The Political Economy of Policy Ideas: The European Strategy of Active Inclusion in Context 9783030557492

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PALGRAVE STUDIES IN EUROPEAN POLITICAL SOCIOLOGY

The Political Economy of Policy Ideas The European Strategy of Active Inclusion in Context

Gemma Scalise

Palgrave Studies in European Political Sociology

Series Editors Carlo Ruzza School of International Studies University of Trento Trento, Italy Hans-Jörg Trenz Department of Media, Cognition and Communication University of Copenhagen Copenhagen, Denmark

Palgrave Studies in European Political Sociology addresses contemporary themes in the field of Political Sociology. Over recent years, attention has turned increasingly to processes of Europeanization and globalization and the social and political spaces that are opened by them. These processes comprise both institutional-constitutional change and new dynamics of social transnationalism. Europeanization and globalization are also about changing power relations as they affect people’s lives, social networks and forms of mobility. The Palgrave Studies in European Political Sociology series addresses linkages between regulation, institution building and the full range of societal repercussions at local, regional, national, European and global level, and will sharpen understanding of changing patterns of attitudes and behaviours of individuals and groups, the political use of new rights and opportunities by citizens, new conflict lines and coalitions, societal interactions and networking, and shifting loyalties and solidarity within and across the European space. We welcome proposals from across the spectrum of Political Sociology and Political Science, on dimensions of citizenship; political attitudes and values; political communication and public spheres; states, communities, governance structure and political institutions; forms of political participation; populism and the radical right; and democracy and democratization.

More information about this series at http://www.palgrave.com/gp/series/14630

Gemma Scalise

The Political Economy of Policy Ideas The European Strategy of Active Inclusion in Context

Gemma Scalise University of Bergamo Bergamo, Italy

Palgrave Studies in European Political Sociology ISBN 978-3-030-55749-2 ISBN 978-3-030-55750-8 https://doi.org/10.1007/978-3-030-55750-8

(eBook)

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: © SEAN GLADWELL/Getty Images This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgments

The idea of this book emerged after two intense years of research collaboration with a tight-knit team of colleagues who took part in the European project “Active Inclusion and Industrial Relations from a multilevel governance perspective” (Airmulp), coordinated by the University of Florence between 2014 and 2016. After carrying out fieldwork and interviews in three different European countries for this project and having found myself faced with diverse understandings of social inclusion and state/market relations, I decided to develop a follow-up project focused on the social embeddedness of ideas. Two more years have passed while I have worked on this new project and during this time I have accumulated a debt of gratitude to many people. Luigi Burroni encouraged me to develop it and provided great support throughout its realisation. Colin Crouch, Manuela Galetto, Alejandro Godino, Maarten Keune, Antonio Martin Artiles, Guglielmo Meardi, Oscar Molina Romo, Anna Mori and Noëlle Payton offered useful comments during the discussions involving members of the Airmulp project and these helped me to elaborate many of the ideas set out in this book.

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Acknowledgments

The first draft of this book was developed during my Max Weber fellowship at the European University Institute (EUI) between 2017 and 2019 and benefited greatly from the insights and mentoring of Dorothee Bohle and Anton Hemerijck. EUI colleagues offered valuable comments on early drafts presented at the Max Weber Program seminars and conferences in 2018 and 2019, in particular Giulia Dotti Sani, Roger Fernandez Urbano, Flavia Fossati, Jiulian Garritzmann, Ioanna Hadjiyianni, Paul van Hooft, Nevena Kulic, Fabienne Liechti, Bernardo Rangoni, Stefano Ronchi and Sbigniew Truchlewski. The Max Weber Program and its staff provided an ideal environment, with Laurie Anderson being particularly helpful. I am also very grateful to Lucio Baccaro and the whole staff of the Max Planck Institute for the Study of Societies in Cologne for hosting me in the spring of 2019. This was a highly stimulating period that gave me the opportunity to develop my ideas and enjoy fruitful exchanges with the many scholars I met there, especially Björn Bremen, Fabio Bulfone, William Callison, Matias Dewey, Donato Di Carlo and Sebastian Diessner. The final version of this work was completed shortly after I started my new job at the University of Bergamo. I would like to thank the director of my new department, Enrico Giannetto, and new colleagues, Marco Marzano, Francesca Pasquali, Alberta Giorgi, Micol Pizzolati, Domenico Perrotta, Maria Francesca Murru and Riccardo Dondi for their warm welcome and mutual support during a very difficult time for our institution and the whole city of Bergamo. The COVID-19 virus hit this area particularly hard and it has been one of the worst affected parts of Italy. Finally, I am grateful to the anonymous referees and to the editors of Palgrave Studies in European Political Sociology for their constructive comments. I myself, as is the custom, remain wholly responsible for what follows.

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Funding Statement The empirical research presented in this volume benefited from funding by the European Commission, DG Employment, Social Affairs and Inclusion, as part of the Airmulp project (VP/2014/0546), and from the University of Florence, EUI and University of Bergamo.

Praise for The Political Economy of Policy Ideas

“In times of strategic uncertainty, ideas matter for policy-making. In this superb book, Gemma Scalise departs from standard methodological nationalism by providing a highly innovative account and theoretical perspective on how new policy ideas, articulated in the corridors of the EU, are translated, re-articulated and re-purposed across local settings, in ways that transcend the member state level. This outstanding, wellstructured and well-written book conjures up a truly novel exploration on how ideas travel across different layers of European social policy making in the 21st century political economies. A must read for policy makers and academics!” —Anton Hemerijck, Professor of Political Science and Sociology, European University Institute, Italy “This book brings new strength to a tradition of studies which look at the role played by ideational factors in the comparative political economy. It innovatively places itself at the crossroads of different streams of literature, by analysing the interplay between ideas, institutional architectures,

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Praise for The Political Economy of Policy Ideas

historical legacies and the choice of actors in charge of implementing policies at the local level.” —Emmanuele Pavolini, Professor of Economic Sociology and Social Policy, University of Macerata, Italy “This important book explores what happens when transnational policy ideas go local. Carefully reconstructing the way social policy ideas originating in Brussels are interpreted by local actors in three European cities, Scalise shows how their interaction with historical legacies and actor’s agency leads to vastly diverse outcomes. The book offers an immensely enlightening analysis, which will affect future debates in comparative political economy and public policy.” —Dorothee Bohle, Professor of Social and Political Change, European University Institute, Italy

Contents

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2

Introduction: Ideas and Comparative Political Economy 1.1 Foreword 1.2 Ideas and Capitalism 1.3 Overview of This Book 1.4 From the Epicentre: Reflections in Times of Coronavirus References Convergence or Divergence? The Debate on Capitalist Societies 2.1 Structure and Agency: A Useful Analytical Framework 2.2 The Balance Between Growth and Inclusion: Six Ideal Types of Capitalism 2.3 Differentiated Pathways to Inclusive Growth 2.4 Actors and Their Different Strategies: State, Social Partners and Firms

1 1 5 10 14 21 25 25 29 32 42

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2.5 The Trajectories of Contemporary Capitalism References 3

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Active Inclusion: A New Policy Paradigm in the Wake of the 2008 Economic Crisis 3.1 Active Inclusion: Its Origin and Diffusion 3.2 Inclusive Labour Markets 3.3 Variety of Combinations of Employment Quantity and Quality 3.4 Social Partners and Inclusive Labour Markets 3.5 Industrial Relations, Public Policies and Employment Quality References Understanding Divergence: A Focus on National Regulation 4.1 A Closer Comparison: Three-Country Analysis 4.2 The Mediterranean Model: Spain 4.3 The Continental Model: France 4.4 The Nordic Model: Sweden 4.5 A Comparative Outlook References From Macro to Micro Evidence: Supranational Strategies, Local Interpretations 5.1 Active Labour Market Policies: Multiple Functions Behind Different Logics 5.2 Activation, Conditionality and Personalisation 5.3 The European Social Fund and the Relevance of Local Regulation 5.4 Governance by Indicators 5.5 From Ideas to Policy and Delivery: Research Design References Local Pathways to Active Inclusion 6.1 A Common Policy Idea, Different Outcomes

59 61 67 67 74 78 84 90 96 101 101 102 114 120 128 133 137 137 140 144 150 153 163 169 169

Contents

6.2 The Restricted Active Inclusion of Barcelona 6.3 An Embedded Active Inclusion: The Lyon Case Study 6.4 Gothenburg: A Capacitating Active Inclusion 6.5 The Active Inclusion of Migrants 6.6 Policy Ideas and Local Interpretations: A Typology of Active Inclusion References

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170 180 188 197 206 210

7 The Political Economy of Policy Ideas: Concluding Remarks and Open Questions 7.1 Ideas, the EU and Knowledge Regimes 7.2 Ideas, Institutions and Actors 7.3 The Multi-Level Governance of Active Inclusion 7.4 What Ideas for the Post-COVID-19 World? References

213 213 217 222 229 233

Index

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Abbreviations

ALMPs AROPE BUSINESSEUROPE CC.OO CEEP CFDT CGT EC ECB EES EP ESF ETUC EU GDP GERD ILO IMF

Active Labour Market Policies At Risk of Poverty or Social Exclusion Confederation of European Business Comisiones Obreras European Centre of Employers and Enterprises Providing Public Services Confédération française démocratique du travail Confédération general du travail European Commission European Central Bank European Employment Strategy European Parliament European Social Fund European Trade Union Confederation European Union Gross Domestic Product Gross Domestic Expenditure on Research and Development International Labour Organisation International Monetary Fund

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Abbreviations

LMPs MoU OECD OMC PES R&D SIP TTIP UEAPME UGT

Labour Market Policies Memorandum of Understanding Organization for Economic Co-operation and Development Open Method of Coordination Public Employment Services Research and Development Social Investment Package Transatlantic Trade and Investment Partnership European Association of Craft, Small and MediumSized Enterprises Unión General de Trabajadores

List of Figures

Fig. 2.1

Fig. 2.2

Fig. 2.3

Coefficient of variation trend for the six policy areas analysed (2000–2014). Source Processed data from Eurostat. Note ALMP: expenditure in active labour policies as % of GDP; PLMP: expenditure on passive labour market policies per unemployed person; State aid: State aid not linked to the economic crisis as % of GDP; Soc_prot: per capita expenditure on social protection; GERD: public spending on R&D as % of GDP; Educ: public expenditure on education as % of GDP Gross domestic product per capita at purchasing power parity (2000–2014). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries Total employment rate, age 15–64 (2000–2015). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries

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List of Figures

Fig. 2.4

Inequality in wealth distribution (Gini Coefficient 2005–2014). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries People at risk of poverty or social exclusion (2005–2014). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries Growth and inclusion (average 2008–2015). Source Processed data from Eurostat The role of the state in the different models of capitalism. Source Processed data from Eurostat. Note For the analysis of state action in the different models, the average for the period 2000–2014 was calculated for the individual European countries, then grouped into the six models, in relation to the following Eurostat indicators: public investment in support of research and development as % of GDP (GERD, average 2000–2014), expenditure in active labour market policies as % of GDP (ALMP, average 2000–2014), expenditure in passive labour market policies per unemployed person (PLMP, average 2000–2014), expenditure per capita in social protection (Soc_prot, average 2000–2013), public spending on education as % of GDP (average 2000–2011), effectiveness of development policies (Eff_Dev_Pol, average 2000–2012), effectiveness of social policies (Eff_soc_pol, average 2004–2015) and effectiveness of redistributive policies (Eff_redistr_pol, average 2006–2015). The last two indicators are measured by the difference in the Gini and AROPE index before and after social transfers. The EU 28 average is equal to 1

Fig. 2.5

Fig. 2.6 Fig. 2.7

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List of Figures

Fig. 2.8

Fig. 2.9

Fig. 3.1

Characteristics of interest representation organisations in the six models of capitalism. Source Processed data from ICTWSS (Visser 2013). Note The analysis of the weight and strength of representative associations is based on four indicators: coverage of collective bargaining, unionisation rate, inclusion of associations in policy-making and their influence in companies. In this case the source is the ICTWSS database (Visser 2013) and refers to the year 2011; the coverage of collective bargaining is calculated on the basis of the different national databases (Crouch 2015). The EU 28 average is equal to 1 The action of firms in the six models of capitalism. Source Processed data from Eurostat and OECD databases. Note In order to analyse the action of enterprises, the six models have been classified according to the following indicators: business investment in innovation and development (Firm_inv_inn, average 2000–2014), total business investment (firm_tot_inv, average 2000–2015), share of R&D personnel per 1000 employees (R&D workers, average 2000–2013), labour productivity (Productivity, average 2004–2015), foreign direct investment as % of GDP (FDI), average enterprise size (Average_dimension) and patent applications per 100,000 inhabitants (Patents). The EU 28 average is equal to 1 Employment rate and low-wage earners. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “low wage earners 2006–2010” is the average value for each country for the period 2006–2010 (only available data) normalized on the EU28 average (EU28=1.0)

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Fig. 3.2

Fig. 3.3

Fig. 3.4

Fig. 3.5

List of Figures

Employment rate and labour productivity. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “labour productivity” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0) Employment rate and long-term unemployment. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “long-term unemployment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0) Employment rate and involuntary temporary employment. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “temporary employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0) Employment quantity and quality. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. All data has been normalized on the EU28 average (EU-28=1)

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List of Figures

Fig. 3.6

Fig. 3.7

Fig. 3.8

Union membership and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Union Membership” data from Crouch 2015 refers to 2011. All data has been normalized on the EU28 average (EU-28=1) Collective bargaining coverage and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Collective bargaining coverage” data from Crouch 2015 refer to 2011. All data has been normalized on the EU28 average (EU-28=1) Inclusion of social partner in policy-making and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “quality of employment index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers, and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Social partner inclusion in policy making” data from Crouch 2015 refer to 2011. All data has been normalized on the EU28 average (EU-28=1)

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Fig. 3.9

Fig. 3.10

Fig. 3.11

List of Figures

Strength of industrial relations and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data refers to 2011 (Crouch 2015). All data has been normalized on the EU28 average (EU-28=1) Strength of industrial relations and quality of LMPs. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Strength of industrial relations index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data refers to 2011 (Crouch 2015). “Quality of LMPs index” is the average of investment in active labour market policies and pro-capita spending on each individual unemployed person (2014). All data has been normalized on the EU28 average (EU-28=1) Strength of industrial relations and GERD. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). GERD is the gross domestic expenditure on research and development (R&D) as a percentage of GDP. Data refers to the average value for the period 2000–2014

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List of Figures

Fig. 3.12

Fig. 3.13

Strength of industrial relations and investment in social policy. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). Investment in social policy is the gross domestic expenditure as a percentage of GDP and refers to the average value for the period 2000–2014 Strength of industrial relations and spending on education. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). Spending on education is the gross domestic expenditure as a percentage of GDP and refers to the average value for the period 2000–2014

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List of Tables

Table 4.1 Table 4.2 Table 4.3 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 6.1

Employment indicators for Spain, France and Sweden, 2019, % of total population Social expenditure indicators for Spain, France and Sweden, 2017, % of GDP Social protection performance indicators for Spain, France and Sweden, 2018, % Welfare state and industrial relations regimes Regional economic and labour statistics at the time of the fieldwork (2016) Majoritarian government party in the three cities Migrant features in the case studies Local interpretations of active inclusion principles

104 106 109 155 157 158 160 208

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1 Introduction: Ideas and Comparative Political Economy

1.1

Foreword

Over the past few decades, an increasing number of scholars have explained the relevance of cognitive and ideational factors in the legitimation of policy solutions (March and Olsen 1989; Hall 1993; Schmidt 2008) and have highlighted how policymaking in advanced capitalist countries has been influenced by economic theories and intellectual and normative ideas, such as Keynesianism and neoliberalism (Hall 1989; Blyth 2002; Campbell and Pedersen 2001, 2014). In particular, the role of transnational paradigms in shaping the political “vision of the world” and influencing national governments actions has been recognised. The strength of such ideas is boosted by the international institutions and powerful epistemic communities that create, validate and disseminate them, thereby contributing to the fact that while certain ideas succeed or persist—considered as they are to be the most adequate in responding to societal needs—others fail and are replaced (Keune and Serrano 2014; Rich 2004; Eriksen and Fossum 2002; Crouch 2011; Schmidt and Thatcher 2013). © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_1

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The European Union (EU) is certainly one of the most influential institutions promoting policy ideas and is strongly committed to fostering common strategies for member states’ economic and social governance by providing sets of diagnostics and recommendations. Since its establishment, the EU has endorsed a variety of policy paradigms through specific initiatives and these ideas have entered into domestic political debates and agendas. This has undeniably taken place since the late nineties with the European Employment Strategy (EES), today part of Europe 2020 Strategy, and through the Open Method of Coordination (OMC): in the case in question, social learning processes and ideational factors have played an important role in bringing about social and labour market reforms in Europe (Ferrera et al. 2002; Hemerijck 2017). This book incorporates the role played by EU policy ideas into the comparative political economy debate about the convergence and divergence of institutional architectures of capitalist societies (Clift 2012). Within this debate, some authors have emphasised the external economic and political constraints, driven by EU policy ideas, that are leading towards the convergence of socio-economic regulation across EU countries, especially in the labour market, welfare and industrial relations arenas (Baccaro and Howell 2017; Streeck 2012). Others, instead, have provided evidence that the policy ideas spreading across Europe are broad and flexible, and argued that this malleable structure means that they can be adapted to different contexts (Burroni and Keune 2011; Ban 2016). Many scholars in the latter group show that path-dependency and historical legacy still play an important part in countries’ trajectories and that models of capitalism maintain their differences (Amable 2003; Bohle and Greskovits 2012; Burroni and Scalise 2017; Crouch 2015; Hall and Soskice 2001). This book contributes to this last particular strand of research and argues that transnational policy ideas are interpreted from below and assume different meanings in different contexts. However, its focus of analysis is rather different from the line prevalently taken in political economy literature, for two main reasons. First, I assume that the local level of regulation is more relevant than is usually postulated. Even in multi-level governance studies, the local level

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is often little explored and regarded as secondary compared to macroeconomic and structural analysis (Brenner 2004). I will show that the local level is, on the contrary, a key dimension, especially when analysing policy arenas such as labour market regulation and social policy. In multilayered European governance, vertical processes entail that local, national and supranational institutions and actors interact and negotiate policy paradigms, strategies and objectives, but that, in doing so, meanings change. As this volume will highlight, in this process institutions and actors located at the local level are crucial: they are the ones, in fact, who actually turn policy ideas into concrete measures and put the policies into practice. Secondly, but connected to the first point raised above, I argue that when policy ideas reach the local level of regulation and require implementation, a process of interpretation takes place, which results from the interplay between structure and agency. Indeed, the empirical analysis reported in the second part of the book will demonstrate that, in order to understand the translation of policy ideas into concrete local programs, we need to take into account the interplay between domestic institutional architecture and historical legacies on the one hand and the choices and action of political and social actors on the other. Both factors play a central role in this process, and their interplay contributes to endowing policy ideas with a specific meaning and to shaping local policy measures and practices, which vary from context to context. The book explains how policy ideas are incorporated and translated into local policy reforms by focusing on one of the key arenas in comparative political economy analysis, labour market regulation, and by analysing one of the leading policy paradigms of the EES, the idea of Active Inclusion. Active inclusion is a policy idea supported by the European Commission (EC) and launched through a specific recommendation to the member states in 2008 in order to respond to the challenge of social exclusion in Europe (Commission Recommendation 2008/867/EC). This policy idea, which sought to help the member states modernise their social protection systems and address growing poverty and social exclusion by making labour markets more inclusive, emerged as part of the new wave of welfare state recalibration. This was characterised by the transition from the logic of compensation to the logic

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of prevention, in which inclusion is realised not only through income support but especially through re-training and participation in work. Following the Social Investment approach (Hemerijck 2017), the core of social policy shifts from the protection of income, compensation, and indemnification to the enforcement of education, re-skilling, labour participation and protection from the new social risks which especially affect women and younger people (Ferrera and Rhodes 2000; Pierson 2001). Thus, social policy increasingly embraces labour market policies, enhancing the various social functions of activation, paid work and participation in the labour force (Barbier and Ludwig-Mayerhofer 2004). What is the domestic response to this supranational idea? What happens to the active inclusion idea when it reaches the local level of regulation and must be implemented and delivered? How is it translated into local programmes and practices? What actors take part in this process? These are the questions that this book intends to answer. As Barbier and Ludwig-Mayerhofer noted, “as activation ideology and practice seem to invade more or less all countries, not least under the influence of the European Employment Strategy, its multi-faceted and variegated nature remains to be fully discovered” (2004, p. 429). My purpose here is to explore this variegated nature of active inclusion by examining its local delivery. Almost ten years after the European Commission’s launch of the Active Inclusion recommendation, and in the aftermath of one of the most trying periods in Europe’s recent economic and political history, the book offers a critical and timely reassessment. By contributing to the growing scholarly literature on ideational political economy, it provides a systematic analysis of the implementation of the idea of active inclusion and breaks new ground by detailing how divergent interpretations in different contexts derive from the interplay between domestic institutional assets and the choices made by relevant political and social actors.

1 Introduction: Ideas and Comparative Political Economy

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5

Ideas and Capitalism

Ideational elements have increasingly entered the debates over the political economic changes of contemporary capitalism. Since the 2000s, a relevant part of scholarship has introduced us to the role of ideas, their relationship with institutions and actors and their capacity to affect policymaking and socio-institutional change (Béland 2005, 2016; Campbell 2004; Schmidt 2002, 2011). This literature shows that ideas have a key function in building coalitions and interests, shaping political processes and policymaking and determining stability and change in contemporary societies. Ideational forces, enduring modes of thought and discourses, informed by underlying cultures, ideologies and values, and promoted by policy entrepreneurs, explain the production and legitimisation of specific policies and the revision of political objectives (Blyth 2002; Schmidt 2008; Ban 2016). Some pioneers of this approach can already be found in the 1970s (King 1973; Heclo 1974) but it is during the 1990s, with the stream of research on historical institutionalism (Hall 1989) and especially with the new contributions on discursive institutionalism (Schmidt and Radaelli 2004; Schmidt 2008), that the role of ideas and the acknowledgement of their power become established in the literature. Since then, an increasing number of scholars have argued that we can no longer fail to take ideas into account in our analyses: ideas matter and shape policy in more fundamental ways than we might realise. However, to take ideas seriously, first, we have to make sure we know what we mean by ideas and what exactly we are discussing when we talk about them. Secondly, we have to be able to study how ideational processes concretely affect policy decisions and policy implementation through systematic and rigorous empirical analysis (Béland 2016; Campbell 2004; Schmidt 2008). As for the definition of ideas, or more particularly policy ideas, in the classifications and typologies that have been identified and discussed in the literature so far, some common elements can be traced that can be considered as their essential components. Almost all scholars would agree on defining ideas as developed mental constructions, such as beliefs and explanations, that are shared by individuals, collective or institutional

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actors, and that incorporate principles, values and assumptions about how the social, economic and political reality around us works (Béland and Cox 2011; Campbell 2004; Hall 1993). These ideas are potent enough to influence political struggle, to propagate a vision of the world in the public debate, diagnose problems, find solutions and shape the decision-making process. This means that a key feature of such ideas is that they are not mere opinions, perceptions or attitudes shared by individuals, but rather deep-rooted and structured historical constructions; they are grounded on prevalent political ideologies, policy paradigms and social or economic theories, or are embedded in dominant public attitudes, national cultures and understandings (Campbell 2004; Dobbin 1994; Hall 1993). Simplifying the definition, ideas are concepts that help to make sense of what happens in the world and to identify the appropriate strategy/policy to solve a problem. An idea is endowed with a collective dimension, since it is shared by a group of people, within a community, which can be, for instance, a social group, a network of experts, a national institution or an international organisation. An idea contains a cause–effect explanation for a problem, and a cognitive assumption, based on a theory, a hypothesis, or a method. Finally, it has a normative dimension, which motivates or influences people and guides action (Braun and Capano 2010). An overarching set of ideas, defined as frames, belief systems and paradigms, aims to reduce complexity, to direct attention to particular issues and enact choices. Competing and conflicting ideas remind us, however, that political struggle and competition start from ideas, and ideas influence the definition of problems but also the goal of policies and the instruments that can be used to attain them. As Hall (1993) argues in his study of institutional change, policy paradigms can enhance adjustments in the setting or level of the instruments used to achieve objectives of policy—what he calls first order change. However, as second order change, they can boost new types of policy instruments, leaving the hierarchy of goals behind policy unchanged. Policy paradigms can also provoke a shift in the goal behind policy, in addition to the shift in the type and setting of policy instruments, which gives us third order change. While first and second order changes are defined as incremental

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policymaking, the third reflects a radical change that Hall calls paradigm shift. In order to explain the relation between ideas, socio-economic policies and institutional change, John Campbell (1998) detects four ways in which ideas manifest. First, ideas become observable as “cognitive programs” with a prescriptive function which guides decision-making and the action of political actors. All the recommendations, best practices and policy targets provided, for instance, by various international organisations (i.e. World Bank, International Monetary Fund, EU, OECD) to influence domestic policy reform, and even the functioning of national economic institutions, can be included in this group. Second, ideas may represent a “cognitive paradigm” which limits the possible range of policy options and solutions for decision makers. Economic ideas, for instance, can represent a series of background assumptions and theories that orient economic governance in a certain direction, affecting policymaking. Third, ideas can be “normative frames” that legitimise determined policy measures and reforms to respond to a specific problem or perform normative standards for policymaking. These normative frames can be found especially in public and intellectual debates and can shape public opinion in order to encourage or contest a policy proposal. Finally, ideas appear in a fourth way as “public sentiments”. This can be a form of social pressure or normative expectation coming from the people that represents a political urge and pushes governments to intervene on specific problems or to stop the delivery of a policy or the implementation of a reform. Where do these ideas come from? According to the ideational approach, ideas are produced, diffused and reproduced within discourses and narratives that give meaning to, interpret and make sense of complex social reality. Ideas circulate through interaction and discourse, within which the struggle over ideas takes place and coalitions take shape. Here, they are legitimised or delegitimised, supported or opposed, over time, by institutions, political and cultural élites, rules, norms and collective organisations. Policy discourses influence perceptions, provide common views in political debates, open up solutions and allow for policy learning (Schmidt and Radaelli 2004).

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Building on the literatures on the power of ideas and discursive institutionalism, ideas are explanatory factors in political and social analysis because they have the power to influence normative and cognitive beliefs by persuading others (power through ideas), by imposing themselves against other ideas (power over ideas) and establishing specific “hemogenic” meanings (power in ideas) (Carstensen and Schmidt 2016). Successful ideas—powerful ideas, in other words—are able to appeal to and frame the interests of different groups (who endorse them) and are capable of generating such critical support that they are adopted into policy and affect socio-economic and political change. This power is enhanced and amplified through rhetorical tools used by different types of policy entrepreneurs: these, as we said, can range from intellectual or social actors to institutions and organisations at different territorial levels and beyond national boundaries (Béland and Cox 2011). This network of actors, forming an epistemic community (Haas 1992) of knowledge-based experts, support decision-makers to define the problems they face, identify policy solutions and assess policy outcomes. The network can be extremely powerful. Think tanks and research or analysis institutions (of different kinds: for profit, independent, university affiliated, political party affiliated, quasi-governmental, or governmental) generate policy advice enabling policymakers to make informed decisions. Consequently, ideas may be included in policy agendas, influencing the content of programs and reforms and impacting on policy outcomes. As both Hall (1993) and Béland (2016) show, the influence of ideas is effective at all the different stages of the policy cycle, even, as this book will highlight, the last, the implementation stage. Indeed, another feature of ideas, which can be also another of their strengths, derives from the fact that ideas are not fixed and immutable: they are flexible, they can be stretched and they are open to different interpretations. Ideas can change over time, interacting with the institutional context, with the actors who share them, support them or criticise them. Above all, as we will see through the comparative case studies reported in the sixth chapter of this book, ideas must always be interpreted, and can thus mean different things to different people. Although the meaning of some consolidated ideas can remain the same over time, like the great ideologies of history

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or economic principles, more frequently ideas are shaped and interpreted in the processes of their dissemination, discussion and in their possible implementation. Yet, also for this reason, it is a great challenge to reconstruct the genesis of ideas, their development, the bargaining over ideas and the interests underlying them. Indeed, the debate on ideas is strictly related to the role of interests in shaping actors’ and institutional behaviours and their concern in influencing policymaking. Ideas and interests interact, influence each other and intersect in determining political-economic outcomes. It is not an easy task to reconstruct exactly where and how ideas are formed, how they change over time in the various phases they go through, how their meaning is shaped and what their social impact is. This is difficult not only because ideas are intangible, hard to define once and for all—because they are subject to change and varied interpretation—and problematic to measure: it is difficult, most importantly, because it is not possible to analyse ideas as if they were detached from social, institutional, political and economic contexts and disconnected from people, interests and conflict. On the contrary, ideas would not exist at all outside such contexts, which generate and influence ideas and, at the same time, are themselves influenced by ideas. Thus, it is not possible to study ideas except in their interplay with institutional contexts and actors: this is why ideas, structure and agency form the analytical framework of this book. The study of the interaction between ideas, institutions and actors can be an insightful and explanatory factor of certain policy outcomes. Different institutional structures, path-dependency processes and the agency of actors are able to shape diverse outcomes in terms of ideas, interpretation and meanings. The attempt made here in this book, in order to contribute to our understanding of this interplay, is an in-depth empirical analysis of one idea, that of active inclusion. The methodological choice made to reach this goal has been to compare different case studies using qualitative methods, combining process tracing with interviews and document analysis. This approach, based on causal process observation, will be applied to trace and understand the ideational mechanisms that influence the

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implementation of the active inclusion idea, showing how the interaction between structure and agency generates different interpretations of this idea, endowing active inclusion with specific meanings for specific contexts. As the book will highlight, it remains a very difficult task to untangle the combined effect of institutions and actors on ideas: structure and agency interactions forge a particular understanding of active inclusion, which means different things in different places to different people. It is the interaction between ideas, structure and the agency of actors that defines the fate of the idea itself.

1.3

Overview of This Book

Following this first brief introductory chapter, the next introduces the debate on the variety of capitalisms. The aim of Chapter 2 is, before delving into the idea of active inclusion, to provide the analytical framework within which the subsequent analyses will be positioned, discussing the interplay between institutional and regulatory structures of contemporary capitalisms and the agency of political and social actors. In particular, the chapter focuses on two key aspects of contemporary capitalism analysis. First, it discusses the debate on the dynamics of convergence or divergence between different models of capitalism. Through the analysis of secondary data, the chapter argues that the institutional structures of the various European countries continue to be very different and that there is no evidence of convergence between them, except in the limited context of certain specific institutional arenas. Second, it tries to identify some of the key factors that contribute to explaining the differentiated results that the various institutional structures produce in terms of social inclusion and competitiveness. In particular, the chapter focuses on the interplay between the institutional framework and the role played by three actors—the state, interest representation associations and firms—and the different ways they exercise their agency. The variety of trajectories of capitalisms results from the tension between institutional structure, historical legacy and the joint agency of these actors.

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Chapter 3 introduces the idea of active inclusion. It reconstructs its origin and diffusion in Europe and shows how, since the end of the 1990s, this idea has been supported by an international epistemic community in Europe and, after the outbreak of the economic crisis, it was adopted even in those countries most resistant to social policy change. Its spread was driven not only by the recommendation launched in 2008 by the European Commission, the expansion of the EES and the success of the Social Investment paradigm (Hemerijck 2013, 2017), but also by the financial and technical incentives that the EU provided, especially through the European Social Fund (ESF), in order to implement it in regional and local contexts. Thus, active inclusion came to inspire national and subnational labour reforms throughout Europe. The chapter demonstrates that the commitment to building more inclusive labour markets, a key objective of the European Commission’s Europe 2020 Strategy that has become prevalent in European employment policies, can mean increasing employment rates but not always higher levels of inclusion in the labour market. The analysis of secondary data on European countries shows that the relationship between the quantity and quality of inclusive labour markets is particularly influenced by public policies and by the role of industrial relations, which are key to reinforcing employment quality. Building on what has been said in Chapters 2 and 3 on the different forms of inclusion and development found in diverse models of capitalism, Chapter 4 adopts a slightly more long-term perspective on developments in terms of labour market and welfare regulation at national level in three countries, Spain, France and Sweden. This allows us to reconstruct the background against which the local case studies will be developed. The focus on three national cases is valuable in terms of understanding the national socio-economic context in which the processes of local interpretation of the active inclusion policy paradigm take place. As we will see, active inclusion developed in each country in a specific fashion, reflecting the particular features of the social model and employment relations regime in which it is embedded. In Spain, it has advanced in a framework of labour market flexibilisation and

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deregulation of employment protection, while in France and Sweden— although in a different way in each case—it found their welfare systems characterised by a long-standing tradition of social inclusion policies. Chapter 5 presents the different definitions and functions of active labour market policies (ALMPs) and then goes on to develop the core principles underlying the idea of active inclusion: activation, conditionality and personalisation. These are strategic for the functioning of active inclusion since, if they are seen as being complementary, they are capable of enforcing the link between job search, participation in targeted upskilling programmes and income support reception, while counteracting the potentially negative effects of out-of-work benefits. The chapter then shifts downward to the local level of regulation and explains why it is so relevant in this policy field. In hard economic times, with pressing constraints on public social policy due to fiscal consolidation and austerity programmes, the incentives provided by the ESF encouraged even the most change-resistant welfare states to include the active inclusion idea in their policy reforms. Since the ESF is directed at European regions and subnational initiatives, the local level of governance assumed a growing role in social and labour market policies, bolstered by the decentralisation and subsidiarisation of competences in this field which have taken place in many EU countries since the 1990s. Chapter 5 also introduces the comparative case studies by presenting the methodology used to analyse active inclusion transposition and implementation at the local level in Spain, France and Sweden. To assess the meanings associated with active inclusion in Catalonia, Rhône-Alpes and West Sweden, and to interpret causal mechanisms and relationships that led to how it was defined in each context, I combine the use of process-tracing and qualitative cross-case comparison. The analysis is based on a broad range of sources, which include the review and thematic content analysis of EU, national and local policy documentation, communication, programs, press accounts and regulation collected both online—on the websites of DG Employment, Ministries of Labour, regional and municipal labour and social units, agencies and public employment services (PES)—and directly from the three contexts themselves. This involved qualitative data collected through 40 semistructured interviews with policymakers and relevant key informants

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(PES staff, social partners, regional and municipal officers for social services and labour market units, and experts) conducted between the end of 2015 and 2018 in the cities of Barcelona, Lyon and Gothenburg. Chapter 6 explores the interpretation of the idea of active inclusion in these local contexts by focusing on its three core principles: the notions of activation, conditionality and personalisation. A convergence towards these principles in EU, national and local rhetoric can be observed. From the EU, they have taken root in national and local policymaking and have become key words in the policy documents and speeches of political actors and stakeholders at all territorial levels, influencing the policy agenda. However, despite the ostensible convergence towards these notions in the vocabulary, empirical results demonstrate that their interpretation differs in the local contexts and that this has significant implications for policymaking and local programs. To track what causal mechanisms trigger and inspire these local interpretations, the book brings into focus the interplay between the structure—mainly institutional and historical legacies—and the agency of actors concretely engaged in the local governance of active inclusion. In particular, it shows how power struggles and negotiation between local policymakers, industrial relations, third sector organisations and street-level bureaucrats shape the local variety of active inclusion. The final section offers concluding reflections on the key arguments of the book. First, the book confirms that policy ideas are relevant and need to be included in institutional analysis. However, to understand their social construction, it demonstrates that it is necessary to understand the interaction between historical legacies, institutional organisation, and the agency of actors. Power relations and choices of actors, embedded in historical and social contexts, shape different interpretations of policy ideas—interpretations that reflect the different forms of compromise between market transformation and social cohesion which characterise European capitalisms. Second, the book makes use of regional case studies to show the significance of local regulation in the European multi-level governance system. This is a layer that is usually underestimated in the literature of multilevel governance: it cannot, however, be excluded from these types of analysis. The study of the most influential policy paradigms and of the

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knowledge regimes that generate them, especially the EU, needs to be counterbalanced by the analysis of bottom-up processes. The normative framework that underlies supranational policy ideas and the terms in which problems are conceptualised at supranational level are reinterpreted in the national and local contexts, where decisions must be taken and these policies are delivered. Here, structure and agency come into play. The strength of domestic institutional assets and the capacity of different local actors to negotiate meanings and influence the political agenda vary considerably across territories. Nested relationships, expectations of trust between collaborating parties, and established or innovative local regulations, practices, and orientations influence the ways in which common policy ideas are differently articulated and played out at the local level, with relevant social and political implications.

1.4

From the Epicentre: Reflections in Times of Coronavirus

As I am writing the last lines of this book, world capitalism and its population are facing a new and unprecedented challenge. The COVID-19 pandemic has become the defining global health crisis of our time and is generating a dramatic social and economic emergency, perhaps the worst recession since the end of World War II. Europe, in early May 2020, is still considered by the World Health Organization (WHO) to be the active centre of the COVID-19 pandemic and I am currently working at its epicentre, the University of Bergamo in Lombardy, the hardest hit province in Italy. A doctor working in intensive care at the hospital of Bergamo, Luca Lorini, with other colleagues working in other hospitals in Lombardy, has recently written an article in a scientific journal of medicine entitled “Adaptation and lessons” explaining what we can understand from the great tragedy experienced and how we can readjust our healthcare systems to face these kinds of threat in the future. The same perspective can be adopted by us, social scientists, who will be long analysing what has started to happen in terms of socio-economic effects in the post

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COVID-19 world. Indeed, the current crisis is not just the most important healthcare crisis that the world has suffered over the last century, but also one that comes with enormous consequences for the global economy and society. What can we learn from what it is happening? How can we readjust our capitalist systems to survive and respond to this crisis? Still being in the lockdown phase, and not knowing what will happen in the few next months, with no reliable and comparable data and information, it is really too early to conduct any analysis and propose any formula. Yet, just reflecting on the key arguments addressed in this book, I cannot but read them in the light of these recent events and the changes that will necessarily take place as consequences of the COVID-19 emergency. The book shows the different forms of inclusion and growth that contemporary capitalisms have revealed in the last decade, including those following the economic crisis of 2008. It emphasises the diverse capacity of delivery employment and inclusion policies and the crucial coordination between local, national and supranational governance— matters that are even more essential given what is happening in the world today. The emergency that we are currently facing, which, starting from the healthcare system, expanded to have a dramatic impact on our social and economic organisation, is once again highlighting not only the unpreparedness of capitalisms to cope with unexpected health and socio-economic shocks, but also, once again, the different capacity of countries to respond to them. As we have all observed and experienced as citizens, the management of this epidemic is being carried out in different ways, confirming the distinct characters of capitalisms, the strengths and weaknesses of states and of different public systems. Hospitals and health structures in different national and regional contexts have different response capacities, especially when the systems are overloaded and under pressure, increasing existing inequalities derived from territorial disparities. Some states were better prepared and equipped due to the fact that, after the emergence of other novel coronaviruses in the 2000s, SARS-CoV and MERS-CoV, both associated with high mortality rates,

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they developed, with the encouragement of the WHO, new preventive pandemic strategies. This provided them with a stronger reaction capacity, while other countries, caught unprepared, were only able to offer a “passive” response. The current crisis has exposed the role of subnational governments, which are at the frontline of the pandemic response. Regional and local authorities are responsible for delivering critical short-term containment measures and more long-term recovery activity—from health and social care to economic development and public investment. Subnational governments account for a quarter of total public health expenditure, on average in the OECD, ranging from more than 90% in Spain to less than 1% in France (OECD 2020). Additionally, they also provide support to members of the most vulnerable populations, such as the elderly, migrants and homeless. One thing we have seen, again and again, is that, in a crisis, it is the most vulnerable who are the most harshly affected. While the disease affects everybody equally, it has unequal social and economic effects. People in the most vulnerable situations are hit the hardest by the COVID-19-led crisis, which is exacerbating structural inequalities in society. Meeting these demands calls for effective coordination at all levels of government. What we have seen during these months of lockdown is how difficult such coordination is between central states and regions/federal states, and between municipalities and regions, in many European and non-European countries. We have observed regions that have regulated the closure of economic and social activities in a different way from that indicated by the state, disputes about competences among levels of regulation and even episodes of disobedience on the part of regions and mayors. Within countries, differences have also emerged between regions which have traditionally given different priority to public health in their territorial governance and have given varying degrees of space to private health management. Since the 1990s, health policy reforms across Europe have, to different extents, tended to follow the “new public management” approach, shifting some healthcare costs on to patients, making service providers compete in the name of greater efficiency and reducing public expenditure on health care. This happened, for

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instance, in Italy, where the National Health System (NHS) was radically reformed—on the basis of the 1991 British NHS reform—to boost competition criteria in the internal market, promote regionalisation and introduce fiscal federalism. Regions were required to autonomously finance their health services, supported by a balancing national fund designed to compensate for cross-regional differences in fiscal capacity. These changes allowed some regions, such as Lombardy, to adopt a quasi-market model where competition between public and private accredited providers was permitted and competencies were shared between private actors, the public sector and non-profit organisations. This model, long regarded as a peak of excellence and one of the most efficient in the national healthcare system, has been called into question by the COVID-19 emergency management. While it is still too early to give a detailed assessment, the main weaknesses seem to concern the territorial public health services, which in Lombardy, for all their efforts, have shown themselves to be less sound than those in other Northern regions, such as Veneto and Emilia-Romagna. One example of this can be found in the varying degree of ability to trace the spread of the virus. While Veneto and Emilia-Romagna were able to immediately test all residents who had come into contact with coronavirus patients, even if they were not showing symptoms, Lombardy was only able to test residents who showed symptoms. This meant that the number of positives in the region was likely to be greatly underestimated, which may also explain the shockingly high levels of mortality. Yet the pandemic is exacerbating inequalities not only in relation to health, but also to human capital. This is exemplified, for instance, by the closure of schools and the use of remote learning, distance education and online learning—something not accessible to all, given that not all households have the same social, cultural and economic capital to give children the same access to their right to education. These interruptions will not just be a short-term issue and could also have long-term consequences for the affected groups, with the likelihood of inequality being increased. The closure of childcare centres and schools and the adoption of workfrom-home practices—an improvised experimentation for many—have also once again held up the function of the family to public gaze and

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the position, as it still seems to be, of women within it. When care work continues to fall almost entirely on women, this has a disproportionate impact on women’s employment, as gender inequality mechanisms in Mediterranean capitalism well exemplify. This sudden switch to remote digital work is a challenge for the technological backwardness of many companies and for regions of the world—even the industrialised world—where connectedness is erratic or does not exist. Digitalisation can offer businesses and workers new opportunities, but also accelerate changes in work conditions. Before the COVID-19 virus struck, digital transformation and the rise of the platform economy already showed its criticalities. Jobs linked to digital platforms—such as ride-hailing and food delivery—put some people in the situation of having to choose between the right to health and safety and the right to work, a trade-off exemplified in unprotected jobs, lacking any, or adequate, access to employment-insurance benefits or sick leave. Digitalisation and the lockdown can accelerate this trend, reinforcing work and inequality, since it is easier for high-skilled workers to work from home, while low-paid and low-skilled workers in essential services continue to face higher risks of contagion or even unemployment. This is the reason why riots have broken out in French suburbs, and why contagion has increased in workers’ dormitories in many parts of the world. The regulation of work, education and social inclusion remains a highly significant issue. As we have seen, between March and May 2020, every country proposed massive income and economic support measures to help those who lost their jobs during this period, to maintain an income for those who were already unemployed before the COVID-19 outbreak and for those who could not run their businesses during lockdown. Even state aid to business is now allowed by the EU to respond to the crisis caused by the blockage of economic activities to counter the spread of the virus. While the rules are the same for everyone, they obviously have profoundly different effects depending on the budgetary situation and strength of individual countries: those who are stronger and less indebted can afford to help their companies more than smaller or heavily indebted states can.

