ‘push-pull’ model and the economic perspective focused on the economic, demographic, and wealth differentials between places of origin and destination, which were conceived as adjustment mechanisms for international migration (Lee, 1966; Ravenstein, 1885). Macro approaches considered flows to be a response to supply and demand for labour between territories, while micro perspectives understood them as individual or family choices of people seeking better standards of leaving, labour conditions, and wages (Stark, 1984). On the other hand, historical-structural perspectives developed within political economy theories recognized the capitalist and modern industrial economies as making the condition for the mobility of workers. The world systems theory sees migration as a consequence of economic openness and globalization (Wallerstein, 1974) while early theories of labour market segmentation see in ‘dual labour markets’ (Piore, 1979) a chance for migrants to fill the most insecure and poorly paid jobs. Contemporary literature has redefined migration as a social process based on a complex set of motivations, linked to the interplay between structural, institutional, and individual aspects, including relationships between countries, embeddedness in social networks, transferability of qualifications, language skills, political conditions, and access to public-good amenities (e.g., education, health, public assistance). By its very nature, migration is multi-dimensional

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and ‘cuts across a range of questions concerning the economy, territoriality, sovereignty, along with a host of moral, ethical and security issues’ (Balch, 2010: 2). Among the multiple factors which define the different types of migration (e.g., humanitarian, economic/labour, family reunion, study) and shape patterns of inclusion in the host society, institutions and policies play a fundamental role, not least because of the large demand and restricted entry to more developed industrialized countries (Meyers, 2000). Immigration law and labour market policies define what migration is ‘favorable’ and a priority for the economy and which is ‘unwelcome’, distinguishing migrants into the categories of ‘legal’, ‘first-preference’, and ‘illegal’ (Samers, 2003), and host societies institutional and structural features delimit migrants’ labour market opportunity and outcomes (Reitz, 2003). While micro-approaches focus on migrants’ individual characteristics as determinants of their labour market outcomes (e.g., level of education and qualifications, knowledge of the host country language, financial resources, and existing networks), the institutional approach shifts the focus on the position of migrants to the macro level, explaining the role of immigration law, incorporation regimes, labour market institutions and regulations in receiving countries, and the agency of stakeholders involved in these policy arenas (Lewin-Epstein et al., 2003; Sainsbury, 2012; Scalise and Burroni, 2020).

9.2 IMMIGRATION LAW, INCORPORATION REGIMES AND CHANGES IN LABOUR DEMAND Immigration law and incorporation regimes are the institutional structures and ideological principles that determine both the formal legal procedures and informal practices employed by states and stakeholders to deal with migrant influxes and social inclusion (Joppke, 1999; Soysal, 1994). They represent the multi-level framework within which a complex set of regulation control migrants’ entry to national territories, acquisition of residence/citizenship, labour and social rights, regularization and participation in the economic, cultural and political life of the host country (Sainsbury, 2006). Immigration law and incorporation regimes are strictly interrelated to the labour market structure and regulation since the former legalize access to residency by controlling the amount and the characteristics of migrants that suit the economic needs. Within the liberal regime, some nations have long histories of selection of migrants on the basis of human capital or competencies that were in demand in the receiving society (e.g., the United States, Australia, Canada) (Reitz, 1998). This ‘interventionist’ approach, with the state selecting applicants, is meant to ensure long-term employability and broader contributions to the host society. Although these are countries with a strong multicultural policy framework, in particular Canada and Australia employ a point system to select migrants that excludes many of them, often the poor and uneducated (Sainsbury, 2012). Throughout the 1950s and 1960s, in a period of intense economic expansion, also some Nordic and Continental countries (e.g., Sweden, Germany, Belgium, France) reacted to the growth in labour demand by signing bilateral agreements with Southern European and non-European countries, which allowed the organized recruitment of Italian, Spanish, Portuguese, Greek, and later Turkish, Maghrebi, and Yugoslavian workers. The Iron Curtain severely limited mobility from Central and Eastern European countries (CEE) but large East-West inflows occurred following political crises such as from Hungary (1956–1957),

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Czechoslovakia (1968–1969), and Poland (1980–1981), especially to Germany (Van Mol and de Valk, 2016). At that time, the demand for an additional labour force to fill vacancies in the unskilled and semi-skilled sectors was massive and newcomers were integrated immediately into the industrial economy. However, migrant employment was marked by features typical of the secondary labour market (Piore, 1979), bad working conditions, and lack of formal protection. Being considered temporary, these ‘guest’ workers were not endowed with all social guarantees (Kogan, 2007). Following the oil crisis and structural unemployment increase in Europe, since the second half of the 1970s countries started setting restrictions on the permanent entry of foreign workers. Despite this ‘zero immigration’ policy (Jordan and Düvell, 2002), migrations continued through family reunion, refugees, asylum seekers, and irregular influxes, intensified since the 1990s by the collapse of the Eastern European socialist bloc and the relaxation of border controls between some CEE and the EU (Stalker, 2002).2 At the same time, structural changes in the economy led to an amplification of the demand for skilled employees, making unskilled workers, including those recruited earlier, redundant through efficiency improvements (Castles and Davidson, 2000). Mediterranean countries started to attract migrants too and despite relatively high unemployment, countries like Italy and Spain, characterized by a growth model led by low productivity and high labour-intensive sectors, had a high rise in influxes with an increasing component of undocumented migrants employed as temporary workers in intensive manual and low-skilled sectors such as agriculture, construction, manufacturing, and the service sector (De Arce and Mahıa, 2014). In the last two decades, political and economic developments have brought new inflows of European citizens (after the EU enlargement in 2004 and 2007 to CEE), asylum seekers and economic migrants from diverse regions: sub-Saharan Africa, the Middle East, and Asia. As for intra-EU flows, in the first decade of the twenty-first-century Polish migration especially towards Germany and the UK made up the greatest share in absolute numbers. Similarly, significant inflows occurred from Romania to Italy and Spain (Van Mol and de Valk, 2016). Due to a confluence of conflicts in parts of the Middle East, Asia, and Africa during the 2010s, and particularly the wars in Syria, Iraq, and Afghanistan, in 2015 1.3 million people came to Europe to request asylum and countries such as Germany and Sweden touched the highest immigration peak in their history. The pressure led several states to adopt extraordinary restrictive measures: national border control, fences built along borders, and restrictions on asylum claims for the reunification of families and access to social security rights (Jakuleviciene, 2017). The era of mass migration is a time of strict border control and tough immigration laws in Europe. While external controls have been undermined by the removal of formal border checks among Schengen states, European governments have gradually restricted asylum policies and visa requirements.3 To crack down on unauthorized migration, the sites and techniques of immigration control have been diversified, moved up to the international levels, down to local governments, and out to non-state actors (Morgan, 2020). Current migration is characterized by a polarization in migrants’ features and conditions. On the one hand, highly educated workers, especially scientists, technicians, managers, and engineers – the so-called ‘elites’ (Muenz and Fassman, 2004) or Eurostars (Favell, 2008) – have increased their international mobility driving an international competition for