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In any case, all countries are making an unprecedented economic effort to help households, workers and businesses. We cannot evaluate the effectiveness of these new measures yet, but we can observe, again, the varying administrative capacity of the states to deliver this financial aid. In the implementation of these emergency measures, weaknesses in some countries’ administrative systems have been confirmed and the different capacity of national and local governments to provide income support and services to citizens and businesses is clearly visible. In Italy, for example, two months after the beginning of the lockdown, this income support had still not arrived to all beneficiaries due to bureaucracy, institutional layering and disorganisation and lack of coordination between state agencies. In the national and local contexts, the current crisis is confirming, or even invigorating, the role of other actors, apart from the state, that are also highlighted in this book. Unions are playing a decisive role in ensuring the enforcement of health and safety standards in the workplace, enabling workers to report if safety protocols are not being followed, and in negotiating supplementary health insurance schemes and solidarity funds. Collective bargaining and consultations between unions, employers and the state have taken place in many countries during the last few months, making it possible to soften the impact of economic restructuring on workers, agreeing on temporary wage-subsidy schemes and rules for smart working. Other social actors as well, such as NGOs and third sector organisations, which traditionally help to guarantee the inclusion of the weakest in the local community, are proving that the role of the volunteer is fundamental in terms of helping not only the most fragile but all those in need and playing a significant part in ensuring that solidarity and social justice are upheld. At supranational level, there are other actors that are at the centre of discussion in current times. These include international organisations, such as the WHO—since we must surely once again have been made aware of the need for a strong, independent international health institution to manage global health surveillance, common standards and rules—and, even more a matter of debate, the EU. The pandemic has reminded us—should this have been necessary—that we are all connected, that no country is isolated and that only by acting together

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can Europe be stronger. Yet EU member states reacted chaotically and egotistically, with some countries even restricting the export of medical supplies and, with little sense of coordination, banning internal free movement within Europe. This crisis has become a major test for the EU, the virus crowning a plethora of existing crises. Its political weakness has been demonstrated yet again, with EU leaders quarrelling over a common economic response to the COVID-19 pandemic and the lack of a strong stance against countries assuming extra powers using the current crisis. The Hungarian government, for example, has been able to extend its state of emergency, thus giving itself the power to rule by decree for as long as it deems necessary and to decide itself when the danger is over. Some say this crisis will be a great challenge for the EU and a gift to the forces of nationalism. Yet if member states want to demonstrate that the lesson from the 2008 crisis has been learned, then this is the opportunity for an in-depth transformation that will make the EU more effective, democratic and resilient. It is an opportunity to relaunch the public health sector in our capitalism through a new EU initiative, creating a common response mechanism that will mean better preparation and the ability to respond in a common and coordinated way to a sanitary crisis. It is an opportunity to come up with a recovery policy to support European society and its economy, going beyond what the European Stability Mechanism, the European Investment Bank and the European Central Bank are doing. This crisis has demonstrated once again the fragility of capitalism. But it may help us at least to see things with greater clarity and to realise that there may in fact be an occasion for progress in the post COVID-19 world and for being better prepared to meet the challenges of other crises. Every crisis can give rise to opportunity if it is looked at in the right way. We may take this opportunity to restart to reflect on what kind of capitalism we want and who or what we place at its centre. All the crises of recent times, including this health emergency and those disasters linked to climate change, such as the enormous fires that have devastated Australia and other parts of the world and the frequent violent flooding in many areas of Europe, suggest that it could be the right time to make difficult but far-sighted political choices to readjust our socio-economic

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and development models. In capitalist countries, private businesses have rarely been as dependent on public policies as they are at present. Many companies need state help to survive. Politics can encourage decisive choices to put climate, health and social rights at the centre of our developmental path. The European Commission’s Green Deal, presented some months ago, aimed at reaching carbon neutrality by 2050, can be a starting point. A further step can be the fight against tax avoidance and fiscal dumping, developing tax harmonisation in the EU and asking companies and multinationals to pay taxes in the countries where their profits are made and where their workers are located. This is where the role of ideas comes into play. History shows us the importance that ideas had in the past when a new social and economic reconstruction, a new start, was needed. Major disruptions can cause fundamental shifts in social attitudes and beliefs, which pave the way for new policies, some of which persist over the long term. It is urgent to begin reimagining new policy ideas to govern societies—societies that will be different after what is happening now and that will necessarily have to be different in the future. How our world will change with COVID-19 is yet to be revealed. What we do know is that, while it will not be the same, the issues of social inclusion and the guarantee of social rights will remain crucial.

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Schmidt, V. (2002). Does Discourse Matter in the Politics of Welfare State Adjustment? Comparative Political Studies, 35 (2), 168–193. Schmidt, V. (2008). Discursive Institutionalism: The Explanatory Power of Ideas and Discourse. Annual Review of Political Science, 11, 303–326. Schmidt, V. (2011). Reconciling Ideas and Institutions Through Discursive Institutionalism. In D. Béland & R. H. Cox (Eds.), Ideas and Politics in Social Science Research (pp. 47–64). New York, NY: Oxford University Press. Schmidt, V., & Radaelli, C. (2004). Policy Change and Discourse in Europe: Conceptual and Methodological Issues. West European Politics, 27 (2), 183–210. Schmidt, V., & Thatcher, M. (2013). Resilient Liberalism in Europe’s Political Economy. Cambridge and New York: Cambridge University Press. Streeck, W. (2012). E Pluribus Unum? Varieties and Commonalities of Capitalism (MPIfG Discussion Paper n. 10/12).

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2.1

Structure and Agency: A Useful Analytical Framework

This book discusses the role played by ideational factors in political economy and, more specifically, looks at the idea of active inclusion to analyse how policy principles are locally interpreted and shaped by the interplay between the agency of actors and the institutional environment. As Rueschemeyer (2006) explains, it is the way ideas are grounded in groups, organisations and institutions, and the attendant relations of communication and influence, that is of decisive importance for the creation and maintenance of ideas and for their impact on society. Indeed, this book will empirically show that the effect of ideas is mediated by the way they are processed by organisations, institutions and collective and individual actors, which shape, interpret and select the content of the ideas themselves. For this reason, before delving more deeply into the idea of active inclusion, this chapter provides the analytical framework within which the subsequent analyses may be positioned, discussing the interplay © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_2

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between institutional and regulatory structures of contemporary capitalisms, and the agency of political and social actors.1 As mentioned in the introduction of this volume, since the early 2000s there has been a renewed interest in comparative analyses of the institutional and regulatory structures of contemporary capitalism from various disciplinary approaches, ranging from studies on welfare systems (Palier 2010; Pavolini 2003; Saraceno 2013; Thelen 2014) to those on industrial relations and labour market systems (Crouch 2009, 2015; Hyman 2008; Keune and Marginson 2013; Meardi 2011; Pedersini 2014) to literature on models of capitalism (Amable 2003; Burroni 2016; Crouch 2013; Dore 2000; Hall and Soskice 2001; Regini 2014; Streeck 2009; Trigilia 2016). Most of these contributions focus on the functioning of one or more institutional and regulatory arenas to explore how they contribute to promoting certain combinations in terms of economic competitiveness and social inclusion—two objects of investigation that have always been central to studies of democratic capitalism (Crouch and Streeck 1997; Burroni 2016; Trigilia 2019). In particular, within this broad set of contributions, it is possible to identify two very important streams of research. The first is related to the debate on the dynamics of convergence or divergence between different models of capitalism. In this case, it is possible to identify a continuum at the extremes of which there are two opposing positions. On the one hand, there are those who emphasise the presence of a process of convergence and analyse the mechanisms that push the various models of capitalism towards increasingly similar structures (Baccaro and Howell 2011; Streeck 2012); on the other hand, there are those authors who highlight the persistence, or extension, of the differences between the institutional and regulatory architectures of the various European countries and who focus on the causes of this process of divergence (Amable 2003; Crouch 2015; Hay 2004). The second theme, closely linked to the first, concerns the identification of the factors that contribute to explaining the differentiated results 1This chapter is based on an article published in the Italian journal “Stato e Mercato” 1/2017 by Luigi Burroni and Gemma Scalise.

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that the various institutional structures produce in terms of social inclusion and competitiveness. Indeed, the comparative analysis of European countries shows their varying capacity in terms of producing different levels and combinations of economic growth and social cohesion (Streeck 2009; Crouch 2015; Clift 2014). While this chapter focuses on the two themes mentioned above, it also aims to highlight an aspect that has been less developed in recent literature. With respect to the presence of convergence–divergence processes, it is argued here that the institutional structures of the various European countries continue to be very different and that there is no evidence of convergence between them, except in the limited context of certain specific institutional arenas. As far as the outcomes in terms of inclusion and growth are concerned, this work identifies different balances between competitiveness and social cohesion and highlights the factors underlying these configurations, focusing on the interplay between the institutional framework and the role played by certain actors. In this chapter, attention is on the state, interest representation associations and firms. Of course, these are not the only actors who influence contemporary capitalism’s trajectories of growth and inclusion. Others, for example, will be seen in the case studies presented in Chapter 4: civil society organisations, think tanks, development agencies, etc. There is no doubt, however, that the state, organisations representing economic interests, and firms, are among the key actors in these fields. The analytical perspective used in this work therefore looks not only at the influence of structural characteristics and historical legacies, which have been widely dealt with by neo-institutionalist literature (Amable 2003; Hall and Soskice 2001; Mahoney and Thelen 2015; Morgan et al. 2010; Pierson 2000), but also at the role played by the agency of actors, a theme far more neglected in recent academic debate. It is precisely by looking at this tension between structure and agency that we can better understand the reasons for the divergence mentioned above and also the different balances between inclusion and competitiveness that characterise contemporary capitalisms. Of course, it is necessary to underline that focusing attention on the agency of actors does not mean assuming that agency exists without

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limits: agency capacity is, in fact, often strongly influenced by a dialogic or even conflictual interaction between different actors and this interaction can engender constraints on action. At the same time, there may be also significant constraints due to the institutional/regulatory structure. To interpret these dynamics, this chapter focuses on the national level of regulation. As we will see in the following chapters, both local and the supranational regulations are, of course, relevant levels that affect these mechanisms and that cannot be ignored. Chapter 6 will show in detail how the local level is especially decisive in the implementation of policies and the provision of services. Meanwhile, there is no doubt that the weight of supranational regulation has grown substantially over the last few decades, as many contributions show (Armingeon and Baccaro 2012; Hall 2007). A clear example of this is the significance of the Troika and of the Memorandum of Understanding (MoU) in influencing the reforms that have taken place in some European countries in the last ten years. In this framework, the margin of action of the nation states has certainly decreased. Yet, despite these pressures from the top and from below, the national level of regulation continues to be highly relevant in terms of all the aspects that will be considered here, such as the structure of policies for development and cohesion, the structure of industrial relations and the regulation of corporate governance models. It should also be remembered, as some research has shown, that it is precisely those transformations at supranational level that can also have an enabling effect at national and local levels, creating new spaces and opportunities for actors at these levels and offering new and broader margins for manoeuvre. Almost paradoxically, therefore, the strengthening of the supranational level can go hand in hand with that of national and local levels. At the same time, the influence between the local, national and supranational levels of regulation is not only one-way and top-down: think, for example, of how national governments can play a key role in favouring or hindering the development of supranational agreements, as the failure of the Transatlantic Trade and Investment Partnership (TTIP) has shown. Another preliminary clarification is also necessary here. In the analysis developed in this book, reference will be made to models of capitalism

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that will be used as ideal types, in the tradition of comparative political economy. The objective of this work is not, therefore, to identify or test clusters of countries with similar characteristics for the institutional arenas analysed. For this reason, the book refers to models already identified and tested by a wide literature. In particular, six models— Anglo-Saxon, Mediterranean, Scandinavian, Continental, Visegrad and Baltic countries—will be taken into consideration, thus entering a line of research that has progressively complexed the Hall and Soskice (2001) typology (Amable 2003; Bohle and Greskovits 2012; Boyer 2005; Burroni 2016; Crouch 2015). After a brief methodological section, the third part of this chapter is dedicated to an analysis of the convergence–divergence theme and the recent trajectories of the different models with respect to the dimensions of inclusion and growth. The fourth section, instead, analyses the agency of the three actors considered here and its effects, while also taking into account the role of certain important historical legacies and the structural characteristics of these actors.

2.2

The Balance Between Growth and Inclusion: Six Ideal Types of Capitalism

Social inclusion and growth are broad, multidimensional concepts that lend themselves to different interpretations and uses (Castel 1996; Marshall 1964; Paugam 1991; Silver 1994; McCartney 2015). For this reason, from an analytical point of view, the study of the different combinations of growth and inclusion in models of European capitalism requires methodological choices aimed at their operationalisation. If we look at the different strands of study that have analysed the institutional and regulatory structures of contemporary capitalisms, we see that these concepts are often defined and used differently. This work does not intend to join in the methodological debate, adopting, for empirical analysis, a choice that favours the use of consolidated indicators—shared by the majority of international comparative works——and commonly

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recognised as strongly linked to the two dimensions of inclusion and growth. In particular, this chapter adopts four indicators. The first two are gross domestic product per capita and employment rate, which are used to estimate the size and dynamism of the economies of European countries. Gross domestic product (GDP) per capita expressed in purchasing power parities takes into account the size of an economy in terms of population and price level differentials between countries. This indicator is then adjusted in terms of purchasing power parities and the different cost of living in European countries. Employment rate, on the other hand, provides important indications of the state of the labour market, and is not actually only an indicator of growth but also of inclusion, if we consider, in the definition of inclusion, work as one of the main means of social integration. The other two indicators selected to represent the inclusion dimension are the Gini index on income distribution and the percentage of people at risk of poverty or social exclusion (AROPE). Here, economic poverty is considered as exclusion from resources, income and, consequently, capability (Sen 1985). According to the Eurostat definition, the share of people at risk of poverty or social exclusion, abbreviated as AROPE, refers to people in a situation either at risk of poverty, in material deprivation or living in very low-work intensity households. AROPE is also the main indicator used to monitor the objectives of the Europe 2020 strategy against poverty. As far as the interpretative models of European capitalism are concerned, the typology used here is based on a consolidated classification developed by numerous research contributions, which identifies six ideal types that complex the original dualistic analyses of Albert (1991) and Hall and Soskice (2001). Thus, it becomes possible to adopt a typology that divides the 27 EU countries, plus the United Kingdom, Iceland and Norway, into six models with relevant internal similarities (Amable 2003; Bohle and Greskovits 2012; Burroni 2016; Crouch 2015; Sapir 2006): 1. Anglo-Saxon: Ireland and United Kingdom 2. Continental: Belgium, Germany, France, Luxembourg, The Netherlands and Austria.

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3. 4. 5. 6.

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Mediterranean: Greece, Spain, Italy, Portugal Nordic: Denmark, Finland, Sweden, Iceland and Norway Baltic: Estonia, Latvia and Lithuania Visegrad: Czech Republic, Hungary, Poland and Slovakia.

Bulgaria, Croatia, Cyprus, Malta, Romania and Slovenia remain excluded from this analysis since these countries are characterised by relevant specificities that make them difficult to fit within a model (see Bohle and Greskovits 2012). To look at the process of convergence-divergence between models, in the next section the trends for the period 2000–2015 are reconstructed for the six models of capitalism, compared to the four indicators described above. Once the trends on the individual indicators have been looked at, two synthetic indices have been composed, one for growth and one for inclusion, with the aim of identifying where the European countries stand with respect to these two dimensions (Fig. 2.6). Additionally, in order to verify whether the models tend to converge over time, a number of policies covering important institutional areas directly related to the relationship between cohesion and competitiveness—active and passive labour market policies, state aid, social protection, gross domestic expenditure on R&D (GERD) and expenditure on education—were also taken into account. For these, the trend in the coefficient of variation will be looked at (Fig. 2.1). Finally, the six models are re-read in the light of the agency and the characteristics of three actors: the state, representative associations and firms. With this goal in mind, a wide range of dimensions will be taken into account for each of these actors. As far as the state is concerned, we will look at: public investment in support of R&D activities; spending on active labour market policies and passive labour policies for the unemployed; per capita spending on social protection and education as a % of GDP; and the effectiveness of development policies, social policies and redistributive policies. As regards the analysis of the weight and strength of representative associations, the coverage of collective bargaining, the rate of unionisation, the inclusion of associations in policymaking and their influence in enterprises will be taken into account. Finally, in

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order to look at the action of firms, there will be an analysis of investments in innovation and development, total investments of companies, share of personnel employed in R&D, labour productivity, foreign direct investments, average company size and patent applications. Looking at these dimensions, the importance of actor agency will be highlighted, a fundamental variable for the explanation of the trajectories of contemporary democratic capitalism.

2.3

Differentiated Pathways to Inclusive Growth

By taking into account the growth and inclusion indicators mentioned above, and looking at their trend over time, it is possible to identify at least three important trends. First, with respect to the debate on convergence and divergence processes, there is no strong evidence to support the assumption of a trend towards convergence. In fact, this trend does not appear when looking at the policies that are being implemented in the various models, nor when analysing the outcomes in terms of cohesion and competitiveness of the models, which continue to be very different from each other. The trajectories between models of capitalism do not therefore move towards a reduction in diversity. Secondly, the different models of capitalism identified by previous empirical analyses (Amable 2003; Hancké et al. 2007; Sapir 2006; Streeck 2009) continue to have heuristic validity; although this obviously does not mean that there are no differences within the various models, something that always happens when ideal types are taken into consideration. Thirdly, if we look at the relationship between growth and inclusion, we see how these two dimensions can go hand in hand: a large number of European countries are in fact characterised either by low growth and low inclusion or by high growth and high inclusion. There are, however, also cases of low inclusion and high growth, as shown by analysing the Anglo-Saxon or Baltic countries, where the predominance of market regulation has favoured economic competitiveness but has not succeeded in reducing inequalities (Crouch 2015).

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Fig. 2.1 Coefficient of variation trend for the six policy areas analysed (2000– 2014). Source Processed data from Eurostat. Note ALMP: expenditure in active labour policies as % of GDP; PLMP: expenditure on passive labour market policies per unemployed person; State aid: State aid not linked to the economic crisis as % of GDP; Soc_prot: per capita expenditure on social protection; GERD: public spending on R&D as % of GDP; Educ: public expenditure on education as % of GDP

Figure 2.1 shows this persistence of differences between the various models. In fact, the results here are of the analysis of the coefficient of variation, also known as relative standard deviation, a standardised measure of dispersion of a probability distribution or frequency distribution. This is given by the ratio between standard deviation and average of each distribution for all the countries considered, and it has been calculated with Eurostat data from 2000 to 2014 for expenditure on six policies that have an important effect on both growth and inclusion: active (ALMP) and passive (PLMP) labour market policies, state aid, social protection (Soc_prot), GERD and expenditure on education (Educ). If a process of convergence between countries were underway, the

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value of the indicator would decrease. But this is not the case: the only value for which the coefficient is decreasing is the value for state aid, and this is due to the constraints imposed on industrial expenditure by the European level of regulation. For the other items, however, the diversity between countries remains stable, as in the case of social protection, or increases, as in the case of active and passive labour policies and, to a lesser extent, education. The state therefore has considerable scope for policy action and uses it differently in the six models of capitalism. This persistence of difference between the various models can also be seen by looking at the performance of the regulatory system, with regard to the four dimensions here taken into account, for which trends for the period 2000–2015 have been calculated. The analysis of the trend of the per capita gross domestic product, the employment rate, the Gini index and the risk of poverty and social exclusion in the last 15 years allows us to observe the trajectories over time of the six models of capitalism, highlighting not only the presence and persistence of important differences between them, but also, in some cases, the accentuation of these differences in recent years. As shown in Fig. 2.2, from 2000 to 2014 the gross domestic product at purchasing power parity is higher in continental Europe and northern countries. Despite being strongly affected by the 2008 recession, the Anglo-Saxon model also remains above the EU-28 average and is recovering rapidly. This means, as we will see further on, that among the models with a higher level of GDP per capita we find countries with very different institutional structures. This difference persists over time: the standard deviation of the average GDP between countries in 2004 has a value of 8202 and after ten years it is 8069, confirming the differences between the cases that continue to exist. Below the average for EU28, on the other hand, there are the Mediterranean countries—the only ones to maintain a constant decline in terms of gross domestic product in the post-crisis period. The Visegrad Group countries and the Baltic States had very high economic development and annual GDP growth until 2008: between 2000 and 2006, the GDP of the Baltic model doubled, and, until 2007, it had the highest growth rates in Europe. In 2008, the Baltic countries were hit hard by the crisis, which had a much greater impact here than in the countries of the Visegrad Group, but the three

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45,000

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Fig. 2.2 Gross domestic product per capita at purchasing power parity (2000– 2014). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries

Baltic republics recovered very quickly, confirming themselves as very dynamic economies. The trend in employment rates also confirms the presence and persistence of different trajectories among the six models of capitalism considered. The employment rate shows a much more fluctuating trend over time than that of GDP, but the standard deviation, also in this case, is stable: 5.50 in 2004 and 5.46 in 2015. Once again it is possible to identify a discontinuity linked to the economic crisis, which is affecting all the European labour markets, with the exception of those of the continental model, the only case in which the employment rate trend is not decreasing (Fig. 2.3). As we will see further on, this resilience is due, on

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the one hand, to the effects of the process of labour market flexibility, which intensified in the early 2000s, and, on the other, to the competitiveness of certain key sectors, such as the high-tech and logistics sectors in The Netherlands or manufacturing in Germany. Apart from a slight decrease corresponding to the period of the crisis, the employment rate remains very high and stable for the Nordic model, where there are high employment rates combined with the presence of voluntary part-time work, low unemployment, high flexibility combined with low precariousness (Burroni and Keune 2011; Ibsen and Mailand 2009; Wilthagen and Tros 2004). The Anglo-Saxon model also starts from a high employment rate but is more affected by the crisis: the institutional-regulatory structures behind this model effectively promote

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high levels of participation, a high employment rate and low levels of unemployment, at the expense, however, as many studies show, of the quality and stability of the employment produced (Amable 2003; Barbier 2009; Martin 2014; Zaidi 2009). As far as the Baltic countries are concerned, employment grew by almost 10 percentage points from 2000 to 2006, exceeding the European average, then falling below 60% as a result of the crisis, but since 2010 employment has increased again, together with strong criticalities linked to the progressive precariousness of the labour market (Bohle and Greskovits 2012). The Visegrad and Mediterranean models are below the European average. The former has been characterised by an increasing trend since 2004 and a rapid recovery after the crisis. Mediterranean capitalism, on the other hand, is the model that cannot recover from the effects of the crisis in terms of employment until 2013, when a timid recovery begins (Burroni 2016; Karamessini 2007; Meardi 2012; Miguélez and Molina 2013; Sacchi and Vesan 2011; OECD 2013). Looking at the indicators that we use to analyse the economic growth—and strength—of a country, it can be seen that the various models follow differentiated trajectories and that no convergence processes emerge. At the same time, we note that among the models that perform better there are countries that are characterised by very different regulatory structures, such as the Nordic and Anglo-Saxon models. Similar paths emerge by analysing the trends of the two indicators related to social inclusion. The Anglo-Saxon and Baltic models are, in fact, both characterised by a more unequal distribution of income: the “residual” principle of promoting equality on which the neoliberal model is based relies on low levels of total state spending, taxation and social security expenditure. A model based on weak social citizenship rights, therefore, and on the role of the state, which intervenes only to deal with situations of serious poverty and much less in the field of income redistribution. Figure 2.4 shows that a high level of inequality in income distribution is also found in Mediterranean countries. A lower level of inequality can be found in the continental model, in the countries of the Visegrad group and especially in the Nordic model: these models have implemented effective redistributive policies capable of keeping this type of inequality low. Here again, therefore, there are

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Fig. 2.4 Inequality in wealth distribution (Gini Coefficient 2005–2014). Source Processed data from Eurostat. Note ANG: Anglo-Saxon model; BA: Baltic model; CON: continental model; MED: Mediterranean model; NOR: Nordic model; VIS: Visegrad model; EU28: EU average 28 countries

differentiated trajectories between the various models that do not show processes of convergence in the redistribution of income: the coefficient of variation of the Gini index is 3.8 in 2005 and 3.7 in 2014. Finally, the trend over time of the risk of poverty and social exclusion also confirms the presence of differentiated trajectories between the six models. Below the European average is the Visegrad model, where the risk of poverty fell by almost 10 percentage points between 2005 and 2009, and the rate is also stable well below this average for the continental model and especially for the Nordic model. On the other hand, the Mediterranean and Baltic models, which have left a large number of individuals exposed to new social risks, show much higher levels of poverty and social exclusion than the European average, as is also the

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case for the Anglo-Saxon model. Heterogeneity between the models is confirmed for this variable too, apart from an approximation of the Baltic and Visegrad models towards the yields of other countries, as shown by the standard deviation from 5.9 in 2006 to 5.2 in 2014 (Fig. 2.5). As in the case of growth, there is a plurality of pathways, as well as a lack of convergence between the various models, with regard to the variables that are linked to social inclusion. In this case, however, it is necessary to highlight a more marked disparity in performance between the Anglo-Saxon model and that of Northern Europe, with the former being less effective in promoting social inclusion; it is thus confirmed that Anglo-Saxon capitalism is able to produce growth but much less social inclusion, an objective that is better achieved by Nordic capitalism. On the other hand, the worst performance of the Mediterranean 40.0

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model is confirmed, alongside the Baltic model as far as social cohesion is concerned. These considerations are confirmed if we bring together the two dimensions of growth and inclusion in a single graph. To do this, we use two synthetic indicators that summarise the situation, this time for the various countries, in the period following the economic crisis. To construct the synthetic indicator for the growth dimension calculated for the period 2008–2015, we have used the average of GDP per capita and of employment rate for the individual countries, standardised on the EU28 average. This synthetic indicator for growth does not indicate the growth rate but is the average value of the 2008–2015 time interval. To construct the synthetic index for social inclusion, we have adopted the average for the period 2008–2015 of the Gini and of AROPE index for the individual countries, standardised on the EU28 average, equal, in Fig. 2.6, to one. 1.6 Iceland Norway

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To confirm what we have seen so far, the continental and Scandinavian countries in Fig. 2.6 are in the quadrant characterised by high inclusion combined with high competitiveness. The two models coexist in the same quadrant but have adopted different strategies towards inclusive growth, as we will see in the next section. The Anglo-Saxon model is located in the low inclusion and high growth quadrant, where high employment rates and high GDP coexist with high inequality and a high rate of exclusion. In the low growth and low inclusion quadrant, two very heterogeneous models coexist: the Mediterranean and the Baltic models, as well as Hungary and Poland of the Visegrad group. The group of Mediterranean countries is historically characterised by a low level of GDP per capita and employment, while the risk of poverty and social exclusion increased during the economic crisis. The case of the Baltic countries is different, since they have introduced economic reforms since the second half of the 1990s aimed at liberalising and reducing social protection. Finally, in the high inclusion and low growth quadrant are the Czech Republic, Slovakia and Slovenia, three countries which, as recent research shows, have tried to combine liberalisation with a medium-high level of social cohesion (Bohle and Greskovits 2012). In conclusion, therefore, we have seen how the analysis of the coefficient of variation of expenditure in active and passive labour policies, state aid, social protection, GERD and education spending, as well as the diachronic reconstruction of the outcomes related to the mix between social cohesion and growth, show that a process of convergence does not emerge for these variables. This confirms what an important part of the literature of comparative political economy shows: that different countries have different returns in terms of inclusion and economic growth (Amable 2003; Crouch 2015; Hay 2004; Sapir 2006). Given these various combinations, it is interesting to examine in depth what the factors that influence the presence of such differentiated pathways may be.

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Actors and Their Different Strategies: State, Social Partners and Firms

What influences the presence of different trajectories in terms of inclusion and growth in the various models that have been considered? Certainly, historical tradition and institutional context bear heavily here, as is also shown by the relative stability of the paths we have seen in the previous section. This explains why a wide range of scientific contributions has focused on the analysis of the relationship between institutional structures and their performance, taking into account for example the influence of the electoral or governance system, the regulation of corporate governance, the structure of representative associations etc. (Amable 2003; Hall and Soskice 2001; Morgan et al. 2010; Pierson 2000; Iversen and Soskice 2006). At the same time, however, it is not possible to understand these differentiated paths without looking at the action of the actors and how they make use of their margins of manoeuvre—their agency, therefore, which has a very significant influence on the trajectories of the various models of capitalism both in terms of social inclusion and economic growth. In particular, there are three actors that influence the combinations of social inclusion and growth, namely the state, interest representation organisations and firms. In recent years, the neo-institutionalist literature has highlighted how analysing the organisational and institutional characteristics of these actors (i.e. size of the public sector and organisation of the state, membership of trade unions and their strength, models of corporate governance of companies, etc.) helps to understand the trajectories of the various countries in terms of competitiveness and inclusion. While we will also look at these structural characteristics in the present work, we will go beyond them by focusing on a theme that has recently been more neglected in the literature, namely the possibility of choice of these actors, who can—and indeed do—follow different logics of action. And it is precisely the different way in which actors play their agency and ability to intervene at national level, and the interaction between these strategies, that become an important explanatory factor in relation to the heterogeneity of regulatory paths and thus to the presence of differentiated outcomes between the different models of capitalism.

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2.4.1 The State While, in recent years, the contributions that have brought the role of the state back to the forefront in the regulation of Western societies and capitalism have multiplied, it is also true that, as has been said, the margins of action of national governments have been reduced compared to the 1980s and 1990s. The state still plays a very important role with respect to the trajectories of countries in terms of inclusion and growth and it is possible to identify significant differences in the ways in which the public actor intervenes in support of cohesion and competitiveness (Mazzucato 2014; Hancké et al. 2007). If we take into consideration the six models identified in the previous sections, we can see that in the countries that have been able to better combine inclusion and competitiveness, i.e. Northern European capitalism (Fig. 2.6), the state has invested more in some specific policies, such as those supporting research and development activities (Fig. 2.7, GERD). Looking at all the countries considered, Iceland, Sweden and Finland are respectively first, third and fourth—with Austria second— in terms of public investment in support of research and development activities: proactive states, therefore, which have deliberately chosen to support business investment and to foster innovation activities. They have also, more than other models, chosen to develop policies directed towards social investment through high public expenditure on education (Fig. 2.7, Educ) with Denmark, Iceland, Sweden, Norway and Finland occupying the first six positions, among the countries studied here, in terms of public investment in education. At the same time, the state in these countries focuses heavily on active labour market policies (Fig. 2.7, ALMP). The agency of the state, following a logic that can be defined as strategic intervention, has had a preventive effect that has reduced the level of unemployment and consequently the need to deliver passive policies and also social protection interventions (Fig. 2.7, PPL and Soc_Prot). However, if we take into account the extent of support for individuals, for example the level of unemployment benefits per unemployed person, this is much higher in Northern European countries than in all other models. The low impact of such policies on GDP therefore

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Fig. 2.7 The role of the state in the different models of capitalism. Source Processed data from Eurostat. Note For the analysis of state action in the different models, the average for the period 2000–2014 was calculated for the individual European countries, then grouped into the six models, in relation to the following Eurostat indicators: public investment in support of research and development as % of GDP (GERD, average 2000–2014), expenditure in active labour market policies as % of GDP (ALMP, average 2000–2014), expenditure in passive labour market policies per unemployed person (PLMP, average 2000– 2014), expenditure per capita in social protection (Soc_prot, average 2000–2013), public spending on education as % of GDP (average 2000–2011), effectiveness of development policies (Eff_Dev_Pol, average 2000–2012), effectiveness of social policies (Eff_soc_pol, average 2004–2015) and effectiveness of redistributive policies (Eff_redistr_pol, average 2006–2015). The last two indicators are measured by the difference in the Gini and AROPE index before and after social transfers. The EU 28 average is equal to 1

depends more on low levels of unemployment than on the low level of benefits. Finally, in this model the state has been able to develop social policies much more effectively than the European average, with more

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effective income redistribution and development promotion (Fig. 2.7, Eff_soc_pol, Eff_redistr_pol and Eff_develop_pol). In continental countries, the state has followed a logic of intervention aimed at favouring the consolidation of larger firms, especially in the financial services, logistics, communication and transport sectors, but also, especially in Germany, in manufacturing. This has involved massive funding for research and development activities, which are crucial for the competitiveness of these sectors, especially in Austria, France and Germany (Burroni 2016; Hall and Soskice 2001). With regard to labour market policies, the continental model has chosen to invest more than the European average in both active (especially in France, Germany and The Netherlands) and passive policies (Belgium, The Netherlands and Germany). Of course, it should be considered that this investment in labour market policies has gone hand in hand with an increase in labour flexibility which, however, contrary to the Northern European model, has led to substantial flexibility “on the margins” through the use of atypical contractual forms aimed at specific groups, with the overall effect of producing new employment while at the same time increasing dualism in the labour market (Burroni 2016; Gualmini and Rizza 2011). The Anglo-Saxon model, which has some similarities with the Baltic countries, is very different, characterised by low public intervention, low spending on active and passive policies and average levels of spending on education. Despite these general characteristics, it is a model which also has important internal differences, with the United Kingdom spending more on social protection—though remaining at very low levels compared to other European countries—while Ireland spends more on active and passive labour policies. Both countries, however, have good policy performance: Ireland ranks immediately behind the Northern European countries in terms of the capacity of its policies to reduce poverty and exclusion, the UK and Ireland are fifth in terms of their capacity to make policies for development, and the UK has adopted very effective policies in reducing income disparities. This model has therefore chosen to spend less, but it has spent well. Despite this, levels of inequality and exclusion pre-public intervention are so high that limited, though efficient, spending fails to promote a level of inclusion equal to that of continental or Northern European countries. Even after public

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intervention, Ireland and the UK have the highest levels of poverty, exclusion and inequality of income distribution after some Eastern European and Mediterranean countries. Spending well is therefore very important, but it is not enough. State intervention in the Mediterranean model, on the other hand, has been little directed towards the policies considered here. Public expenditure is low in the field of innovation policies, labour market policies—especially active but also passive, social protection policies, and education policies. This low level of funding is a historical feature of this model, which in recent years has been reinforced by the growing request for macroeconomic stability through austerity, a strategy that has led to a marked reduction in public spending. This reduction has been pursued in the Mediterranean countries through the logic of linear cuts—not through a reorganisation of expenditure aimed at reducing overall levels, but rather aimed at safeguarding certain strategic sectors. The impact of the crisis, combined with specific policy choices, has therefore led to a further reduction in policies to stimulate economic growth and policies to support the development of high productivity sectors. In the Mediterranean countries, not only has it been decided not to invest in strategic sectors, but spending has been even worse: Greece, Spain and Italy are among the countries with the least capacity to make effective development policies, Greece and Italy are the countries with the least capacity to reduce the risk of poverty and exclusion, and Italy is the country with the least capacity to reduce income disparities. The administrative capacity of these countries therefore remains very weak. Lower spending on labour market policies, both active and passive, also characterises the Baltic and Visegrad models of capitalism. These countries also have lower spending on social policies, which is lower than the European average. This characteristic can be explained by the neoliberal connotation of these countries, which, however, has given rise to two different trajectories: firmer in the Baltic republics, and more moderate in the countries of the Visegrad group, where it has been defined as an embedded neo-liberalism (Bohle and Greskovits 2012; Crouch 2015). The difference between the two paths is highlighted by the higher spending on social and labour policies in the Visegrad countries, which have chosen to “temper” the liberalisation of many sectors

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with a higher investment in inclusion policies. This increased focus on inclusion can also be seen by looking at the effectiveness of social policies and redistribution policies, which are much higher in the Visegrad countries. The agency of the state in the two models, therefore, and the logic behind their interventions have decisively influenced the path out of socialism. In conclusion, this analysis leads to three main considerations, often overlooked but actually of fundamental importance in relation to the debate on the variety of capitalisms, underlining as they do how it is not possible to study the combinations of growth and inclusion without looking at the role and agency of the state. First, national governments have used and continue to use the scope for action available to them in different ways. The logic of intervention is different both in the field of support for development and innovation, in labour policies, in education and in social policies. Different strategies in European countries reinforce the presence of different pathways and yields. Secondly, in addition to the willingness to invest more or less in the arenas mentioned above, models also differ in their ability to make effective policies. There are therefore differences not only in spending capacity, but also in the quality of spending. Varying institutional capability tells us that, if we want to better understand the role of the state, it is not enough to look only at how much is spent but also at how it is spent. Third, putting these considerations together, we can see how two different models of state intervention emerge. On the one hand, strategic intervention which follows a logic focused on supporting innovation and the key areas for competitiveness, the development of skilled human resources, strong support for active labour market policies, inclusion through social policies and the ability to deliver highly effective policies. On the other hand, a model of “short-sighted” intervention, which decides to invest very little in innovation, education and active labour market policies, and which not only spends less but spends worse. The countries of northern capitalism and, in part, those of continental capitalism, tend towards the type of state intervention defined as strategic, while the countries of Mediterranean Europe tend towards the second

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type of state intervention. In contrast to other typologies, therefore, if we look at the role of the state with the perspective adopted here, we see that the opposite of the model of coordinated economies is not AngloSaxon capitalism, which invests little but well in certain strategic sectors, but rather Mediterranean capitalism.

2.4.2 Organisation Representing Collective Labour and Business Interests In order to explain the multiple balances between inclusion and competitiveness, it is also necessary to take into account the key role played by industrial relations actors, namely the organisations which represent collective labour and business interests. Three main aspects in particular need to be highlighted. First of all, strong trade unions and employers’ associations are compatible not only with high levels of social inclusion, but also with the growth of competitiveness and innovation. To confirm this, we will see that in some cases it is in fact associative regulation that promotes competitiveness. Secondly, having strong trade unions is not a guarantee of competitiveness and inclusion: there are countries with large and influential trade unions that are experiencing an increase in social exclusion and a reduction in economic competitiveness. Thirdly, if we want to understand the relationship between associative regulations, competitiveness and inclusion, we need to look at the structural characteristics of the industrial relations system: coverage of collective bargaining, capacity for influence and inclusion in policymaking and membership rate. A high coverage of collective bargaining is, in fact, often associated with a reduction of inequalities and exclusion at work. A high influence of representative associations in policymaking mechanisms can favour the development of effective policies to combat social exclusion and support competitiveness. A high membership can guarantee greater strength and widen the scope for action of representative associations. However, looking at these structural features, as much comparative political economy does, is not enough. It is also necessary to examine in depth the logic that collective actors follow and how they use

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the spaces available to them: if these actors adopt a more encompassing logic, social partners follow inclusive strategies and tend to create conditions involving less dualism and segmentation in terms of guarantees and rights. In contrast, associations that follow the logic of protecting specific interests, even if they are influential, may favour the reproduction of inequalities. As is well known, Northern European countries share a long historical tradition of neocorporativism founded on a strong workers’ movement and few representative organisations, which are very inclusive and have an extremely high number of members. These are linked to the sectors most exposed to competition and are constantly involved in the regulatory processes related to the labour market, income policies, welfare, service provision and their organisation thanks to consolidated institutions of participation at central and decentralised level (Dølvik 2009; Crouch 1993). The logic of action of these associations has always been of the “inclusive” type, aimed at protecting general as well as sectoral interests. This structure has favoured the consolidation of rights and protections based on universalistic principles and consequently a massive investment in social policies. At the same time, the choice of trade unions and employers’ associations to pursue proactive action has strengthened the competitiveness of the economic system. These characteristics of the industrial relations system are confirmed by the data shown in Fig. 2.8: the involvement of associations in policymaking practices is very high in all five Northern European countries. This participation in the political arena has also been fostered by high levels of membership: in these countries unionisation is around 70% (for Denmark, Sweden and Finland) and in Norway, the country with the lowest level of unionisation in this model, it is 55%. In terms of the extent of collective bargaining, the countries of the Northern European model are characterised by centralised bargaining which has favoured extensive coverage, well above the European average, of around 90% in Finland and Sweden, 80% in Denmark and 70% in Norway. However, this structure has not ruled out the presence of mechanisms that have favoured decentralisation: a decentralisation of an organised type, i.e. with a high degree of unionisation and coverage of collective

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Fig. 2.8 Characteristics of interest representation organisations in the six models of capitalism. Source Processed data from ICTWSS (Visser 2013). Note The analysis of the weight and strength of representative associations is based on four indicators: coverage of collective bargaining, unionisation rate, inclusion of associations in policy-making and their influence in companies. In this case the source is the ICTWSS database (Visser 2013) and refers to the year 2011; the coverage of collective bargaining is calculated on the basis of the different national databases (Crouch 2015). The EU 28 average is equal to 1

bargaining, and a centralised type, i.e. with company bargaining that developed in the area of subjects and themes that are delegated and regulated directly by the national level of the sector through framework agreements. This condition, in this highly unionised context and with representative organisations that have strongly supported competitiveness, has promoted the involvement of workers at company level and the adoption of organisational practices that have supported productivity and favoured negotiated flexibility and the emergence of innovative and shared models of human resource management. In these countries, therefore, the logic of action of the associations has favoured both competitiveness and inclusion.

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The institutional set-up and historical tradition of continental countries have also favoured the strong participation of representative organisations in policymaking mechanisms: a regulatory system based on a combination of a state which activates concertation on the one hand and organisations representing interests with a quasi-public connotation on the other (Streeck 1997; Baccaro and Howell 2011). In fact, as shown in Fig. 2.8, the inclusion of trade unions is higher in the continental model than in other models, despite the fact that the rate of unionisation is, with the exception of Belgium, not higher than the European average. This medium-low membership corresponds, however, with a high capacity to influence policies and also a high coverage of collective bargaining, equal to that of the Nordic model. However, as far as agency is concerned, it should be remembered that in some countries of the continental model, interest representation organisations have followed a strongly sectoral logic of action, which has given great importance to the interests of workers in the strongest sectors, thus favouring a segmentation of safeguards in the labour market. At the same time, it should be noted that in some countries, such as Germany, the coverage of bargaining has dropped considerably in recent years, with a growing role for bargaining at company level and an increasing number of companies using opening clauses (Keller and Kirsch 2011). This type of relationship between structure and agency in the industrial relations system, therefore, has also influenced the balance between inclusion and competitiveness in the continental model. Industrial relations in the Anglo-Saxon model are characterised by medium-low unionisation, bargaining that takes place mainly at company and individual level, rather than sector level, and the absence of social consultation. It is a pluralist model, where interest organisations have developed into a sort of “free organizational market”, without participation in the political space (Crouch 2015; Schmitter 1974). In this model, the contribution of interest organisations to the development of policies for inclusion and competitiveness has progressively decreased. A process of decentralisation has also been underway for some time; it is no coincidence that Crouch defined the UK model of “collective bargaining in disintegration” as early as the first few years of the 1990s (Crouch 1993, p. 293). Collective bargaining, when present, is focused

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on the corporate rather than the sector level, with the consequence that industrial relations in these countries have a “micro-regulatory” dimension. In the Anglo-Saxon model there is, by historical tradition, a clear distinction between the regulation of wages and working conditions on the one hand and the regulation of issues related to social protection and citizenship rights on the other; the consequence is that the social partners have rarely dealt with these issues (Hyman 2008). For the same reason, the level of inclusion in policymaking processes is lower than in other models of capitalism (Crouch 2015). In the Irish case, however, there has been a greater level of inclusion through consultation with agreements that have played a key role in supporting competitiveness, fostering wage moderation and supporting a lean welfare system and economic policy strategy based on attracting foreign direct investment (Teague and Donaghey 2009). In terms of agencies, the representative organisations have therefore followed more specific, sectorial and company-based logics of action and are less oriented towards protecting interests of a general nature. The effect of such associative regulation and logic of action has been to open up spaces for market regulation, which has been able to support economic competitiveness but much less social inclusion. An intermediate level of inclusion in policymaking practices is to be found in the Mediterranean model: there was, during the 1990s, a massive recourse to concerted practices. For example, in both the Italian and Spanish cases, the state has often delegated certain important decisions in the labour market and welfare fields to the social partners. As far as agency is concerned, the representative organisations in these countries have sometimes tended to protect specific interests. At the same time, however, the low institutionalisation of consultation practices has favoured “over-the-counter” involvement on the part of governments, which have involved them in consultation experiences mainly aimed at the preparation of “negative” type measures and policies—those, in other words, aimed at reducing expenditure and guarantees and not at developing instruments and rights for those exposed to new social risks. The mix between sectoral representation and limited space for the agency has indirectly favoured the emergence of differentiated protection

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regimes. Also for this reason, in recent years, there has been a substantial abandonment of concerted practices combined with a weakening of social consensus towards these organisations. As far as unionisation is concerned, the weight of representative organisations, compared to other European models, is intermediate, with Italy and Greece having the highest unionisation and Spain the lowest. Finally, with regard to collective bargaining, in this model, too, the sectoral level is the most important and the coverage is medium-high (Lampousaki 2014; Sanz 2014; Pedersini 2014). Alongside the high coverage of bargaining, however, it is necessary to highlight the growth in the use of opt-out practices from collective agreements and the emergence of decentralisation processes. This process takes place in the presence of relatively weak trade unions at company level and for this reason has not fostered a virtuous circle between participation, competitiveness and inclusion in the workplace. The limited agency and weak institutional framework of industrial relations have not created the conditions for strong support for competitiveness and inclusion. In industrial relations, too, there are significant differences between the Visegrad model and that of the Baltic States. In the former, as the figures in Fig. 2.8 also show, there is greater coverage of collective bargaining, a higher rate of unionisation, more extensive influence in business and greater involvement in policymaking practices than in the Baltic bloc countries. This result can be traced back to the different historical traditions of the two models, with stronger and more developed industrial relations in the Visegrad countries (Crouch 2015). It also depends on the agency of the actors, and in particular on the role played by the state, which has tended to reduce the margins of participation with regard to the associative aspect in the Baltic countries. Another significant factor relates to the strategic choices made by industrial relations actors, both in the period immediately before and after the fall of the Soviet system: consider, for example, the case of Solidarity in Poland. In conclusion, therefore, as shown by Northern and continental European capitalisms, differences between the various models confirm that strong trade unions are not only compatible with social cohesion but also with competitiveness and innovation. At the same time, however, having strong trade unions is not in itself a guarantee of competitiveness

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or even inclusion: in order to fully understand the role that industrial relations play, it is above all important to study the logic of action of these actors and its multiple effects. It is in fact by looking at the relationship between structure and agency that we can better understand what kind of influence the representative associations exert in the different models of capitalism.

2.4.3 Firms In order to understand the mechanisms related to growth and inclusion in the various models of capitalism, it is also essential to look at the productive arena, such as enterprises and their strategies and regulatory architectures (i.e. type of enterprises and networks, organisational models, sectorial specialisations, etc.). These are, in fact, dimensions that are directly related to the competitiveness of the various countries and obviously have a decisive influence on production, export, job and wealth creation. But looking at these dimensions also helps to better focus on certain dynamics related to social inclusion, given that the organisation of work in companies and the competitive strategies chosen by firms directly influence wages and income distribution, the level of inclusion and participation in the workplace, the more or less inclusive configuration of the labour market, the demand for skilled human resources and the presence of high or low quality work. If we look at corporate governance, we can see that Northern European capitalism is characterised by a high diffusion of so-called learning organisations—companies within which workers have a high degree of autonomy in dealing with complex tasks, as well as mechanisms that promote participation, learning and problem-solving skills, while the repetitiveness of tasks and the performance of low-skilled tasks are under-represented (Lorenz and Valeyre 2005). Analysing the data of the European Survey on Working Conditions for the EU-15, Lorenz and Valeyre showed that 60% of employees in Denmark work in learning organisations, compared to 52.6% in Sweden, 47.8% in Finland, 38% in France and Belgium, 34% in the UK, 30% in Italy and 20% in Spain.

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The development of this type of enterprise has been favoured by the presence of a centralised mechanism of income policies: this establishes equal wage levels for all and makes it impractical for enterprises to compete downwards on costs, thus pushing them to seek profits through the development of activities and sectors with high productivity and competing through product quality rather than price (Amable 2003). At the same time, however, an important role is played by the companies’ agency and by their choice to follow competitive strategies based on innovation, as can also be seen from the high investments in this field (Fig. 2.9). It is no coincidence, then, that there is a very high share of workers in the research and development sectors: Iceland, Finland, Denmark and Sweden are the four European countries with the highest share of workers in these activities, with Norway sixth. This is also confirmed by the patent intensity in high technology sectors, which is much higher in the Nordic countries: Finland, Sweden and Denmark are in the top four positions for patent intensity in high technology. These are mainly domestic companies, as shown by the low presence of foreign direct investment (FDI), and often large in size: for example, with regard to Sweden, big companies specialising in high technology, such as Ericsson, in more traditional forms of production such as Volvo or in consumer and household goods, such as Ikea and Electrolux (Kristensen and Lilja 2011; Burroni 2016). In the countries of continental capitalism, the production organisation and competitive strategies adopted by companies are based on strongly structured inter-enterprise relations, involving medium and long term relationships and characterised by a high level of cooperation between the parties. This organisational architecture focuses on interaction and participation. This interaction features the decision of—mainly large—companies to favour an internal organisation based on strong sharing: managers of larger companies are hardly likely to adopt unilateral decision-making methods. They often have to have the agreement of the company’s supervisory boards, which include workers’ representatives and major stakeholders, as well as, in some cases, suppliers’ representatives. In this model, large companies, with their strategies and agency, have played a key role: they include the French “national champions”

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Fig. 2.9 The action of firms in the six models of capitalism. Source Processed data from Eurostat and OECD databases. Note In order to analyse the action of enterprises, the six models have been classified according to the following indicators: business investment in innovation and development (Firm_inv_inn, average 2000–2014), total business investment (firm_tot_inv, average 2000– 2015), share of R&D personnel per 1000 employees (R&D workers, average 2000–2013), labour productivity (Productivity, average 2004–2015), foreign direct investment as % of GDP (FDI), average enterprise size (Average_dimension) and patent applications per 100,000 inhabitants (Patents). The EU 28 average is equal to 1

in the high technology and energy sectors, the large German manufacturing companies, the logistics sector in The Netherlands and services in Belgium. While this is a model focused on innovation and research, as shown by data on patent intensity and the presence of specialised personnel in R&D activities, it has also been able to attract more foreign direct investment than Northern capitalism, particularly in The Netherlands and Belgium (Fig. 2.9). The decision to make massive investments in technological innovation aimed at increasing labour productivity— the highest of the models taken into consideration—and the strategy of

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competing on product quality have also in this case pushed towards the high path of competitiveness (Amable 2003). The Anglo-Saxon model has undergone a long and massive process of de-industrialisation and this has led to a drastic reduction in the weight of manufacturing activities both in sectors characterised by small and medium size enterprises, such as mechanical production, and in those characterised by large companies, such as the automotive sector. The manufacturing companies that have used their agency in order to successfully face this period of restructuring are today mainly large, often multinational, companies. It is no coincidence that the Anglo-Saxon model has a larger average size of enterprise than the others considered here. These are companies that specialise in intermediate quality products and adopt organisational models that are very different from those of the countries of Northern and Continental Europe: inter-enterprise relations characterised by unstable, short-term links and poorly structured networks. As far as the organisation of work within companies is concerned, the presence of a high degree of external flexibility has always favoured a significant mobility of workers, who thus have less incentive to invest in specific learning processes and instead move towards more transversal skills. The trend towards general skills has gone hand in hand with the choice of companies to move towards production models based on intermediate product quality and, at the same time, the high mobility of workers has favoured the emergence of organisational arrangements based on lower involvement. The lower focus on quality production is confirmed by the fact that companies invest less in innovation. Research and development staff and share of patents are much lower than in Continental and Northern Europe, while labour productivity is higher, mainly due to the Irish case and the massive investment of foreign companies in high-tech sectors. The production organisation in the Mediterranean countries is characterised by the prevalence of small and medium-sized enterprises, with little specialisation in high technology and innovation and a high level of undeclared work. It is a system where companies have chosen a competitive model characterised by low productivity and oriented towards cost containment rather than product quality—in essence, an agency that has favoured the consolidation of a model of capitalism based on the low

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path of development. It is not surprising, therefore, that overall investment by companies and investment in research and development are both lower than the European average. In addition to these characteristics, there is also a limited presence of personnel specialised in research and development activities and a very low patent intensity: the incidence of patents on the population in Italy and Spain is almost 15 times lower than in Finland. If we look at the data that we have taken into account for the Visegrad bloc and Baltic countries, there are many similarities. Both models are characterised by company decisions that go in the direction of low investment in innovation: the share of personnel involved in research and development activities is low, as is both productivity and the number of patents. There is, on the other hand, a high presence of foreign direct investment. Nevertheless, differences can also be identified within the two models. For example, looking at the Visegrad model, it can be seen that there are differences in the types of production specialisations. Poland and the Czech Republic, with a more skilled workforce in manufacturing sectors, have attracted more specialised foreign direct investment in a competition model focused on cost containment. Hungary, meanwhile, characterised by a more professional workforce in the knowledge economy, has attracted more specialised foreign investment in high value-added activities (Perulli 2009; Crouch 2015). In conclusion, the way companies use their agency margins in terms of choice of specific organisational models, more or less based on investments aimed at supporting product quality, innovation and productivity, shows their influence both in terms of the competitive capacity of capitalism models and of social inclusion processes. From this point of view, a continuum can be identified: at one extreme, there are models characterised by an agency that leads to the so-called “high road to development”, based on high investments in innovation, training, organisational modes based on participation, marked attention to quality and product diversification. At the other extreme, instead, we find models of capitalism where companies choose to invest in the “low road to development”, characterised by cost competition, medium-low product quality and low investment in innovation and research and development.

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The Trajectories of Contemporary Capitalism

The path of analysis reconstructed so far has allowed us to go more deeply into two themes: the first, related to the presence of processes of convergence or divergence between the different models of capitalism; the second, to certain possible explanatory factors behind the differentiated returns of institutional structures in terms of social inclusion and competitiveness. These two themes are at the centre of the debate regarding comparative political economy and varieties of capitalism. This analysis has highlighted two main aspects. First, with respect to the debate on convergence–divergence, it has been shown that for the dimensions taken into consideration here—competitiveness and inclusion—the assets of European countries continue to be very different from each other. In this work, therefore, there is no strong empirical support for the theses that have become relevant in the international debate in recent years—those, in other words, that support the presence of a process of convergence between the various models of capitalism. This can be seen both by looking at the configuration of a wide range of policies directly related to the promotion of inclusion and competitiveness, such as active and passive labour policies, state aid, social protection, GERD and education spending, and by looking at the outcomes in relation to these dimensions, as shown by the trends in GDP per capita, employment rate, Gini index and the risk of poverty and social exclusion. Secondly, it has been seen how these differentiated returns are linked to the regulatory systems inherited from the past and to the institutional arrangements that characterise the different models, as shown by an extensive literature of comparative political economy (Amable 2003; Crouch 2013; Dore 2000; Hall and Soskice 2001; Iversen and Soskice 2006; Streeck 2009; Trigilia 2016). The main contribution of this chapter, however, is to highlight the importance of actor agency and its weight in influencing trajectories in terms of inclusion and growth. As mentioned above, it is an agency that encounters limits and it is not a mechanism that gives rise to a linear and simple process: in fact, agency is often influenced by the relationships—even conflicting ones— between the actors, and, in addition, is subject to relevant constraints in

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the characteristics of the institutional and regulatory context. Nevertheless, looking at the role of the actors and how they exercise their capacity for action is very useful in terms of understanding the trajectories of contemporary capitalism. In this chapter, in particular, we have underlined how it is possible to identify different configurations related to the way actors move and their logic of action. For example, the state can take “strategic” action aimed at promoting inclusive growth through support for innovation and key sectors for competitiveness, the development of skilled human resources, active labour market policies and social policies. However, the same actor can also have a “short-sighted” attitude, with little ambition to support innovation, education, and investment in labour policies—a state that spends negligibly and ineffectively. The countries of Northern capitalism and partly those of continental capitalism lie closer to that extreme of the continuum that can be defined as strategic intervention; at the other end, meanwhile, lie the countries of Mediterranean Europe. Actor agency also plays a relevant role in the field of industrial relations: this occurs when trade unions and employers’ associations protect widespread interests and support generalised inclusion, as in the case of Northern capitalism, while they are less effective in their action when they adopt a more specific and sectorial representation logic aimed at protecting only the interests of certain groups. This fosters dualism and segmentation in terms of guarantees and rights and, therefore, forms of inequality, as happens in some continental and Mediterranean countries. We have also seen that the agency of trade unions and employers’ associations influences not only levels of social inclusion, but also the competitiveness of the various models of capitalism: in continental and Scandinavian capitalism it was precisely the choice of interest representation organisations to follow “proactive” logic at the level of the company that contributed to the increase in productivity and product quality. Finally, it is also the action and choices of firms that guide the path of a country: their agency not only affects competitiveness—through production, exports, job creation and wealth creation—but, as we have seen, also the ability of a company to be inclusive, influencing the organisation of work, income distribution, participation in the workplace, the demand for more or less qualified human resources and the presence

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of high or low quality work. In Northern and Continental capitalism, companies have acted through competitive strategies oriented towards the ‘high way’ of development and, by promoting job quality, product diversification and innovativeness, have ensured that competitiveness and levels of inclusion grow together. However, companies can also choose a strategy to compete “downwards”, following what we have called the “low way” for development, focused on external flexibility and product cost containment. This logic is present both in models that combine high growth but low inclusion, such as the Anglo-Saxon and Baltic models, and in models characterised by low levels for both dimensions, as in the Mediterranean examples. The results of this analysis show the extent to which actors count: their margin of action, their agency, are decisive with respect to the trajectories that contemporary capitalisms follow. And it is extremely important to look both at the interaction between them and at their “joint action”. In conclusion, therefore, it is of course important to look at the weight of historical legacies and institutional arrangements, as much of recent comparative political economy has done. At the same time, however, it is essential to focus attention on the strategies of the state, representative associations and companies, on the effects—intentional and otherwise— of their agency, and on the complex interaction between the actions of these three actors. This allows us to better understand the recent transformations of democratic capitalism, as well as the risks and opportunities of the different paths that it may take in the coming years.

References Albert, M. (1991). Capitalisme Contre Capitalisme. Paris: Éditions du Seuil. Amable, B. (2003). The Diversity of Modern Capitalism. Oxford: Oxford University Press. Armingeon, K., & Baccaro, L. (2012). Political Economy of the Sovereign Debt Crisis: The Limits of Internal Devaluation, Industrial Law Journal, 41(3), 254–275.

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Baccaro, L., & Howell, C. (2011). A Common Neoliberal Trajectory: The Transformation of Industrial Relations in Advanced Capitalism. Politics & Society, 39 (4), 521–563. Barbier, J.-C. (2009). Workfare, “flexicurité”, réflexions sur le voyage international des idées politiques dans les politiques sociales et la persistance des compromis nationaux insérés dans les cultures politiques nationales. Communication au Congrès de l’AFSP, Réseau thématique RT23, Politiques sociales, Grenoble. Bohle, D., & Greskovits, B. (2012). Capitalist Diversity on Europe’s Periphery. Ithaca, NY: Cornell University Press. Boyer, R. (2005). How and Why Capitalism Differ. Economy and Society, 34 (4), 509–557. Burroni, L. (2016). Capitalismi a confronto. Istituzioni e regolazione dell’economia nei paesi europei. Bologna: Il Mulino. Burroni, L., & Keune, M. (2011). Flexicurity: A Conceptual Critique. European Journal of Industrial Relations, 17, 75–91. Castel, R. (1996). Les marginaux dans l’histoire. In S. Paugam (Ed.), L’exclusion: L’état des savoirs. Paris: Editions La Découverte. Clift, B. (2014). Comparative Political Economy. State, Markets and Global Capitalism. Basingstoke: Palgrave Macmillan. Crouch, C. (1993). Industrial Relations and European State Traditions. Oxford: Oxford University Press. Crouch, C. (2009). Privatised Keynesianism: An Unacknowledged Policy Regime. British Journal of Politics and International Relations, 11(3), 382–399. Crouch, C. (2013). Making Capitalism Fit for Society. Cambridge: Polity Press. Crouch, C. (2015). Governing Social Risks in Post-crisis Europe. Cheltenham: Edward Elgar. Crouch, C., & Streeck, W. (Eds.). (1997). The Political Economy of Modern Capitalism: Mapping Convergence and Diversity. London: Sage. Dølvik, J. E. (2009). Percorsi nordici di trasformazione del mercato del lavoro. Stato e Mercato, 86, 217–234. Dore, R. (2000). Stock Market Capitalism: Welfare Capitalism. Japan and Germany Versus the Anglo-Saxons. Oxford: Oxford University Press. Gualmini, E., & Rizza, R. (2011). Attivazione, occupabilità e nuovi orientamenti nelle politiche del lavoro: il caso italiano e tedesco a confronto. Stato e Mercato, 92, 195–221. Hall, P. A. (2007). The Evolution of Varieties of Capitalism in Europe. In B. Hancké, M. Rhodes, & M. Thatcher (Eds.), Beyond Varieties of Capitalism:

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Conflict, Contradictions, and Complementarities in the European Economy. Oxford: Oxford University Press. Hall, P. A., & Soskice, D. (Eds.). (2001). Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press. Hancké, B., Rhodes, M., & Thatcher, M. (Eds.). (2007). Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy. Oxford: Oxford University Press. Hay, C. (2004). Common Trajectories, Variable Paces, Divergent Outcomes? Model of European Capitalism Under Condition of Complex Economic Interdependence. Review of International Political Economy, 11(2), 231–262. Hyman, R. (2008). Britain and the European Social Model: Capitalism Against Capitalism? (IES Working Paper n. WP19). Ibsen, C. L., & Mailand, M. (2009). Flexicurity and Collective Bargaining— Balancing Acts Across Sectors and Countries (FAOS Forskningsnotat 102). Iversen, T., & Soskice, D. (2006). Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More Than Others. American Political Science Review, 100 (2), 165–181. Karamessini, M. (2007). The Southern European Social Model: Changes and Continuities in Recent Decades (ILO Discussion Paper n. 174). Keller, B. K., & Kirsch, A. (2011). Employment Relations in Germany. In G. J. Bamber, R. D. Lansbury, & N. Wailes (Eds.), International and Comparative Employment Relations: Globalization and Change. London: Sage. Keune, M., & Marginson, P. (2013). Transnational Industrial Relations as Multi-level Governance: Interdependencies in European Social Dialogue. British Journal of Industrial Relations, 51(3), 473–497. Kristensen, P. H., & Lilja, K. (Eds.). (2011). Nordic Capitalism and Globalization: New Forms of Economic Organization and Welfare Institutions. Oxford: Oxford University Press. Lampousaki S. (2014). Greece: Industrial Relations Profile. http://www.eurofo und.europa.eu/it/default/observatories/eurwork. Lorenz, E., & Valeyre, A. (2005). Organizational Innovation, Human Resource Management and Labour Market Structure: A Comparison of the EU-15. Journal of Industrial Relations, 47 (4), 424–442. Mahoney, J., & Thelen, K. (Eds.). (2015). Advances in Comparative-Historical Analysis. Cambridge: Cambridge University Press. Marshall, T. H. (1964). Class, Citizenship and Social Development. New York: Doubleday.

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Martin, J. P. (2014). Activation and Active Labour Market Policies in OECD Countries: Stylized Facts and Evidence on Their Effectiveness (IZA Policy Paper n. 84). Mazzucato, M. (2014). Lo Stato innovatore. Roma and Bari: Laterza. McCartney, M. (2015). Economic Growth and Development. A Comparative Introduction. London and New York, NY: Palgrave Macmillan. Meardi, G. (2011). Flexicurity Meets State Traditions. International Journal of Comparative Labour Law and Industrial Relations, 27 (3), 255–270. Meardi, G. (2012). ‘Mediterranean Capitalism’ Under EU Pressure: Labour Market Reforms in Spain and Italy, 2010–2012. Warsaw Forum of Economic Sociology, 3(1), 51–81. Miguélez, F., & Molina, O. (2013). From Negotiation to Imposition: Social Dialogue in Austerity Times in Spain (ILO Working Paper n. 51). Morgan, G., Campbell, J. L., Crouch, C., Pedersen, O. K., & Whitley, R. (Eds.). (2010). The Oxford Handbook of Comparative Institutional Analysis. Oxford: Oxford University. OECD. (2013). OECD Economic Survey. Greece. Paris: OECD. Palier, B. (Eds.). (2010). A Long Goodbye to Bismarck? The Politics of Welfare Reform in Continental Europe. Amsterdam: Amsterdam University Press. Paugam, S. (1991). La desqualification sociale: essai sur la nouvelle pauvreté. Paris: Presses universitaires de France. Pavolini, E. (2003). Le nuove politiche sociali. I sistemi di welfare tra istituzioni e società civile. Bologna: Il Mulino. Pedersini, R. (2014). European Industrial Relations Between Old and New Trends. Stato e Mercato, 102, 341–368. Perulli, P. (2009). Lo sviluppo locale. In L. Sciolla (Ed.), Processi e trasformazioni sociali. La società europea dagli anni sessanta a oggi. Laterza: Bari. Pierson, P. (2000). Increasing Returns, Path Dependence, and the Study of Politics. The American Political Science Review, 94 (2), 251–267. Regini, M. (2014). Models of Capitalism and the Crisis. Stato e Mercato, 100, 21–44. Rueschemeyer, D. (2006). Why and How Ideas Matter. In E. R. Goodin and T. Charles (Eds.), The Oxford Handbook of Contextual Political Analysis. Oxford: Oxford University Press. Sacchi, S., & Vesan, P. (2011). Le politiche del lavoro. In U. Ascoli (Eds.), Il welfare in Italia. Bologna: Il Mulino. Sanz, P. (2014). Spain: Industrial Relations Profile. http://www.eurofound.eur opa.eu/it/default/observatories/eurwork.

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Sapir, A. (2006). Globalisation and the Reform of European Social Models. Journal of Common Market Studies, 44 (2), 369–390. Saraceno, C. (2013). Il welfare. Bologna: Il Mulino. Schmitter, P. C. (1974). Still the Century of Corporatism? The Review of Politics, 36 (1), 85–131. Sen, A. (1985). A Sociological Approach to the Measurement of Poverty: A Reply to Professor Peter Townsend. Oxford Economic Papers, 37 (4), 669–676. Silver, H. (1994). Social Exclusion and Social Solidarity: Three Paradigms. International Labour Review, 133(5–6), 531–578. Streeck, W. (1997). Beneficial Constraints: On the Economic Limits of Rational Voluntarism. In R. J. Hollingsworth & R. Boyer (Eds.), Contemporary Capitalism: The Embeddedness of Institutions. Cambridge: Cambridge University Press. Streeck, W. (2009). Re-forming Capitalism: Institutional Change in the German Political Economy. Oxford: Oxford University Press. Streeck, W. (2012). E Pluribus Unum? Varieties and Commonalities of Capitalism (MPIfG Discussion Paper n. 10/12). Teague, P., & Donaghey, J. (2009). Social Partnership and Democratic Legitimacy in Ireland. New Political Economy, 14 (1), 49–69. Thelen, K. (2014). Varieties of Liberalization and the New Politics of Social Solidarity. New York: Cambridge University Press. Trigilia, C. (2016). Tipi di democrazia e modelli di capitalismo: un’agenda di ricerca. Stato e Mercato, 2, 183–214. Trigilia, C. (2019). Capitalismo e democrazia politica. Crescita e uguaglianza si possono conciliare? in Stato e Mercato, 2, 177–195. Visser, J. (2013). The ICTWSS Database 4.0. Amsterdam: AIAS. Wilthagen, T., & Tros, F. (2004). The Concept of ‘Flexicurity’: A New Approach to Regulating Employment and Labour Markets. Transfer, 10 (2), 166–187. Zaidi, A. (2009). Welfare-to-Work Programmes in the UK and Lessons for Other Countries (Policy Brief ). European Centre for Social Welfare Policy and Research.

3 Active Inclusion: A New Policy Paradigm in the Wake of the 2008 Economic Crisis

3.1

Active Inclusion: Its Origin and Diffusion

The success of the idea of active inclusion goes back to the beginning of the twenty-first century, when international organisations like the OECD and the EU, leading academics and political elites moved to support an active welfare state, after decades of recommendations for the retrenchment of the state, deregulation, and a reduction in the weight of social policy (Bonoli 2013; Pierson 1995). The reorientation of social policy was primarily meant as a response to the changing nature of social problems and to the emergence of new social risks (Anderson 2015; Armingeon and Bonoli 2006; Taylor-Gooby 2004). The new wave of the welfare state (Hemerijck 2013) was conceived as a transition from the passive logic of inclusion through compensation to active and preventive models, in which inclusion is realised through training and participation in work. The objective of social policy shifted from the protection of income and indemnification—in the case of unemployment, sickness, the elderly and invalidity—to re-insertion in society through labour market participation and the protection of new social groups, such as women and younger people (Ferrera and Rhodes © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_3

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2000; Pierson 2001). Thus, social policy increasingly embraced labour market policies, enhancing the various social functions of paid work and participation in the labour force (Barbier and Ludwig-Mayerhofer 2004). This active dimension of welfare and social policy is not something new. Its precursor can be found in the 1950s in the Northern social democratic model (Esping-Andersen 1990; Huber and Stephens 2001). However, it is in more recent decades that this idea has gained ground beyond the Scandinavian countries and, although profound differences persist between European capitalisms, a common direction of social policy change towards the active approach and pro-employment welfare has been generally acknowledged (Bonoli and Natali 2012; van Berkel and Hornemann Moller 2002). How did this happen? The active approach has been widely promoted and supported by the EU through various policy initiatives since the late nineties, in particular the European Employment Strategy (EES) and the Open Method of Coordination (OMC) (Zeitlin 2008). In international public debates, the European Commission and policy and intellectual elites endorsed the active approach as the solution to post-industrial labour market “maladies”: first, the mismatch between a high supply of, and low demand for, low-skilled labour; second, the low wages paid to unskilled workers, which discouraged participation in work, especially in contexts with generous welfare provisions. A set of socially constructed ideas is always the basis of any economic or political paradigm, analysis and recommendation (Hall 1989; Clift 2014). Indeed, in the 1993 Jacques Delors White Paper on “Growth, Competitiveness, Employment”, the European Commission already attributed the persistent increase in unemployment in Europe from the early 1970s to the absence of active labour market policies (European Commission 1993). This assumption was built on a novel normative conception which framed social policy as an instrument to promote participation and actively mobilise citizens by endowing them with capabilities. It is in this period that “the valorization of human capital” and the promotion of “individual responsibility and social participation” (European Commission 1993, p. 143) started to become part of a consistent and coherent cognitive framework—a framework that led to support

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for supply-side measures and an increase in deregulation, given that flexible and open labour markets were considered better equipped to seize opportunities presented by globalisation (OECD 1994). In 1997, the objective of developing a common strategy for employment and for “promoting a skilled, trained and adaptable work-force” (art. 125 EC, art. 145 TFEU) was introduced in the Amsterdam Treaty and the EES was launched with the aim of encouraging member states to increase the take up of paid employment and activate groups with “weak attachments” to the labour market. As Karen Anderson (2015) highlights, after protracted efforts in political bargaining and thanks to a favourable shift in the political majority of some member states, such as France and the UK, in the mid-1990s the European Commission was able to gain a more comprehensive role in employment policy and created a critical mass in favour of an EES. This process resulted in the insertion of the Employment Title into the 1997 Amsterdam Treaty and in the creation of an Employment Committee (EMCO) to monitor national employment conditions and policies. Member states were bound to the EU employment policy through the OMC and were expected to meet a set of common targets. Quantitative indicators for benchmarking and monitoring national policy outcomes became strategic technical tools for making sense of social and economic problems, influencing public debate and driving policymaking (Salais 2006; Campbell and Pedersen 2014). The EES, which became a core element of the 2000 Lisbon Strategy, was subsequently revamped through a decentralised approach aimed at involving regional and local levels, as well as social partners and civil society (European Council 2000; Lòpez-Santana 2009). It was also intended to broaden the conciliation of labour market flexibility with social security for vulnerable employees. The flexicurity formula quickly became influential and, thanks to the openness and ambiguity in its definition, it was endorsed by economic and political actors from different political factions throughout Europe (Burroni and Keune 2011).1

1The idea of flexicurity was inspired by the Danish golden triangle, where this formula was sustainable thanks to the interplay between low dismissal protection, extensive unemployment benefits and active labour market policies (Madsen 2006).

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The active inclusion idea was also introduced in the 2006 streamlined social OMC process: a consultation on active inclusion was initiated to frame policy discussion more directly within the activation paradigm, which displaced the focus of the earlier phase of policy coordination on combating social exclusion (Armstrong 2010; Daly 2008). An extensive literature and a number of diverging opinions exist with regard to the effects of the EES on national reforms, the endurance of subsidiarity in this policy field and the efficacy of non-binding soft policy tools such as the OMC (Büchs 2007; Ferrera et al. 2002; Rhodes 2005; Visser 2009; Zeitlin 2008). Although it is difficult to assess the impact of the EES on national reforms, by the end of the 1990s the European Commission was certainly a key agent of social policy change, putting concrete goals and a common language on the political agenda (Anderson 2015; Hemerijck 2013; Zeitlin et al. 2005). In some cases, these converged with domestic objectives and the preferences of institutional and social actors (Graziano 2011). Thus, the active approach started to gain ground, especially in certain Continental and Anglo-Saxon countries, where social spending was reoriented towards more capacitating provisions (Bonoli 2013; van Berkel and Hornemann Moller 2002; Hemerijck 2013). The supranational push towards active policy was combined with what Giuliano Bonoli (2013), using Weaver’s words (1986), called “affordable credit”, claiming that this concept prospered in an improved economic situation—between the late 1990s and the mid-2000s—and with the return of Social Democrat government in many countries. Here, its logic was compatible with the national need to improve job opportunities, but in a context of cost containment. In this phase, activation was also supported by politically influential scholars and mainstream Third Way rhetoric on equality of opportunity and the interpretation of work as both an entitlement and a responsibility. Countries such as the UK, Ireland, Germany and the Netherlands started to invest in new labour market programs. France and Spain followed more slowly, while other Southern European countries, especially Italy and Greece, did not embrace the turn towards activation at this particular time and instead pushed ahead with deregulation (Bonoli 2013; Burroni et al. 2019).

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With the onset of the financial crisis, the European Commission tried to react to the economic downturn by relaunching the idea in 2008, with a new Recommendation on the Active Inclusion of people excluded from the labour market (Commission Recommendation 2008/867/EC). This recommendation coincided with rapidly deteriorating economic and social conditions caused by the crisis Europe was facing and aimed to help provide those who were able to work with “sustainable, quality employment, and to provide those unable to work with enough resources to live in dignity” (Commission staff working document on the implementation of the 2008 Commission Recommendation, 2017, p. 1). It stressed the importance of a comprehensive approach based on a combination of three policy strands: adequate income support, inclusive labour markets and access to quality services. These strands were seen as a precondition for the economic and social integration of people furthest from the labour market. The recommendation was endorsed by the Council of the European Union (Council conclusions of 17 December 2008) and the European Parliament (EP) (European Parliament Resolution of 6 May 2009 2008/2335(INI)).2 The EP resolution welcomed the recommendation and called for an agreed-upon EU target for minimum income schemes and universal access to affordable and high-quality social services—something that was considered an essential element of the European Social Model. This time, active inclusion implementation made progress even in Southern countries, although often in a fragmented and uneven way (Mori et al. 2016). Soft governance, in times of crisis, became much more effective when supported by tangible financial incentives. Indeed, European structural funds—in particular the European Social Fund

2 Active

inclusion recommendation builds on the 1992 Council Recommendation that recognized the basic right of a person to sufficient resources and social assistance “to live in a manner compatible with human dignity” and provided practical guidelines on how to implement this right. The general principles for recognizing this right included active availability for work or vocational training for people whose age, health and family situation so allows, and economic and social integration measures for others (OJ L 245 of 26 August 1992, p. 46).

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(ESF)—were conditional on the local implementation of the EES (Lòpez-Santana 2009).3 Between 2007 and 2013 the broad range of ESF co-financed activities covered many areas of active inclusion, except for income support, which was not eligible. Member State programmes focused primarily on supporting activation services for those with least access to the labour market, such as young people, single parents, migrants, older people and people with disabilities. In total, 16.5 billion euros in EU and national funding—or 14% of total ESF investment—was allocated to social inclusion. Given the persistent social challenges, for the following programming period, from 2014 to 2020, economic resources were increased further and all member states were asked to allocate at least 20% of the ESF to social inclusion. Ex-ante conditionality meant that funding was conditional on putting in place national active inclusion strategies, shaped in accordance with the poverty and social exclusion target of the country concerned and involving stakeholders and providing evidence base in order to assess progress. By the end of 2016, all member states concerned had fulfilled the ex-ante conditionality on active inclusion (European Commission 2017). Thus, since 2008, the active inclusion idea has entered national and local reform agendas, especially in those countries subjected to fiscal consolidation or austerity programmes, which developed a wide array of activation policy programmes, changes in employment services and income support reforms. The ESF, which had already spurred policy change towards activation before 2008 (Verschraegen et al. 2011), became a lifeline for member states in the European periphery, in a context of reduced resources, severe austerity measures, increased unemployment and economic emergency. 3 While

in its initial phase the ESF was mainly dedicated to vocational training, to increase workers’ geographical and occupational mobility, and to address regional labour market imbalances, its aim was successively expanded, and the Commission was empowered to issue guidelines and steer priorities. The Commission increasingly focused on the effects of structural changes on labour markets in the EU and advocated active labour market policies. Further reforms of the ESF redirected it to the following priorities: fighting youth unemployment and boosting worker adaptability with new skills; improving access to employment by training lessskilled job seekers to improve their job prospects; helping people from disadvantaged groups to get jobs. For the period 2014–2020, more than 80 billion euros were allocated to the ESF (Commission 2014).