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talent needed to fuel innovation in advanced economies and fill the lack of specialists in the health sector, in the biotech industry, and information technologies (Mahroum, 2008). For example, in 2001 Germany started a so-called ‘green card’ initiative allowing foreign specialists in information technologies; in 2002 a ‘highly skilled migrant programme’ was introduced in the UK to admit foreign professionals without a pre-arranged job offer; in 2009 the EU set the ‘blue card’, a fast-track procedure for issuing a special residence and work permit, on more attractive terms, to enable third-country workers to take up highly qualified employment in the member states. On the other hand, those without sought-after skills find it much more difficult to obtain a visa to work regularly in Europe and one of the few legal routes is with a temporary permit for seasonal work. Refugees, asylum seekers, and undocumented migrants are the major component of recent migration and most undocumented migrants enter legally and overstay, often relying on unauthorized forms of work to support themselves, filling the growing demand and decreased supply in low-skilled sectors and care services in rich ageing societies (Triandafyllidou and Ambrosini, 2011). However, their overrepresentation in the sectors that are more sensitive to cyclical fluctuations, and in low-status jobs, makes them particularly affected by economic slowdowns. Women comprised 47.9% of total international migrants in 2020, who moved prevalently to Europe and North America (UN, 2021). In many countries, especially within the Mediterranean regime, the weakness of the welfare and care system has meant an increasing influx of migrant care workers, mostly women and coming especially from CEE, engaged by private households in the informal care economy, who have no access to social protection and basic labour rights and are often highly skilled but discriminated against despite their qualifications (Triandafyllidou and Marchetti, 2013; UN, 2021).

9.3 LABOUR MARKET POLICY STRATEGIES FOR MIGRANT INTEGRATION The openness of a country to migration is conditioned by the structural features of its economy (e.g., type of specialization, lack/presence of job opportunities, demand for skilled or lowskilled labour), by labour market policies (e.g., flexibility, employment protection, activation programmes), and complementary social policies (e.g., income benefits, housing services). Labour market institutions influence migrant mobility choices and life chances and represent crucial tools for migrant integration and wellbeing. Active labour market measures and specific policies aimed at assisting job-seekers (e.g., vocational training, assistance in the job search process, wage subsidies or public works programmes, support to micro-entrepreneurs or independent workers) and at reducing participation obstacles (e.g., anti-discrimination laws, equal rights provision in employment) represent essential arrangements to address the barriers that can hinder participation and inclusion of migrants in host societies. There is no consensus among scholars on the potential interaction between labour market institutions and migration flows. Employment regulations (e.g., concerning hiring and firing, minimum wage, conditions for using temporary or fixed-term contracts, training requirements, short-time work schemes) influence employment opportunities and wages in destination countries, thus affecting expected costs and benefits of migrations (Geis et  al., 2013; Sà, 2011). For instance, employment protection differential between source and destination countries

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seems to represent an important determinant of high-skilled mobility, but to a lesser extent for low-skilled migrants who may face greater difficulties in finding protected jobs. On the other hand, a higher minimum wage, by increasing average hourly earnings among low-skilled workers, can represent a tool to improve migrants’ working conditions, but also to protect more vulnerable native workers against the potentially detrimental effect of migration on their wages (Edo and Rapoport, 2019). Different regulatory regimes come with various constellations of labour market institutions which do not only influence the arrival of migrants, but especially their inclusion. In countries where labour market programmes exclude particular migrant groups (e.g., recent incoming, migrants without host country citizenship or particular legal status), denying them the basic financial resources necessary to sustain a job search, migrants tend to be forced to enter employment immediately, reducing their job acceptance threshold. The outcome is often migrants’ lower unemployment rate, but high share of job mismatch and low occupational status. This is well exemplified by the assumption that high levels of benefits might reduce work incentives, typical of the liberal regimes (Esping-Andersen, 1999; Greve, 2019). In countries like the UK or US, we find relatively open migrant admission and naturalization/assimilation policies, but migrant inclusion is largely left to market forces (Engelen, 2003). This is increasingly representative also of some CEE countries (except the Czech Republic), characterized by a deregulated labour market, weak and decentralized industrial relations and poor active labour market programmes, combined with residual welfare institutions, citizenship-based social provisions, and occupational and private insurance. In liberal and some CEE countries, stringent means-testing tools prevail in the distribution of income support and public institutions have modest involvement in migrant settlement, apart from aiding refugees. The dynamic economic context offers ample job opportunities and prevents long-term unemployment, but it relies significantly upon the efforts of the migrants themselves, their networks and local voluntary initiatives, and is characterized by high income disparities and relatively pronounced in-work poverty. As able 9.1 shows, in liberal and CEE countries with weaker labour market, foreign-born employment rate is tendentially the same of the native population (or even higher, such as in Hungary, Ireland, and Poland), since the major problem for migrants is not so much employment entry, as risk of economic deprivation (Faist, 1996). On the contrary, in countries where migrants are entitled to labour and social rights similar to those of the native-born, irrespective of their status or length of stay, this may result in longer periods of unemployment, in which migrants benefit from institutional support to settle and labour market programmes to attend language and training courses and focus upon obtaining employment that better fits their qualifications (Kogan, 2007). The Nordic regime, which promotes the integration of migrants in strictly regularized labour markets, favours the admission of refugees, asylum seekers, and workers recruited on the basis of the needs of the economy through corporative institutions. Developed active labour market policies and universal and comprehensive individual entitlements (e.g., unemployment benefit, employment services, training) support migrant inclusion into the educational system and employment (Blume and Verner, 2007; Sainsbury, 2012). Unlike liberal economies, and more similarly to the Continental ones, in these countries newcomers are less exposed to poverty and deprivation. However, this is achieved especially through extensive institutional support rather than migrant employment opportunities, as stringent labour market regulation and a high educational threshold necessary to enter the advanced knowledge economy tend to reduce overall access to the labour market among migrants. As Table 9.1 shows, in Denmark, Finland,