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The idea of active inclusion was successively integrated into Europe 2020 and was further developed in the framework of the 2013 Social Investment Package (SIP) (COM/2013/83 final). Thanks to the social investment debate on social policy as a productive factor (Hemerijck 2013, 2017) and to the literature on successful cases from the North, where recovery from the crisis took place much earlier and where the unemployment rate remained stable and considerably below the EU average, this long-standing idea has continued to have an important influence on national and local policymaking. The social investment perspective provides a new economic rationale for social policy provision, stressing its productive potential (Morel et al. 2012). By arguing that, to succeed in the knowledge economy, a high-skilled and educated workforce is essential, it retains the focus on active inclusion, and combines it with the importance of the life cycle and the necessity of investing in the future instead of in equality outcomes in the present. Given that, after 2008, the number of people at risk of poverty and social exclusion increased in 18 member states out of 28, in his 2012 State of the Union address President José Barroso warned of the “real social emergency” in Europe, with rising poverty and massive levels of unemployment. The response was the Commission’s SIP, which guides EU countries in using their social budgets “more efficiently and effectively” and seeks to “strengthen people’s current and future capacities”. The SIP reinforced the link between social assistance and activation measures by emphasising “prevention rather than cure” and requiring the reduction of the need for benefits (European Commission 2013). In its 2013 resolution on Social Investment, the EP called on member states to endorse the active inclusion principles as a priority, pointing out that active inclusion policies should be consistent with a lifelearning approach and be tailor-made, needs-oriented and participative (European Parliament resolution 2013/2607(RSP)). Subsequently, in June 2016, the Council adopted a set of conclusions on an integrated approach to fighting poverty and social exclusion which again relaunched the idea that innovative active inclusion approaches, while ensuring equal opportunities for both women and men, were necessary in order to oppose poverty and social exclusion effectively. It called on member states to recognise the value of an integrated

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approach and to step up efforts to prevent and combat poverty and social exclusion.4 The new policies that have, over the last few years, been introduced throughout Europe in the framework of the SIP under the label of active inclusion (even though with diverging meanings, as we will see later in Chapter 5), have led to significant system redesign in many countries. Since 2008—also due to the necessity to respond to the inclusion problems triggered by the crisis—important policy initiatives have been implemented across the three active inclusion strands to modernise social protection systems, make labour markets more inclusive and broaden access to essential social services. Studies show that, despite the fact that member states have established active inclusion measures, relevant national or local weaknesses continue to persist (Bouget et al. 2015; Mori et al. 2016). In particular, as we will see, one of the main challenges is fostering linkages between the three strands. Even in countries performing well overall, governments have often focused on policy improvements under a particular strand. In countries with high levels of unemployment, such as Spain and Italy, the priority was mainly to improve labour market inclusion and significant budget constraints have impeded the development of a broader approach: financial incentives to take up work and income benefits were thus particularly limited. Although the current economic recovery in Europe has brought with it gradual improvements, great social and employment disparities remain and rising in-work poverty suggests that not all labour markets are inclusive in qualitative terms and not all jobs provide sufficient income security.

3.2

Inclusive Labour Markets

The 2008 European Commission recommendation requests member states to design and implement an integrated strategy for the “active inclusion of people excluded from the labour market” (…) “into sustainable and quality employment”, encouraging social and labour 4 http://data.consilium.europa.eu/doc/document/ST-10434-2016-INIT/en/pdf.

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participation. By combining “(1) adequate income support, (2) inclusive labour markets and (3) access to quality services”, the strategy aims to enhance the “social and economic integration of disadvantaged people” and to combat the “multifaceted causes of poverty” (Commission Recommendation 2008/867/EC, p. 12). The objective is to tackles various challenges—e.g. marginalisation, in-work poverty, labour market segmentation, long-term unemployment and gender inequalities—in an integrated way. Indeed, the recommendation refers to the interrelationships and trade-offs between social and economic exclusion and, in order to overcome them, invokes coordination between public agencies and services involved in the delivery of active inclusion measures and policy coordination between local, regional, national and EU authorities in the light of their competences. With regard to the different actors involved, particular emphasis is given to the participation of social actors— especially social partners, trade unions and employer associations—and non-governmental organisations in the development, implementation and evaluation of active inclusion policies. Yet, while the first and third streams of active inclusion—adequate income support and quality services—are fairly clear, the second, which is a key aspect of the entire strategy, remains rather ambiguous. Indeed, the concept of inclusive labour markets—something that is widely dominant in EU rhetoric but never explicitly defined, not even in the European Commission recommendation—is especially vague and recalls the debate on work as the main means of social integration. Social inclusion, as a multidimensional concept, is generally defined in both the scientific literature and political documents as the process of creating conditions which enable the full and active participation of every member of the society in all aspects of life, including civic, social, economic and political activities. In social policy, it refers to combating poverty and marginalisation, and empowering poor and vulnerable people. Academic literature, political institutions and international organisations have predominantly discussed the relationship between employment and social inclusion: at the individual level, exclusion is associated with loss of income, poor education and employment outcomes; at the macro level, it is demonstrated by insufficiency of

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gross domestic product and human capital wealth. Over the last twenty years, a vast number of studies and policy papers have stressed the positive relationship between economic growth and social inclusion and the “inclusive labour market” concept has started to become part of the mainstream. In response to what was considered the beginning of a chronic unemployment crisis in Europe, from the mid-1990s the International Monetary Fund (IMF), the EU and the OECD encouraged more inclusive labour markets, stimulating policy measures to mobilise all people of working age who were “underutilized” groups in the economy to participate in paid work. As we have seen, building more inclusive labour markets became a key objective of the European Commission’s Europe 2020 Strategy to increase workforce participation. This perspective became prevalent and was developed in employment policies throughout Europe by means of labour market flexibility, loosened employment protection and weakened security provisions. The result was that the dominant perspective gradually moved away from the multidimensional comprehension of social inclusion, a shift in conceptual boundaries that implied a weakening of labour and social rights, reshaping the nature of work (Keune and Serrano 2014). The priority of raising the employment rate led to an underestimation of the quality of employment that the new regulation was creating and this trend was exacerbated by the 2008 economic crisis, when the political priority became even more a matter of bringing the unemployed and inactive into the labour market. However, a different perspective on labour market inclusiveness focuses on the nature, characteristics and quality of employment (see among others Clasen et al. 2016; Gallie 2007). This strand of research has identified two different types of quality. The first is job quality: this is related to variables at the workplace level and it is an important driver of productivity and economic performance. In this case, the quality of the working environment (i.e. the nature and content of the work performed, working-time arrangements and workplace relationships) is measured as a key aspect of job satisfaction, typically explored through surveys based on individual self-reported job assessment. The second is employment quality: this is related to labour market characteristics (i.e. level of atypical employment, long-term unemployment, the quota

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of low-wage workers, structural inequality between different groups of workers, etc.) that are to a large extent created and regulated by policies. By focusing on the latter, it can be observed that the relationship between employment quality and quantity is not always positive. One example of this is represented by certain countries—Mediterranean and Anglo-Saxon, for example—in which, before the 2008 crisis, employment growth was largely based on insecure and precarious forms of work. Since the 2000s, in these countries a consistent part of new employment has been based on non-standard, fixed-term work, and involuntary temporary and part-time work, especially where women and young people are concerned. Although the spread of zero-hour contacts, oncall jobs and “false self-employed” digital platform workers, involving low pay and exclusion from social benefits, is a trend which characterises all European labour markets, job insecurity has particularly grown in Southern, Anglo-Saxon and Continental countries (Thelen 2014; Crouch 2019).5 A tendency towards increasingly dualised labour markets is causing deep inequality and conflict between insiders and outsiders— workers, in other words, with different levels of employment status, social entitlement and risk structure, depending on their situation on the labour market. Insiders in permanent full-time work are, for example, protected from the risk of becoming unemployed by employment protection legislation, whereas outsiders are either unemployed or in insecure temporary contracts (Rueda 2007; Vlandas 2013). In the crisis period, the levels of participation of women and young people, as well as older workers and the low-skilled, decreased throughout European labour markets. In the recovery phase, these groups, together with migrant workers, continued to be disproportionately represented in poor quality and low-paid non-standard jobs, and there has also been an increase in the presence of poverty among working young people and in households in general (Eurofound 2017).

5 False

self-employment refers to the situation in which a person is registered as self-employed or freelancer but it is de facto an employee carrying out a work activity under the authority and subordination of another company. Such false self-employment is often a way to circumvent social welfare and employment legislation, for example by avoiding employer’s social security and income tax contributions.

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This is a picture that shows that high levels of employment do not always therefore correspond to a high level of inclusion in the labour market in qualitative terms. Indeed, this relationship is particularly influenced by the direct and indirect role of public policies and by the agency of industrial relations actors—agents who have traditionally been able to enhance employment quality.

3.3

Variety of Combinations of Employment Quantity and Quality

It is interesting to observe the relationship between employment quantity and quality through different indicators which demonstrate how this interplay varies according to where we direct our gaze. In the following descriptive analysis, employment quantity, measured through employment rate, is related to four different indicators of employment quality selected from the Eurostat database: (1) The percentage of low-wage earners; (2) The level of long-term unemployment, which shows the presence in the labour markets of groups that are characterised by a high and persistent level of exclusion; (3) The percentage of involuntary temporary employment, which represents the presence of workers who would like to have a permanent job but cannot find one; (4) Labour productivity, which qualifies labour quality through measuring its hourly output. In order to have a snapshot of the situation in the years following the 2008 crisis, the average figure for the period 2008–2015 (or 2006– 2010, according to data availability) for each of the above-mentioned indicators is calculated. This data shows that the relationship between employment quality and quantity varies according to the indicator taken into consideration. In particular, in certain cases, this relationship is a more direct one, as it obviously is between long-term unemployment and employment rates; in other cases, on the other hand, it is less clear or even absent altogether. For instance, Fig. 3.1, which relates employment to rates of low-wage earners, shows that the all four Scandinavian countries are clustered together, all of them having high levels of employment in relation to few low-wage earners. A second group of countries,

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2 1.8 Latvia Lithuania

1.6

Low wage earners 2006-2010

Romania Poland

1.4

Estonia Cyprus Hungary

1.2 EU-28 average

Slovakia

Croatia

1 0.8

United Kingdom Germany

Ireland Bulgaria Portugal Slovenia

Netherlands

Czech Republic

Malta Greece

Austria

Spain Luxembourg Italy

0.6 Denmark Belgium

0.4

Norway

France Finland

0.2 Sweden

0 0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

Employment rate 2008-2015

Fig. 3.1 Employment rate and low-wage earners. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “low wage earners 2006–2010” is the average value for each country for the period 2006–2010 (only available data) normalized on the EU28 average (EU28=1.0)

meanwhile, combines high employment rates with high levels of lowwage earners: this group includes different models of capitalism, such as the UK, Germany and the Netherlands. A third group is characterised by a low level of low-wage earners and a low rate of employment—the Baltic and Visegrád countries in this case—while, in most Mediterranean countries, salaries reach an intermediate threshold but the employment rate is substantially below the EU average. In other words, the data shows that not all countries with high rates of employment have low levels of low-wage earners. Labour productivity, adopted as the employment quality indicator in Fig. 3.2, also highlights that the relationship between employment quantity and quality can be a negative one. While high labour productivity

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2 1.8

Luxembourg

Labor productivity 2008-2015

1.6 1.4

Norway

Belgium Ireland

Netherlands Denmark Germany

France

1.2 EU28

Italy

1

Austria Finland United Kingdom Spain

0.8

Slovenia Portugal Hungary Croatia

Cyprus

Slovakia

Malta

Greece

0.6

Sweden

Lithuania

Czech Republic Estonia

Poland Latvia Romania Bulgaria

0.4 0.2 0 0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

Employment rate

Fig. 3.2 Employment rate and labour productivity. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “labour productivity” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0)

and high employment rates can be found in all Scandinavian countries, in some Continental countries (Germany and Austria, for example) and in the UK, others instead—the Czech Republic, Portugal, Slovenia, Estonia, Lithuania and Latvia—have high employment rates and low productivity. Another group features both a low level of productivity and employment, and this consists of Greece, Slovakia, Hungary, Croatia, Poland, Romania and Bulgaria, together with Italy and Spain, which are slightly above the EU average. Finally, Ireland and Belgium show a low rate of employment but high labour productivity. As already said, a stronger relation between employment quantity and quality emerges if we use the long-term unemployment rate as indicator of the (lack of ) employment quality, given that it represents a form of persistent exclusion from the labour markets. This is

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confirmed by Fig. 3.3. In this case, all Scandinavian and many Continental countries, as well as the Czech Republic, Slovenia and the UK, combine high employment rates and low long-term unemployment. In the Mediterranean countries, in contrast, we find high levels of longterm unemployment and low levels of employment rates. This is the case for Spain, Portugal, Italy and Greece, but also for some East European countries, such as Hungary, Bulgaria, Croatia and Slovakia, and, finally, Ireland, too, where the impact of the crisis was particularly felt. Very few countries—Belgium, Poland, Romania and Malta—have both long-term unemployment and employment rates below the EU average. Finally, there is also a direct correlation between involuntary temporary employment and employment rate. Most of the European countries taken into account in Fig. 3.4 are located in two of the four quad3 Greece

Long-term unemployment 2008-2015

2.5

Spain Slovakia

Croatia

2

Portugal

1.5

Ireland Latvia Bulgaria

Italy

1

Lithuania Hungary

EU-28

Estonia Belgium Poland

Malta

Romania

Slovenia France

Cyprus Germany

Czech Republic

0.5 Luxembourg

United Kingdom Netherlands Finland Denmark Austria

Sweden Norway

0 0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

Employment rate 2008-2015

Fig. 3.3 Employment rate and long-term unemployment. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “long-term unemployment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0)

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G. Scalise

temporary empl because could not find a permanent job 08-15

1.8

1.6 Cyprus Spain

1.4

Greece

Portugal

Romania Slovakia

Czech Republic

Belgium

1.2 Italy

Hungary

Bulgaria Poland Ireland

Latvia

Finland

Lithuania

1 France

0.8

Sweden

Slovenia

Malta Croaa

Norway

Luxembourg

Denmark

Netherlands

0.6

Estonia

0.4

Germany

0.2 Austria Iceland

0

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

1.25

employment rate 08-15

Fig. 3.4 Employment rate and involuntary temporary employment. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “temporary employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0)

rants of the graph, with high employment rates and low involuntary temporary employment distinguishing the Scandinavian countries and some of the Continental countries. The quadrant with high involuntary temporary employment and low employment rate contains Ireland, all the Mediterranean countries and some from Eastern Europe. There are fewer countries with both high and low levels of employment rate and involuntary temporary employment. In Fig. 3.5, a synthetic index of employment quality composed of the four indicators listed above—low-wage earners, long-term unemployment, involuntary temporary employment and labour productivity—is correlated with employment rate. What we observe is a somewhat positive relationship between employment quantity and quality. In particular, three combinations emerge: high levels of both employment quantity and quality in Northern Europe, some Continental countries (The

3 Active Inclusion: A New Policy Paradigm …

83

4.000

3.500

2.500

2.000

1.500

Quality of employment 2008-2015

3.000

Norway Sweden

Austria

Finland

Denmark

Luxembourg Germany Netherlands

France Belgium

United Kingdom Malta

Italy

1.000

Spain

Poland

Croatia Greece

Hungary

Ireland

Romania Bulgaria Slovakia

Slovenia Portugal Lithuania

Czech Republic CyprusEstonia

Latvia

0.500

Employment rate 2008-2015 0.000 0.800

0.850

0.900

0.950

1.000

1.050

1.100

1.150

1.200

Fig. 3.5 Employment quantity and quality. Source Processed data from Eurostat Database. Note “employment rate 2008–2015” is the average value for each country for the period 2008–2015 normalized on the EU28 average (EU28=1.0); “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. All data has been normalized on the EU28 average (EU-28=1)

Netherlands, France, Germany and Austria) and the UK. This last country, however, is slightly above the EU average in terms of quality (it is important to note that the European average is lowered by the presence of the East European countries, and that, if the EU-15 were considered, the UK would be below the European average). Low levels of both employment quantity and quality typify the Mediterranean countries (Italy and Malta are on the EU average), together with Ireland, Romania, Poland, Bulgaria, Hungary and Slovakia. Slovenia, Estonia and Cyprus feature high levels of employment but low quality. Belgium seems to be the only country where employment quality is above, while the employment rate is just below, the EU average.

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G. Scalise

This analysis, although descriptive in nature, and focused on a period when the crisis was severly affecting European labour markets, shows us that the relationship between employment quality and quantity is tendentially positive. However, a high employment rate does not always correspond with a high level of employment quality, as is shown by the correlation of data relating to employment rate and labour productivity, involuntary temporary employment and low-wage worker rates.

3.4

Social Partners and Inclusive Labour Markets

As the European Commission’s (2008) recommendation points out, social partner engagement at all territorial levels is a key element for the inclusiveness of labour markets. Active inclusion involves crucial issues for industrial relations actors, and trade unions and employer organisations can, at various territorial levels, play a vital role in its development. Their competences concerning areas such as vocational training and lifelong learning and their institutionalised practices, such as collective bargaining and social dialogue, can be of great support for the design and delivery of active inclusion measures. The importance of their role is demonstrated by the fact that European social partners have been consulted by the European Commission since 2006 with regard to the launch of the active inclusion strategy and in 2010 European social partners negotiated an Autonomous framework agreement on Inclusive labour markets. This agreement committed the members of the Confederation of European Business (BUSINESSEUROPE)—the European Association of Craft, Small and Medium-Sized Enterprises (UEAPME), the European Centre of Employers and Enterprises Providing Public Services (CEEP) and the European Trade Union Confederation (ETUC)—to its promotion and recommended that public authorities and other bodies involved in the governance of the labour market collaborate with social partners at the appropriate level in order to implement it. The aim was to provide workers, employers and their representatives with an action-oriented framework to identify obstacles to inclusive labour markets and solutions to overcome them. The social partners at

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territorial level were keen to be involved in particular in the policy design of measures for specific groups that encounter difficulties in the labour market, and in the development of training schemes to improve job-skill matching and increase the effectiveness of career advice services. They also pledged to support the full and effective use of EU funding and to facilitate conditions so that benefit systems would help people enter, remain and develop in the labour market. The commitment of European social partners to active inclusion was also relaunched in their Work Programme 2012–2014. However, the promotion of the framework agreement and work programme was extremely weak in some countries (Mori et al. 2016). This problematic implementation was due to the weakening of national and local social partners and to the restricted room for manoeuvre of social dialogue relating to the austerity measures. EU social partners, however, were also unable to achieve their objectives of cooperation between one another, of influencing European and national policymakers, and of collaboration with social partners at national and regional levels (Keune and Payton 2016). Although industrial relations literature speaks of a strong tendency towards an “institutional conversion” which has weakened the role of the social partner (Baccaro and Howell 2017), unions and employer associations still retain their function for labour market regulation which, especially in comparative terms, can still be relevant. Indeed, employment quality is particularly affected by collective bargaining coverage, which insures the broad extension of contractual rights, and by the inclusion of social partners in the policymaking process, which may have an impact on reforms in terms of pro-labour logic (Crouch 1994, 2015). In the following analysis, the synthetic index of employment quality is related to three indicators of industrial relations strength: (1) Level of union membership; (2) Collective bargaining coverage; (3) The inclusion of social partners in policymaking (data refers to 2011, source Crouch 2015). Figure 3.6 shows that the relationship between union membership and employment quality is not particularly strong. High levels of membership can be found in countries where employment quality is high—in Scandinavia, for example—but also where quality is tendentially low,

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4.000

3.500

3.000

2.500

2.000

Employment quality index

Norway

Sweden

Austria

Finland Denmark Luxembourg

1.500

Germany Netherlands

France

Belgium United Kingdom

Czech Republic

1.000 Croatia

Estonia Poland Lithuania

0.500

0.000 0.000

Latvia

Slovakia

0.500

Hungary

Malta

Italy Ireland Romania

Slovenia Spain

Bulgaria Greece

Cyprus

Portugal

1.000

1.500

2.000

2.500

Union membership

Fig. 3.6 Union membership and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four abovementioned averages. “Union Membership” data from Crouch 2015 refers to 2011. All data has been normalized on the EU28 average (EU-28=1)

as in Italy or Ireland. Most countries with a low membership rate, in contrast, also have low employment rates: this is the case for the rest of the Mediterranean countries and East European countries. Finally, many countries belonging to the Continental model, such as Germany, the Netherlands and France, combine medium or low membership rates with employment quality which is above the EU average. The relationship between employment quality and collective bargaining coverage, however, is a more evident one (Fig. 3.7): in most of the countries where the level of coverage is low, employment quality is also below the EU average (Luxembourg being the only exception,

3 Active Inclusion: A New Policy Paradigm …

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4.000

3.500 Norway

Sweden

Quality of Employment index

3.000

Austria

2.500

2.000 Denmark

Finland

Luxembourg Germany

1.500

Netherlands

France Belgium

United Kingdom Malta

Estonia

1.000

Poland

Hungary

Romania

Lithuania Bulgaria

Cyprus

Spain Croaa Greece

Slovenia Portugal

Slovakia Latvia

0.500

0.000 0.000

Italy

Czech Republic Ireland

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

Collecve bargaining coverage

Fig. 3.7 Collective bargaining coverage and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Collective bargaining coverage” data from Crouch 2015 refer to 2011. All data has been normalized on the EU28 average (EU-28=1)

while the UK is just slightly above the EU average). If, on the other hand, we look at countries where collective bargaining coverage is above the EU average, it can be observed that for many of them employment quality is also high: Scandinavian and Continental countries have high rates in both fields. Mediterranean countries and Slovenia, Malta and Croatia, however, combine high coverage and tendentially low quality. This result suggests that collective bargaining coverage, while important, neither determines nor ensures employment quality; low coverage, on the other hand, is strongly linked to a low level of employment quality. Figure 3.8 demonstrates the relationship between employment quality and social partner inclusion in policymaking. In this case, too, most

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G. Scalise

4.000

3.500

3.000

2.500

2.000

Quality of employment

Norway Sweden

Austria

Finland

Denmark Luxembourg

1.500

Germany

France

Netherlands Belgium

United Kingdom

1.000

Romania

Lithuania

0.500

Latvia

Greece Bulgaria

Italy Czech Republic Estonia Ireland Spain Poland Slovakia Hungary

Malta Slovenia Cyprus

Croatia

Portugal

Inclusion of assocations in processes of policy making 0.000 0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

Fig. 3.8 Inclusion of social partner in policy-making and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “quality of employment index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers, and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Social partner inclusion in policy making” data from Crouch 2015 refer to 2011. All data has been normalized on the EU28 average (EU-28=1)

European countries are located in two quadrants of the graph: high levels of inclusion of social partners in policymaking are related to high employment quality for the Scandinavian and Continental countries. Finland and France are the exceptions here, characterised as they are by low levels of inclusion and high quality: in this case, the state has implemented polices independently from the associations that have guaranteed quality standards (Crouch 1994, 2015). A few of the smaller countries— Slovenia, Croatia, Malta and Cyprus—have high levels of inclusion of social partners in policymaking and low-quality employment. Most of the countries where inclusion is low also show low employment quality.

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This is the case for the UK, Ireland, the Mediterranean and many East European countries. Finally, Fig. 3.9 confirms the important relationship between the strength of the industrial relations system—measured with the synthetic index that brings together membership, collective bargaining coverage and inclusion in policymaking—and employment quality. European countries are again divided into three main groups: Scandinavia and some Continental countries combine high-quality employment with strong industrial relations—with the exception of Germany and France, 4.000

3.500

Employment quality index

Norway

3.000

Sweden

Austria

2.500

2.000

Finland Denmark Luxembourg Germany France

1.500

Netherlands Belgium

United Kingdom

1.000

Estonia Poland Lithuania Latvia

0.500

0.000 0.000

0.200

0.400

Bulgaria

0.600

Italy Czech Republic Slovenia Romania Ireland Spain Croaa Portugal Hungary Greece Slovakia

0.800

1.000

1.200

Malta Cyprus

1.400

1.600

1.800

Strength of industrial relaons index

Fig. 3.9 Strength of industrial relations and employment quality. Source Processed data from Eurostat and Crouch 2015. Note “employment quality index”: for each country, the average value has been calculated for the period 2008–2015 of labour productivity, long term unemployment, involuntary temporary workers and the average value of the period 2006–2010 for low wage earners (due to data availability); the synthetic index is the average of the four above-mentioned averages. “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data refers to 2011 (Crouch 2015). All data has been normalized on the EU28 average (EU-28=1)

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G. Scalise

where industrial relations strength is slightly below the EU average. In the Anglo-Saxon, Baltic, Visegrad and some Mediterranean countries, medium–low employment quality is associated with weak industrial relations. Italy, Portugal, Slovenia, Malta and Cyprus, on the other hand, offer a different perspective, where there is no correspondence between the stronger role of social partners and high employment quality. Thus, it is possible to say that—with the two notable exceptions of France and Germany—when there exists a situation of “weak” industrial relations, employment quality tends to be low. When, meanwhile, industrial relations are strong (high membership, high coverage, high levels of inclusion) employment quality tends—in this case, with the exception of Italy, Slovenia, Malta and Cyprus—to be high. Figure 3.9 confirms the relevant connections between industrial relations strength and the level of employment quality. To sum up, the two synthetic indexes of industrial relations strength and employment quality demonstrate a positive association. There exists, on the one hand, a direct relationship, such as that of collective bargaining coverage, which increases employment quality through ensuring a broader extension of labour rights; and, on the other hand, an indirect association, such as that of the effect of industrial relations on employment quality, through the latter’s influence on politics and policies.

3.5

Industrial Relations, Public Policies and Employment Quality

The indirect relationship between employment quality and the strength of industrial relations depends on the involvement of industrial relations actors in policymaking and their ability to influence public policies. Here below, in Fig. 3.10, the quality of labour market policies (LMPs) is calculated in a synthetic index that gathers together data on investment in active labour market policies and pro-capita spending on each individual unemployed person (2014). The graph highlights that, in countries where social partners are stronger, and where we find high levels of inclusion of industrial relation actors in policymaking, the quality of LMPs,

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3 Denmark

2.5

Quality of LMPs index 2014

Luxembourg

Belgium

Ireland

2

Sweden

Norway Netherlands

1.5

Austria

Finland

France Germany

1 Spain United Kingdom Italy Portugal

Hungary

0.5

Poland Czech Republic Greece Estonia Slovakia Croatia Latvia Romania Bulgaria

Slovenia

Cyprus Malta

Lithuania

0 0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

Strength of Industrial Relations index

Fig. 3.10 Strength of industrial relations and quality of LMPs. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Strength of industrial relations index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data refers to 2011 (Crouch 2015). “Quality of LMPs index” is the average of investment in active labour market policies and pro-capita spending on each individual unemployed person (2014). All data has been normalized on the EU28 average (EU-28=1)

and employment quality as well, is higher than the EU average. Indeed, confirmation is provided with similar results to previous figures in terms of the position of various countries: Scandinavia and many Continental countries show a high level of quality of LMPs and a stronger position with regard to social partners. Baltic, Visegrad and some Mediterranean countries, meanwhile, with low levels of quality of LMPs and weak industrial relations, are in the opposite camp. Italy, Slovenia, Malta and Cyprus, are, together with France, Ireland and Germany, countries where the strength of social partners has no great influence on the quality of LMPs. France, Ireland and Germany also demonstrate that a high quality of LMPs has no link with strong industrial relations.

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G. Scalise

The positive relation between industrial relations strength and quality of public policies is also confirmed by the analysis presented in the three following Figs. (3.11, 3.12, and 3.13). In these cases, the synthetic index which represents industrial relations strength has been related to three more strategic policies directly linked to employment quality: (1) gross domestic expenditure on R&D (GERD), (2) investment in social policies and (3) spending on education. The data refers to the average value for the period 2000–2014 of the state’s spending in these policy arenas as a percentage of the GDP. Figure 3.11 supports the hypothesis that there is a relation between social partner inclusion in policymaking and higher levels of state investment in research and development—something that is a typical feature of 1.00 0.90 Austria

0.80

Finland

France

Sweden

Denmark

Germany

0.70

Norway

GERD 2000-2014

Netherlands

0.60 Slovenia

Czech Republic

Estonia

0.50

Portugal

United Kingdom

Spain

Italy Belgium

Hungary

0.40

Lithuania

Croatia Ireland

Poland

Luxembourg

Greece

0.30 Bulgaria

Slovakia Cyprus

Romania

0.20

Latvia

Malta

0.10 0.00 0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

Strength of industrial relations

Fig. 3.11 Strength of industrial relations and GERD. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). GERD is the gross domestic expenditure on research and development (R&D) as a percentage of GDP. Data refers to the average value for the period 2000–2014

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Investment in social policies as % of GDP (2000-2014)

35.00

France Denmark

30.00 Germany

Sweden

Austria Belgium

Netherlands United Kingdom

Finland

Italy Greece

25.00

Norway

Portugal Slovenia Spain

Luxembourg

Hungary Croatia Poland

20.00

Czech Republic

Ireland

Slovakia

Malta Cyprus

Lithuania

15.00

Estonia

10.00 0.000

0.200

0.400

Bulgaria Latvia

0.600

Romania

0.800

1.000

1.200

1.400

1.600

1.800

Strength of industrial relations

Fig. 3.12 Strength of industrial relations and investment in social policy. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). Investment in social policy is the gross domestic expenditure as a percentage of GDP and refers to the average value for the period 2000–2014

the Scandinavian model. Social partners in a weak position, meanwhile, correspond to a lower level of investment in this field in Baltic, Visegrád and Anglo-Saxon countries. Mediterranean countries also show results below the EU average in this particular policy area. In the Continental model, Austria and the Netherlands confirm the relationship between industrial relations strength and the quality of national investment in R&D, while Belgium is characterised by stronger social partners but lower levels of GERD. France and Germany, in contrast, have reasonably high levels of GERD in a context of the medium-low influence of social partners in policymaking. Social partners can have a direct impact on social policies addressed to combat social exclusion, poverty and unemployment when they are

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G. Scalise

9.00

Expenses on education as % of GDP (2000-2014)

Denmark

8.00

Cyprus

7.00

Sweden Norway Finland Belgium

6.00 France Slovenia Netherlands

Latvia Portugal

United Kingdom

Lithuania

Malta Austria

Ireland

5.00

Hungary

Estonia Poland

Czech Republic

4.00

Bulgaria

Germany Spain

Italy

Croatia Slovakia Greece Romania

Luxembourg

3.00

2.00 0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

Strength of industrial relations

Fig. 3.13 Strength of industrial relations and spending on education. Source Processed data from Eurostat (2014) and Crouch (2015). Note “Industrial relations strength index” is the average of the following three indicators: union membership, collective bargaining coverage and social partner inclusion in policy making. Data has been normalized on the EU28 average (EU-28=1) and refers to 2011 (Crouch 2015). Spending on education is the gross domestic expenditure as a percentage of GDP and refers to the average value for the period 2000–2014

included in policymaking. They can also have an indirect influence when they mobilise in order to prevent the reduction of rights and social protection programmes, guaranteeing the standard of living for workers. As Fig. 3.12 highlights, the same trend among European countries is also evident in this case. Finally, another important policy field which plays a role in employment quality is spending on education, which has an impact on labour force skills and productivity. Social partners contribute to national policymaking on education and training, an area that in the last decade has increasingly been recognised as strategic in terms of economic growth. It has also, however, been particularly affected by austerity measures. Investment in this policy field depends on state priorities and resources,

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but social partners can be directly involved in the identification of national educational and training programmes. Significant variation is also confirmed across countries in this case. In Fig. 3.13, the group of countries where social partners have a legitimate place in the nation’s affairs also tends to have higher investment in education. This analysis, referring to the period before and during the crisis, has highlighted different models of inclusive labour markets in European countries. The variety is obviously related to many factors: the most important causes include the diverse institutional configuration of economic regulation, national welfare systems, labour market structures, and domestic industrial relations systems. All these aspects affect the contrasting output in terms of employment growth and social inclusion throughout Europe. The different models that result, however, demonstrate that a high level of employment (quantitative inclusion) does not always mean a high level of inclusion in the labour market in qualitative terms—even though there does emerge a somewhat positive correlation. Mediterranean countries, for instance, are characterised by both low employment quality and quantity. Belgium’s level of employment is below the EU average while France’s is just above: in these cases, it coexists with medium-high employment quality. Scandinavian and many Continental countries are able to combine high levels of employment quality and quantity and, finally, the Anglo-Saxon model is characterised by high employment quantity and low quality. The strength of social partners and the involvement of industrial relations actors in policymaking positively affect labour market inclusion processes, especially in their qualitative dimensions. The same is true for collective bargaining coverage, which fosters “high road” inclusion based on high employment quality (Burroni and Scalise 2017). As shown, two possible industrial relations influence mechanisms have an impact on employment quality. The first influence is direct: collective bargaining coverage affects employment quality through protecting rights and measures related to the improvement of working conditions. Naturally, this is not an automatic relationship: cases exist of sectors in which unions are particularly weak and industry-wide agreements do not guarantee a high level of employment quality. The second

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G. Scalise

mechanism is indirect: the strengths and involvement of social partners in policymaking practices favour the institution of policies directed towards following the high road of development, based on investment in innovation, social policies, labour market policies and education. The level of expenditure in these policy fields and the quality of the policies show the ability of the state, together with institutionalised social actors, to steer and determine labour market inclusiveness, and the importance for social partners to influence its action. It is also interesting to note that a strong role played by industrial relations fosters employment quality but is also favourable to a high level of employment—something demonstrated by the example of the Nordic countries, all of which are characterised by strong industrial relations and a high rate of employment. This confirms that union action, intent on protecting labour rights, does not always have a negative impact on competitiveness. For these reasons, in order to better understand processes of inclusion in the labour market, it is important to bring politics back into the picture and look at the role of social and political actors. As will be seen in Chapter 5, the agency of these actors, together with domestic institutional assets, administrative capability and the structure of industrial relations, are thus elements of extreme importance: they not only explain the variety of quantitative and qualitative inclusiveness in European labour markets, but also influence country trajectories and the possibility of change for different models.

References Anderson, K. (2015). Social Policy in the European Union. Basingstoke: Palgrave. Armingeon, K., & Bonoli, G. (Eds.). (2006). The Politics of Post-Industrial Welfare States. London: Routledge. Armstrong, K. A. (2010). Governing Social Inclusion Europeanization Through Policy Co-ordination. Oxford: Oxford University Press. Baccaro, L., & Howell, C. (2017). Trajectories of Neoliberal Transformation: European Industrial Relations Since the 1970s. Cambridge: Cambridge University Press.

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Barbier, J.-C., & Ludwig- Mayerhofer, W. (Eds.). (2004). The Many Worlds of Activation. European Societies, 6 (4), 423–436. Bonoli, G. (2013). The Origins of Active Social Policy. Oxford: Oxford University Press. Bonoli, G., & Natali, D. (2012). The Politics of New Welfare States. Oxford: Oxford University Press. Bouget, D., Frazer, H., Marlier, E., Sabato, S., & Vanhercke, B. (2015, April). Social Investment in Europe. A Study of National Policies. Luxemburg: Publication Office of the European Union. Burroni, L., & Keune, M. (2011). Flexicurity: A Conceptual Critique. European Journal of Industrial Relations, 17 (1), 75–91. Burroni, L., & Scalise, G. (2017). Quando gli attori contano. Agency, eredità storiche e istituzioni nei modelli di capitalism. Stato e Mercato, 109, 133– 172. Burroni, L., Gherardini, A., & Scalise, G. (2019). Policy Failure in the Triangle of Growth: Labour Market, Human Capital, and Innovation in Spain and Italy. South European Society and Politics, 24 (1), 29–52. Büchs, M. (2007). New Governance in European Social Policy. Basingstoke: Palgrave. Campbell, J. L., & Pedersen, O. K. (2014). The National Origins of Policy Ideas: Knowledge Regimes in the United States, France, Germany, and Denmark. Princeton: Princeton University Press. Clasen, J., Clegg, D., & Goerne, A. (2016). Comparative Social Policy Analysis and Active Labour Market Policy: Putting Quality Before Quantity. Journal of Social Policy, 45 (1), 21–38. Clift, B. (2014). Comparative Political Economy. Basingstoke: Palgrave Macmillan. Crouch, C. (1994). Industrial Relations and European State Traditions. Oxford: Oxford University Press. Crouch, C. (2015). Governing Social Risks in Post-Crisis Europe. Cheltenham: Edward Elgar. Crouch, C. (2019). Will the Gig Economy Prevail?. Cambridge: Polity Press. Daly, Ma. (2008). Whither EU Social Policy? An Account and Assessment of Developments in the Lisbon Social Inclusion Process. Journal of Social Policy, 37 (1), 1–19. Denis, B., Frager, H., Marlier, E., Sabato, S., & Vanhercke, B. (2015). Social Investment in Europe. Luxembourg: European Commission-European Social Policy Network.

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Esping-Andersen, G. (1990). The Three Worlds of Welfare Capitalism. Cambridge: Polity Press. Eurofound. (2017). In-Work Poverty in the EU . Luxembourg: Publications Office of the European Union. European Commission. (1993, December 5). Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21st Century (White Paper. COM (93) 700). European Commission. (2008). Recommendation of 3 October 2008 on the Active Inclusion of People Excluded from the Labour Market (C(2008) 5737). European Commission. (2013, February 20). Towards Social Investment for Growth and Cohesion. Including Implementing the European Social Fund 2014–2020 (COM (2013) 83). European Commission. (2014). Investing in People: EU Funding for Employment and Social Inclusion. DG Employment, Social Affairs and Inclusion. European Commission. (2017). Commission Staff Working Document on the Implementation of the 2008 Commission Recommendation on the Active Inclusion of People Excluded from the Labour Market, SWD(2017) 257 final . European Council. (2000). Lisbon European Council 23 and 24 March 2000, Presidency Conclusions. Ferrera, M., & Rhodes, M. (2000). Building a Sustainable Welfare State. West European Politics, 23(2), 259–283. Ferrera, M., Matsaganis, M., & Sacchi, S. (2002). Open Coordination Against Poverty: The New EU “Social Inclusion Process”. Journal of European Social Policy, 12(3), 227–239. Gallie, D. (2007). Production Regimes and the Quality of Employment in Europe. Annual Review of Sociology, 33, 85–104. Graziano, P. (2011). Europeanization and Domestic Employment Policy Change: Conceptual and Methodological Background. Governance, 24 (3), 583–605. Hall, P. (Ed.). (1989). The Political Power of Economic Ideas. Princeton: Princeton University Press. Hemerijck, A. (2013). Changing Welfare States. Oxford: Oxford University Press. Hemerijck, A. (Ed.). (2017). The Uses of Social Investment. Oxford: Oxford University Press. Huber, E., & Stephens, J. (2001). Development and Crisis of the Welfare State: Parties and Policies in Global Markets. Chicago: University of Chicago Press.

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Jacobsson, K., Hollertz, K., & Garsten, C. (2017). Local Worlds of Activation: The Diverse Pathways of Three Swedish Municipalities. Nordic Social Work Research, 7 (2), 86–100. Keune, M., & Payton, N. (2016). Active Inclusion and Industrial Relations from a Multi-level Governance Perspective (WP A Report, Airmulp Project). Keune, M., & Serrano, A. (2014). Deconstructing Flexicurity and Developing Alternative Approaches: Towards New Concepts and Approaches for Employment and Social Policy. London: Routledge. Lòpez-Santana, M. (2009). Having a Say and Acting: Assessing the Effectiveness of the European Employment Strategy as an Intra-Governmental Coordinative Instrument. In S. Kroger (Ed.), What We Have Learnt? Advances, Pitfalls and Remaining Questions on OMC Research (European integration online papers, special issue 1, 13, 15). Madsen, P. K. (2006). How Can It Possibly Fly? The Paradox of a Dy-namic Labour Market. In J. L. Campbell, J. A. Hall & O. K. Pedersen (Ed.), National identities and the Varieties of Capitalism: The Danish Experience (pp. 321–355). Mont-real and Kingston: Mc Gill-Queen’s University Press. Morel, N., Palier, B., & Palme, J. (2012). Towards a Social Investment Welfare State? Ideas, Polices and Challenges. Bristol: Polity Press. Mori, A., Galetto, M., Guglielmo, M., Martín Artiles, A., Molina O., & Godino, A. (2016). Active Inclusion and Industrial Relations from a Multilevel Governance Perspective. WP B Comparative Country Report on France, Italy, Poland, Spain, Sweden and the UK, Airmulp Project. OECD. (1994). The OECD Jobs Study, Evidence and Explorations, Part II . Paris. Pierson, P. (1995). Dismantling the Welfare State? Regan, Thatcher and the Politics of Retrenchment. Cambridge: Cambridge University Press. Pierson, P. (2001). The New Politics of the Welfare State. Oxford: Oxford University Press. Rhodes, M. (2005). Employment Policy: Between Efficacy and Experimentation in New Modes of Governance. In Hellen Wallace & William Wallace (Eds.), Policy Making in the European Union (pp. 279–304). Oxford: Oxford University Press. Rueda, D. (2007). Social Democracy Inside Out. Partisanship and Labour Market Policy in Industrialised Democracies. Oxford: Oxford University Press. Salais, R. (2006). Reforming the European Social Model and the Politics of Indicators: From the Unemployment Rate to the Employment Rate in the European Employment Strategy. In A. Serrano Pascual & M. Jepsen (Eds.), Unwrapping the European Social Model (pp. 189–212). Bristol: The Policy Press.

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4.1

A Closer Comparison: Three-Country Analysis

Before looking in detail, in the next chapter, at what happens to the idea of active inclusion when it reaches the local context in Spain, France and Sweden, it is useful to adopt a slightly more long-term perspective and focus on the developments in terms of labour market and welfare regulation in these three countries. Building on what has been said in previous chapters with regard to different models of capitalism, the objective of this chapter is to go more deeply into three of these models by focusing on national regulation in Spain, France and Sweden. This will make it possible to create a framework in which to place the local case studies developed in the following chapters. These countries, of course, do not correspond to the ideal type of the capitalism they belong to, nor do they represent all the countries within their own model. The focus on three national cases is especially worthwhile in terms of understanding the national socio-economic context and background in which the processes of local interpretation of the active inclusion policy paradigm take place. © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_4

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As we will see, active inclusion developed in each country in a specific fashion, reflecting the particular features of the social model and employment relations regime in which it is embedded (Mori et al. 2016; Scalise 2019). In Spain it has advanced in a framework of labour market flexibilisation and deregulation of employment protection, while in France and Sweden—although in different ways—it encountered welfare systems characterised by a long-standing tradition of social inclusion policies. In the following sections, we look in more detail at their features and at what has happened in the three contexts over the last two decades.

4.2

The Mediterranean Model: Spain

As is well known, in the strand of the variety of capitalisms, building on Hall and Soskice’s theory (2001), two models had initially been identified—liberal market economies and coordinated market economies— which included most European countries. However, most Southern European societies, and in particular Portugal, Spain, Italy and Greece, were inconsistent with respect to this typology—so much so that they were not really suited to either type. In 2003, Bruno Amable grouped them into a Mediterranean model of capitalism and, in 2008, Oscar Molina and Martin Rhodes introduced the category of mixed-market economies to form them into a cluster. Since then, the category of Mediterranean capitalism has been accepted and used and considered tendentially consistent with other comparative analyses in the field of welfare studies and industrial relations, although, in this latter arena, France is often included in the Mediterranean group of countries. Though each country of Southern Europe has its specificities, there are certain institutional features that make it matter of judicious certainty to talk about a Mediterranean model that is distinct from the others. One of these features is the regulation of the labour market. Compared to other models of capitalism, Southern European labour markets are characterised by particularly unequal conditions. Women and young people there encounter more obstacles in finding a job and inequality is rife in the contractual conditions of different workers, in terms of salary,

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working hours, security and cover against risks, such as loss of employment. This high segmentation of the labour market means, for instance, that the female employment rate is much lower than it is for men and career paths are more difficult. This is despite the fact that, since the 1990s, women’s participation in work in Spain has greatly increased: in the period 1993–2007, before the financial crisis started in 2008, the female employment rate rose from 30.7 to 55.3%. However, although it increased to 61% in 2018 (Table 4.1), it is still much lower than in Scandinavian, Continental and Anglo-Saxon countries. Moreover, hardly any policies have been brought in with the aim of addressing the pay gap or dynamics of occupational segregation. As mentioned above, the other strongly disadvantaged group in this context is young people. In 2014, still in an emergency phase related to the impact of the economic recession, the average youth unemployment rate in Spain, compared to 22.2% in the EU28, was 53.2%. Recently, in 2019, the Figure was 32.5%, meaning that, with only Greece below them (35%), Spain is still the European country with the highest incidence of youth unemployment. The difficulty of finding a job for these social groups is also demonstrated by the high incidence of long-term unemployment and of intellectual unemployment: 8.6% of people with tertiary education are unemployed in Spain. Finally, a last important element of social fracture, especially in Spain, but also in other Mediterranean countries such as Italy, involves territorial disparity: in Andalusia, for example, 49% of young people were unemployed in 2017, 22 percentage points more than in the Basque Country (OECD 2018). Youth employment has, however, received special attention in recent years. The government launched the Strategy of Entrepreneurship and Youth Employment 2013–2016, and the National System of Youth Guarantee. Both initiatives emphasised the promotion of employment through hiring incentives, self-employment and entrepreneurship. However, neither policy appears to have had a significant impact on job creation, especially with reference to stable and quality jobs. Local municipalities have been assigned social assistance responsibilities and can contribute to public offers of temporary employment in the local community through agreement between national public

61.0 67.0 80.2

14.1 8.5 6.8

16.0 8.4 7.0

6.4 3.8 1.1

32.5 19.6 20.1

8.6 5.1 3.7

Source Eurostat. a Latest available data from 2018; b Latest available data from 2016

Spain 67.0 France 71.4 Sweden 82.4

Unemployment Total rate of Total Youth employment Female Female people with employment unemployment unemployment Long-term unemployment tertiary rate ratea rate (20–64)a rate unemploymenta (15–24) education

Table 4.1 Employment indicators for Spain, France and Sweden, 2019, % of total population

81.7 47.8 49.4

54.4 38.0 22.9

Involuntary temporary employment Involuntary (% of total part-time temporary employment)b employment

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employment centres and municipalities. However, as we will see with the Catalan case study in the following chapters, many municipalities have long failed to manage these programmes due to the lack of financial and human resources. Previous chapters show that, in the last decade, Mediterranean capitalism invested very little in active labour market policies. In this case, Spain can be considered an exception compared to other Southern Mediterranean countries. Since the 2000s, both national and regional ALMPs have been introduced and activation measures have been gradually expanded, although a significant gap remains between Spain and Continental and Northern European countries in terms of the resources devoted to promoting training and labour market intermediation services. The Spanish Strategy for Employment Activation (PAPE) rationalised the design of programmes, linking them to specific targets, and supported public–private partnerships to improve job matching. However, resources devoted to ALMPs during the crisis declined by 50% between 2007 and 2014. As Table 4.2 highlights, besides high expenditure on unemployment benefits due to the higher unemployment rate, labour market services expenditure in Spain is still lower than in France and Sweden. The labour market criticalities mentioned above have been tackled with a long series of reforms aimed at increasing labour market flexibility through, on the one hand, the introduction of new flexible contractual formulas and, on the other hand, the flexibility of the old formulas. This is also because, as early as the 1980s, when the hypothesis of so-called Eurosclerosis was formulated—a pattern of economic stagnation in Europe that may have resulted from government over-regulation and overly generous social benefit policies—the Mediterranean countries were taken as the emblematic example of the perverse relationship between development, welfare and labour market rigidity. In those years, Spain began to reduce labour market rigidity with reforms that provided for a broad flexibilisation of fixed-term employment. This led to a “rigid exit” from the labour market for standard workers but “flexibility in entry” for job seekers, a mix that introduced discrimination between workers and obviously made it much more advantageous for entrepreneurs to offer more jobs on a temporary rather than permanent

23.4 34.1 28.8

0.2 1.0 1.1

0.9 1.2 1.8

Tertiary education expenditurea 0.10 0.08 0.24

Source Eurostat. a Percentage of gross national income, 2016

Spain France Swe-den

Total social expenditure

Social exclusion expenditure

Supported employment and rehabilitation expenditure 0.15 0.24 0.25

Labour market services expenditure 1.8 1.9 1.0

Unemployment benefit

Table 4.2 Social expenditure indicators for Spain, France and Sweden, 2017, % of GDP

1.5 2.0 0.5

Out-of-work income maintenance and support

1.2 2.4 2.9

Family/children benefit

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basis. Indeed, temporary work has grown greatly since the mid-1990s in Spain: temporary contracts rose from 500,000 in 1984 to over 8 million in 1996, when they represented about 35% of total employment (Karamessini 2007; Meardi 2012). The process of flexibilisation of the labour market in Spain has also continued in more recent times, with standard work also being affected. A long series of reforms between 1997 and 2012 increasingly reduced the costs of redundancies and expanded the possibilities of dismissal (Botti and Field 2014). Work flexibility was also extended through the new regulation of working hours and internal functional mobility and through a new type of collective agreement for companies. This last was characterised by lower guarantees and social contributions and aimed to reduce labour costs and compensation for discriminatory dismissals, allowing derogation clauses from national bargaining (Godino and Molina 2011). The effect of these reforms has been to increase the flexibility of the labour market both in the private and public sectors. At the same time, the unemployment rate decreased. From 1993 to 2007, youth unemployment in Spain fell from 40 to 18% and female unemployment fell from 13.9 to 7.9%. Most of these new jobs, however, involved temporary contracts and intermittent, low-security, low-wage positions. Additionally, the development of non-standard types of work strengthened the so-called precariousness trap, meaning that these new jobs did not, after an initial period of time, trigger stable work. This is particularly true for women and also for the better educated who, in Mediterranean countries, are most exposed to the risk of precariousness (Barbieri and Scherer 2009). It is in this context, already weak in terms of labour market institutions, that the economic crisis of 2008 hit Spain, exposing and exacerbating its vulnerability. Since 2008 there has been a progressive decline in the employment rate, much higher than the European average, with a loss of around 8.5 percentage points over the period 2006–2012 and a point of arrival that is well below the objectives of the Europe 2020 strategy. Table 4.1 also show that the levels of involuntary temporary work and part-time work are considerably higher in Spain compared to France and Sweden. In addition, there continues to be a high number of discouraged

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inactive people and young people who are neither in education nor in employment (NEET, Table 4.3). Thus, the process of labour market flexibility contributed to the growth of employment, even if this has never reached the levels of the other models of capitalism and has maintained the forms of discrimination that historically characterise Mediterranean labour markets. However, the high diffusion of fixed-term work and flexibilisation and still low employment rates led Burroni and Trigilia (2012) to talk about an “incomplete reformism” of the labour market, in the sense that the reforms that have increased the flexibility of work have not been compensated for by interventions aimed at increasing its quality and productivity. There is still very little support given to policies embracing the logics of active inclusion and social investment and focused on risk prevention through the promotion of education and training, which continues to be much lower than in other European countries. While investment in primary and secondary education is in line with the European average— but much lower than in Scandinavian countries—investment in tertiary education, the number of graduates, and the capacity of the education system to reduce inequalities, remain low (Ballarino et al. 2009). In part this is also linked to the Spanish development model, where the marked employment growth from the 1990s in labour-intensive sectors, such as construction, did not require high-level schooling (Burroni 2016). Finally, the regulatory architecture of the welfare system is another distinctive and typical feature on which the Mediterranean model is built (Ferrera 1996). A mixed regime of coverage, which lies between a universalistic model and a conservative or insurance regime, produces a hybrid system with relevant contradictions and fragilities. On the one hand, the provision of services, such as those offered by the health system and education, has a universalist connotation, even if these sectors are still under-financed compared to other countries and still in a framework of strong territorial disparity in terms of the effectiveness and efficiency of these services (Ascoli and Pavolini 2012). On the other hand, income support measures aimed at protecting people from social risks are characterised by a highly fragmented and unequal system. As already mentioned, adequate income support embodies one of the three pillars

26.1 17.4 18.0

14.6 8.9 7.4

Employed persons at risk of poverty or social exclusion 6.03 4.23 4.13

Inequality of income distributiona 29.5 22.9 20.6

Children (0–17) at risk of poverty or social exclusion 22.94 44.40 43.25

10.5 19.0 34.1

Adult participation in learningc

12.4 11.1 6.0

NEET (young people aged 15–24 neither in employment nor in education and training)

Source Eurostat, EU-SILC and EU-LFS statistics. a The ratio of total income received by the 20% of the population with the highest income (top quintile) to that received by the 20% of the population with the lowest income (lowest quintile). Income must be understood as equivalized disposable income. b Reduction in percentage of the risk of poverty rate, due to social transfers (calculated comparing at-risk-of poverty rates before social transfers with those after transfers; pensions are not considered as social transfers in these calculations). c Data from 2019. The indicator measures the share of people aged 25–64 who stated that they received formal or non-formal education and training in the four weeks preceding the survey (numerator). The denominator consists of the total population of the same age group, excluding those who did not answer the question regarding ‘participation in education and training’. Adult learning covers both general and vocational formal and non-formal learning activities. Adult learning usually refers to learning activities after the end of initial education

Spain France Sweden

People at risk of poverty or social exclusion

Impact of social transfer (excluding pension) on poverty reductionb

Table 4.3 Social protection performance indicators for Spain, France and Sweden, 2018, %

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on which the EU strategy for active inclusion is based. In Spain, fragmentation of measures and lack of institutional coordination are a constraint to its potential. Income support measures for unemployed groups consist of a wide array of means-tested programmes: Unemployment Assistance Benefits, the Agrarian Unemployment Subsidy and Income, the Active Integration Income (RAI), the Professional Requalification Programme (PREPARA) and the Employment Activation Programme (PAE). These unemployment schemes have been gradually integrated on an “ad hoc” basis and reformed to tackle the issue of long-term unemployment, something that is particularly severe in Spain (Mori et al. 2016). Despite the fact that, since 2003, some coordination tools have been introduced in Spain, such as the National Employment System, the Annual Employment Policy Plan, the State Employment Public Service Information System (SEPE) and the Public Employment Services of the Autonomous Communities, a serious lack of coordination still affects the Spanish income support system, as the recommendations of the European Commission have also highlighted (Rodriguez Cabrero 2009). As a consequence, this structure exacerbated discrimination between occupational categories generated by labour market regulation, separating social groups that are highly protected and those instead that are much more vulnerable and more exposed to new social risks. The role of social policy in promoting the inclusion of vulnerable groups, including young people, the long-term unemployed and migrant workers is very limited. A key reason for this is also that, while flexibilisation has been taking place since the 1990s, no new measures have been introduced in the social security system to protect the larger number of people exposed to new risks and employed under the new types of contracts. In other European countries, such as Scandinavia, flexibilisation has gone hand in hand with the development of a new network of guarantees; but, in the Mediterranean countries, the promotion of flexibility has not been balanced by the introduction of new forms of protection (Fullin 2004). It is also to meet these challenges that, in such a context, compared to the other models of capitalism, the family plays a major role. Indeed, in this framework of weak income protection, the family provides care and financial resources to acquire services on the market. It is within

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the family that care services offered to a lesser extent by the public and private sectors are compensated for, and it is still within the family that financial resources are transferred from parents to their children to help them both in case of exposure to new social risks and as economic aid to finance the purchase of services on the market. The family, acting as a fundamental buffer, has been defined as the pillar of the Mediterranean model (Burroni 2016). This role played by the family, however, is under increasing pressure and is changing. During José Zapatero’s government in the precrisis years, certain important and effective reforms were introduced to improve the reconciliation of work and family care and to encourage women’s participation in the labour market, contributing to a partial recalibration of Spanish welfare (Ferrera 2010). But, as Table 4.2 shows, Spain is still one of the countries that spend less as a percentage of GDP on family support policies: only 1.2%, compared to 2.4% in France and 2.9% in Sweden. This lack of public support inhibits the defamilisation process, forcing children to stay longer in the parental home, and has an impact on the family structure: marriages take place at a later age, as does the birth of a first child, while the number of children per family decreases—something often also due to the already mentioned changes in the regulation mechanisms of the labour market (Barbieri et al. 2015). It must be remembered that the development of such systems, in which new income support measures have not been developed, has been strongly conditioned by the long period of austerity that had already begun before the 2008 crisis and that increased dramatically after its outbreak. Spain, indeed, was one of the first countries in continental Europe to vigorously follow the path of financial sustainability and rationalisation of expenditure: since the end of the 1980s, it had already been tightening pensions and reorganising contributions and unemployment benefits (Guillén 2010). The active inclusion measures that came into the Spanish political agenda in the 2000s—although there remains a significant gap between discourse and implementation—have experienced a significant decline in recent years (Mori et al. 2016). In order to face up to the economic crisis, the government has emphasised job creation

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as the priority of the most recent labour market reforms, thus relegating to a secondary role training, the fight against dualisation and extending protection for the unemployed. Since 2012, both the duration and generosity of unemployment protection benefits have experienced cuts and even though non-contributory schemes have been extended for the older long-term unemployed, the coverage of unemployment benefits has experienced a steady decline. Economic constraints that led to the increasing containment of public expenditure in key sectors, lack of political intervention to improve the capacity of the welfare system to respond to the new social and economic challenges, and an inefficient administrative structure—all these factors, together, inhibited the development of the welfare system.

4.2.1 Irregular Social Dialogue In Spain, as in other Mediterranean countries, the involvement of social partners in political decisions has gone through several, distinct periods. In some of these, the national state was more open to dialogue with collective actors, such as during the 1990s, when important events involving social consultation in the field of income policies took place. These included welfare reform and labour market regulation, which was also promoted by the European regulation level. The period of stimulus response, meanwhile, in 2008–2009, was characterised by the significant involvement of Spanish social partners, though with little results in terms of agreements signed in those years. In other cases, instead, the political space was “bulletproof ” in terms of any chance of dialogue. Indeed, especially since the beginning of the 2000s, recourse to concertation has been less systematic and in decline, such as in the period between 2010 and 2013, when the debt crisis led to the adoption of a unilateral approach to policy-making, with no room for social partnership—the unique exception being the 2011 Tripartite Social and Economic Agreement. The erosion of social dialogue not only affected its tripartite dimension, but also bipartite relations between trade unions and employer organisations (Mori et al. 2016).

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The economic crisis had a particularly negative impact on the consensus and legitimacy of organisations representing workers’ interests in Spain, where, in the first phase of the crisis, the indignados movement harshly attacked the trade unions held responsible for sharing many of the reforms that contributed to the flexibility of the Spanish labour market. Additionally, the fact that there was little recourse to concertation practices was because austerity reduced the margins of manoeuvre for national governments, giving them less room for negotiation with social partners. Since 2014, when recovery started, there has been a revival of tripartite and bipartite social dialogue. This continues to be fragmented and intermittent, however, as in other countries where social dialogue has never been institutionalised. Thus, the low level of institutionalisation of social dialogue explains, at least in part, the alternating phases of social dialogue. Although unionisation rate is low (around 15%), trade unions continue to have a high capacity to mobilise members and the consensus towards industrial relations actors remains high (Godino and Molina 2011). The logic of action of Spanish unions has tended to be oriented towards inter-institutional cooperation, although unions have alternated phases in which they have effectively participated in social consultation practices and phases characterised by intense social conflict. Collective bargaining coverage is medium-high (72% in Spain) and the sectoral level is the most important, even though the role of bargaining at the decentralised level has increased in recent years (Sanz 2014; Pedersini 2014). However, the increase in the possibility of derogating from the national collective agreement has already been present since the mid-1990s. Thus, companies have increasingly more exit clause possibilities (Sanz 2014). As we will see thanks to the empirical analysis at local level in the next chapters, although Spanish trade unions have very actively promoted the creation of a universal guaranteed income and the extension in the duration and generosity of unemployment benefits, their role has gradually weakened. The reduction of their position in public and political spaces has contributed to the emergence of new social actors, something that is also a reaction on the part of civil society in order to tackle the growing risk of poverty. Social movements, such as the Occupy movement, the

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Platform Affected by Mortgages and others, started to play a notable role. The role of so-called Third-Sector organisations was also promoted after the outbreak of the crisis, including a specific law (Law 43/2015) that gave them more space and resources to intervene in matters of social inclusion and to take part in Social Dialogue meetings regarding regional employment plans. Organisations such as Caritas, the Red Cross, Voluntary Associations, NGOs and others had a growing role in brokering and trading locally to deal with long-term unemployment and the risk of social exclusion. They thus became an influential parliamentary lobbying group, partly because of their transversal coverage of the political and union spectrum (Mori et al. 2016). As we will see, managing active inclusion programmes, they have also contributed to shaping the idea of active inclusion.

4.3

The Continental Model: France

While, in their ideal type of coordinated market economies, Hall and Soskice grouped together the countries of Northern Europe with the countries of continental Europe, other scholars have kept the latter separate from those in Scandinavia, stressing the differences between their regulatory and institutional architectures—in the welfare and industrial relations arenas, for example—and because of their different outcomes in terms of labour market inclusion. Common elements between the Hall and Soskice coordinated market economy model and that of continental capitalism can surely be found in the labour market arena. As we have also seen in Chapters 2 and 3, this is a matter of a more regulated labour market than that of the Anglo-Saxon countries, with a higher level of employment protection and skills development capacity, so that a high portion of specialised workers can perform several functions within their company (internal flexibility). However, after the high increase of joblessness in the 1990s, the use of flexible forms of contracts—such as temporary employment, fixed-term contracts, short-time contracts—also became more common in Continental countries.

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Indeed, after the 2000s, France, too, increased labour market flexibility, introducing a series of new temporary contractual formulas for different types of workers and more flexible ways of dismissal. At the same time, flexibilisation was regulated through certain limitations— fixed-term or part-time contracts, for instance, were restricted to specific sectors. This set of reforms has certainly led to the partial replacement of permanent jobs with flexible contracts, but flexibility is less accentuated than in Anglo-Saxon or Scandinavian countries. In the same period, France reorganised its wide range of income benefits. As Mori et al. (2016) show, unemployment benefits (Assurance chômage), managed by social partners, were recast as “return-to-work benefits” (Allocation de retour à l’emploi—ARE) and eligibility was henceforth conditional on the signature of an individualised agreement of support to return to work (Plan d’aide au retourn à l’emploi). A tax credit regime for low-wage employees (Prime pour l’emploi—PPE) was introduced in 2001 to sustain working and prevent their return to unemployment benefits. The minimum income scheme (Revenu Minimum d’Insertion—RMI) was reformed in 2003 and then replaced in 2009 by Active Solidarity Income (Revenue de Solidarité Active—RSA), the financing and provision of which were decentralised to local authorities. A new Activity Minimum Income (Revenu Minimum d’Activité— RMA), partly replacing the RMI, was associated with the introduction of the Insertion Contract (Contrat d’Insertion—Revenue Minimum d’Activité—CIRMA), as a new work-focused inclusion tool: a fixed-term employment contract for long-term RMI claimants, hired by public or private-sector organisations. A social minimum for single parents (Allocation de Parent Isolé) was introduced and youth unemployment was tackled through apprenticeship schemes and the extension of the RSA to include unemployed people aged 18–25. Finally, reforms aimed at increasing social cohesion brought in subsidised employment and job-creation schemes, “supported contracts” (Contracts aidés; contrat d’insertion dans la vie sociale) addressed to different social groups covering job-seeking expenses, training and daily allowances. Public Employment Services (PES) introduced structural reforms and outsourcing dynamics, aimed at providing services differentiated according to the specific needs of jobseekers.

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A comprehensive range of measures is thus addressed to those who have a very low income, or no income at all, including tax credit for lowincome workers, while incentives such as exemption of contributions are also provided for companies willing to hire the long-term unemployed. Such a series of interventions, based on significant investment in policies that are active, but, above all, passive, and in services such as employment centres to facilitate the matching of supply and demand, recognise that, to escape poverty, it is not enough simply to have a job. The risk of poverty is compensated for by means of benefit linked to the level of pay—the higher the pay rises, the lower the benefit falls—and the provision of targeted activities to promote integration into the labour market (Jensen 2012). Yet, although active inclusion tools have gradually entered the French system, labour and social policy in France has instead developed around the concept of “insertion” (Barbier 2009)—something that had already been discussed since the 1970s and that was brought into the welfare system in 1988, under the socialist government led by Michel Rocard, through the introduction of the first Minimum Insertion Income (RMI). Activation marked a step forward with Law 758/2008 on Rights and Obligations for Jobseekers (Loi relative aux droits et aux devoirs des demandeurs d’emploi), which intensified conditionality for benefit claimants, modified the definition of reasonable work offers that claimants have to accept in exchange for support and hardened the sanction regime in case of non-compliance with the “personalized project for access to Employment” (PPAE) (Mori et al. 2016). This long period of reform, which was carried out not only in the labour market arena but also in the welfare and, in particular, the pension system, was enacted to respond to the challenges of the financial sustainability of the welfare system in the medium-long term and also to its growing inadequacy in terms of dealing with the new social risks that significant groups of the population had to face. The reforms were driven by the logic of reducing costs and extending working life (Palier 2010), all policy principles in line with EU suggestions and with what had been done by other countries in the continental group. This extended phase of policy reforms, which also took place in many other continental countries, such as Germany, Austria and the

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Netherlands, had a relatively positive impact in terms of employment dynamics, though the model displayed a certain degree of variation (i.e. higher employment levels in Germany, Austria, the Netherlands, lower in France and Belgium). All countries experienced a decline in the employment rate as a result of the 2008 crisis, but overall this had a lower impact on the level of employment compared to Mediterranean countries. The French labour market has become increasingly dualised, however, and, in this case, too, women and young people are among the most vulnerable groups, often having to accept involuntary temporary or part-time jobs. Flexibility especially affects specific segments of the labour market, but, compared to the Mediterranean countries, these find greater support in the direct role of the state through specific benefits for low-income workers. As Palier and Thelen wrote (2010), the state has played a role in the institutionalisation of dualism. Segmentation in society also depends on a welfare system that tends to reproduce the status quo and certain inequalities (Esping-Andersen 1990; Palier 2010). Corporate-conservative welfare follows a Bismarkian insurance-type logic—meaning that access to benefits is based on contributions paid by workers and employers and not on general taxation— and involves a very high coverage and high level of expenditure (Schröder 2013). However, since the welfare system provides compulsory social insurance for workers and benefits are linked to the specific characteristics of the job position, protections depend on the work and the contributions paid. Thus, as we will see in the next section on Sweden, these are very different characteristics compared to the universalism and solidarity welfare system of the Scandinavian countries, albeit with an equally high degree of coverage. The consideration must be made, of course, that there have been hybridisations in this system, which over time has also taken on characteristics more typical of a universalistic system: for example, alongside the pensions based on the contributory system, socalled minimum pensions have been introduced. These are not linked to the contribution of those who receive them, and are directed at the elderly who are either without income or with an income below a certain threshold (Saraceno 2013).

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As can be seen in Table 4.2, France guarantees a high level of expenditure in a wide range of areas and pays particular attention to social exclusion. Expenditure on social protection is higher than the European average, as is expenditure on measures related to unemployment and poverty. The same applies to measures targeting the area of health and the elderly (Burroni 2016). Finally, it is a model that invests heavily to support families and children. While investment in education is in line with the European average, vocational training in France is less developed compared to other Continental countries (i.e. Germany) (Thelen 2014; Pavolini et al. 2015). As result, this model has been able to produce relatively low levels of poverty and social exclusion and reduced inequality in income distribution. Social transfer has a highly significant impact on poverty reduction, while the share of people who receive education and training is low compared to Northern European countries (Table 4.3). Social partners have traditionally played a role in the governance of public employment policies and services in France through their contribution to employment negotiations as well as to the administration of public employment centres. However, many recent reforms have been conducted largely unilaterally, revealing the limits of the French system of social dialogue. It is therefore extremely useful, in this context, to delve more deeply into the industrial relations dynamics in progress.

4.3.1 Strong State, Weak Unions As is known, in Continental Europe the cooperation between trade unions and employers’ associations have traditionally influenced the production of collective goods for competitiveness and contributed to the design and implementation of labour and welfare policies. The heritage of long-standing divisions between different political and religious identities has affected the architecture of industrial relations, which is characterised by a high degree of union fragmentation and developed ties with parties (Crouch 1994; Gumbrell-McCormick and Hyman 2013). Despite these common features, the Continental model contains differences within it. In particular, it is France that largely differs from

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other countries, so much so that it tends to be excluded from the continental models of industrial relations (Gumbrell-McCormick and Hyman 2013; Pedersini 2014). In Germany, Austria and the Netherlands, the system of representation of interests is robustly organised—although important changes have been introduced in recent years—and so the degree of institutionalisation of industrial relations is high, while consultation and participatory and co-decision tools are highly regulated. In France, however, we find a very low involvement of social partners in policy-making processes and low membership rates. This is due to the combination of a highly fragmented form of interest representation and the attitude of the French state, which is less inclined to share political space with, and give space and autonomy to, organised collective actors. For this reason, many issues that in other countries are often managed autonomously by the social partners (minimum wage, for example) are, in France, regulated by the state. This tradition, the dirigiste attitude of the state, has a powerful effect on social and economic regulation and on the relationship with collective social actors, resulting in an unbalanced rapport between a strong state and weak and fragmented unions. Trade unions have traditionally been ideologically divided and have adopted a conflictual logic. Their membership rate has never been particularly high and today it is less than 8%. They are present and moderately influential in large companies but substantially absent in small ones. There has also been a decline in the importance of two other forms of representation that have traditionally constituted key elements of legitimacy for French trade unions: elections in the workplace—increasingly less attended and with a growing proportion of those elected from outside the union—and mobilisation. French trade unions have had a high capacity for mobilisation in times of conflict in the past, but this capacity has diminished over time (Gumbrell-McCormick and Hyman 2013; Goetschy and Jobert 2011) Today, the impressive mobilisation by the gilets jeunes (“yellow vests”) which took place in France from May 2018 to 2020, has nothing to do with unions. It is a spontaneous protest movement, created through social networks, and, independent from trade union and parties, it does not seek organisational, political or trade union mediation. There have

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sometimes, however, been joint demonstrations on the issue of increasing the minimum wage. In contrast to the workers’ trade unions, there is greater unity on the employers’ side, though here there is also a certain weakness in terms of their ability to participate in the national regulatory arena. This is also because the top-down industrialisation model typical of France has gone hand in hand with the emergence of a model where larger companies have enthusiastically adhered to the US model of human resource management—an authoritative style, a rigid division of labour—on which the flexible mass production model was based (Burroni 2016). This model found its strength not so much in associative coordination mechanisms, as in other continental European countries, but in the role of the state and of the individual large companies, which did not act collectively but individually. Company push on employers’ associations to create favourable conditions for productivity and wage moderation was much lower in France than in Germany (Goetschy and Jobert 2011). The French industrial relations system has been through a number of transformations and also undergone new regulation since the 2000s, partly as a consequence of European recommendations, but mainly driven by the state, given that the attitude of unions and employers’ organisations continues to be a conflictual one, with no interest shown in moving towards concerted practices. This is despite the fact that, since 2007, a law has existed (130-2007) on the modernisation of social dialogue which obliges governments to consult the social partners whenever they propose to intervene in the field of industrial relations, the labour market and vocational training.

4.4

The Nordic Model: Sweden

As we have seen in previous chapters, it is the Nordic model that best combines growth capacity with widespread well-being, and this is particularly due to its capability to combine a flexible and dynamic labour market with highly developed and universalistic welfare. This is certainly true for Sweden: after a period of economic and institutional crisis in the 1990s, when unemployment was high and the economy began to suffer

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from the impact of international competition, the country has, since the 2000s, once again become a model to look to for its vigorous capacity for social inclusion and ability to compete in global markets (Burroni 2016). As previously said, one of the reasons why this balance works so well is the high level of participation in the labour market. The Swedish economy relies on a full-employment political economy approach. As Table 4.1 shows, the context is one of high employment rates, both overall and female, and predominantly voluntary part-time work; unemployment, overall and long-term, is low; and high flexibility is combined with a low level of precariousness. In such a system, active inclusion into the labour market is a key element of the historical configuration of the whole welfare system. In the 1960s, when many other European countries supported a traditional socio-economic model based on the “male breadwinner” family, the expansion of the public sector in the Scandinavian countries was already favouring women’s participation in the labour market, freeing them from care activities within the family and offering them employment opportunities in the public and welfare sectors. At the same time, the fact that this model was financed by taxation on an individual, rather than a family, basis, indirectly favoured work participation for each member of the couple to a higher level than in other European countries (Alestalo et al. 2010; Kangas and Palme 2005). As shown in Chapter 2, another important element in this model’s labour market is the large public investment in labour market policies, with particular reference to active labour market policies: these reach levels of expenditure and participation that have always been higher than the European average. Investment in activation measures has traditionally had two main aims here: to promote labour market participation on the one hand and to facilitate the matching of supply and demand on the other. This support involves massive investment in training policies, both for young people, such as initial training measures, and for adults already at work through continuing training. These policies have thus also reduced the trend of labour market dualisation, a problem that, as we have seen, has become increasingly important in other models of capitalism, such as those in Continental and Mediterranean countries.

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The matching of supply and demand is also favoured by high investment in labour market services, such as public employment services (PES). Finally, as we have seen in previous chapters, Northern European capitalism is also characterised by high investment in passive policies, mainly in the field of income support: this means that the risk of poverty in these countries is low, not only for those in work, but also for the unemployed. After 2007, different new programmes were launched to intervene in long-term unemployment—something that affects mostly foreign nationals—through reduced social security contributions to employers who hire job seekers who have been unemployed for 6–12 months and through a special employment package. This latter aimed to boost labour market inclusiveness for young people and foreign-born workers and expand career guidance, personal coaching and support in job seeking (i.e. Job and development guarantee; Step-in job programme; Forum50+; Fast track programme). Another reason why the Nordic model is well known is certainly its system of flexicurity—another strategy, originally developed in Denmark, supported and advocated by the EU since the mid-2000s. It is an approach that combines job flexibility with worker security. In this case, flexibility refers both to internal flexibility (i.e. the organisational models adopted by companies focus on high mobility and job rotation and assumption of responsibility) and to external flexibility (i.e. fairly low employment protection). External flexibility of work certainly reduces job security. However, this is counterbalanced by employment security, in the sense of the possibility of easily finding a new job, which is widely promoted. It is easy to lay workers off, but everything is done to make it possible for those who lose their jobs to find another one very quickly, thus reducing periods of non-working and provoking less economic impact on the welfare system. This works because of the high investment in active labour market policies based on individual intervention programmes, continuous training and hiring incentives. It is precisely this integrated system of measures that plays a key role in reducing job search and inactivity time. Finally, high unemployment benefits provide economic security during the period of non-work (Ibsen and Mailand 2009; Burroni and Keune 2011).

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One of the key differences between what Hall and Soskice have defined as coordinated market economies and Northern European capitalism is that while the former have an occupational welfare, the latter has a universalistic connotation, with all citizens benefiting from free public health, schooling and generous, extensive protection against old and new social risks. This is still a crucial distinction, despite the latest reforms in Continental and Scandinavian countries that have led to the hybridisation of both models. As mentioned, one of the three pillars supporting the EU strategy for active inclusion is adequate income support. The Swedish welfare state provides comparatively generous unemployment insurance and a minimum income scheme was introduced in Sweden in 1982 for those not qualifying for unemployment insurance. Social assistance (socialbidrag/ekonomomiskt bistånd), regulated by the Social Service Act and administered by the municipalities, aims to guarantee a reasonable standard of living for everyone. Its level is close to 60% of the median income. The scheme is now called income support (försörjningsstöd) (Mori et al. 2016). Welfare is financed by high and progressive overall taxation, and only to a small extent by companies, allowing the state, both at central and decentralised levels, to use taxes to finance a wide range of social policies such as housing, childcare and care for the elderly (Kangas and Kvist 2012; Hiilamo et al. 2013). Controversial reforms have been introduced since 2006. Qualifying criteria became stricter with unemployment insurance reform, which consisted of two measures, a voluntary earning-related benefit, based on a voluntary state-subsidised insurance fund, and a flat-rate basic benefit, universal and provided by municipalities as a last resort to provide income to all unemployed persons. Both benefits and the duration of the income support scheme, which were unlimited before this reform, were reduced, while the membership fee rate for the unemployment insurance fund was raised. National sickness insurance was also reformed to encourage people on sick leave or early retirement to return to work through a rehabilitation process and an assessment of individual capacity to return into the labour market. An “in-work tax credit” (jobbskatteavdrag) was also designed to encourage people to return into the labour market (Mori et al. 2016).

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In this context, however, support for the family, especially for its individual members, greatly helps to strengthen the high presence of double-income families. It is precisely towards this type of family that part of the welfare services is directed, especially in terms of reconciling work and free time—parental leave, for example—through firm support for equal parenting (Table 4.2). At the same time, defamilisation is of great importance: with a constant universalistic logic based on residence, the extension of services to mitigate individual dependence on the family for a whole series of services, not only care services (EspingAndersen 1990; Ranci and Pavolini 2015; Vogel 2003). These measures are of course also linked to a more equal distribution of family burdens compared to other Mediterranean or Continental countries. Supply and demand for welfare services are therefore strongly linked to the ways in which society is organised and regulated. As for education and training, in previous chapters we have seen that in the Northern countries investment in these fields is also much higher than the European average. In Sweden all grades of education, including secondary and tertiary levels, as well as research, are considered a public good. For this reason, the number of private schools and universities is very low. The public consideration attached to education is also demonstrated by the lower intensity of cuts in public spending in these areas. Due to the importance of lifelong learning and education, Scandinavian countries are defined as learning societies (Antikainen 2006). Indeed, the result of high public investment and low private spending on education and lifelong learning is a high level of schooling and a high share of both men and women with a university education—higher than the European average—together with low intellectual unemployment and low segregation in education: in contrast to Germany, the vocational training system there is fully integrated into the general education system (Busemeyer and Nikolai 2010). However, the literature on the recent changes and labour market reforms in this model speaks of the reduction in the size of unemployment benefits and their average duration and, especially in Sweden, the progressive shift towards a more conditional system, in which benefits are paid on the basis of individual compliance with a number of requirements (Kvist and Greve 2011). Thus, although the activation discourse

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can be detected in the narrative of all Swedish governments, regardless of political orientation, social democratic and conservative governments have had a different approach in terms of the emphasis placed on conditionality and individual responsibility. The liberal-conservative coalition in power in 2006–2014 put forward a bold labour market reform agenda centred on strengthening the employment and non-universalistic component of welfare services and on “making work pay” (i.e. stricter eligibility criteria to receive income support benefits, stricter deadlines and time limits for unemployment and sickness benefits, job tax deduction and a rise in membership fees for unemployment funds). The social democratic-led government in power since 2014 has brought back the emphasis on education and training, but the activation discourse has remained almost unaltered (Andersen 2012; Mori et al. 2016). Still, in comparative terms, Scandinavian countries have performed well, even during the crisis. The Europe 2020 employment target (75% employment rate for the 20–64 age group) had already been achieved well before 2000 and has not substantially changed in recent years. In 2018, the employment rate in Sweden was more than 80%, compared to 71% in France and 67% in Spain. Sweden has a female employment rate of 80%—almost 15 points higher than the European average—as well as a better situation from the point of view of long-term unemployment, which is very low (Table 4.1). All this is reflected in an unemployment rate: although it increased as a result of the crisis in Sweden (from 5.3% in 2000 to 8% in 2013), it still remains lower than in many other European countries. On the other hand, youth unemployment is slightly higher in Sweden than the EU28 average, although this data is influenced by the fact that few young people end their studies with secondary education, with most people choosing to continue studying. The complementarity of all education, employment and welfare measures, according to the logic of social investment, has guaranteed that the Swedish system has been able to mitigate gender, generational and employment disparities and fractures within society, promoting an inclusive model with less inequality and poverty (Hemerijck 2017). If we look at the relationship between the labour market and welfare, we can see that this can be defined as an active inclusion model, given that

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high income support, accessible welfare services and an inclusive labour market are well integrated (Kvist et al. 2012; Hiilamo et al. 2013). Of course there are also critical elements: one of these is the presence of a severe level of segmentation between immigrant and non-immigrant workers, especially where vulnerable jobs are concerned: the share of immigrant workers in low-skilled professions is in fact very high and the difference in the employment rate between immigrant and nonimmigrant workers is equivalent to 25 percentage points (Andersen and Mailand 2005). As the case study on Gothenburg in Chapter 6 will show, immigrant inclusion in society is one of the most crucial and pressing challenges that Sweden is facing.