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Table 9.1  Stock of foreign-born population, employment and unemployment rates, 2019 Stock of foreign-born population (thousands and %)

Employment rate of native-born

Employment rate foreign-born

Unemployment rate of native-born

Unemployment rate of foreign-born

Austria

1,728.6 19.3

74.9

68.9

3.5

8.3

Belgium

1,981.5 17.2

66.9

58.7

4.3

10.4

Czech Republic

903.4 8.5

75

79.2

2

2.9

Denmark

606.5 10.5

76.3

65.7

4.7

8.4

Estonia

197.9 14.9

75.4

74.6

4.4

6.2

Finland

387.2 7.0

73.6

64.2

6.5

11.9

France

8,343.8 12.8

66.6

58.9

7.8

13.1

Germany

13,457.0 16.1

78.2

70.8

2.6

5.6

Greece

1,307.5 12.5

56.8

53.3

16.3

28.6

Hungary

564.8 5.8

69.9

77.4

3.5

2.7

Iceland

61.4 18.1

84.3

82.4

3.5

4.7

Ireland

867.7 17.8

68.9

71.5

4.8

5.9

Italy

6,298.0 10.4

58.7

61.4

9.6

13.1

Latvia

241.8 12.7

72.5

70.5

6.5

7.0

Lithuania

138.2 5.0

73

71.9

6.5

5.6

Luxemburg

291.2 47.3

62.9

72

4.1

6.7

Netherlands

2,298.7 13.4

80.2

66.5

3.0

6.0

Norway

841.6 15.6

76.9

69.8

2.9

7.4

Poland

760.9 2.0

68.2

75

3.3

5.7

Portugal

1,106.9 10.8

69.8

76.3

6.5

8.4 (Continued)

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Table 9.1  (Continued) Stock of foreign-born population (thousands and %)

Employment rate of native-born

Employment rate foreign-born

Unemployment rate of native-born

Unemployment rate of foreign-born

Slovak Republic

194.4 3.6

68.3

78.7

5.9

5.2 (2017)

Slovenia

265.1 12.8

72.3

68

4.3

5.9

Spain

6,541.2 14.0

63.4

62.7

13.1

18.9

Sweden

1,955.6 19.5

80.7

65.8

4.5

15.5

United Kingdom

9,482.0 14.0

75.3

74.7

3.7

4.3

OECD. Source:  

Norway, and Sweden, the employment rate of foreign-born people is much lower than that of natives, and unemployment rate is often doubled. The labour market is highly segregated and wealth and employment inequalities between foreign-born and native workers tend to persist. This model has been much discussed for its weak economic incentives that may produce longterm state dependency, and in the last two decades it has gradually become less generous and forms of conditionality over job-related benefits have been increased (Scalise, 2020). Occupationally segregated labour market and widespread inequalities characterize also Continental and Southern European regimes, although in this case they are also connected to conservative work-related social insurance schemes which determine differences in entitlements and guarantee low protection for non-citizens with weak attachment to the labour market. The social insurance logic, in fact, linking work contributions to benefits, reinforces the strong divide between labour market insiders and outsiders because of the high contributory threshold before migrants are entitled to unemployment compensation benefits (Hemerijck et al., 2013). In the Continental model (e.g., Austria, Belgium, France, and Germany), where post-colonial and labour migration occurred at high levels and corporatist practices contribute to managing immigration procedures, labour markets, industrial relations, and training have become increasingly ‘dualized’ between a stable core and a growing periphery concentrated in the service sectors (Palier and Thelen, 2010). Liberalization outside the ‘industrial core’ applies particularly to migrants who may not have the necessary skills to participate in the labour market and hence to build labour rights. Dualization has increased in the Southern European model as well (e.g., Italy, Spain, Portugal, Greece), where weaker states and less generous and fragmented labour market policies are largely ineffective in supporting those on the margins of the labour market, including natives (Burroni et al., 2021). In the last decade, labour market reforms have increased flexibility without guaranteeing protection for unstable and temporary employment, causing poverty expansion for many categories of outsiders who remain ineligible for social assistance, such as the long-term unemployed, new entrants into the labour markets, and the large number of irregular and underground migrant workers – who are not even included in statistics – and who, in a context marked by a large informal economy, fell through the cracks of a formal

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social safety net. Research shows that in this context even having high educational degrees does not give migrants an advantage in terms of occupational or wage assimilation relative to their native counterparts (Rodrıguez-Planas et al., 2014).

9.4 THE ROLE OF LABOUR MARKET ACTORS Since holding a qualifying job offer is the necessary admission criterion for labour migrants in European countries – to ensure that migrant workers can swiftly contribute to the host country economy – employers, unions, employment services, and recruitment agencies have a key role in migrant selection and integration. Securing an international job match is not easy with geographical distances, language barriers, and foreign qualifications and the means by which workers are recruited is a critical determinant of whether they enjoy decent work. Migrant workers are exposed to exploitation and abuse that very often depends on the poor governance of labour migration recruitment, protection gaps, malpractices, and collusion between recruiters in origin and destination countries, complicated bureaucracy, and weak regulation (ILO, 2020). As demonstrated by an increasing amount of literature, these challenges translate into workers experiencing discrimination and inequalities at the workplace, as well as skills underutilization and job-skill mismatches. Racial discrimination affects migrants, ethnic minorities, second- and third-generation migrants, and citizens of foreign origin. Research shows that a foreign nationality leads to a clear disadvantage in hiring, compared to natives, and employers’ discrimination applies especially for positions ranked higher in the occupational hierarchy and seems to increase potential lock-in effects in bad jobs (Ballarino and Panichella, 2015; Auer et al., 2019). Over the past decades, industrial relations actors have increasingly engaged in international recruitment practices, bilateral labour matching, and inclusion programmes at national and local levels. On the one hand, employer associations support their international recruitment by lobbying with national governments and the EU for more demand-driven and open migration regulations, as well as by providing industry-led international training. On the other, trade unions promote and protect workers’ rights through policy advocacy, service provision, and outreach to workers. However, the literature shows that the attitude of trade unions towards migration is in certain cases more ambiguous and stresses unions’ ‘dilemmas’ leading them not always to be favourable to migration influxes, sometimes playing an exclusionary role (Knotz et al., 2020; Marino, 2012; Penninx et al., 2000; Meardi, 2012). One of the dilemmas concerns trade unions’ position in recruiting workers from abroad, since migrant work can increase the risk of wage depression for native workers. Another dilemma deals with migrant union membership and with the extension of social rights to them, as also in this case their inclusion could threaten the position of native workers. Finally, a third dilemma concerns whether they should represent native workers and migrants in the same way or whether migrants require targeted strategies and different forms of representation (Marino, 2012). Unions navigate issues around migration differently depending on their organizational and institutional structures and these three dilemmas find different solutions in the different regimes, depending not only on unions’ weight and power of influence (Marino et al., 2017), but also on their logic of action, what has been called the ‘type of trade unionism’ (Hyman, 2001; Crouch, 1993): in the Nordic model, encompassing organizations aim at influencing

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labor market regulation by defending the general interests of workers, tend to be favorable to social trilateral concertation and to adopt a more inclusive approach towards migrants; instead, in institutional regimes where unions are more narrowly organized, divided by sector or fragmented, such as in some Continental and especially Mediterranean countries, or where they are weaker, such as in the liberal and CEE regimes, they may be less favorable towards migrants while defending particular interests of specific groups of workers, tend to adopt an antagonistic approach, are more prone to social mobilization and are against social trilateral negotiation. Yet, the attitude of unions towards migrants can change over time following economic and political dynamics. In some cases, traditionally pro-inclusion unions, which have favoured influxes and promoted economic, cultural, and civic integration, have started to demonstrate concerns over the growth of inflows and seen an increase in their members who vote for nationalist anti-immigrant parties, factors leading them to adopt more ambiguous behaviour towards migration. This has been particularly manifest in the policy shift that has occurred in some Nordic countries, such as Denmark and Sweden, which have long prided themselves on their generous asylum stance and in recent years turned to more restrictive measures while migration-related concerns took centre stage in the public debate. Finally, unions’ action depends also on the level of involvement and participation in labour migration integration at national and local levels. While in Nordic and Continental corporative countries (except France) institutionalized trilateral organizations are devoted to setting up employment-related policies for migrants, in Mediterranean, liberal, and CEE regimes the state is less keen to institutionalize this kind of participative practices. In some cases, governments’ opening up of the political space to new social actors, such as NGOs and citizen associations, especially at local level, diminished the role of social partners in the political arena and unions lost their capacity to take part in local agenda setting (Scalise, 2020).

CONCLUSION Labour market institutions and policies, combating discrimination and ethnic occupational segregation, contribute making societies more equitable and inclusive, and can represent empowering tools to generate employment opportunities while promoting compliance with human, social and labour rights. Research shows that migrants make their best contribution to the socio-economic development of advanced democracies when fairly integrated through education, training, and access to labour and social entitlements so that they can participate under the same conditions as other citizens. Yet, increased migration is a major concern for policymakers and has relevant political implications, influencing public support for different types of labour market policies (e.g., more demanding measures, which put pressure on the unemployed to accelerate their labour market reintegration by tightening individual job search requirements and curtailing the duration and generosity of passive benefits). As we have seen, the diverse regulatory regimes in Europe enacted different modes of responding to the challenges posed by migration which reflect national differences in terms of institutional arrangements and social partner operational capacity. However, dissimilar responses are related also to the different types of migrants that these countries have attracted in different periods. The Nordic regime has a long tradition of labour migrant recruitment and refugee intake and although there is still significant low‐skilled migration, since the 2000s

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it has been complemented by larger numbers of highly skilled migrants from the Middle East and Asia. Highly skilled migrants – such as computing professionals and engineers – required by high‐technology firms are considered essential for the country’s growth. Interorganizational relationships within firms and cooperation with unions and state agencies are crucial in the recruitment programmes of highly skilled people. At the same time, refugees and migrants who have insufficient skills are encouraged by social partners to invest in training programmes and professional qualifications. This kind of cooperation is also developing in Continental and liberal regimes, while is still weak in Mediterranean and CEE countries, where although some programmes to attract highly skilled migrants have also been introduced, their capacity is very limited. In some Continental countries, such as France, influxes are still strongly influenced by the legacy of colonialism as well as its long tradition of recruiting low-skilled foreign workers for the manufacturing, building and service sectors. Despite its restrictive immigration policy, about 40% of immigrants continue to enter the country to join family members and almost half of these come from just three former colonies. Mediterranean countries are also characterized by low‐wage foreign labour, as a structural feature of their labour markets. Here, the absence of a politics of skills recognition makes the share of overqualified foreign-born workers particularly high. As mentioned, the strength of interest organizations, their logic of action, and their relationship with the government shape their effectiveness in taking part in decisions and influencing the political agenda, avoiding government unilateralism, and supporting relevant reforms and societal change. In the Nordic regime, the contractual nature of labour market regulation coupled with medium-high union density and coverage rate of collective bargaining create a favourable institutional environment for the emergence of negotiated policymaking and institutionalized social dialogue, including on migrant integration. On the other hand, where industrial relations are still developing and very weak, such as in CEE, or when reputation of collective representatives declines, such as in the Mediterranean regime, there is a general lack of trust in employers’ organizations, trade unions, and the government, their organizational and operational capacity are limited, the role of social partners is weak and also revolves around the dominance of different political governments. Migration, together with economic globalization, institutional deregulation and the rise of the digital economy are not only a challenge for labour market institutions and actors, but can also provide a chance for reform by becoming more inclusive and taking into account the diversity of workers. This is particularly important, since migration will continue to be of most policy relevance in the current times, due to the ongoing climate and health emergencies, political instability in Eastern Europe, the Middle East, and North Africa, where millions of people in need of humanitarian aid will be forced to become migrants in the near future. Given the expanding significance of mass migration and the interconnectedness between areas of the world, further in-depth analysis of currently changing contexts and of critical factors for population movements, such as the pandemic and the Ukrainian refugee crisis, is certainly a needed and insightful line for upcoming research.