4.4.1 Resilient Cooperative Policy-Making As with the other Northern European countries, Sweden, too, has a long historical tradition of neocorporativism with a strong workers’ movement, in which the representative organisations, while few, are highly inclusive and have a very high number of members. Consolidated institutions of participation at a central and decentralised level are used to involve them constantly, in both a formal and informal way, in the regulatory processes related to the labour market, income policies, welfare and supply of services and their organisation (i.e. labour policies, training, etc.). A centralised and strongly coordinated system, it is experiencing a significant growth of decentralised bargaining at sector and enterprise level (Dolvik 2009; Crouch 1994). As Crouch (1999) has underlined, the long historical legacy linked to Lutheran tradition means that the state has always shared the political space with interest organisations. As a consequence, a grass-rooted consensual democracy has nurtured cooperation between civil society and economic and state organisations. Together with this cultural tradition, the institutional structure fostered this highly cooperative policymaking—something that endures over time. The so-called Ghent system, a way of involving trade unions in the management of unemployment, is one of the reasons why we find an industrial relation model based on high unionisation and few large

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organisations. Traditionally, indeed, union membership was necessary in order to obtain certain social security benefits, such as unemployment benefits. In recent years, however, the importance of the Ghent system has diminished due to the growth of new benefit mechanisms that do not require union membership and to the progressive growth of nonmonetary forms of benefits (Kjellberg 2006; Van Rie et al. 2011). As a result of these changes, in addition to the challenges of representation, unionisation has also seen a progressive, albeit slight, reduction. In Sweden, the rate of unionisation fell from 87% in 1993–1995 to 69% in 2010 and, for the first time, in 2013, the membership of non-manual workers exceeded that of manual workers (Arvidsson 2014). Where the logic of action of unions is concerned, they have always favoured a collaborative approach dictated by a profound awareness of the difficulties for companies exposed to international competition. They have accepted both a high level of work flexibility and the adoption of organisational practices that have fostered productivity. Employers’ associations, at the same time, have at least partially sacrificed the objective of labour market deregulation in favour of the benefits of promoting substantial wage moderation through centralised and coordinated bargaining (Martin and Swank 2012; Dolvik 2009). This system, grounded on solidarity-based income policies, is capable of producing a strong intersectoral and inter-company homogenisation of wage and working conditions (the so-called Rehn-Meidner model). The aim is, first, to control inflation by identifying wages-based centrally on the “same pay for the same work” principle; second, to ensure that real wages do not increase more than productivity, encouraging companies to increase their productivity (Burroni 2016). In recent years new forms of decentralisation at sectoral, territorial and corporate levels have expanded and the actors at company level have had more room for manoeuvre, without, however, weakening the centralised level of the sector that establishes the limits and rules of the game of company bargaining, such as representation. Thus, a process of progressive decentralisation towards the sectoral and also corporate level has been achieved in a highly coordinated framework (Anxo and Niklasson 2008; Arvidsson 2014).

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It is in this context that collective bargaining also expands to include initial and continuing training (Ibsen and Mailand 2009), social policies, supplementary pensions and other welfare measures. Collective bargaining begins to produce benefits in monetary and service terms that at least partly compensate for the reduction of certain benefits by the public actor (Trampusch 2007). Additionally, company-level industrial relations have fostered negotiated flexibility and the emergence of innovative and shared models of human resource management in companies. Thus, requests for deregulation by employers’ associations have been less marked than in other countries. Despite some recent reforms—which, weakening the Ghent system, have made union membership more expensive and reduced union revenues and membership—concertation and cooperation practices between government and social partners continue to be well established and show more signs of stability than change (Mailand 2009). At the same time, decentralisation processes, certainly less radical than in other European countries and often taking place within a framework of organisation and coordination, represent a major challenge for this model of industrial relations.

4.5

A Comparative Outlook

Since the mid-1990s, there have been a series of transformations that have progressively modified the institutional structure of European models of capitalism. Numerous labour market and welfare reforms have been introduced to tackle the new social risks that have emerged alongside old social risks, such as measures to deal with changes in work and family patterns, to ease transition into paid work, particularly for unskilled people, and to address the problems of social exclusion. As this chapter has highlighted, Spain, France and Sweden have followed different paths in this evolution and have obtained very different employment and inclusion outcomes. Problems of low employment and strong segmentation in terms of age, territory and gender have been addressed in Spain through a long

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process of reforms aimed at making the labour market more flexible and at a preliminary attempt to introduce ALMPs. This resulted in a long period of employment growth, though not of upskilling and productivity growth, which was, however, interrupted by the outbreak of the 2008 crisis—triggered, in Spain, by the housing bubble. The new growth in employment, however, was based on low-quality jobs in terms of wages, conditions and guarantees: it was a labour market expansion predominately built on low-professional work in low productivity sectors that could not withstand the impact of the crisis. After 2008, these very fragile conditions turned into a serious unemployment crisis. In the welfare arena, too, many reforms have been carried out, but mainly aimed at supporting financial sustainability. Much less has been done to introduce forms of protection for those who were exposed to new social risks. In this framework, the family still continues to play a very important role as a buffer, even if, in recent years, it is experiencing important challenges and is finding it increasingly difficult to be a functional substitute for welfare and care services. While these transformations were taking place, social dialogue has also changed, facing various periods of instability: this was due to the fact that the involvement of social partners often took place depending on the type of reform to be carried out and on the specific contingent conditions that, to a greater or lesser extent, required the consent of interest organisations. Thus, the industrial relations system did not help in terms of job quality and productivity growth, partly because of the low level of recourse to decentralised bargaining. This, even in the years before the crisis, was often carried out with a defensive, rather than proactive, purpose—for example, in support of reorganisation aimed at increasing innovation and product quality. Moreover, a high level of wage moderation has, to a certain extent, allowed the illusion of cost competitiveness. These reforms generated a dualism between guaranteed groups and groups strongly exposed to the new risks produced by labour market changes. Flexibility thus became synonymous with precariousness and the arrival of the crisis increased the climate of permanent austerity that already characterised the welfare of Mediterranean capitalism (Burroni 2016).

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A paradox seems to emerge here. Indeed, in this difficult context, the development of reforms focused on the logic of social investment were completely abandoned. This was a path that was obviously influenced by the pressures of the supranational context and by the financial and economic constraints imposed by the Troika—meaning the joint action by the European Commission, the International Monetary Fund and the European Central Bank. This established, in the Memorandum of Understanding (MoU), the conditions of financial assistance to be given to European states that were in debt. While the European commission, on the one hand, recommended the development of active inclusion policies for the growth of skills and the development of quality jobs, on the other, it limited the possibility of developing these policies by reducing spending margins. All this has made the Spanish context, as in other Mediterranean countries, fertile ground for the increase of poverty and social exclusion among both workers and the unemployed. It is a capitalism that has put a strain on social cohesion, partly because certain traditional forms on which cohesion was based, such as the family, are experiencing significant difficulties due to a mix of overburdened functions and lack of support. Moreover, social cohesion is also not facilitated by redistribution mechanisms: a high level of wage moderation has gone hand in hand with a high level of inequality in income distribution. As we have seen, in France, too, a series of labour market and welfare reforms have taken place in order to overcome the “welfare without work” situation of the 1990s. This process increased employment growth but also led to today’s problem of labour market dualism. Yet the role of the state, in the continental model, is fundamental to an understanding of its path. The state directly promotes, and makes sustainable, temporary and low-income jobs compensating these with income subsidies. Welfare reforms have favoured flexibility, especially functional flexibility, indirectly offering incentives for employment stability and encouraging investment in specific professional skills and internal mobility paths. On the one hand, reforms were able to bring greater financial sustainability to the welfare system, diminishing the importance of welfare on a contributory basis in order to respond to new social risks with a more

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universalistic perspective. This has increased the capacity to promote social inclusion and reduce poverty. On the other hand, however, the traditional characteristics of fragmentation in welfare provision have not disappeared definitively and in some cases have actually been exacerbated. Indeed, today, one of the major challenges for continental capitalism is to maintain the goals achieved—high levels of employment and a developed welfare—while being able to limit the degree of dualism. This will be one of the most important issues that French trade unions and employer organisations will have to address and on which the future of these collective actors will probably be played out. As we have seen, social dialogue in France seems purely formal and lacks the cooperative component necessary to achieve shared decisions. The recent “yellow vest” forms of protest show that workers are organising and mobilising independently from unions, further revealing the latters’ fragility. It is the public actor’s action in support of competitiveness and social inclusion that makes the difference in this context. Public policies, together with the role of large companies and their networks, have enhanced economic innovation, which, however, remains less developed than in the Scandinavian model. At the same time, European integration has in this case been a more favourable factor, contributing to the moderation of product costs and keeping the value of the Euro relatively low, thus helping the growth of export-led countries in Continental—but also Northern—Europe. The role of the state is also a key factor in the case of Sweden, although as we have seen, it is a model that preserves its specific identity based on the particular ability to keep alive the characteristics of a consensual democracy. Successful cooperation with social and economic collective actors is thus constantly directed at negotiated policy decisions. We have already analysed the high capacity to combine flexibility, protection and activation. However, it would be wrong to consider such a model as exempt from major challenges and processes of change. Probably the most important current challenge is linked to the connection between the problems of welfare state sustainability and, especially, immigration, but also other social groups such as welfare recipients and the unemployed. An increasingly widespread anti-immigrant perspective is combined with welfare chauvinism or nationalism. The idea that

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welfare benefits should be restricted to certain groups, particularly to non-immigrants rather than immigrants, is one progressively employed as a strategy of rhetorical argumentation by right-wing populist parties, thus increasing the possibility of a new form of ethnic dualism. This issue is related to the debate on the generosity of the welfare system. Some authors argue that the high level of unemployment benefits, combined with other benefits linked, for example, to housing policies, may have a discouraging effect. Individuals are thus prompted to stay longer on welfare benefits—so much so that, in recent years, significant progressive reduction in benefit generosity and tax relief on low wages have been introduced, increasing the difference between wages and benefits in favour of the former, in order to reduce the inactivity trap (Ibsen and Mailand 2009). Yet, despite the fact that the challenge of financial sustainability exists in such a context of high welfare benefits and increase in life expectancy (Kautto 2010), this model is demonstrating that the combination of growth and widespread well-being is indeed possible. In particular, the constitutive characteristics of high social cohesion and inclusion results from a coordination mechanism between different territorial and governmental levels. As the next chapters will highlight, notwithstanding the importance of the national level of regulation, the majority of welfare and social assistance services are provided with resources from local taxation. Yet, although local governments are becoming providers of a wide range of public services, central government continues to play a very important role—for example by directly influencing the action of local actors through the introduction of ceilings on local taxation. In the multi-level governance of the welfare system, the decentralised level plays an increasingly key role. This means that national institutional arrangements and their link with supranational ones are extremely relevant in terms of explaining both the dynamism and crisis of models of capitalism. However, in this multi-level governance framework, a shift in the understanding of the local level of regulation is required, given that it needs to be integrated with the others. The focus on regional and municipal contexts helps greatly to identify the ability and potentiality of territorial institutions and local political and social actors to effectively fight inequality, create wealth and jobs, and tackle other pressing development challenges.

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References Alestalo, M., Hjort, S.O., & Kuhnle, S. (2010). The Nordic Model: Conditions, Origins, Outcomes, Lessons (Working Paper n. 41). Hertie School of Governance. Amable, B. (2003). The Diversity of Modern Capitalism. Oxford: Oxford University Press. Andersen, T. M. (2012). A Flexicurity Labour Market in the Great Recession: The Case of Denmark. De Economist, 60 (2), 117–140. Andersen, S. K., & Mailand, M. (2005). The Danish Flexicurity Model: The Role of the Collective Bargaining System (Report for the Danish Ministry of Employment). Antikainen, A. (2006). In Search of the Nordic Model in Education. Scandinavian Journal of Educational Research, 50 (3), 229–243. Anxo, D., & Niklasson, H. (2008). The Swedish Model: Revival After the Turbulent 1990s?. Genève: ILO. Arvidsson, M. (2014). Changes to the Swedish Model: Trade Unions Under Pressure. Berlin: Friedrich-Ebert-Stiftung. Ascoli, U., & Pavolini, E. (2012). Ombre rosse: il sistema di welfare italiano dopo venti anni di riforme. Stato e Mercato, 96, 429–464. Ballarino, G., Bernardi, F., Requena, M., & Schadee, H. (2009). Persistent Inequalities? Expansion of Education and Class Inequality in Italy and Spain. European Sociological Review, 25 (1), 123–138. Barbier, J.-C. (2009). Workfare, “flexicurité”, réflexions sur le voyage international des idées politiques dans les politiques sociales et la persistance des compromis nationaux insérés dans les cultures politiques nationales. Communication au Congrès de l’AFSP, Réseau thématique RT23, Politiques sociales, Grenoble, septembre. Barbieri, P., Bozzon, R., Scherer, S., Grotti, R., & Lugo, M. (2015). The Rise of a Latin Model? Family and Fertility Consequences of Employment Instability in Italy and Spain. European Societies, 17 (4), 423–446. Barbieri, P., & Scherer, S. (2009). Labour Market Flexibilization and Its Consequences in Italy. European Sociological Review, 25 (6), 677–692. Botti, A., & Field, B. N. (Eds). (2014). La Spagna di Rajoy. Bologna: Il Mulino. Burroni, L. (2016). Capitalismi a confronto. Bologna: Il Mulino. Burroni, L., & Keune, M. (2011). Flexicurity: A Conceptual Critique, in European. Journal of Industrial Relations, 17 (1), 75–91.

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Burroni, L., & Trigilia, C. (2012). Politics Against Market. The Hard Way of Italian Capitalism. In I. Masa-nobu (Ed.), Varieties of Capitalism, Types of Democracy and Globalization (pp. 106–123). Abingdon, Oxon: Routledge. Busemeyer, M., & Nikolai, R. (2010). Education. In F. G. Castles, S. Leibfried, J. Lewis, H. Obinger, & C. Pierson (Eds.), The Oxford Handbook of the Welfare State. Oxford: Oxford University Press. Crouch, C. (1994). Industrial Relations and European State Traditions. Oxford: Oxford University Press. Crouch, C. (1999). Social Change in Western Europe. Oxford: Oxford University Press. Dølvik, J. E. (2009). Percorsi nordici di trasformazione del mercato del lavoro. Stato e Mercato, 86, 217–234. Esping-Andersen, G. (1990). The Three Worlds of Welfare Capitalism. Cambridge: Polity Press. Ferrera, M. (1996). The ‘Southern Model’ of Welfare in Social Europe. Journal of European Social Policy, 6 (1), 17–37. Ferrera, M. (2010). The South European Countries. In F. G. Castles, S. Leibfried, J. Lewis, H. Obinger, & C. Pierson (Eds.), The Oxford Handbook of the Welfare State. Oxford: Oxford University Press. Fullin, G. (2004). Vivere l’instabilità del lavoro. Bologna: Il Mulino. Godino, A., & Molina, O. (2011). Failed Remedies and Implications of the Economic Crisis in Spain (OSE Re-search Paper n. 6). Goetschy, J., & Jobert, A. (2011). Employment Relations in France. In G. J. Bamber, R. D. Lansbury, & N. Wailes (Eds.), International and Comparative Employment Relations: Globalization and Change (5th ed.). London: Sage. Guillén, A. (2010). Defrosting the Spanish Welfare State: The Weight of Conservative Components. In B. Palier (Ed.), A Long Goodbye to Bismarck? (pp. 183–206). Amsterdam: Amsterdam University Press. Gumbrell-McCormick, R., & Hyman, R. (2013). Trade Unions in Western Europe: Hard Times, Hard Choices. Oxford: Oxford University Press. Hall, P., & Soskice, D. (Eds.). (2001). Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press. Hemerijck, A. (Ed.). (2017). The Uses of Social Investment. Oxford: Oxford University Press. Hiilamo, H., Kangas, O., Fritzell, J., Kvist, J., & Palme, J. (2013). A Recipe for a Better Life: Experiences from the Nordic Countries. Helsinki: CMI-Martti Ahtisaari Centre. Ibsen, C. L., & Mailand, M. (2009). Flexicurity and Collective Bargaining — Balancing Acts Across Sectors and Countries (FAOS Forskningsnotat 102).

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Jensen, J. (2012). A New Politics for the Social Investment Perspective: Objectives, Instruments, and Areas of Intervention in Welfare Regimes. In G. Bonoli & D. Natali (Eds.), The Politics of the New Welfare State. Oxford: Oxford University Press. Kangas, O., & Kvist, J. (2012). Utopia or Dystopia? Well-Being in the Nordic Welfare States. In Försäkrings-kassan, Kön, klass och etnicitet: Jämlikhetsfrågor i socialförsäkringen – Rapport från forskarseminariet i Umeå. 18–19 januari 2012, Stockholm. Kangas, O., & Palme, J. (Eds.). (2005). Social Policy and Economic Development in the Nordic Countries. London: Palgrave Macmillan. Karamessini, M. (2007). The Southern European Social Model: Changes and Continuities in Recent Decades (ILO Discussion Paper n. 174). Kautto, M. (2010). The Nordic Countries. In F. G. Castles, S. Leibfried, J. Lewis, H. Obinger, & C. Pierson (Eds.), The Oxford Handbook of the Welfare State. Oxford: Oxford University Press. Kjellberg, A. (2006). The Swedish Unemployment Insurance. Will the Ghent System Survive? Transfer, 12(1), 87–98. Kvist, J., & Greve, B. (2011). Has the Nordic Welfare Model Been Transformed? Social Policy & Administration, 45 (2), 146–160. Kvist, J., Fritzell, J., Hvinden, B., & Kangas, O. (Eds.). (2012). Changing Social Equality: The Nordic Welfare Model in the 21st Century. Bristol: Policy Press. Mailand, M. (2009). Corporatism in Denmark and Norway—Yet Another Century of Scandinavian Corporatism? WSI Mitteilungen: Monatszeitschrift des Wirtschafts- und Sozialwissenschaftlichen Instituts in der Hans-BöcklerStiftung (No. 1/2009). Martin, C. J., & Swank, D. (2012). The Political Construction of Business Interests: Coordination, Growth, and Equality. Cambridge: Cambridge University Press. Meardi, G. (2012). ‘Mediterranean Capitalism’ Under EU Pressure: Labour Market Reforms in Spain and Italy, 2010–2012. Warsaw Forum of Economic Sociology, 3(1), 51–81. Mori, A., Galetto, M., Meardi, G., Martín Artiles, A., Molina O., & Godino, A. (2016). Active Inclusion and Industrial Relations from a Multi-level Governance Perspective. WP B Comparative Country Report on France, Italy, Poland, Spain, Sweden and the UK, Airmulp Project. OECD. (2018). OECD Regions and Cities at a Glance 2018. Paris: OECD Publishing. Palier, B. (Ed.). (2010). A Long Goodbye to Bismarck? The Politics of Welfare Reform in Continental Europe. Amsterdam: Amsterdam University Press.

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Palier, B., & Thelen, K. (2010). Institutionalizing Dualism: Complementarities and Change in France and Germany. Politics & Society, 38(1), 119–148. Pavolini, E., Argentin, G., & Fullin, G. (2015). Le politiche di sostegno alle transizioni istruzione-lavoro. In Ranci and Pavolini, Le politiche di welfare. Bologna: Il Mulino. Pedersini, R. (2014). European Industrial Relations Between Old and New Trends. Stato e Mercato, 102, 341–368. Ranci, C., & Pavolini, E. (2015). Le politiche di welfare. Bologna: Il Mulino. Rodrìguez Cabrero, G. (2009, April). Spain: Assessment of Minimum Income Schemes. European Commission. Sanz, P. (2014). Spain: Industrial Relations Profile. http://www.eurofound.eur opa.eu/it/default/observatories/eurwork. Saraceno, C. (2013). Il welfare. Bologna: Il Mulino. Scalise, G. (2019). The Local Governance of Active Inclusion: A Field for Social Partner Action. European Journal of Industrial Relations. https://doi.org/10. 1177/0959680119889707. Schröder, M. (2013). Integrating Varieties of Capitalism and Welfare State Research: A Unified Typology of Capitalisms. Basingstoke: Palgrave Macmillan. Thelen, K. (2014). Varieties of Liberalization and the New Politics of Social Solidarity. New York: Cambridge University Press. Trampusch, C. (2007). Industrial Relations as a Source of Solidarity in Times of Welfare State Retrenchment. Journal of Social Policy, 36 (2), 197–215. Van Rie, T., Marx, I., & Horemans, J. (2011). Ghent Revisited: Unemployment Insurance and Union Membership in Belgium and the Nordic Countries. European Journal of Industrial Relations, 17 (2), 125–139. Vogel, J. (Ed.). (2003). European Welfare Production: Institutional Configuration and Distributional Outcome. Amsterdam: Kluwer.

5 From Macro to Micro Evidence: Supranational Strategies, Local Interpretations

5.1

Active Labour Market Policies: Multiple Functions Behind Different Logics

The shift towards the active inclusion idea and the delivery of active labour market policies (ALMPs) has been well documented in the academic literature (Bonoli 2013; Barbier and Ludwig-Mayerhofer 2004; Eichhorst and Konle-Seidl 2008). As observed in chapter three, in hard economic times, with pressing constraints on public social policy due to fiscal consolidation and austerity programmes, the ESF incentive has encouraged even the most change-resistant welfare states to include the active inclusion idea in their policy reforms. Since the ESF is directed at European regions and subnational initiatives, as explained in the next section, the local level of governance had a growing and relevant role in this process. A wide range of instruments and measures labelled as ALMPs has been designed and introduced by national and local governments throughout Europe since the 2000s. This was combined with numerous reforming initiatives intended to improve the efficiency and service quality of Public Employment Services (PES). Preventive and active logic also became a © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_5

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part of PES administration and many changes have been introduced. In most European countries, PES were decentralised to regions, with some of their services increasingly outsourced to private providers and, in some cases, they took on the task of providing income support to jobseekers (Mosley 2003; Sol and Westerveld 2005). The development of ALMPs boosted the elaboration of different kinds of tool that have distinctive functions and follow diverse logics. Scholars have clustered and classified these in many ways. Bonoli (2010), for instance, identifies four ideal-types of ALMPs, stressing their different functions: 1. Incentivising measures aimed at encouraging work participation for benefit recipients (i.e. tax-credits, in-work benefits, benefit conditionality and reinforcing time limits on recipiency); 2. Employment assistance to remove obstacles to labour market participants (i.e. placement services, counselling and job search programmes); 3. Occupations which stimulate labour market participation and the activation of the jobless in order to prevent human capital depletion associated with unemployment spells (i.e. job-creation schemes in the public sector, job-related training); 4. Human capital investment, which includes education at all levels and vocational training. Another relevant analytical distinction has been proposed by Eichhorst and Konle-Seidl (2008) who differentiate between “demanding” and “enabling” activation. Demanding activation refers to policies aimed at increasing job search requirements and the probability of accepting a job. This implies more demand on individual behaviour in terms of mandatory job search obligations and potential sanctioning. Emphasis on a fast entry into employment by way of demanding elements (the so-called work first strategy) means: 1. Lowering the duration and level of insurance or assistance benefits;

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2. Making availability criteria and sanctioning clauses stricter (i.e. a more restrictive definition of “suitable job offers”, punitive sanctions for non-compliance); 3. Requiring individual activity through integration contracts, monitoring individual job search efforts and making participation in ALMPs mandatory; 4. Replacing out-of-work income with in-work benefits that depend on being active in employment (following the logic of making work pay). Enabling activation, on the other hand, refers to policies that try to raise the level of individual employability and productivity. These imply investment in human capital to improve employability in the longer run, in order to make job searchers more attractive to potential employers and to increase potential wages. This approach is based on: 1. Job-related training and upskilling schemes, job search assistance and counselling; 2. Start-up grants, subsidised employment and mobility grants supported by income benefits; 3. Fiscal incentives/make work pay (i.e. earnings disregard clauses, wage supplements granted in case of taking up low-paid jobs, in-work benefits); 4. Personalised and family support (i.e. psychological and social assistance, childcare allowance, etc.). Yet, given the wide range of measures that can be put in place to facilitate inclusion and given the different logics that such measures can follow, what kind of policies, precisely, does the European Commission want to promote with the idea of active inclusion? This is not explicit in the recommendation, where national and local governments are asked to “take the necessary measures to promote inclusive labour markets in order to ensure access to employment is an opportunity open for all” (Commission Recommendation 2008/867/EC, p. 13). Additionally, domestic authorities have to “facilitate the integration into sustainable, quality employment of those who can work and provide

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resources which are sufficient to live in dignity” (Commission Recommendation 2008/867/EC, p. 12). The lack of a univocal and precise definition of policy instruments to obtain very broad goals renders the strategy imprecise, open to different interpretations and associated with multiple types of policies, ranging, as we have seen, from upskilling programmes to different forms of subsidies and job incentives. Like other European policy principles (i.e. flexicurity), active inclusion is an extensive, ambiguous and imprecise notion, sometimes incoherently or ideologically described and understood differently in different contexts (Serrano Pascual and Jepsen 2019; Keune and Serrano 2014; Burroni and Keune 2011; Barbier and Ludwig-Mayerhofer 2004). However, if we want to explore the domestic interpretation and implementation of the European Commission’s recommendation, it is particularly useful to shift our attention from the description of the different policy tools to the principles and logics underlying the idea of active inclusion.

5.2

Activation, Conditionality and Personalisation

There emerges, from content analysis of the recommendation and other related policy documents (i.e. the 2017 staff working document on the implementation of the 2008 Commission Recommendation; the 2015 and 2013 policy roadmaps for the implementation of the Social Investment Package, etc.), the presence of three interconnected key concepts: activation, conditionality and personalisation. These are strategic core principles for the functioning of active inclusion. Their added value is that, if understood in a complementary manner, they are capable of enforcing the link between job search, participation in targeted upskilling programmes and income support reception––thus counteracting potentially negative effects of out-of-work benefits and increasing the potential of targeted and personalised measures. As with active inclusion, in this case, too, the lack of a univocal definition for these principles has not prevented them from increasingly becoming part of political, administrative and academic documents and

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discourse. They have entered the national and local policy vocabulary on welfare provision and labour market regulation, and are commonly used in EU secondary regulation, national and local policy documentation as core notions. The subjects interviewed for local-level analysis, as reported in Chapter 6, confirm that they are frequently used by the policymakers, social partners and street-level bureaucrats. The first principle, activation, is designed to transfer the unemployed and inactive person, faced with complex challenges and extensive barriers, into the labour market, job search or training programme. It is described as an enabling concept, building on a preventive system capable of tackling in-work poverty to expand employability, avoiding disincentives to work and poverty traps. As Eichhorst and Konle-Seidl (2008) show, activation places emphasis on two different aspects: on the one hand, incentives to return to the labour market and to reduce the length of time people are out of work; on the other, investment in human capital and the promotion of capabilities. Activation, however, in both its forms, is inextricably linked to principles of conditionality and personalisation––something stressed in European Commission documents. The activation framework is based on the principle of conditionality, given that claiming benefits has to be conditional upon individual action and cooperation. Participation in training, education and job search programmes is made mandatory by being a prerequisite for further benefit receipt––something identified as a key factor in improving the effectiveness of labour market policies. However, the link between activation and income support can be tough and punitive to varying degrees, and the conditionality principle can be applied on a number of levels, ranging from participation in activation programmes, to mandatory job search combined with participation in activation, up to the use of sanctions for those who fail to fulfill entitlement conditions or to participate fully in activation programmes. Thus, activation approaches and intensity of conditionality can vary according to context and to individual cases. Finally, the link between activation and conditionality is strengthened thanks to quality services able to offer personalised programmes and contracts, especially where the administration of income support claims is integrated with PES. The notion of personalisation is emphasised by

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the Commission in relation to the fundamental role played by activating and enabling services: “personalized approaches” are required “to meet the multiple needs of people” and “individual contracts between service providers and participants, setting out their rights and obligations, empower the individual and contribute to developing human capital” (Commission Recommendation 2008/867/EC, pp. 13–14). This third principle, personalisation, makes mutual obligation a key element: benefit recipients are obliged to accept personalised employment options or training schemes in order to receive benefits while, on the other hand, the state is obliged to enhance the employability of benefit claimants. The local-context comparative analysis reported in chapter six will highlight the fact that, although the active inclusion recommendation is not explicitly mentioned in domestic policy strategies, where there are general references to the EU approach and tools, it is possible to identify the three policy principles of activation, conditionality and personalisation in many labour market measures combined with income support programmes and PES reforms. This confirms the fact that ideas and concepts promoted by the EU influence domestic policies more than European citizens and politicians themselves realise. Yet, despite the use of the same vocabulary throughout European countries, identical policy principles take on different meanings in different contexts. This is the result of a process of domestic interpretation that depends on context-related institutional features, path-dependency and the actions of political and social actors. Thus, notwithstanding the diligent transposition of EU legislation and the attention paid to EU discourse, the implementation of active inclusion is adjusted to suit domestic strategies. This process of adaptation means that, in certain contexts, active inclusion focuses, for instance, on marginalised people and the three principles are enacted to increase social inclusion and participation in society. In others, meanwhile, active inclusion focuses specifically on unemployed people and the three principles aim at increasing participation in the labour market. The local adaptation of EU concepts is, as will be explained, rooted in both political interests and cultural traditions. A universalistic model of active inclusion, based on an encompassing and redistributive income security together with active measures, stands in contrast to a selective model, determined by individual behaviour

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and aimed at reducing the burden on public assistance (Johansson and Hvinden 2007). Different logics can be also found behind the principle of conditionality. In some contexts, this is less linked to activation and conceived more as general evidence of the means to have access to income benefit; in others, it is strictly connected to activation and subsidies are rigorously related to training, active job search and job offer acceptance. The notion of personalisation, too, in practice, undergoes a process of reinterpretation following very different logics. It often refers to targeted social policy measures, directed at specific social groups, such as immigrants or the young, but it can be also associated with personalisation in terms of responsibility for the condition of unemployment. Indeed, it can be interpreted in the sense that the condition of the person depends on his/her individual investment. This is, for instance, the logic behind the making work pay idea, aimed at reducing dependence on subsidies though an individualistic understanding of the unemployment condition. It is interesting to note that even the concept of labour market flexibility has had different domestic interpretations. Labour market flexibility, which refers to the capacity of labour to respond to changes in market conditions, is considered an important aspect of how labour market functions adjust supply to demand. Reforming employment protection legislation by introducing flexibility can affect individuals in the labour market in different ways. In some countries, flexibility has been interpreted as a general principle and has been directed at all participants in the labour market: so, greater flexibility has been introduced both in the hiring and firing of all workers (regardless of their type of contract), employee turnover, wage determination, minimum wages, hours of work, etc. In other countries, in contrast, the principle has only been directed at specific groups of workers and circumstances. This is the case, for instance, of so-called flexibility at the margins of the labour market, a typical characteristic of a dualised labour market. In this case, flexible labour conditions affect only specific groups of workers––fixedterm employees only, for instance––without affecting the conditions of the workers already employed in permanent contracts. The growth of these atypical employment contracts has led to what are often referred

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to as segmented labour markets. In fact, reforms that increase flexibility only at the margin mostly have an impact on labour market entrants or workers searching for a job, while leaving existing employment contracts, or “insiders”, practically unaffected. The ambiguities and contradictions that emerge from policy ideas and political discourse are thus reproduced in domestic contexts, or even used to accommodate local priorities and needs. The diffusion of ideas is not a linear process. European strategies and rules try to come to grips with heterogeneity and trigger conflict. Institutional factors significantly alter the meaning of ideas. While still highly influential, they are, of necessity, forced to contend with the social, political, economic, cultural and historical conditions of the receiving countries.

5.3

The European Social Fund and the Relevance of Local Regulation

As already mentioned, the incentive of the European Social Fund (ESF) has encouraged welfare state reforms at all territorial levels throughout Europe to include the active inclusion idea in their policy framework. This is one of the European Structural and Investment Funds (ESIF), which are dedicated to improving social cohesion and economic wellbeing across the regions of the Union. Created in the foundational Treaty of Rome in 1957, it is the oldest of the Structural Funds. As of today, it pours 10 billion euros per year towards the main goal of fostering employment, reducing social exclusion and investing in skills; it also, in some EU countries, supports administrative reform. The specific goals, defined in the Europe 2020 strategy, are set by the European Commission and EU countries that agree on ESF priorities and how to spend its resources. In particular, each member state, in partnership with the European Commission, agrees on one or more Operational Programmes for ESF funding for the seven-year programming period. Operational Programmes describe the priorities for ESF activities and their objectives. The EU distributes ESF funding to the

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member states and regions to finance their operational programmes. These programmes fund employment-related projects which are run by a range of public and private organisations. The partnership also involves a wide range of other actors, such as NGOs and workers’ organisations, in the design of the ESF strategy and the monitoring of its implementation. Working in partnership is considered the best method to ensure that spending is as effective and efficient as possible and that it meets the needs of the region or community concerned. The functioning of the ESF is based on a co-financing agreement, which ensures ownership at national and regional level. ESF funding is always accompanied by public or private financing (co-financing rates vary between 50% and 85–95% in exceptional cases––of the total project costs, depending on the relative wealth of the region). Shared management allows for taking responsibility at the appropriate level: ESF guidelines are designed at European level through consultation with a wide variety of stakeholders, and Operational Programmes are negotiated between national authorities and the Commission. Implementation on the ground, through Operational Programmes, is managed by the relevant authorities in each country. The level of ESF funding and the types of projects that are funded differ from one region to another, depending on relative wealth. EU regions are divided into three funding categories based on their regional per capita GDP compared to the EU average (Brine 2002). Three key priorities can be identified in the 2014–2020 ESF Operational Programmes: the first is to boost worker adaptability with new skills and enterprises with new ways of working. The second priority focuses on improving access to employment, either by helping young people make the transition from school to work, or training less-skilled job seekers in order to improve their job prospects. Indeed, vocational training and lifelong learning opportunities to give people new skills form a large part of many ESF projects. The third priority focuses on helping people from disadvantaged groups to get jobs––those born abroad, those with disabilities, the long-term unemployed, etc. This is part of enhancing social inclusion, in recognition of the important role played by employment in helping people to integrate more successfully

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into society and everyday life. The financial crisis has led to a redoubling of efforts to keep people in work or help them return to work quickly if they lose their jobs. The nature, size and aims of ESF projects are extremely varied, and they address a wide variety of target groups. There are projects aimed at education systems, teachers and schoolchildren; at young and older job seekers; and at potential entrepreneurs from all backgrounds. The ESF thus finances tens of thousands of local, regional and national employment-related projects all over Europe: from small projects run by neighbourhood charities to help local disabled people find suitable work to nationwide projects that promote vocational training throughout the whole population (Dubois and Fattore 2011). Since the ESF is primarily directed at European regions and subnational initiatives, the local level of governance has had a growing and relevant role in social and labour market policies––a role that has been bolstered by the decentralisation and subsidiarisation of competencies in this field that have taken place in many EU countries since the 1990s (Kazepov 2010; OECD 2003). This is a process that the EU and international organisations have actually promoted since the 1980s, through strengthening interregional cooperation over social policy and supporting institutional and financial links between territorial initiatives and supranational authorities (Ferrera 2005). The increasing role of local institutions was normatively justified as the best way towards improving social, economic and environmental viability and sustainability. It is the one of the duties of local government to promote appropriate business and employment opportunities, providing overall quality of life for the people who reside in the communities. This has been supported by three main arguments: by being closer to citizens, the local level is considered to be more participative and at the same time more responsive to citizens’ social needs; secondly, since citizens expect their local government to be fair and to spend wisely, the local level is considered financially more effective and consequently able to reduce public expenditure waste; third, the dynamic arrangements generated by the specific local socio-economic and cultural conditions

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give rise to more sustainable systems and enhance innovative practices (Andreotti et al. 2012; Ferrera 2005; Oosterlynck et al. 2013). These arguments are in line with the multi-level governance approach, which emphasises the involvement of a large number of decision-making arenas at multiple territorial levels, interlinked in a non-hierarchical way: this results in an increase in governance flexibility as opposed to an approach that is concentrated in one centralised level (Hooghe and Marks 2003). This multi-level approach, based on subsidiarity and coordinated action, has been acknowledged by the EU, which has increasingly called for all levels of government in Europe to enhance the added value of multi-level governance and recognise the legitimacy and responsibility of local and regional authorities for the implementation of public policies. The territorial reorganisation of welfare systems––something that has especially occurred since the 1990s––greatly increased administrative and budgetary responsibility and the autonomy of regions and municipalities in terms of the provision of employment and social services and assistance. In addition, the devolution of PES to municipalities multiplied the actors involved in its management, including private providers, and in some cases, as we will see, weakening the role of social partners. Analysing this “rescaling” process, Yuri Kazepov (2010) associates different territorial connotations with the various models of welfare state. First, the liberal welfare system is less affected by decentralisation and continues to be characteris–ed by a centrally framed organisation. Social measures are thus mainly managed homogeneously throughout the country. However, the process of devolution has had an impact on labour market governance and in recent years territorial differences related to the arrangements of ALMPs have been identified. Second, the social democratic welfare system is characterised by a local autonomy centrally framed system, in which municipalities have a high level of independence in managing and funding policies in a nationally defined regulatory context. In this case, too, the aim is to avoid excessive territorial differentiation. An example of this model is the Scandinavian system, in which the “nationalized local government” has strong local fiscal and politico-administrative capacities designed to guarantee

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universal social rights with contextualised service provisioning (Sellers and Lindström 2007). Third, corporatist welfare systems are characterised by a variety of territorial organisations. Federal countries, such as Germany and Belgium, have regionally framed systems in which exclusive legislative competences on social policies mainly pertain to regions (except for insurance-based benefits and provisions). However, horizontal coordination between regions guarantees that there is no excessive diversification. In centralised countries, on the other hand, such as France, welfare measures are largely regulated and funded at the national level, with the exceedingly hierarchical structure assigning implementation competences to the various administrative levels. The familistic welfare system of Southern European countries has gone through an emphatic process of devolution and can be defined as regionally framed. In this case, regional differentiation has not been limited by guaranteed universal rights and these countries are increasingly characterised by fragmentation and diversification. Finally, Central-Eastern Europe’s transition welfare systems have territorial organisations that are moving in different directions, with countries characterised by a transitional mixed model––multi-level arrangements (in Poland, for example) or more assertive central control (e.g. in Slovenia) (Kazepov 2010; Oosterlynck et al. 2013). The territorial reorganisation of welfare in the context of European multi-level governance entails a double dynamic made of upscaling and downscaling policy responsibilities and resources between local, national and supranational levels (Kazepov 2010). This impacts on the reorganisation of public and private services and on the coordination of actors and tools involved in welfare provision. The so-called welfare mix (Ascoli and Ranci 2002; Evers and Laville 2004), the combination of different actors and sectors involved in the delivery of welfare programmes–– the public, private, voluntary and informal sectors––requires a process that rebalances “the relationship between the public sector, the market economy and the civil society designed to ease the difficult transition from the welfare state to the ‘active welfare society’” (Andreotti et al. 2012, p. 1932).

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Decentralisation and multi-level governance have led to a hybridisation of social services and the boundaries between the public and the third sectors have become more and more indefinite (Evers 2005). This means that public services have started to adopt third-sector features and third–sector organisations have begun to be increasingly dependent on state funding and regulations. These processes led to the development of new practices in public administration, increasing the complexity of policy decision-making and implementation and intensifying the agency of civil society. This is a change that has also been signalled by an adjustment in terminology through the shift from “government” to “governance”, in order to highlight the new forms of horizontal coordination between a wide variety of actors with different aims: this includes political actors and institutions, corporate interests, civil society, social partners and governments at different territorial levels (Pierre 2000; Bevir 2006). The shift from government to governance was intended to stress the divergence between governmental and governance arenas. While the former are characterised by vertical policy and decision-making, the latter work through cooperative relations between governmental units located at different territorial levels and a variety of non-public bodies such as third-sector organisations, firms and unions. New forms of governance involve bargaining, compromise-seeking and problem-solving practices deemed necessary for policy-making and implementation. These changes, related to the decentralisation and devolution of responsibility, and influenced by European multi-level governance, have been particularly relevant in the case of ALMPs. Indeed, despite differing national and subnational state roles, their transfer towards the territorial level of regulation has been a visible tendency in almost all European public policy reforms, making it possible to adapt policy programmes to local needs and circumstances and involve local stakeholders (Kazepov 2010). A wide margin of manoeuvre allows local actors to design their own activation, upskilling and matching programmes, to fund additional income support schemes and to decide on job incentive reinforcement. Even in those contexts where employment policies are centralised, and the state maintains a strong role in steering policies, such as in France

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and Sweden, the local level plays a key role in the development of the national guidelines within local networks, where the meaning, content and targeting of measures are renegotiated. On the one hand, the situated actions (Künzel 2012; Bonvin and Rosenstein 2015) of regional and municipal governments develop and supplement national labour market policy with initiatives intended to create opportunities and to contribute to the functioning of the local labour market for jobseekers and employers. On the other, local initiatives are directly financed by the ESF, influenced by supranational recommendations and monitored by EU performance and benchmarking indicators.