NOTES 1. This chapter adopts the word ‘migrant’ as a synonym of ‘immigrant’ and ‘foreign-born’. Unless mentioned otherwise, it includes all persons born abroad, regardless of their migration category or legal status.

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2. For a long time states’ attention focused on narrowly defined ‘economic migrants’ (EU workers and/or non-EU migrants entering EU countries via labour migration routes) while non-economic migrants (e.g., family members, students, and refugees) – who make up a significant proportion of inflows in most EU countries (e.g., about two-thirds of long-term migrants in France and the Netherlands and just under half in the UK and Italy) – have remained a ‘hidden’ workforce whose role has often been neglected in European labour markets (Cangiano, 2012). 3. Asylum seekers are entitled to very limited legal and social rights. During the period while their asylum claims are processed, in many countries they are not permitted to work. At the conclusion of legal proceedings, which may last for several years, many applicants are refused. However, due to considerable legal and practical obstacles they are not deported home, but remain in the host country illegally or with insecure status. Recognized refugees, on the contrary, enjoy full economic and social rights, take part in integration programmes including language and professional courses, and receive financial support and assistance in finding employment (Kogan, 2007).

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Fasano, F. and Mazza, J. (2020) A Vulnerable Workforce: Migrant Workers in the COVID-19 Pandemic. Luxembourg: Publications Office of the European Union. Favell, A. (2008) Eurostars and Eurocities: Free Movement and Mobility in an Integrating Europe. Malden: Blackwell Publishing. Fingleton, B., Olner D. and Pryce, G. (2019) Estimating the local employment impacts of immigration: A dynamic spatial panel model. Urban Studies 57(13): 2646–2662. Ford, R. and Sobolewska, M. (2016) The Politics of Immigration: Old and New Developments in British Politics. Basingstoke: Palgrave Macmillan. Geis, W., Uebelmesser, S. and Werding, M. (2013) How do migrants choose their destination country? An analysis of institutional determinants. Review of International Economics 21(5): 825–840. Greve, B. (ed.) (2019) The Routledge Handbook of the Welfare State. London: Routledge. Hemerijck, A., Palm, T.P., Entenman, E. and Van Hooren, F.J. (2013) Changing European Welfare States and the Evolution of Migrant Incorporation Regimes. Impact Paper, University of Amsterdam. Hennebry, J. (2014) Falling through the cracks? Migrant workers and the global social protection floor. Global Social Policy 14(3): 369–388. Hyman, R. (2001) Understanding European Trade Unionism: Between Market, Class and Society. London: SAGE. Hooghe, L. and Marks, G. (2018) Cleavage theory meets Europe’s crises: Lipset, Rokkan, and the transnational cleavage. Journal of European Public Policy 25(1): 109–135. ILO (2020) ILO Brief: Trade Union Action to Promote Fair Recruitment for Migrant Workers, Publication of the International Labour Organization. Jakuleviciene, L. (2017) Migration related restrictions by the EU member states in the aftermath of the 2015 refugee crisis in Europe: What did we learn. International Comparative Jurisprudence 3(2): 222–230. Joppke, C. (1999) Immigration and the Nation-State. Oxford: Oxford University Press. Jordan, B. and Düvell, F. (2002) Irregular Migration: The Dilemmas of Transnational Mobility. Cheltenham: Edward Elgar. Knotz, C., Fossati, F., Scalise, G. and Hooijer, G. (2020) The roles of employers and trade unions in immigration and welfare state policymaking. Journal of European Social Policy 30(5): 521–527. Kogan, I. (2007) Working Through Barriers. Basingstoke: Palgrave Macmillan. Lee, E. (1966) A theory of migration. Demography 3(1): 47–57. Lewin-Epstein, N., Semyonov, M., Kogan, I. and Wanner, R. A. (2003) Institutional structure and immigrant integration: A comparative study of immigrants’ labor market attainment in Canada and Israel. International Migration Review 37(2): 389–420. Mahroum, S. (2008) Europe and the immigration of highly skilled labour. International Migration 39(5): 27–43. Marino, S. (2012) Trade union inclusion of migrant and ethnic minority workers: Comparing Italy and the Netherlands. European Journal of Industrial Relations 18(1): 5–12. Marino, S., Roosblad, J. and Penninx, R. (eds.) (2017) Trade Unions and Migrant Workers: New Contexts and Challenges in Europe. Cheltenham: Edward Elgar. McAuliffe, M. and Triandafyllidou, A. (2022) Report overview: Technological, geopolitical and environmental transformations shaping our migration and mobility futures, in IOM UN World Migration Report 2022, IMO, Geneve. Meardi, G. (2012) Union immobility? Trade unions and the freedoms of movement in the enlarged EU. British Journal of Industrial Relations 50(1): 99–120. Meyers, E. (2000) Theories of international immigration policy – A comparative analysis. International Migration Review 34(4): 1245–1282. Morgan, K.J. (2020) Policing markets: The role of the social partners in internal immigration enforcement. Journal of European Social Policy 30(5): 571–586. Muenz, R. and Fassmann, H. (2004) Migrants in Europe and Their Economic Position: Evidence From the European Labour Force Survey and From Other Sources. Hamburg: Hamburg Institute of International Economics. OECD (2020) What is the Impact of the COVID-19 Pandemic on Immigrants and Their Children? Paris: OECD. https://www​.oecd​.org​/coronavirus​/policy​-responses​/what​-is​-the​-impact​-of​-the​-covid​19​-pandemic​-on​-immigrants​-and​-their​-children​-e7cbb7de/.

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Palier, B. and Thelen, K. (2010) Institutionalizing dualism: Complementarities and change in France and Germany. Politics and Society 38(1): 119–148. Penninx, R. and Roosblad, J. (eds.) (2000) Trade Unions, Immigration, and Immigrants in Europe, 1960–1993: A Comparative Study of the Attitudes and Actions of Trade Unions in Seven West European Countries. New York/Oxford: Berghahn Books. Piore, M. (1979) Birds of Passage: Migrant Labor and Industrial Societies. Cambridge: Cambridge University Press. Ravenstein, G. (1985) The laws of migration. Journal of the Statistical Society of London 48(2): 167–235. Reeskens, T. and van Oorschot, W. (2012) Disentangling the ‘new liberal dilemma’: On the relation between general welfare redistribution preferences and welfare Chauvinism. International Journal of Comparative Sociology 53(2): 120–139. Reitz, J.G. (1998) Warmth of the Welcome. Boulder, CO: Westview Press. Reitz, J.G. (ed.) (2003) Host Societies and the Reception of Immigrants. San Diego, CA: Center for Comparative Immigration Studies, University of California. Reyneri, E. and Fullin, G. (2011) Labour market penalties of new immigrants in new and old receiving West European countries. International Migration 49(1): 31–57. Rodrıguez-Planas, N., Angel Alcobendas, M. and Vegas, R. (2014) Wage and occupational assimilation by skill level: Recent evidence for Spain. In: A. Artal-Tur, G. Peri and F. Requena-Silvente (eds.) The Socio-Economic Impact of Migration Flows. Cham: Springer. Ruhs, M. (2013) The Price of Rights: Regulating International Labour Migration. Princeton, NJ: Princeton University Press. Sà, F. (2011) Does employment protection help immigrants? Evidence from European labor markets. Labour Economics 18: 624–642. Sainsbury D. (2006) Immigrants’ social rights in comparative perspective: Welfare regimes, forms in immigration and immigration policy regimes. Journal of European Social Policy 16(3): 229–244. Sainsbury, D. (2012) Welfare States and Immigrant Rights: The Politics of Inclusion and Exclusion. Oxford: Oxford University Press. Samers, M. (2003) Invisible capitalism: Political economy and the regulation of undocumented immigration in France. Economy and Society 32(4): 555–583. Scalise, G. (2020) The political economy of policy ideas. In: The European Strategy of Active Inclusion in Context. Basingstoke: Palgrave Macmillan. Scalise, G. and Burroni, L. (2020) Industrial relations and migrants’ integration in European cities: A comparative perspective. Journal of European Social Policy 30(3): 587–600. Soysal, Y. (1994) Limits of Citizenship-Migrants and Postnational Membership in Europe. Chicago, IL: University of Chicago Press. Stalker, P. (2002) Migration trends and migration policy in Europe. International Migration 40(5): 151–179. Stark, O. (1984) Rural-to-urban migration in LDC’s: A relative deprivation approach. Economic Development and Cultural Change 32(3): 475. Triandafyllidou, A. and Ambrosini, M. (2011) Irregular immigration control in Italy and Greece: Strong fencing and weak gate-keeping serving the labour market. The European Journal of Migration and Law 13(3): 251–273. Triandafyllidou, A. and Marchetti, S. (2013) Migrant domestic and care workers in Europe: New patterns of circulation? Journal of Immigrant and Refugee Studies 11(4): 339–346. United Nations (2021) World Migration Report 2022. Geneva: UN IMO. Van Mol, C. and de Valk, H. (2016) Migration and immigrants in Europe: A historical and demographic perspective. In: B. Garcés-Mascareñas and R. Penninx (eds.) Integration Processes and Policies in Europe. Basingstoke: Palgrave Macmillan, pp. 31–55. Wallerstein, I. (1974) The rise and future demise of the world capitalist system: Concepts for comparative analysis. Comparative Studies in Society and History 16(4): 387–415. Zhou, M. (1997) Segmented assimilation: Issues, controversies, and recent research on the new second generation. International Migration Review 31(4): 975–1008. Zimmermann, K. (ed.). (2005) European Migration: What Do We Know? Oxford: Oxford University Press.

10. Technological change and labour market policy preferences David Weisstanner

INTRODUCTION Technological change profoundly transforms labour markets in advanced democracies, replacing existing jobs and creating new ones. This trend produces “winners” and “losers” and creates divisions that often become politicised and shape electoral behaviour (Kurer and Palier, 2019; Kurer, 2020; Gallego et al., 2021b). The unequal impact of technological change depends not only on the relative demand and supply of workers in different occupations, but also on political choices and the provision of public policies (Goldin and Katz, 2008; Huber and Stephens, 2014; Atkinson, 2015). Therefore, public policy and labour market policy are key to understanding how technological change affects the labour market. This chapter explores how technological change affects the demand for labour market policy. It builds on a growing literature which argues that the risk of individuals’ jobs getting displaced by machines should increase their demand for social insurance and compensation through the welfare state (e.g. Thewissen and Rueda, 2019). Both findings from the existing literature and my own analysis in this chapter provide empirical evidence for the claim that risk of job automation tends to increase support for compensatory unemployment benefits. But the impact of technological change is not the same for other dimensions of labour market policy preferences: existing empirical studies and the findings in this chapter find little evidence that automation risk increases support for universal basic income and active labour market policy. Affected workers seem to prefer compensation through passive benefits as a rational short-term response rather than more investment-oriented policies (Dermont and Weisstanner, 2020; Kurer and Häusermann, 2021; Busemeyer and Sahm, 2021). An important recent debate in the literature is whether objective automation risks are indeed perceived accurately by individuals. The overlap between objective risk and subjective risk perceptions may be weaker than assumed (Kurer and Häusermann, 2021; Gallego et al., 2021a). My own findings based on data from the European Social Survey (ESS) for 21 democracies in 2016–2017 also show that there is a weak positive association between objective automation risk (as measured through the “routine task intensity” indicator) and subjective risk perceptions. But the association may be spurious, since it is largely explained by differences in income and other socio-economic characteristics. It appears that only the high-income and highly educated groups stand out as clear winners of technological change, with low objective and subjective risks. Although the employment shares of middle-skilled routine workers have declined (Kurer and Gallego, 2019) and the “hollowing out of the middle” has received much attention, a fruitful research avenue is to focus more explicitly on the behaviour of the winners of automation, that is, the substantial share of the population who perceives modest gains from technological change (Gallego et al., 2021b). 132