5.4

Governance by Indicators

Since the mid-1990s, the expansion of EU multi-level governance has also implied a rapid increase in the production and use of performance indicators. In all policy arenas, indicators are the main tools employed to provide information for decision-making. They are adopted to identify problems, to assess the effectiveness and efficiency of policies and monitor their progress, to verify whether initial goals have been accomplished and to decide how to allocate funds. One of the most influential bodies in this field is the European Commission. It provides sets of diagnostics and recommendations for the actions of member states, backed up by performance indicators for ranking and benchmarking, and subsidised by Structural and Social Funds (Zeitlin et al. 2005). Comprehensive data and common indicators have become a key necessity for the development of EU coordination, learning mechanisms between member states and the search for responses to common challenges. However, while a great deal of attention has been paid by European and national agencies to setting-up standardised measurements and to verifying their suitability from a statistical point of view, this increasing use of indicators has not been accompanied by a systematic reflection on their steering effects, social implications, unintended consequences and pitfalls. Indicators are statistical measures that represent social facts, trends and conditions, but they are not objective and neutral. They are the outcome

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of a process of social construction through which knowledge and facts are affirmed, shaped, and made known and “true” (Berger and Luckmann 1966; Meyer and Rowan 1977). This intrinsic characteristic of indicators merits serious attention since they have “the potential to alter the forms, the exercise and perhaps even the distribution of power” (Davis et al. 2012, p. 4). Indicators guide and affect public policy, influencing problem definition and policy choice. They have normative, social and political consequences (Mügge 2016; Kelley and Simmons 2014). As Law, Ruppert and Savage (2011) argue, they affect social life and history. These, however, are unexplored features of indicators, since we know very little about their political construction and legitimisation, their direct influence on policy-making, their social implications and unintended effects on national labour markets. The effects of what has been defined governance by indicators (Davis et al. 2012) are particularly evident in labour market regulation, a key policy arena in which member states invest about 2% of their GDPs and where EU indicators weigh heavily. The European Employment Strategy (EES)––now part of Europe2020 Strategy and implemented through the European Semester––is based on a set of common indicators, the scoreboard of key employment and social indicators, which are used to assess the employment situation of member states and their responses to EU recommendations. Interdependences between European, national and local levels, as well as between the actors involved in the European labour market governance, are strengthened by the use of EES performance indicators: quantified EU-level objectives are established in high-level agreements (i.e. the Lisbon Treaty and Europe 2020), expanded through national reference frameworks (i.e. Operational Programs and Country Reports based on the scoreboard assessment of key employment and social indicators) and, finally, implemented through national, regional and local policies. These performance indicators, which drive European governance and funding in this field, help ensure the efficient use of resources and support evidence-based policy-making (Boaz and Nutley 2009). However, they are not without their dysfunctions and ailments (Karoly and Balàs 2015).

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First, from a methodological perspective, the ways in which they are calculated and how they simplify complex social phenomena are often contested. Despite the improvement of internationally comparable datasets, many authors demonstrate the limitations, contradictions and distortions of indicators both from a statistical and theoretical point of view (Karamessini 2015; Salais 2006). For example, employment rate is a gross target, covering all types of job and is not calculated in fulltime equivalents: any task counts, regardless of length, number of hours worked per week, status, pay, quality of job and national legislation over contracts. Unemployment rate is also ambiguous, since the definition of “unemployed person” varies from country to country: in some statistics, only people who do not work at all may be considered unemployed, while others include anyone who works up to 15 hours per week but would like to work more. The same is true for job search data, which is closely dependent on the registration rules of domestic employment agencies and on unemployed people in receipt of benefit, determined by the rules applicable under the unemployment benefit systems (eligibility, duration and level of benefit, reasons for its withdrawal, etc.). These variations reflect the differences in the diverse systems of social transfer and support. Second, from a normative perspective, indicators embody ideological orientations, concealed behind the apparently unbiased statistical tool. Indicators are selective, directing the gaze towards one group of problems and creating blind spots for others. They have the power to define the way in which problems are identified, conceptualised, categorised, quantified and analysed, creating a system of knowledge that steers policy decisions and influences behaviour (Engle Merry et al. 2015; Keune and Serrano 2014). Normative orientations influence decision-making with regard to choosing one indicator and excluding others, and affect the way in which a problem is formulated. In other cases, the availability of data also influences how problems are defined, with that which is not measurable excluded from the picture. Third, the political choice of which indicators to use and which not to use can produce a performance paradox, unintended consequences and social costs, such as strengthening forms of discrimination in the labour market. This happens, for instance, when policies aimed at increasing the

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employment of women, migrants or disabled people are developed on the basis of indicators that measure only un/employment rates––that is the number of women, foreigners and people with disabilities in employment/unemployed. By promoting an increase in their employment rate, these measures overlook the implications in terms of the type, conditions and quality of employment that is created and the new forms of inequality and discrimination that they may foster. Another example of an indicator which is used to assess the effectiveness of employment policies is the average cost of a new employee. If the underlying logic is “the less a new job costs, the more jobs can be created”, and “the more jobs the better”, this indicator does not address the sustainability of the new jobs: their durability, jobqualification matching, skills development, working conditions, social protection and the range of real opportunities offered to unemployed people. In this way, such an indicator can lead to new forms of social risk and segmentation, as well as to in- and out-of-work discrimination. Thus, the use of performance indicators to decide priorities and steer political action reinforces the influence of supranational ideas. Indicators cannot be treated uncritically, since they shape objectives and competition mechanisms, exercising forms of coercion, and can be used by government to avoid negotiation with other actors (Le Gales 2016).

5.5

From Ideas to Policy and Delivery: Research Design

What is the response of the local context to supranational pressures? What happens to European policy ideas when they reach the local level of regulation and must be implemented? How are these translated into local programmes and practices? Who are the actors that take part in this process? Implementation is inherently more difficult to observe than policy in laws and programmes, and it is only rarely the object of systematic empirical research (Hemker 2017). For this reason, fieldwork research and qualitative case studies are essential to assess the local interpretation of supranational paradigms.

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In the following chapter, I use three comparative case studies to assess the transposition of the idea of active inclusion at the local level in Spain, France and Sweden and demonstrate that, despite the convergence towards it in the vocabulary used by actors involved in labour market governance, its translation into local measures is rather different. As we will see, the three core principles of active inclusion––activation, conditionality and personalisation––assume very diverse meanings in the three contexts investigated, with significant implications for policy-making. To explain the domestic varieties of active inclusion, at the conclusion of this book I will bring into focus the interplay between structure and the agency of competing actors that participate in the local governance of active inclusion, i.e. industrial relations and political actors, third-sector organisations and street-level bureaucrats. To this end, I selected three local case studies in three European regions in order to conduct the fieldwork: the city of Lyon in RhôneAlpes; Gothenburg in West Sweden; and Barcelona in Catalonia. As already mentioned, the content analysis of European, national and local policy documents shows a convergence towards the three principles underlying active inclusion––activation, conditionality and personalisation. They have become key words in the policy programmes and speeches of political actors and stakeholders at all territorial levels, influencing the policy agenda. This result has been also confirmed by the interviews conducted in the three selected contexts, with interviewees employing EU terminology and the key concepts of active inclusion, even if they were not familiar with the European Commission’s recommendation. The sense associated with these terms and concepts was not, however, the same everywhere. To assess the meaning associated with these common principles, and to track and interpret the causal mechanisms and relationships in place that led to their interpretation, for the empirical analysis I combine the use of process tracing and qualitative cross-case comparison (Beach 2018). Process tracing is a method that aims at unpacking causality mechanisms and understanding the “process whereby relevant variables have an effect” within individual cases (Hall 2008, p. 306). This technique, which is particularly sensitive to the context in which processes unfold, allows for systematic and rigorous qualitative analysis of causal effects and

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chains. It does not seek precise estimates of specific causes, but observes causal process through close-up qualitative analysis within single cases (Trampush and Palier 2016). The analysis is based on a broad range of sources: on the one hand, the review and thematic content analysis of EU, national and local policy documentation, communication, programmes, press accounts and regulations collected both online––on the websites of DG Employment, Ministries of Labour, regional and municipal labour and social units, agencies and PES––and directly in the three contexts; on the other, qualitative data collected through 35 semi-structured interviews with policymakers and relevant key informants (i.e. PES staff, social partners, regional and municipal officers for social services and labour market units, local expert and policy advisors) conducted between the end of 2015 and 2017 in the three cities. This micro-level analysis and a focused comparison allow us to explore the processes behind the interpretation from below of active inclusion and its actual realisation.

5.5.1 The Case Studies In the next chapter, I compare three diverse “local worlds of activation” (Garsten et al. 2013), showing the different interpretations of the active inclusion idea and the implications in terms of policy-making. The three contexts in Spain, France and Sweden have been selected so as to represent different types of political economy, welfare state and industrial relations regime (Table 5.1). Table 5.1 Welfare state and industrial relations regimes Spain Welfare/Capitalism Mediterranean regimes Industrial Pluralist/Staterelation centred tradition

France

Sweden

Continental/Conservative

Nordic/Social democratic Corporatist

Conflictarian

Sources Esping-Andersen (1990), Ferrera (1996), Hall and Soskice (2001) and Crouch (1993)

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In the three countries, labour market governance is based on a complex multi-level system, with a high number of institutional actors involved with financial and administrative responsibility: labour policy is regulated by national laws and implemented by the local offices of the PES. However, regions and municipalities also have a regulative, financial and administrative capacity, especially with regard to training, social assistance and local development. Although Spain shows the highest degree of regionalisation, in France and Sweden mid-level institutions are not mere implementers of national policy, being autonomous in relation to many welfare provisions and services. Public administration has a multi-level structure and governance is shared among administrative bodies at regional, provincial and local levels. The rationale for this territorial fragmentation of administration is based on the possibility of more successfully accommodating the needs of the local community and improving accountability. A place-based governance, closer to people, can provide policies that better match citizens’ preferences and allows for better access to policymakers, improving political accountability (Table 5.2). The three selected regional contexts, Catalonia, Rhône-Alpes and West Sweden, are among the most economically dynamic metropolitan regions in Europe and all of them are driven by competitive and international second capital cities. They have a strategic geographical position and strong international trading activities, based on solid economic ties with the other European competitive regions: two of them, Rhône-Alpes and Catalonia, together with Baden-Würtemberg and Lombardy, form part of the so-called “four motors for Europe”. All of them have a longstanding industrial tradition but have experimented with a progressive transformation of their identity, becoming global and post-industrial cities based on a transition to new economic and innovative sectors such as high-tech industries, biomedicine and telecommunication. These conditions are particularly relevant for the analysis: in these metropolitan contexts, GDP per capita and male and female employment rates are above the national average (with the exception of the Swedish case, where the rate is still high) and above or in line with the European average. This means that there is a need for a labour force and

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Table 5.2 Regional economic and labour statistics at the time of the fieldwork (2016)

GDP––PPSa (Euro) Territorial fragmentation (2014)b Total Employment rate Employment rate non-EU citizens Total unemployment rate Female unemployment rate Youth unemployment rate (15–24) People living in households with very low work intensity People at risk of poverty or social exclusion

RhôneAlpes

France

West EU-28 Catalonia Spain Sweden Sweden average

30,000

30,400

32,000

26,700 35,300 36,000 29,200

16.7

–

2.0

-

1.3

–

–

71.9

66.4

70.0

64.8

71.5

75.2

71.7

38.1

43.7

52.7

53.7

48.5

47.9

53.6

8.1

10.1

15.7

19.6

6.5

7.0

8.6

8.0

9.9

16.9

21.4

5.8

6.6

8.8

21.3

24.7

34.3

44.4

18.1

18.9

18.7

n.a.

8.3

7.2

14.8

9.4

8.3

n.a.

n.a.

18.2

17.9

27.9

19.3

18.3

n.a.

Source Eurostat, Regional and national statistics; OECD, Metropolitan areas. a The gross domestic product (GDP) per inhabitant is measured in terms of purchasing power standard (PPS) to eliminate the differences in price levels between countries. b Number of local governments per 100,000 inhabitants in the metropolitan area, here defined as functional economic areas (FEAs) characterized by a densely inhabited city and a commuting zone whose labour market is highly integrated with the core

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Table 5.3 Majoritarian government party in the three cities Governing party (city-level)

Barcelona

Lyon

Gothenburg

Catalan European Democratic Party (2011–2015) Barcelona en Comú (left wing citizens platform) (2015–)

Socialist party (2001–2017) La Republique en Marche (2017–)

Social democrats (2009–2017) Moderate party (2018–)

there are more resources to develop labour market and social policies compared to less dynamic areas in Europe. At the time of the fieldwork (2015−2017), the three cities were governed by centre-left coalitions and the three regions were receiving the European Social Fund (Table 5.3). Despite the fact that they are wealthy European regions, the three contexts were hit hard by the 2008 economic crisis and, at different stages, they all faced problems of sustaining growth, together with rising inequality and poverty. West Sweden recovered much more rapidly and easily while Rhône-Alpes and Catalonia remained more severely affected. All three contexts had to cope with difficulties resulting from increased unemployment and the concomitant burden on public budgets, and all tended to incentivise labour market participation. However, as we will see, the strategies they followed were very different. Catalonia, in particular, had not yet recovered by the time of the interviews and was still affected by acute unemployment: according to Eurostat, in 2014 in Barcelona the unemployment rate was 20–47.1% among residents aged 16–24. Since 2008, the context has long been characterised by chronic high unemployment, acute segmentation, a large irregular economy, a cheap, unskilled, temporary workforce and insufficient provision of services. The crisis, which went on for almost a decade, intensified social inequalities, bringing about the general impoverishment of the middle classes and increasing the vulnerability of citizens, driving many people into exclusion. In addition, deep fault lines were exposed between the region and the rest of the country.

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The crisis also exacerbated income inequalities in Rhône-Alpes. Both unemployment and poverty rates increased in the region between 2008 and 2010 and the area was profoundly shaped by the economic polarisation and poverty segregation. Metropolitan Lyon, also known as Grand Lyon became characterised by a social and territorial fracture, with precarious workers, the unemployed and low-income families concentrated in certain geographical areas of the urban community, the Southern and Eastern districts, where job uncertainty and poverty rates are higher than the regional average. Although the unemployment rate is tendentially lower than the national one, it increased by 2.3% between 2008 and 2009, reaching 8.6% in 2009 and 9.8% in 2013. Fiscal and social redistribution has had an important re-balancing effect on income inequality here, but the poverty rate has increased over the last few years, displaying its close links to the employment situation (Insee 2015). Finally, in West Sweden, economic recovery after the 2008 financial crisis proved to be faster than in the other two contexts. Unemployment in the region fell after 2014 and, for the first time in two decades, reached a lower level in Gothenburg than in Stockholm. In 2015, the unemployment rate in the Gothenburg region was 6.3%, down from 6.7% in 2014, and since then it has in the main continued to decrease. In 2015, the national unemployment rate was 7.4%, while in Stockholm it was 6.4%. Certain groups, however, continued to find it difficult to get a firm foothold in the labour market: young people with a low level of education; NEETs (young people neither in employment nor in education or training); the unemployed between the ages of 55 and 64; and, in particular, those born abroad. Like most Swedish metropolitan areas, Gothenburg has a sizeable immigrant population and socio-economic and housing segregation has become one of the city’s major problems (Gothenburg City 2015).

5.5.2 A Focus on the Foreign-Born Population The 2008 economic crisis hit the immigrant population particularly hard because the most precarious and unstable jobs are often filled by foreign

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nationals. They generally have weaker relational networks and less social support for dealing with social risk factors. As we will see, in the three case studies, immigrant inclusion in the labour market is a key issue: all three cities are multicultural and in recent decades have experienced a rapid increase in their foreign population, which has challenged the local provision of social welfare. The joint effects of the legacy of the 2008 economic crisis, together with the record number of asylum seekers and migrants in 2015, has brought about serious problems of social exclusion, unemployment and welfare sustainability. Barcelona’s foreign resident population grew from 3.5% in 2000 to 18.1% in 2009 and the city experienced a sharp increase in the arrival of asylum seekers from 2016. In 2017, 17.5% of the population was foreign, 23% foreign-born and 30% had a foreign background (Table 5.4). Table 5.4 Migrant features in the case studies Foreign-born population rate (2017) Unemployment rate of foreign-born (2017) Main countries of origin

Main period of arrival

Type of immigration

Gothenburg

Barcelona

Lyon

25%

23%

13% (without French citizenship)

16.4% (against 5.7 of nationals)

23% (against 13.1 of nationals) Latin America, EU, Pakistan, China, North and SubSaharan Africa Since 1980s

13% (against 7% of nationals)

20th century

Economic (irregular) migrants, recently refugees

Labour migrants/migrants from former colonies/recently refugees

Finland, Iraq, Iran, Somalia, Eritrea, BosniaHerzegovina, Poland, Syria

From 1950 to 1970 labour migrants, since 1980 refugees Labour migrants and refugees

Sources Insee (2018), OECD (2018a, b)

Maghreb, Southern and Eastern Europe, Asia, (recently Sub Saharan Africa and Middle East)

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Extensive decentralisation gave the Autonomous Community and the municipality wide room for action to support migrant integration. However, the acute economic crisis that emerged in 2008 had a significant impact on immigrant integration, with an unemployment rate more than 20% higher than the native-born population during the peak of the crisis (41.8% against 20.9%, respectively in 2013) (OECD 2018a). Lyon has a long tradition of immigration––immigrants were an important part of the workforce for a large part of the twentieth century– –and most of the children and grandchildren of immigrants who have arrived in recent decades have become French citizens. The number of immigrants increased steadily during the second half of the twentieth century and today 13% of the population in Lyon is foreign-born and without French citizenship, a higher rate than the average national rate (11.4%) (Insee 2018).1 However, the civic and assimilationist model has increasingly become less effective and from the beginning of the 1980s– –a period of economic downturn––migrants started to be significantly more affected by unemployment than natives, and discrimination and spatial segregation became more evident. The first riots in France took place at the end of the 1980s beyond the Lyon ring road, in a district originally built to house migrants for the industrial and construction sectors and where today unemployment is twice the national average. Riots in this and other “banlieues” occurred again in the 1990s and in 2005, revealing that policies had failed to integrate the marginalised among immigrant minorities. Events of this kind relaunched the debate about migrant integration as a “social problem”, which has once again become a dominant theme since 2015, following the terrorist attacks in France. Finally, although 41.7% of Gothenburg’s immigrants arrived before 2010, the city experienced a peak in the influx of refugees and asylum 1 In

the French census and official surveys, there are two distinct categories of immigrants: those who have kept their foreign citizenship and those who came to France as foreigners and obtained French citizenship later. Born in France, the children of foreign citizens are not considered immigrants––under the 1889 law introducing jus soli they automatically benefit from French nationality––and since the French census does not collect data on ethnic origin or religious belief, they become statistically invisible. For the same reason, there is little data on immigrant integration within trade unions and employer associations.

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seekers after 2012––in particular in 2015, when 6193 asylum seekers were accepted. Today, in Sweden’s second-largest city, 25% of the population are immigrants and 34% have a migrant background. A heavily segmented labour market based on racialisation, difficulties in employing foreign-born people and socio-economic and housing segregation–– ethnic and class-based––have become the main problems in the city, and episodes of violence in the deprived suburbs have kept immigration at the top of the local political agenda (OECD 2018b). The macroeconomic context of the period in which the fieldwork was conducted, however, related to the legacy of the economic crisis, had an impact on the analysis. Most regular and irregular migrant workers were shown to be particularly concentrated in sectors that were hard-hit by the crisis, and this had an effect not only on the labour conditions but also on the social conditions of migrants. More generally, the changes in the labour market that have taken place in recent decades in all European countries, on the one hand linked to processes of deregulation and flexibility and on the other to the influence of digitisation, have had a further impact on immigrant workers, a category that was already extremely vulnerable and particularly exposed to precariousness. In an increasingly segmented labour market, immigrants end up predominantly disadvantaged and in working situations that are the least likely to improve. The employment rate of immigrants in OECD countries is tendentially lower than that of non-immigrants and they are forced to deal with problems of segregation into low-skilled and low-paid jobs more frequently than natives. More risk factors are, therefore, accumulated. In addition to the issue of concentration in low-quality jobs, immigrants face problems of discrimination (Auer and Fossati 2019), over-education, a higher incidence of accidents and weaknesses in terms of contract and rights, associated with different types of residence permits or irregular working conditions. All these factors expose immigrants, more than other categories of workers, to greater risk of blackmail, in-work poverty and social exclusion. Penalisation and segregation lead foreigners to be placed in the poorest segments of the labour market, to lose their jobs more often than natives,

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and to suffer from very low social and labour mobility towards skilled and more remunerative sectors (Reyneri and Fullin 2010). Low-cost, irregular, underpaid and de-skilled jobs characterise immigrants in both new and traditional economic sectors. Foreign workers in different sectors are a structural and stable component of the labour market, from the more traditional, such as logistics, to the gig economy (riders or drivers linked to platforms, for example), up to farm labourers in the agricultural sector and to work in construction and care services– –many of them irregular and therefore absent from statistics. They are, in other words, “trapped” in sub-standard conditions, the victims of exploitation practices that are reproduced from one sector to another and that reduce opportunities for integration and inclusion. For employers, being able to find workers willing to accept harsh conditions and sub-standard contractual treatment (which is why, in some countries, the periods of unemployment of immigrants tend to be shorter than those of natives) represents an alternative solution to investing in improving working conditions. Immigrant employment predominantly concerns activities such as construction or care services that cannot be transferred to countries with lower labour costs: they are therefore particularly exposed to cost squeezes––through outsourcing and subcontracting, for example, producing savings in technology investment and safety measures––and the use of disadvantageous contracts. In a context such as Europe, where the rowdy political debate on immigration drowns out the weak public debate on the socio-economic role of immigrants, and in the absence of a clear and explicit demand for policy from business representatives, it is important to reflect on the labour market inclusion policies directed at this category of workers and on the effectiveness of these measures to protect them.

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Karoly, M., & Balàs, G. (2015). Measuring for Absorption: How the Institutionalization of EU Cohesion Policy Influences the Use of Performance Indicators in Hungary. The NISPAcee Journal of Public Administration and Policy, VIII (2), 125–147. Kazepov, J. (Ed.). (2010). Rescaling Social Policy: Towards Multilevel Governance in Europe. Farnham: Ashgate. Kelley, J. G., & Simmons, B. A. (2014). Politics By Number: Indicators as Social Pressure in International Relations. American Journal of Political Science, 59 (1), 55–70. Keune, M., & Serrano, A. (2014). Deconstructing Flexicurity and Developing Alternative Approaches: Towards New Concepts and Approaches for Employment and Social Policy. London: Routledge. Künzel, S. (2012). The Local Dimension of Active Inclusion Policy. Journal of European Social Policy, 22(1), 3–16. Law, J., Ruppert, E., & Savage, M. (2011). The Double Social Life of Methods: Centre for Research on Socio-Cultural Change (Working Paper No. 95). Le Galès, P. (2016). Performance Measurement as a Policy Instrument. Policy Studies, 37 (6), 508–523. Meyer, J. W., & Rowan, B. (1977). Institutionalized Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology, 83(82), 340–363. Mosley, H. (2003). Flexibility and Accountability in Labour Market Policy: A Synthesis. In OECD (Ed.), Managing Decentralisation: A New Role for Labour Market Policy. Paris: OECD Publishing. Mügge, D. (2016). Studying Macroeconmic Indicators as Powerful Ideas. Journal of European Public Policy, 23(3), 410–427. OECD. (2003). Managing Decentralisation: A New Role for Labour Market Policy. OECD Publishing. OECD. (2018a). Working Together for Local Integration of Migrants and Refugees in Gothenburg. Paris: OECD Publishing. https://doi.org/10.1787/978926 4299603-en. OECD. (2018b). Working Together for Local Integration of Migrants and Refugees in Barcelona. Paris: OECD Publishing. https://doi.org/10.1787/978926430 4062-en. Oosterlynck, S., Kazepov, Y., Novy, A., Cools, P., Wukovitsch, F., Saruis, T., Barberis, E., & Leubolt, B. (2013). Exploring the Multi-Level Governance of Welfare Provision and Social Innovation: Welfare Mix, Welfare Models and Rescaling, ImPRovE Working Papers 13/12, Herman Deleeck Centre for Social Policy, University of Antwerp.

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Pierre, J. (Ed.). (2000). Debating Governance: Authority, Steering and Democracy. New York: Oxford University Press. Reyneri, E., & Fullin, G. (2010). Labour Market Penalties of New Immigrants in New and Old Receiving West European Countries. International Migration, 41(1), 31–57. Salais, R. (2006). Reforming the European Social Model and the Politics of Indicators: From the Unemployment Rate to the Employment Rate in the European Employment Strategy. In M. Jepsen & A. Serrano Pascual (Eds.), Unwrapping the European Social Model . Bristol: Polity Press. Sellers, J., & Lidström, A. (2007). Decentralization. Local Government, and the Welfare State, Governance: an International Journal of Policy, Administration, and Institutions, 20 (4), 609–632. Serrano, A., & Jaspen, M. (Eds.). (2019). The Deconstruction Od Employment as a Political Question. Basingstoke: Palgrave Macmillan. Sol, E., & Westerveld, M. (2005). Contractualism in Employment Services: A New Form of Welfare Governance. The Hague: Kluwer Law International. Trampusch, C., & Palier, B. (2016). Between X and Y: How Process Tracing Contributes to Opening the Black Box of Causality. New Political Economy, 21(5), 437–454. Zeitlin, J., Pochet, P., & Magnusson, P. (Eds.). (2005). The Open Method of Coordination in Action: The European Employment and Social Inclusion Strategies. Brussels: Peter Lang.

6 Local Pathways to Active Inclusion

6.1

A Common Policy Idea, Different Outcomes

As documented in previous chapters, over the last decade the academic literature has widely acknowledged the introduction of active inclusion programmes into welfare policy reforms (Bonoli 2013; Barbier and Ludwig-Mayerhofer 2004; Eichhorst and Konle-Seidl 2008; Eichhorst et al. 2008; Serrano 2004). For my own purposes here, I will not focus on reporting the diverse range of instruments and measures labelled as active labour market policies (ALMPs) (i.e. income support, incentive reinforcement, upskilling training, employment assistance and job matching services) enacted in the three contexts under analysis. Instead, I will focus on the local interpretation of this idea by exploring the understanding of the three core principles of active inclusion: the notions of activation, conditionality and individualisation. As explained in chapter five, these are strategic principles for the functioning of active inclusion, whose interpretation gives shape to labour market policy design and implementation. There is no univocal definition of these notions, but they are © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_6

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commonly used both in EU regulations and domestic policy documentation as core principles designed to bring more people into the effective labour force and to tackle various challenges. The latter include in particular (in-work) poverty, social exclusion, long-term unemployment and poverty traps—for example, when unemployment benefit recipients find that they are no better off if they enter a low-paying job, because their take-home pay, after deducting taxation and national insurance contributions, is either less, the same, or not significantly more than, what they are currently receiving. Solutions to these challenges can involve enforcing the link between income benefits, targeted quality training and job search programmes in order to improve skills and employability. The lack of a univocal definition of these principles has not prevented them from increasingly becoming part of public, political and academic discourse. They have entered the national and local policy vocabulary on welfare provision and labour market regulation and interviews have shown that they are commonly used by local policymakers, social partners and street-level bureaucrats. However, the meanings that are given to them tend to be rather different. As we will see, EU concepts are interpreted locally to suit national and local specificities, structural and institutional conditions, choices of political and social actors and local prevailing interests. It is the battle over these principles, within specific institutional contexts, that gives shape to the local interpretation of active inclusion.

6.2

The Restricted Active Inclusion of Barcelona

A strong contradiction emerged between the local policy documents analysed and the information collected through the interviews in Barcelona. If we look at the local development plans, employment and social programmes, great emphasis is given to active inclusion broadly intended. Local programmes are directed at vulnerable individuals or groups exposed to extensive inequalities and socio-economic difficulties. For instance, in the 2012–2015 Barcelona Social Inclusion Plan (Plan para la Inclusión Social de Barcelona 2012–2015 —the result of the joint

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work of Barcelona City Council and civil society in the framework of the ACBI, the Citizens’ Agreement for an Inclusive Barcelona); in the Catalan plan for the development of employment policies 2014–2016 (Pla de desenvolupament de polítiques d’ocupació de Catalunya 2014 – 2016 ); and in the Catalan strategy 2020 (Estratègia Catalunya 2020 ), the development of active inclusion programmes is intended as a tool for fighting social exclusion beyond the strictly economic aspects. Active inclusion recognises the multidimensional nature of social problems. This broad definition encompasses a combination of disadvantages, from poverty to the obligation of caring for a dependent family member. In particular, social exclusion is considered to emerge in eight different arenas: (1) relative poverty is related to the economic arena; (2) frailty in old age, disability and diseases with social risk are linked to social and health aspects; (3) unemployment and job uncertainty are linked to the labour market; (4) weakened family and community networks are connected to the relational sphere; (5) unaffordable housing, inadequate homelessness and informal settlements are associated with residential and community domains; (6) illiteracy and inadequate schooling are related to education; (7) poor exercise of civil, social and political rights are associated with the dimension of citizenship; and (8) finally, digital illiteracy and inequality of access to cultural capital are connected to the cultural sphere. Many explicit references link local policy plans to combat social exclusion to EU documents and policies, from the EU Charter of Fundamental Rights to the Lisbon Treaty, and to many EU initiatives and tools adopted to tackle the economic crisis (i.e. the EU Social Protection Committee, the 2007–2013 Community Programme for Employment and Social Solidarity). Europe 2020 strategy, in particular, is the benchmark for responding to the challenge of reorienting policies away from crisis management towards the introduction of medium- to longer-term reforms that promote inclusion, growth and employment. Although no explicit reference to the European Commission recommendation on active inclusion has been found in local plans, many of its objectives are mentioned and its vocabulary is widely replicated. Great emphasis is, in fact, placed on the aim of supporting people of working age who are experiencing social exclusion “to live a life in dignity” and help

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them move towards a “decent job” and to learn more skills in order to participate actively in their communities. However, the information collected on the territory, through interviews, shows us a very different picture. The meaning attributed to active inclusion in the Catalan context is primarily oriented towards the removal of obstacles to labour market participation and to strengthening work incentives: “A job is the first step and the foremost priority for us […] our aim is to improve the personal capability of finding a job and help try to get people back into work […] facilitating the quickest possible placement ” (interview, Barcelona Activa—Local economic development agency for Barcelona City Council, November 2015). This type of interpretation was obviously influenced by the impact of the crisis and it intensified when the promotion of quick labour market re-entry became the priority in order to reduce the exceptionally high unemployment. In the 1990s, in a period of employment expansion, activation measures were developed to increase the synergy between income support and labour market policies on the one hand and to devote greater resources to skill improvement on the other. After the outbreak of the crisis, however, and the austerity measures that followed, a work-first orientation prevailed.1 The emergency situation, which lasted for years, even beyond 2012, when the Spanish Government agreed upon the Memorandum of Understanding (MoU) with EU and international authorities, led to a shift in focus in terms of bringing the unemployed and inactive into employment and reducing dependency, with no attention paid to the type of work that was offered. However, this shift was not simply due to internal and external economic constraints: it was also the outcome of an interpretation process of active inclusion, resulting from the struggle and conflict over this policy idea between social and political actors. Before the crisis, the

1 Since

the end of the 1990s, a change has occurred in favour of active labour market policies in Spain, with a special emphasis on the most excluded groups, to facilitate their access to employment and professional training. Significant investment has been made via the National Training and Professional Insertion Plans, partially funded by the ESF via the Pluri-regional Operational Programme Adaptability and Employment 2007–2013.

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Catalan region was characterised by a high level of social trilateral negotiation, which promoted the above-mentioned measures based on enabling ALMPs. The 2008 crisis was a critical juncture (Capoccia 2016) that triggered a divergence in interpretation between the local government and unions. On the one hand, the local government construed active inclusion as an emergency measure and considered the push towards employment the necessary option in times of crisis: any job was seen as an improvement, including those that were low-quality, low-paid or threatened. The unions, on the other hand, believed that it was important to continue to invest in a strategy based on enabling ALMPs, upskilling and training, together with adequate investment in income support, aimed at promoting good quality employment. The aim has been to incentivize the workless to take work, arguing that doing so will help the life chances of individuals and families […]. Merely moving into work did not lead to improvement. The stories of people being circulated from benefits into low-grade, temporary work and back to benefits again are widespread here […]. Poor working conditions and in-work poverty are a major threat to people’s wellbeing and increase their risk of poverty […] social inclusion depends on ensuring access to all essential rights, benefits and services. (Interview, Confederaciòn Sindacal de Comisiones Obreras, Barcelona, November 2015)

After the outbreak of the crisis, national and local unions lost much of their legitimacy and membership, thus weakening their bargaining power with the state. At the same time, the local state decided to reduce the room for traditional social trilateral negotiation, diminishing the participation of social partners in decisions related to policymaking, while opening the political space to other actors, from civil society and the private sector, through deliberative tools (Molina 2014). In Spain, as in other Mediterranean countries, social trilateral negotiation is not institutionalised, it is based on a voluntaristic system, at all territorial levels: this means that the inclusion of unions and employer associations in policy decisions depends on the will and openness of governments—something that can vary across time and depends on coalitions and government strategies (Lopez-Andreu 2019; Regalia and Regini 1995).

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In addition, in the context of austerity, the margin for manoeuvre for redistribution was limited and subordinated to the macroeconomic objectives of deficit reduction. This was a notable constraint on union claims. For these reasons, their position as social partners became a marginal one and they had very little capacity to intervene on the political agenda, playing a secondary role in the implementation of the active inclusion strategy in Catalonia. At the same time, the strategy to enhance practices of deliberative democracy locally strengthened the role of civil society organisations only in the implementation phase, and not in policy design. NGOs and other citizen organisations in Barcelona were highly involved in the delivery of social services, but did not have the power to influence political decisions and policy design. Thus, the vision of local policymakers prevailed, and greatly influenced the interpretation of the principles of activation, conditionality and individualisation. However, as we will see, the concrete implementation of these policies was also influenced by the actions of other actors, in particular the third sector organisation members and street-level bureaucrats, who in some cases softened the social impact of local policy measures. As for the principle of activation, the local interpretation that emerged from the qualitative analysis refers to a compelling activation, aimed at making it easier for the unemployed to join the workforce. Despite the emphasis on the multidimensionality of social exclusion, local programmes contained a rationalisation in the design of measures and the identification of specific targets—mainly the young, the over fifty, the long-term unemployed and immigrants—and precise goals, basically to improve employment rates for these targets. The local interpretation of activation was based on the choice to prioritise supply-side policies, focused on employment assistance and placement services, with a clear imbalance in favor of employment concerns and an underestimation of other aspects of exclusion and discrimination. Any reference to the quality of jobs offered or of any other form of insecurity related to employment conditions (i.e. lack of social protection for people in nonstandard employment and self-employment, low-wage jobs, etc.) was not discussed.

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The economic recovery has been based on temporary and part-time jobs. This leads to an increasingly accentuated salary devaluation. Before the crisis, 1,000 euros a month was considered a low salary. These days, it is an unattainable goal for many workers. (Interview, CEOE, Employers’ Association, December 2016)

The massive unemployment Catalonia faced was followed by an increase in jobs that were poorly paid, involuntary part-time, selfemployed and low-quality, and by negative effects on poverty levels and social exclusion, which increased throughout the crisis (Malo 2015). As claimed by interviewees, this trend was exacerbated by the decrease in the coverage of passive policies, due to austerity measures: guarantee of income was low, fragmented and heavily reliant on social assistance benefits (Cabrero 2015).2 Last year only 20% of the unemployed received contributory unemployment benefits. Around another 24% received assistance benefit, which amounted to e426, which is absolutely insufficient to maintain the unemployed and their families with a minimally acceptable level of income. People had to find any job to survive, but jobs were not there. (Interview, Confederaciòn Sindacal de Comisiones Obreras, Barcelona, November 2015)

Another consequence of austerity measures, which prioritised cuts in public expenditure through reducing benefits and public services, was that the financing of labour market policies implemented by the Catalan regions was strongly reliant on the ESF. Yet, as interviewees confirmed, this financial tool does not guarantee long temporal continuity and funds specific projects, while the grave nature of the level of unemployment and its greater incidence among young people required a comprehensive employment strategy and continuous investment. Additionally, respondents reported problems of vertical coordination between national and local administrations, and horizontal coordination between actors and measures, that made the services offered less efficient. The lack 2 Compared

with other EU-28 countries, expenditure on passive policies of unemployment protection per point of unemployment in Spain in 2014 is about 40% lower, the EU-28 average being 0.18%, and Spain’s only 0.11%, of the GDP (Miguélez 2015).

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of policy complementarity and collaboration between social services and national and local (public and private) agencies that managed job guidance, training programmes and income guarantee made the running of the different activation programmes more complicated. The provision of services would be essential to support active inclusion in the economic and social spheres […] but services are poorly formalized and there is a lack of resources […]. Our training programs are often dependent on ESF funding of projects. The national employment offices and the regional and municipal services do not interact, and they sometimes offer overlapping programs. (Interview, Confederaciòn Sindacal de Comisiones Obreras, Barcelona, November 2015)

The second principle, conditionality, has been also introduced in the analysed policy documents as a tool to rationalise, and increase the efficiency of, the link between income support and activation. The conditionality principle adapted to the Catalan context required strict monitoring of jobseeker behaviour. The requirement to be actively seeking work was written into the unemployment benefit statute with the aim of turning passive benefit claimants into active jobseekers (Mori et al. 2016). If conditions were not met, sanctions could be imposed in relation to benefits. However, the local interpretation of conditionality made its implementation very weak in practice. Benefits have already been curtailed by austerity measures, sanctions are not applied. We also have a relevant problem with the lack of personnel in the public sector. It is not possible to provide real support to every unemployed person nor to apply these requirements. (Interview, Municipality of Barcelona, November 2015)

In this case, it is the role played by street-level bureaucrats, and the interpretation by civil society and third sector organisations, which prevail over policymakers’ views. Conditionality criteria were not applied for several reasons. According to interviewees, conditionality was interpreted by local public servants as an unfair measure in a context where resources were already scarce and were seen as likely to increase the risk of

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social exclusion, poverty and the stigmatisation of non-compliant recipients. Conditionality was also intended as a selectivity and targeting tool: it determines those who are entitled to benefits, because they are acting in ways that are desirable; it identifies those who are in need and also assumes that this category of people needs to be steered to make decisions in their own interest. In addition to this, interviewees reported that the insufficient number of public servants in local administration did not allow them to guarantee an efficient orientation service and matching between training and job offers for the unemployed, nor effective control over requirements.3 The public services responsible for developing employment-related strategies and their implementation lacked the human and economic resources to deliver efficient services. They were supported by the action of third sector organisations, which, however, could not substitute their function. Barcelona has an extensive network of third sector associations that perform basic tasks to promote social inclusion. They participate in the city public consultation processes and manage most of the social and labour integration projects directed at the unemployed and the poor. […] Their involvement in activation policies is aligned with the objectives of the ESF, they are relevant stakeholders in combating poverty and managing projects of active inclusion. (Interview, Ajuntament de Barcelona—Direcció Servicios Socials, November 2015)

Although some ESF projects were devoted to helping the public authorities, stakeholders and third sector organisations to work together, to train civil servants and to increase the use of IT to promote efficiency and information sharing, the delivery of successful programmes is grounded on an extensive employment strategy and related investments, and these were lacking. Finally, the problems of coordination between the State, the Autonomous Community and the Barcelona municipality, above all between their employment and social services, were a great limit to achieving effective active policies. Policy coordination between the 3 In

Spain, the ratio of clients to employment counselling staff was 607/1 while the ILO recommended 80/1 (Miguélez 2015).