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Finally, this chapter discusses the possibility that the effect of technological change varies across institutional contexts (Busemeyer and Sahm, 2021; Busemeyer and Tober, 2021). Contextual factors may mediate the relationship between automation risk and policy preferences due to policy feedback mechanisms (Gingrich and Ansell, 2012; Busemeyer et  al., 2021). One particularly intriguing expectation is that vocational education and training (VET) systems may help non-tertiary educated workers to obtain the skills necessary to adapt to the risk of skill-biased technological change (Özkiziltan and Hassel, 2020). My analysis provides some initial evidence for this expectation. The effect of automation risk on compensatory LMP preferences varies significantly across countries, but automation risk does not have any positive association with compensatory preferences in countries like Austria, Germany, or Switzerland with dual education systems. The remainder of this chapter is structured as follows. First, after briefly putting debates about technological change in a broader historical context, I systematically review the main theoretical debates and empirical findings from the growing recent literature on automation risk and policy preferences. Second, I discuss the important question of the overlap between objective and subjective risks of job automation, and provide a comparative picture of these risks. Third, I present original findings on the association between automation risk and three different dimensions of labour market policy preferences. Fourth, I explore the heterogeneity in the effect of automation risk across countries and policy contexts. The final section concludes with implications and promising areas for further research.

10.1 TECHNOLOGICAL CHANGE AND THE LABOUR MARKET Debates about the impact of technological change on the labour market have a long history. The profound and salient structural transformations that come with technological advances were seen in the Industrial Revolution in the 18th and 19th centuries, which brought the first large-scale replacement of certain jobs by machines. Despite enormous long-term economic benefits, the Industrial Revolution came with significant social unrest. Such social unrest and risk of backlash – particularly among the losers of technological change – seem to be a recurrent feature of such transformations (Frey, 2019). In recent decades, the potential of technological change to automate occupations has accelerated with the computer revolution starting in the 1960s and with the spread of the internet in the 1990s. Most recently, advances in artificial intelligence (AI) and robotics are likely to accelerate the potential for job automation even further. The labour market implications of these most recent developments are still uncertain (Brynjolfsson and McAfee, 2014). Some models predict that significant numbers of occupations are at risk of automation (Frey and Osborne, 2017), although other researchers have provided more moderate estimates (Arntz et al., 2016). The historical perspective on technological change illustrates two points. First, its impact on the labour market usually creates both (long-term) economic opportunities and challenges relating to the (short-term) disruption of job replacement. Second, the impact of technological change is often unequal across individuals. People with a certain occupational profile are more affected by the risk of job automation at a certain point in time than people with a different profile. In other words, the distributional implications of technological change create “winners” and “losers”. From a political science perspective, identifying the winners and

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losers of technological change allows us to predict demand for labour market policy arrangements that could mitigate the disruptions that potentially come with it. Who are the “winners” and “losers” of contemporary technological change driven by advances in information and communications technology (ICT)? Two influential perspectives in labour economics are the theories of “skill-biased technological change” (SBTC) and “routine-biased technological change” (RBTC). Regarding the winners of automation, both predict that ICT is complementing non-routine tasks and thus increases the relative demand for high-skilled workers. Regarding the losers of automation, SBTC expects low-skilled workers to be worse off, while RBTC seeks to explain the strong growth of low-skilled jobs and the pattern of job polarisation in many countries by predicting a hollowing out of middle-skilled jobs with high routine task intensity (Autor et al., 2003; Goos et al., 2009; Goos et al., 2014; Acemoglu and Autor, 2011; Autor and Dorn, 2013). Acemoglu and Restrepo (2019) proposed a model where the negative effects of automation on jobs and wages are weighed up against the positive effects due to new demand for non-automated tasks created by rising productivity. Several political science studies have worked with the assumption from RBTC models that middle-skilled and middle-income occupations are most susceptible to automation (e.g. Thewissen and Rueda, 2019: 180). A weak correlation between automation risk and income or education would be consistent with the finding that such mid-skilled routine jobs have disappeared most (see also Kurer and Gallego, 2019). This particular distribution of automation risk would also turn out to be useful for studying political preferences and behaviour – in this case, automation risk could clearly be distinguished from other forms of risks such as risk of unemployment or income loss, which correlate (to varying degrees) with many other indicators of economic hardship (Rehm, 2016). However, not all researchers agree that technological change has led to job polarisation and a hollowing out of the middle. Oesch (2013), for instance, finds an overall upgrading of the occupational structure at the expense of the lowermiddle class and the industrial working class instead. 10.1.1 Automation Risk and Policy Preferences If likely “winners” and “losers” of automation can be empirically identified, this type of risk can then in turn inform people’s policy preferences. The relationship between risk and individual-level attitudes towards the welfare state has become a central theoretical framework in comparative welfare state and political economy research (Iversen and Soskice, 2001; Rehm, 2009, 2011, 2016; Gingrich and Ansell, 2012; Schwander and Häusermann, 2013). The core expectation is that individuals with higher employment-related risks – irrespective of their current material position (e.g. income level) – demand more extensive welfare policies as an insurance against these risks. Vlandas (2020), for example, applies this logic to labour market preferences. He shows that individuals with high occupational unemployment risk are more likely to demand unemployment benefits and jobs from the government. Table 10.1 summarises the findings from some prior studies that have explored how automation risks affects different types of welfare policy preferences. It distinguishes between general redistribution preferences to more specific areas of labour market policy (LMP) preferences: passive LMP, universal basic income, and active LMP. I include both comparative studies on automation risk and policy preferences (Thewissen and Rueda, 2019; Dermont and Weisstanner, 2020; Im, 2021; Busemeyer and Sahm, 2021; Kurer and Häusermann, 2021; Im and Komp-Leukkunen, 2021; Busemeyer and Tober, 2021) and studies with original survey

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Table 10.1  Prior findings on automation risk and policy preferences Study

Automation risk measure

Support for redistribution

Passive labour market policy

Thewissen and Rueda (2019)

RTI

+

Dermont and Weisstanner (2020)

RTI

+

Sacchi et al. (2020)

RTI Subjective

Busemeyer and Sahm (2021)

Frey/Osborne Arntz et al.

Busemeyer and Tober (2021)

Subjective RTI

Gallego et al. (2021a)

Subjective RTI Arntz et al.

Guarascio and Sacchi (2021)

RTI Subjective

Im (2021)

RTI

+

Im and KompLeukkunen (2021)

RTI

+

Jeffrey (2021)

Automation shock

Kurer and Häusermann (2021)

Subjective RTI Frey/Osborne

+ + + +

+ 0 0/– 0

0 –

+ +

– –

0 0 0 + 0

–/0

Active labour market policy

0 + 0

0 0 0

Universal basic income

+ 0

0/+ + + +

0/– 0 0

Notes:   + positive association, 0 no consistent/statistically significant association, – negative association.

data from single country contexts (Gallego et al., 2021a; Jeffrey, 2021; Sacchi et al., 2020; Guarascio and Sacchi, 2021). Many studies use the routine task intensity (RTI) as their measure for objective risk of automation, although some rely on alternative indicators by Arntz et al. (2016) or Frey and Osborne (2017). The findings in Table 10.1 are somewhat mixed. Most studies find some evidence for a positive association between automation risk and demand for compensatory policy measures (conceptualised as support for redistribution or passive labour market policy). The one important exception is Gallego et al. (2021a) who find no association in their original survey from Spain. One explanation for this might be that their measure of compensatory policies is explicitly about increasing spending on benefits, which would imply a departure from the status quo although respondents might support current policy arrangements. With regard to universal basic income (UBI), null findings are more prevalent. UBI is a policy area distinct from other labour market policies, among others because UBI is somewhat contested even among traditional supporters of the welfare state (Dermont and Weisstanner, 2020; Schwander and

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Vlandas, 2020). Despite these differences, UBI support is still strongly driven by material risk (Vlandas, 2021) and the studies in Table 10.1 find either a positive association or a null effect between automation risk and UBI support. The one policy area that seems clearly distinct is active labour market policy. Im (2021) and Im and Komp-Leukkunen (2021) find that RTI is associated with support for cutting unemployment benefits for unemployed respondents if they turn down lower-paying jobs or jobs with lower educational requirements. In contrast, Busemeyer and Tober (2021), Kurer and Häusermann (2021) and Busemeyer and Sahm (2021) find a mostly negative association between RTI and active LMP. If anything, respondents who perceive a higher risk of automation are more opposed to active LMP, especially among lower-skilled workers (Kurer and Häusermann, 2021: 13). A challenge is that these studies use different items used to measure active LMP. The studies finding positive associations ask about preferred levels of benefit cuts if unemployed individuals turn down jobs (Im, 2021; Im and Komp-Leukkunen, 2021). This is very different from support for tertiary education and labour market reintegration measures (Kurer and Häusermann, 2021). Conceptually, distinguishing between compensatory and investment-oriented policies can help explain the different results produced with different policy measures (Beramendi et al., 2015; Garritzmann et al., 2018). Compensatory policies include welfare transfers like unemployment benefits or pensions that provide short-term economic protection. Investmentoriented policies, such as active LMP, education, or childcare, are a more indirect long-term approach of activation and human capital development. Policies like UBI are somewhat ambiguous to classify in this framework, as they provide direct cash benefits, but the universal provision of UBI also makes it similar to other investment-oriented policies. For the case of technological change, supporting compensatory unemployment transfers is a rational shortterm response for workers at risk of automation (Kurer and Häusermann, 2021). Investing in human capital formation through initial education and training as well as further training for older workers may also help workers to cope with future technology-induced changes, but the risk-mitigating benefits of this approach only materialise in the long-term (Busemeyer and Tober, 2021; Kurer and Häusermann, 2021).

10.2 THE (ACTUAL AND PERCEIVED) WINNERS AND LOSERS OF AUTOMATION An important assumption in the hypothesised relationship between automation risk and policy demand is that individuals recognise and accurately perceive the risk of their job being automated. Recent studies have started to question this overlap between actual and perceived risk of automation. Kurer and Häusermann (2021) find consistent associations between standard indicators for objective automation risks and subjective risk perceptions, but the correlations are quite moderate and objective risk does not seem to explain a large share of the variation in subjective risk. Interestingly, according to their measure, most respondents feel less threatened by automation than the objective indicators suggest. Gallego et al. (2021a) also find that the majority of Spanish respondents think that technology has positive consequences for their own occupation, while only 19% report negative consequences. They do not find a consistent association between objective and subjective risk across all measures of automation risk. Similarly, Guarascio and Sacchi (2021) do not find a strong correlation between objective and perceived risk of job loss due to automation.

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To provide a comparative picture of the objective and subjective risks of automation, I draw on data from round eight of the European Social Survey fielded in 2016 and 2017 for 21 European democracies (see Figure 10.2 for the specific countries included). Objective risk of automation through technology-related occupational change is measured with the “routine task intensity” (RTI) indicator, which estimates the degree of routine tasks within an occupation and indicates a higher likelihood that a job gets replaced by robots (Autor et al., 2003). This approach has its limitations since it is time invariant and originally based on US occupational dictionaries from the 1970s to distinguish routine, manual, and abstract tasks. However, it is still the most widely used measure in the literature and although other measures have become popular, the correlation between different measures is quite high and associations with policy preferences do not vary dramatically (see Table 10.1). Following Thewissen and Rueda (2019), I use the RTI provided by Goos et al. (2014) and match it with occupational data in the ESS (two-digit ISCO-08). I use two measures of subjective risk. The ESS does not contain risk measures specifically related to technological change, but it has items on general perceptions of job risk (how likely unemployed and looking for work next 12 months) and income risk (how likely not enough money for household necessities next 12 months). Both are measured on a four-point scale from “not very likely” to “very likely”. If the objective risk of losing one’s job due to automation is reflected in subjective risk perceptions, there should be a positive correlation between objective automation risk (as measured by the RTI indicator) and these two subjective risk measures. Figure 10.1 shows some positive correlation between RTI scores of an occupation and general risk perceptions about how likely respondents think they will become unemployed or will not have enough money in the next 12 months. Managerial and professional occupations with low shares of routine tasks tend to indicate low subjective economic risks. In contrast, production and service workers in occupations with medium or high RTI scores on average report higher subjective risk. However, the correlation is far from perfect. Some occupations with low routine content (small-business managers, drivers – perhaps one of the more questionable RTI classifications – or personal workers) report high risk, while office clerks with the highest RTI score have only moderate subjective concerns. At the individual level, the correlation between the RTI indicator and the two subjective risk measures is statistically significant. The bivariate correlation with RTI is slightly weaker for job unemployment risk (b=0.04, s.e.=0.01, p