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financing and management of labour and social security carried out by the central state, and between those managed by the Catalan Autonomous Communities and the projects run at municipal level with the involvement of charities and social economy companies, was extremely weak and programmes overlapped, producing a patchwork of measures and income guarantees. As for the principle of personalisation, this also became a part of Catalan labour market policies. Following the Lisbon Strategy and Europe 2020, regional and municipal services started to adapt tailored job search and upskilling measures from the 2000s on, increasing individual labour guidance, targeting groups that had difficulty getting into work and offering a series of employment actions to enable access to an integration pathway. Personalisation was widely documented in many policy plans (i.e. Estratègia catalana per a l’ocupació 2012–2020; Pla de desenvolupament de polítiques d’ocupació de Catalunya 2014–2016; III Pla general de formació professional a Catalunya 2013–2016; Programa d’ocupació juvenil a Catalunya. Garantia juvenil 2014–2020) but, again, respondents explained how difficult this principle was to put into practice. Personalised monitoring of the unemployed requires a high volume of spending on intermediation in the labour market. As testified by interviewees in Barcelona, personalised attention after 2008 became almost irrelevant in practice because of the increase in the number of unemployed people, the lack of human resources in the public employment services and the restraint on spending. In addition, interviewees reported that some local intermediary companies differentiated their treatment of individuals, depending on their employability. During the crisis, the government decided to increase marketisation in the provision of public employment services, as a way to improve the effectiveness of employment services. However, the pressure to allocate the unemployed to the labour market increased as well. Systems of reward based on the number of unemployed that the providers were able to allocate led companies to treat primarily those groups that were more easily employable—so, highly skilled, young workers. This meant neglecting jobseekers that were more difficult to employ, such as older workers, the long-term unemployed or the very low-skilled.

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Thus, the combination of institutional conditions and the agency of local actors led to the personalisation principle exerting increasing pressure on individuals and individual responsibility (Crespo and Serrano 2004) for their professional future, since the condition of the person depended more and more on his/her individual investment. The active inclusion strategy in Barcelona acquired a stronger individual character, more focused on people’s behaviour, forcing the unemployed to undertake the necessary actions to improve their situation. Overall, the local interpretation process led to a compelling system of activation, inadequate income support and services, and increased individual responsibility, which together have shaped a restricted strategy of active inclusion in the Catalan context. A strategy that aims to make labour market inclusion as fast as possible, pushing all those that have the capacity to work into jobs without considering the limits of employment demands and real capacities of access, increases the potential risk of placing workers in unstable job situations, and may lead to new requests for social assistance.4 Very fragmented income support, disorganised job search and skills formation coordination do not allow for strong and effective activation and enabling mechanisms. Its role in promoting the inclusion of vulnerable groups is limited and has tended to focus more and more on individual behaviour and their burden on public assistance, in a context where the rise of inequality and marginalisation has long remained the primary challenge.

4 Indeed,

temporary employment contracts increased in Barcelona. According to the agency Barcelona Activa, indefinite employment contracts went from representing 16.3% in 2008 to 13.3% in 2015, while in 2015, 39.7% of contracts in Barcelona corresponded to an employment duration equal to or less than one month, and 56.5% corresponded to a period equal to or less than 6 months.

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An Embedded Active Inclusion: The Lyon Case Study

The Rhône-Alpes case demonstrates a different form of governance of active inclusion based on highly concentrated resources in local public– public partnership. This kind of partnership is a formalised and hierarchical system of alliances composed mainly of public actors: the so-called “state déconcentré” includes the prefecture, state agencies, territorial administrative bodies, municipalities, regional and urban community institutions. In other words, an alliance between a variety of public actors that is very different from traditional trilateral negotiation between local government, trade unions and employers’ associations. Strong vertical coordination allows the national level of regulation to determine the broader general policy goals and provide resources, and the regional and urban institutions to make use of their local knowledge, administrative and budgetary means to design and implement policies. Social partners are particularly weak in the French context, more so than in the Spanish case. Although they enjoy positive institutional recognition stemming from their mobilisation capacity and social standing—an important power resource—they have traditionally been characterised by low membership rates, weak organisational capacity and a conflictual attitude, making them unable to actively take part in, and influence, policymaking (Crouch 1994; Gumbrell-McCormick and Hyman 2013). This means that local-level unions and employers’ associations are not able to influence policymaking related to placement and access to employment. They are informed and consulted but do not play a relevant role in defining the policy agenda. However, after the introduction of Law no. 130/2007 on the Modernization of Social Dialogue (Loi de Modernisation du Dialogue Social ), social concertation underwent a process of institutionalisation in France and unions and employers’ organisations were entitled to bargain with regard to labour market reforms and employment-related topics. RhôneAlpes local and regional governments have made some preliminary attempts to involve unions, but their participation appears ritualistic and

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weak and decision-making is on the whole unilateral. Thus, an asymmetrical relationship persists, where decision-making power rests with the public actor. Our involvement is a standardized practice. We are called to meetings but we do not have a real influence on labour market and social programs. The region and metropole do not listen to us and duplicate state intervention, through the distribution of standardized aid to the territory. (Interview, Confédération générale du travail, Département à la Métropole, Lyon, January 2016)

Some minor spaces for the concrete actions and cooperation of social partners emerged only in the implementation phase of training policies and in the management of job-school alternance. Regional agencies coordinate the partnerships, in particular in the area of vocational training and education. Here there is space for meeting with social representatives. Vocational training is the most important field for consultation with collective actors in the region when determining objectives and implementing tools. Employers’ associations, in particular, are strongly involved in apprenticeships. (Interview, Lyon, Conseil régional RhôneAlpes—Direction du développement économique et de l’emploi, January 2016)

The concentration of power in the public actor—that is, the most relevant player in the interpretation of active inclusion principles—clearly emerges from the interviews. Respondents describe it as a reproduction of the state’s model of governance, a “dirigisme style” of regulation reproduced at the local level (Clift 2012). Other representatives of the local civil society, too, such as NGOs, third sector and solidarity groups, are involved in sideshow and specific social projects run by the local government, but they also play a minor role. This approach generated a specific local understanding of the three concepts analysed here. In contrast with the liberal “welfare-to-work” trend that has emerged in the Catalan context, in Rhône-Alpes the public actors’ interpretation of active inclusion is rooted in the traditional French attachment to the collective dimension of social exclusion. Local public actors place responsibility on society and on the state to

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enable individuals to be included. This approach is already explicit in the vocabulary adopted by the public administration, both in local plans and in public political speeches. An example of this is the use of the term “insertion” instead of “inclusion”. “Insertion” is traditionally the concept adopted in the French language to talk about integration into society and the labour market, which refers to a solidaristic social integration— not primarily meant in terms of constraining people to take jobs on the market but to support social participation. In contrast to what happened in the Catalan case, here the diffusion of EU strategies and recommendations did not affect the vocabulary adopted to regulate social policy and the labour market and the term inclusion did not substitute insertion. Moreover, no explicit mention of the active inclusion strategy or the social investment package (SIP) emerges from the analysis carried out on the regional and municipal policy plans. Active inclusion is not even widespread in political and public discourse, as if French political actors, at all territorial levels, avoid the use of EU concepts and strategies. However, in practice, all three active inclusion pillars—adequate income support, inclusive labour market and access to quality services—as well as its three core principles—activation, conditionality and personalisation—can be found in many plans and measures adopted by regional and urban governments. Unexpectedly, references to the influence of the European social dialogue on territorial social dialogue have instead been found in the discourse and some documents elaborated by the main French trade unions, the Confédération general du travail (CGT). Here, the role of the EU as an institution which supports a renewed model of industrial relations and the evolution of local social dialogue is emphasised, especially the EU’s recognition of the territorial dimension as important not only in terms of implementing public policies but also for horizontal consultation and new project proposals. Finally, the discourse analysis also shows a conceptual distinction between ALMPs and activation policies that characterises this context. As Barbier (2004), too, has highlighted, the former refers to measures to help get unemployed people back to work (i.e. job placement services, vocational training and job creation/new business support), and this appears to be the most common action at regional and urban levels. The

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latter, meanwhile, refers to the provision of financial resources (benefits and incentives) to ensure that jobseekers have a better chance of finding employment. Thus, the activation principle in this context is merged with the logic of insertion sociale, described by an interviewee as a way “to foster participation in the local collective life of those who are in need, based on citizenship rights and on the strong responsibility of the public authority to address it ” (interview, Lyon, Rhône-Alpes Regional council, Direction du travail, January 2016). This view, shared by institutions and the collectivity, gives shape to a protective activation, which is primarily oriented towards security and assistance, and its first objective is to counteract social exclusion. Exclusion here means a deficit of solidarity in society and activation in this case has the goal to reintegrate excluded people into social life, in a context where unemployment is understood as a structural problem and it is not dependent on individual behaviour or motivation. This approach is sustained by encompassing passive policies and programmes aimed at increasing the chances of getting into the local labour market through the combination of income support, job creation schemes, training and job assistance. The ideal of collective responsibility and the obligation of the state towards its citizens emerge especially from the role played by specific state-aided jobs (i.e. Travaux d’Utilité Collective and Contrats Emploi-Solidarité; Contrats Emploi Consolidé and Contrats Initiative Emploi), which continue to be relevant within the local activation programmes. The Rhône-Alpes government implements a wide range of supported contracts (Contracts aidés) and contracts for inclusion in social life (Contrat d’insertion dans la vie sociale—CIVIS), together with integration clauses (clauses d’insertion) in invitations to public sector tenders, to encourage the inclusion of long-term unemployed jobseekers, income benefit recipients, the low-skilled, the inactive young and the disabled.5 5 With

a series of decentralisation laws over the last 20 years, the financing and provision of these types of programmes in France have been carried out at the local level and increasingly managed by local authorities, together with vocational training policies for the young and adult unemployed. Regions coordinate the action and policies of the state, departments and cities. The main tool for this is the state-regional agreement “Contrat de plan État/region”, where, every five years, regions and state elaborate and agree on plans, policies and funding for regional development.

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In this way, the local government provides an alternative to market employment through subsidised temporary jobs in the public sector or in the non-profit sector (Bonoli 2013). Although not the most efficient tool in terms of combating unemployment and enhancing the long-term integration of participants into the labour market, these types of policies continue to be implemented and to receive public consent. New measures aimed to emphasise a more active unemployment policy and some typical activation tools introduced since the 2000s included personalised action plans and a stricter link between income support and job search. These changes are especially associated by interviewees with the period following the economic crisis, and with the role played by EU employment goals, which have been incorporated at local level to assess labour market outcomes and policies funded by the ESF. The recession also created large job losses in Rhône-Alpes and the effects of the crisis on employment were alleviated by local measures taken to limit the elimination of certain jobs (such as the extension of part-time work) and to encourage job creation (such as zero employer social contributions for very small enterprises and expanded work-linked training). Additional resources were allocated to the PES (Service Public de l’Emploi), combined with greater use of ESF and private employment agencies (Opérateurs Privés de Placement, OPPs) to foster retraining through personalised reclassification contracts (Convention de Reclassement Personnalisé, CRP) and occupational transition contracts (Contrat de Transition Professionnelle, CTP). Despite protests and tension between government and social partners over some of these measures, the general perception of interviewees is that Rhône-Alpes remained committed to its primary objective of social inclusion and the role played by passive policies is still considered to be predominant. The prevailing objectives are still employment security, protection and compensation. These priorities come before the activation of unemployed people. Our policy measures are firstly aimed at protecting the unemployed and excluded people. (Interview, Conseil régional Rhône-Alpes, Unité accès à l’emploi, January 2016)

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Despite a certain level of redundant responsibility, coordination between the different territorial levels and benefit provisions guarantee high coverage of different social risks and types of vulnerability, beyond unemployment, “to prevent the cutting of the ties between individuals and society” (interview, Conseil régional Rhône-Alpes, Unité accès à l’emploi, January 2016). This approach to active inclusion also influences the way in which conditionality has been implemented. This principle had already been gradually introduced into France through the first Minimum Insertion Income (Revenu Minimum d’Insertion—RMI) in 1988, which contained an insertion clause requiring all benefit claimants to formally engage in activities set up to ease their integration into the labour market. Here the reciprocal engagement between the claimants and the state is rather ambiguous and the degree of obligation imposed upon claimants is unclear. Local policymakers also tried to reinvigorate the job search obligation, introducing individualised action plans and personal contracts helping individuals to return to work. Interviewees especially reported the changes which took place after the coming into force of the Active Solidarity Income (Revenue de Solidarité Active—RSA), which replaced the RMI in 2009, and of Law 758/2008 on Rights and Obligations for Jobseekers’ (Loi relative aux droits et aux devoirs des demandeurs d’emploi), which introduced the “reasonable work offers” that benefit claimants have to accept in exchange for income support, and the consequences in case of non-compliance with the Personalised Project for Access to Employment (PPAE). Yet, despite these reforms, the conditionality principle continued to play a largely symbolic role. There was a change in the law on rights and obligations for jobseekers and a stronger emphasis was placed upon claimant commitments and on mutual exchange […] but income support beneficiaries are only formally obliged to undertake the actions necessary for a professional insertion, in common practice this is considered only a condition for access to financial support, not to put pressure on the unemployed nor to reduce the length and amount of benefits. There is no sanctioning or compulsory work. (Interview, Employment office, Lyon, January 2016)

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Although the effort was made to emphasise the potential of benefit conditionality as an instrument for putting people back to work and reducing the risk of the unemployment trap, in practice, according to interviewees, the conditionality principle seems to have essentially no coercive function. Benefits are formally linked to the active search for jobs or to engage in activities promoting social inclusion, but the failure to respect these conditions does not lead to sanctions. The activities required of claimants are used by civil servants to assess their eligibility to receive benefits: conditionality is interpreted by all the actors involved in terms of general proof of means to an unconditional right to an income. This means that the contractual dimension is intended more as an agreement that allows claimants to maintain their income support than as a tool enabling re-entry into the labour market. Thus, conditionality exercises a very loose form of constraint and does not follow a coercive approach. The unemployment trap does not function for recipients of the RMI, because recipients who are unemployed are usually active in job searching and rarely refuse, I’ve never heard of refusing it for financial reasons […] They are more likely to face a shortage of labour demand […]. Employment provides enhanced well -being. The risk for RMI recipients is more that of falling into a poverty trap than into an unemployment trap, because if they have poor quality jobs they remain confined to them, and there is low probability of improving towards better jobs. (Interview, Direction de l’emploi, Region Rhône-Alpes, January 2016)

Finally, as for the personalisation principle, results again show great differences compared to the Catalan case study. In Barcelona, the lack of economic and human resources did not allow public civil servants to adopt the personalisation principle as an individualised pathway to support quality employment and implement it in an effective way. This is not the case, however, with the Lyon case study. The analysis of word frequencies in the local plans for inclusion and employment produced by Grand Lyon metropole and the Rhône-Alpes region shows that the local approach is concretely centred on individuals, especially with reference to the upskilling programmes. The most frequent words are “persons”, “individual formation”, “personalised paths” (parcours personnalisés) and

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particular emphasis is given to education and vocational training. For instance, the local plan for inclusion and employment (Plan Local pour l’Insertion et l’Emploi) stresses how this “guides the beneficiaries in their personal path”, that inclusion “is an individual professional and social integration” and that “training is a personal right accessible to all”. The main targets in these documents are generally “people currently distanced from employment”, with particular focus on women, the foreign-born and the disabled. Despite the fact that staff in employment centres, especially in areas of the city most affected by unemployment and marginalisation, complain about the excessive number of unemployed people they have to cope with, and the scarcity of resources, interviewees also confirm that concrete attention is given to personalised support in the local political agenda, especially with regard to vocational training. There is a lot of attention paid to improving inclusion in the labour market and fighting poverty, with particular emphasis on education and vocational training and through measures focused on individuals. (Interview, Employment center, Lyon-East, January 2016)

The main idea is that policies help individuals in their personal, professional and social integration, in a context where education is a right guaranteed to everybody. There is growing recognition of the heterogeneity of target groups and of local labour markets, which challenges uniform methods of managing social exclusion. Attention is paid to the differentiation of instruments and measures, implemented in the social integration contracts agreed upon with a local careers guidance body in order to organise the required means of supporting access to lasting employment. The sense attributed to personalisation is individualised support, in a framework of shared and public responsibility and engagement. Overall, the Lyon case study shows particularly well how active inclusion is interpreted to suit an institutional environment where welfare provisions are socially intended as a universal acquired entitlement and right of citizenship. The values of solidarity and security prevail in the interpretation of this strategy, with active inclusion embedded in local

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social and labour traditions and in national institutional and cultural norms. Indeed, Rhône-Alpes active inclusion has been promoted in particular through job creation, insertion contracts and personalised plans for access to employment, encompassing social policies and significant public investment in training and vocational programmes. Republican ideals are not mere rhetoric, but permeate local policymaking. However, the French model has come under a great deal of fire in the last few years. An increasingly dualised welfare and labour market is separating “insiders”, who still benefit from generous social security systems and institutionally sheltered employment relationships, from a growing number of “outsiders”, who hold non-standard jobs and are eligible for second-tier benefits only (Palier and Thelen 2010). The increased inequalities and the strong social and political conflict around the latest social policies are calling into question the value of social equality, provoking cognitive change and a shift towards the emergence of different interpretations. Evidence of this is provided by the grassroots citizens’ protest movement known as the gilets jaunes (“yellow vests”). This began in November 2019 as a demonstration against a planned rise in fuel tax by Emmanuel Macron’s government, then grew into a wider anti-government movement, largely deriving from peripheral towns, cities and rural areas across France. Protests, which also went on for months in the city of Lyon, were predominantly against a tax system perceived as unfair and unjust, but also called into question the minimum wage, housing, the health and education systems, and more recently, pension reform.

6.4

Gothenburg: A Capacitating Active Inclusion

The Gothenburg case study fits best with the mainstream interpretation in terms of industrial relations and political economy in the Scandinavian countries. Indeed, as we will see, the state tradition of social concertation plays a fundamental role in this model of governance. At the same time, interesting differences have also emerged compared to the Northern model. First of all, strong decentralisation in social policymaking allows

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local actors to have great autonomy in both the design and implementation of policies. Secondly, the Swedish context has been exposed to significant pressure, with the financial crisis and, to an even greater extent, the 2015 immigration influx, representing relevant challenges for the national and local governance of active inclusion. Compared to the Catalan and Rhône-Alpes cases, the local institutional and normative context, together with the role played by political and social actors, gives shape to a widely different interpretation of active inclusion. Here, in particular, the agency of collective actors takes place in an institutional system that gives them great scope for action. Gothenburg is the context where we find the highest degree of inclusion and power of organised interests in urban governance. “Gothenburg’s style means that decisions in the city are made with significant agreement with social partners” (interview, Labour Market Unit, Gothenburg City, April 2016). Social and political actors with roughly equal resource endowments cooperate in creating a consensual dominant coalition and shared meanings as a way to maintain an organised and stable governance. While this method of regulation reflects the corporative system in place at national level, the high degree of autonomy at municipal level allows the local actors to develop their own practices of collaborative social dialogue with unions and the business community, which greatly affect the interpretation of the active inclusion strategy. This multi-stakeholder involvement in decision-making and in the delivery of policies consists primarily of public bodies and social partners, while the involvement of non-public and third sector actors is very limited. No direct, institutionalised participation or third sector organisation involvement in the local decision-making procedures on active inclusion programmes have emerged. The city has some forms of cooperation with the voluntary sector, but this is rarely institutionalised. For specific programmes, especially in areas such as homelessness, disability, the elderly, and the young, the non-profit sector is included in the coordinated planning process, but, as in the Lyon case, it plays a secondary role and has limited tasks. The Labour Market and Adult Education Unit (NAV) of Gothenburg municipality is the leading actor in the city’s strategy on social and labour market inclusion and it carries a strong mandate. It was established

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in 2014 to increase coordination between the different programmes and all the actors involved in labour market governance: the national Public Employment Service (Arbetsförmedlingen), city districts, the business community and social partners. Its aim is to create cohesive labour market and education assignments and create added value for the affected target groups, with a full mandate to plan local priorities through an institutionalised form of social dialogue. Trade unions have a strong influence on the process of negotiation of meanings and exert substantial political power. The high degree of unionization and the responsibility that unions have for unemployment insurance make us central actors in the political debate related to labour market policies, quality of work and unemployment issues. (Interview, Gothenburg, LO—Swedish Trade Union Confederation— Department of Economic and Labor Market Policy, April 2016)

Cooperation is carried out through a long-standing local tradition of social dialogue and consultation on different projects, the same strategy adopted for political planning in the city. Business organisations also collaborate with policymakers in the local Business Secretariat (from 2000, Business Region Gothenburg), a formalised arena for specific cooperation between policymakers and the business world, created in the late 1970s in reaction to the local shipyard crisis. The commitment of these actors has a direct influence on the cognitive definition of problems and on Gothenburg’s interpretation of active inclusion’s core principles. As explained in chapter three, Sweden has played an important role in the genesis of the EU active inclusion strategy, since the principle of activation underpins the historical configuration of its social model. The national model has been a particular subject for debate in Sweden over the last decade and political and public opinions are divided, some claiming the necessity of defending the encompassing income security and universalistic model of activation, some pushing for a selective model of activation inspired by the work-first principle (Johansson and Hvinden 2007).6 A debate on the link between income security and 6A

strong popular belief in the “moral virtues of work” supported the Nordic approach to activation. From the beginning of the twentieth century, labour movements endowed the duty of

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employment promotion had already started at the end of the 1990s and brought active inclusion policies to the centre of political and public discussion. In Gothenburg, the purpose and effects of ALMPs, social assistance eligibility rules and social assistance caseload levels have also become topics for politicians, the business sector and civil society to discuss. Other matters in the debate include concerns regarding unemployment traps and the supposed effect of social assistance on the erosion of individual motivation to find a job. Despite this, discourse keeps its distance from EU recommendations and priorities on active inclusion, considered less efficacious in comparison to the national system. At the local level, discourse is particularly focused on the precarious balance between the twofold goals of municipal action: on the one hand, to enhance individual skills and education levels and increase opportunities in the local labour market; on the other, to reduce passivity and dependency on social assistance (Thorén 2008). In Gothenburg, certain ambiguities and contradictions emerge from an analysis of the local policy programmes and the narratives by political actors around active inclusion. Local institutional actors describe unemployment as a social problem that is primarily related to skills shortage and is addressed, in municipal programmes, by emphasising greater access to training possibilities, adult education and special education for immigrants. Although this social problem is not perceived as determined by individual attitude, the discourse is also oriented towards behaviour and to the burden that unemployed people, especially those not eligible for national unemployment benefits, represent for municipal social assistance. Thus, on the one hand, the social construction of unemployment is contextualised in a broader framework referring to universalistic principles of equity, social cohesion and human rights. In the city policy programmes, the right to work is defined as a prerequisite for creating a “more equitable and socially cohesive Gothenburg”, and as a basic individual right, given that everybody should have “the opportunity for a

contributing to the common good with a moralistic overtone. Trade Union banners encouraged members to “perform their duty to demand rights” and similar norms were incorporated into the public welfare system, e.g. in the form of the close link between previous records of employment and entitlements to social benefits (Johansson and Hvinden 2007).

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safer and freer life” (Gothenburg City 2015). On the other, the pragmatic municipal objective of “shortening the way to self-sufficiency” in order to take the strain off social assistance dependency has become stronger over the last few years, reinforced by the challenge to the welfare system due to the record numbers of asylum applicants to Sweden. Social partners participating in the Gothenburg public debate, particularly unions, discuss a tendency from a “life-first” to “work-first” approach—one realised by reinforcing incentives to work and decreasing spending on active (as well as passive) policy. The former is considered a holistic approach that focuses on the entire life situation of the unemployed and entails a less coercive and more supportive activation. This model also only intervenes at a later moment in order to increase the chances of accessing the regular labour market. The latter can come under criticism, given that it tends to consider jobs as the only priority and as an obligation. Despite this intense controversy, the Gothenburg context is characterised by a shared major policy goal: a low unemployment rate and a high rate of labour market participation for all groups. Thus, the conceptualisation of social exclusion is strictly intertwined with the condition of not working. This is confirmed by the interviewees, who consider work “the only entrance ticket to the universalistic welfare state” and place activation at the core of this system: “I don’t think a society can function without every person active and working ” (interview, Hotell-och Restaurangfacket trade unionist, Gothenburg, April 2016). The emphasis on increasing the number of people entering the job market, however, is based on completely different assumptions compared to the work-first orientation that emerged from the Catalan case study, where any job, given that it was considered to be an improvement, was accepted. Instead, the principal tool of making people self-sufficient in Gothenburg is vocational training orientated towards human capital investment. The aim is not to find the first possible job, but to promote autonomy, freedom of choice and also to offer the opportunity of good quality jobs to those who have obsolete skills. An emancipating activation lies behind the local upskilling strategy, which follows an empowering approach aimed at guaranteeing a skilled and flexible labour force and at

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making the best use of human capital through the best matching of skills and job roles. Local government supplements the national labour market policy with various initiatives intended to create opportunities and contribute to the functioning of the local labour market for jobseekers and for employers. At the municipal level, we found forms of translation and implementation of state-induced policy, where the meaning of activation is mediated through established local practices and orientation. In Gothenburg, issues of trust between all the actors involvedinstitutions, workers, unions and employers—and confidence in the public agencies—and services are underlined, together with the shared responsibility for collective well-being and the aim of investing in the capacities of people. Creating preconditions for work, facilitating entry into the labour market, is the so-called “focus area” for which Gothenburg governance has increased its initiatives since 2008. It has made use of methods such as supportive and advisory centres and job matching with a more individualised approach, offering accessible and financially viable adult education for everyone, introducing social requirements in public procurement, stimulating the development of social enterprises and cooperative work, developing strategies for good working conditions and opportunities for people in daily activities to gain access to internships or work. An important part is also the provision of extra support to those in need in order for them to gain a first foothold, or regain a lost foothold, on the labour market. As in the Rhône-Alpes case, social inclusion and participation in society are expanded through an encompassing social policy. However, in this model, social policy is considered a productive factor (Hemerijck 2013, 2017): thus, citizenship is equated to being in paid work much more than is commonly seen (Halvorsen and Jensen 2006). Active policies have priority over passive measures and the relationship of reciprocal engagement between the state and those in need is a much firmer one. “Active measures have always been privileged over passive income support ” according to a principle which entails that “no person should be granted long-term public income support until all ways of making them self sufficient through employment has been tried ” (interview, Labour Market

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Unit, Gothenburg City, April 2016).7 This interpretation of activation is the result of the interplay between the institutional environment and the role of local policymakers and stakeholders, based on their agreement with regard to one of the main principles behind the social investment approach—that is, to boost productivity and economic growth by better understanding the skills that employers need. Joint action between local government and social partners helps employers make the best use of the skills available to them in their workforce. The tight bond between the state and social benefit recipients also emerges from the interpretation of the principle of conditionality. Interviewees refer to strict eligibility criteria for unemployment insurance, a double level of conditionality established both at national and municipal levels, and to new requirements relating to occupational and geographical mobility, which have been increased. Participation in active measures no longer qualifies a person for a new period of benefit, with the introduction of a time limit on unemployment insurance, together with sanctions for non-acceptance of an assignment to a programme or job. The unemployment insurance system reform in 2007 introduced cuts in gross replacement rates, meaning a reduction in benefits received, and shortened the duration of the income support scheme that was practically unlimited before […]. The number of working hours necessary to be eligible for benefit has been more sharply defined […] and the membership fee for the unemployment insurance fund was also raised . (Interview, Public Employment Centre, Gothenburg, April 2016)

In addition, the municipal system of activation, developed since the 1990s, allows the municipality to require anyone who receives social assistance to participate in training and other activation measures. Thus, conditionality is interpreted by local actors as a strict and effective proof of activation. It is not a formality to have access to income subsidies, as in the Rhône-Alpes case, since activation requirements are exacting: 7 Comparatively

generous unemployment insurance is accompanied by a minimum income scheme for those not qualifying for unemployment insurance. Social assistance (socialbidrag/ekonomomiskt bistånd), regulated by the Social Service Act and administered by the municipalities, aims to guarantee a reasonable standard of living for everyone. Its level is close to 60% of the median income. The scheme is now called income support (försörjningsstöd).

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subsidies are strictly bound to training, active job-seeking and job offer acceptance. Gothenburg municipality has considerable autonomy to formulate its own policies and to link activation requirements to social assistance benefits. While, in the Catalan case, social workers and street-level bureaucrats inhibit the effects of conditionality and tend not to apply the principle, the municipality of Gothenburg has a strict strategy to incentivise the use of various activation measures and to impose sanctions, such as reducing social assistance payments. Public servants have substantial discretion, within municipality rules, in deciding on the level of benefits and their duration and in demanding participation in activation measures in individual cases (Minas 2011). We have a new in-work tax credit, which is a tax deduction on job income to strengthen the economic incentive to work […] and the sickness insurance system has also been reformed to encourage people on sick leave or early retirement to return to work. The local system assesses the capacity of people to return to the labour market through retraining programs and those on benefits are encouraged to either go back to their original job or to look for another one. (Interview, Public Employment Centre, Gothenburg, April 2016)

If we look at the interpretation of the third principle, personalisation, a commonality emerges between the approaches of Lyon and Gothenburg. In both cases, the active inclusion strategy requires individual support and targeted measures. In Gothenburg, personalisation is even more marked. Local government and social partners enhance the interpretation of lifelong training to prepare for the knowledge society through personal assessment and employment opportunities tailored to the variety of needs and capacities of the individual, the objective being to develop the person’s ability to support themselves in the future. Our priorities are to reduce unemployment, helping with special programs, especially for young and unemployed parents, to combat child poverty, and for newly arrived people to play an active role in our society. Specific municipal programs are devoted to adult education, training in Swedish for immigrants and special training for adults with disabilities. (Interview, City Mission Gothenburg, April 2016)

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A new municipal competence centre aimed at tailored interventions for individuals who do not find suitable support in their district or need additional support in order to obtain a job or begin training was set up in 2015 in close cooperation with the PES and the business community. The interventions offered were based on participants’ needs and goals and included coaching, guidance and counselling, matching to work, practice and skills training. As mentioned above in relation to the local debate on active inclusion, the budget constraints due to the increased number of claimants linked to the legacy of the 2008 economic crisis, and to the increased number of immigrants and asylum seekers, have become salient issues in Gothenburg. Some interviewees also reported that municipal responsibility for the local social assistance scheme, and budget constraints due to the increased number of claimants, led local government to support faster inclusion in the labour market, increasing the potential risk for placing clients in unstable job situations and possibly leading to new social assistance requests. “Social assistance claimants with no work experience or educational degrees need more human capital improvement in order to obtain a quality job on the labour market ” (interview, Hotelloch Restaurangfacket trade unionist, Gothenburg, April 2016). As in the Catalan case study, in Gothenburg, too, the greater emphasis on the reduction of social assistance costs tends to exert more pressure on individual jobseekers and their obligations and responsibility in the attempt to maximise claimant responsiveness and their abilities to work and leave social assistance benefits. In this case, however, both income support and upskilling measures are far more extensive. This trend has been exacerbated by the challenges that Gothenburg’s welfare has faced due to the record number of asylum applicants. Since 2015, this has become both an emergency and a priority for the municipality. Gothenburg city launched new pilot projects for newly arrived refugees and asylum seekers to support their integration into society, starting from basic skills and Swedish language learning for adults, to upper-secondary education, the validation of formal and informal competencies and the recognition of degrees, social orientation, schoolto-work transition, job search and support for women in terms of both employment and the workplace.

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These have a double focus, on both education and job matching, for migrants who cannot move directly into work, but should be able to work as soon as possible. (Interview, Labour Market unit, Gothenburg City, April 2016)

These projects were based on an incremental job strategy and knowledge lift system that allowed immigrants to find a job after a short initial training period (6–18 months) and to continue with training later on. Similarly, unemployment among young people was tackled by adopting strategies that coordinate education and training with support in job seeking and incentives to employers for hiring young workers. These measures were enhanced by the ESF as a complement to the national measures managed by the PES and local measures managed by the municipality. Overall, the interpretation of active inclusion found in Gothenburg is very different from the situation in Barcelona and Lyon, given that, in the former case, the common values behind active inclusion are empowerment and capabilities. Despite the latest changes and challenges, Gothenburg implements an integrated, comprehensive and emancipating active inclusion strategy. There, different types of social risk and perspective— social and labour market exclusion, with the inclusion of immigrants and the disabled, childhood support and gender perspective—are tackled by social policy and the leading principle is to provide everyone with enough support and coaching in order to find a good job. Most of the programmes promoted by the EU were already set up in this context, a pioneer in this policy field and very possibly a source of inspiration for the European agenda itself.

6.5

The Active Inclusion of Migrants

The European Commission’s concept of active inclusion refers to the battle against poverty and the social exclusion of society’s vulnerable groups. A key concern is the wide range of barriers which immigrants must confront in order to participate in the labour market and integrate into society in the EU. The barriers involve institutional, social and

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cultural elements of discrimination, all of which undermine equal opportunities for people with a migrant background. Indeed, the foreign-born population in the EU is often concentrated in the low-wage, low-skilled and low-quality labour market. Migrants are more likely than natives to live at risk of poverty. The active inclusion strategy includes social policies that promote the mobilisation of the migrant workforce through enabling their access to the labour market and social services and ensuring a decent standard of living for vulnerable migrants outside the labour market by providing them with adequate social assistance. Research on migrant integration has drawn attention to the role played by political actors, mainly regional and municipal authorities, and by non-governmental and third sector organisations, all of whom certainly play a fundamental part in social and economic policymaking and implementation, including welfare- and work-related service delivery (Hepburn and Zapata-Barrero 2014; Scholten and Penninx 2016). However, the action of social partners cannot be underestimated in this field and it is interesting to explore their role in local governance in relation to the active inclusion of migrants. The literature in the field of industrial relations tells us about social partner attitudes and positions on migration in the national political context while research on unions at the territorial level focuses on the workplace. Very little information exists on the participation of social partners in the city governance of migrant integration. This section looks at how unions and employers contribute to shaping different patterns of migrant inclusion in the three contexts investigated: Barcelona, Lyon and Gothenburg. As described in Chapter 5, the three cities have experienced a rapid increase in their foreign population, and this has challenged the local provision of social welfare. However, in this case, too, varying responses to this challenge can be noted in the different contexts, and the unions, especially, contribute to shaping them.

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6.5.1 Barcelona Barcelona has become a pole of attraction for immigration since the 1990s in particular and, from the very beginning, local trade unions have been actively supportive of migrant integration, fighting against unregulated immigration in order to avoid a deterioration in working conditions and a rise in inequality between workers. Employers’ associations advocated deregulation, underlining the increasing demand for unskilled labour after the economic restructuring of the late 1980s and encouraged migrant influxes to fill vacant jobs in the construction industry, agriculture and the tourism and care sectors (Calavita 2005). These are segments of the labour market that have a substantial informal sector, a pull factor that drove international migration in the period of economic growth. Undocumented migrant increased as well, partly in relation to increasingly restrictive national immigration law and asylum regulations. In this context, Barcelona enacted pioneering forms of migrant inclusion. Although national funding is not devolved to subnational administrations for the purpose of migrant integration, significant initiatives have been taken by the Autonomous Community and especially by the municipality. The first Catalan Integration Plan, launched in 1993, was followed by five other integration plans during the 2000s, the last being the Citizenship and Migration Plan 2017–2020. Additionally, since the 1990s, the city has designed, implemented and financed its integration policies, sharing objectives with, and delegating tasks to, local social partners and third sector organisations. Yet, as already mentioned, weak vertical coordination between state, regional and local institutions and fiscal consolidation policies has reduced the response capacity of public social services. Barcelona municipality set up and ran a key migration hub, the Service Centre for Immigrants, Emigrants and Refugees (SAIER), an integrated one-stop-shop for migrants jointly managed by the Secretariat of Welcome Policies for Migrants set up by the city council, trade unions, NGOs and labour organisations. Here, all migrants, regardless of their legal status (50% of those requesting services are in an irregular situation) find counselling in several languages and services (language learning,

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legal advice, health, labour research and skills-recognition). The SAIER also provides social assistance for the most vulnerable users, referring them to the municipal Social Services or directly providing emergency assistance. This includes information but also the financing of basic sustenance and emergency shelter when needed for the most exposed, such as undocumented migrants and asylum seekers, to avoid homelessness and social exclusion. Complementary to the SAIER, a Service of Orientation and Support for Migrant People (SOAPI) is offered in different districts of the city to provide welcome and support in access to migration procedures and public services. Between the 1990s and the 2000s, tripartite planning structures and social dialogue were used to develop a wide range of programmes and services, adopting a broader focus not only on employment but also on social issues (i.e. training and education, welfare provisions, social housing). The leading trade unions, Comisiones Obreras (CC.OO) and Unión General de Trabajadores (UGT), engaged migrants in workplaces, set up immigrant sections and information centers in local union offices and incorporated migrant activists. Links with migrant communities were established and common lobbying projects for the extension of workers’ rights and supporting migrant workers were established. The municipality outsourced migrant labour market integration services (i.e. support for diploma recognition, employment search and vocational training) to the trade union UGT-AMIC (the Migrant Unit within the UGT union), offering the services not only to newcomers but also to long-standing migrants in employment difficulties, something increasingly common following the economic crisis. Local trade unions, together with the regional and municipal governments, also took part in a variety of forms of mobilisation, asking for the expansion of social rights and the recognition of migrant status and their right to work; these were followed by a series of national regularisations and amnesties (in 1986, 1991, 1996, 2000, 2001, and 2005). In the same period, employer organisations, trade unions and the regional government collaborated in tripartite agreements for the establishment of annual quotas. After the Spanish industrial relations system, severely affected by the 2008 economic crisis, lost legitimacy and government support, the

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importance of social partners in the local political arena diminished. However, local unions continued to engage with migrant social inclusion, shifting their action towards the provision of services addressed both at migrants and other vulnerable groups in the labour market (Martinez Lucio 2017). Their inclusive political approach continued to be promoted through the provision of a network of information centres in their local offices and the delivery of help in relation to employment, legal issues, social rights, health and housing. During the economic crisis these services were extended to the citizenry and workforce in general. In a period in which conditions for access to national and local income benefit schemes became stricter, unions tried to develop antiracist projects to counter the stigmatisation of income benefit beneficiaries “such as non-EU immigrants, who tend to be accused of abusing the system” (interview, CC.OO—Secretaria Política Social i Serveis Públics, Barcelona, November 2015). The formal collaboration of social partners also takes place in Barcelona Activa, the municipal agency created to foster economic development and enhance employment and entrepreneurship programmes accessible to all residents regardless of legal status. Since irregular migrants cannot work, the municipality promotes the establishment of cooperatives of self-employed migrants. For regular migrants, a startup incubator was set up, together with business support (e.g. access to finance) and matching between the unemployed and private companies. The programme “Labora” was also launched by the municipality to enhance access to employment for the most vulnerable residents, connecting residents at risk of exclusion with private employers through matching and vocational training. Despite this strong local activism, the absence of measures to help workers transition from the secondary to the primary labour market remains a main local concern, together with the exploitation of migrants and the enormous difficulties of finding a job in a country with one of the highest unemployment rates in the eurozone.

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6.5.2 Lyon As we have seen, the conflictual attitude and lack of cooperation of French social partners do not allow them to have a relevant role in the local governance of active inclusion. As in Barcelona, Lyon trade unions also support migrants, but following a logic of universal worker representation, rather than specific representation for migrants. In the immediate post-war period, the major French unions, the Confédération générale du travail (CGT) and the Confédération française démocratique du travail (CFDT), advocated measures to regulate migration flow, giving priority to French workers and preserving their wages and working conditions.8 Immigrants were welcomed by employers in particular with reference to expanding the industrial workforce. After the 1980s, the unions changed their approach to oppose restrictionism, the tightened criteria for recruiting new immigrants (Haus 2002). Immigration was already beginning to be a controversial subject in this period in Lyon. The deterioration of territorialised social policy, residential segregation and the expression of social discontent demonstrated by the multiple riots in the 1990s and 2005 in the city affected political and social approaches towards immigration. From the 1990s, local government implemented new policies to improve the living conditions of the districts affected by social unrest. These “city policies” (Politiques de la ville) did not explicitly target ethnic groups but, rather, urban minorities in poor neighbourhoods—according to the Republican principle of equality—even though the largest section of the resident community was of North-African or Sub-Saharan origin. In neighbourhoods in which migrants were overrepresented, public partnerships mobilised the private sector and unions to provide assistance to jobseekers in line with the skill needs of the employers and the economic specificities of the territory. 8 In

contrast, the Confederation general du travail unitaire (CGTU)—a minority union dominated by the French Communist Party—has favoured open borders since the post-war period (Haus 2002). Traditionally, French unions are fragmented and divided into a number of rival confederations, competing for membership.

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The city government also launched collaboration with social partners on projects with an impact on migrants. In particular, 27 Sensitive Urban Zones (ZUS) and 4 Urban Free Zones (ZFU) were set up in Lyon, priority districts where the residents suffer from higher-than-average levels of unemployment and exclusion. Small businesses operating here receive financial and social security assistance for 5 years. In return for these conditions, companies must satisfy specific recruitment clauses (one-third of all recruits must come from among residents of the urban area’s ZUS and a permanent contract or fixed-term contract of at least 12 months). Additionally, the city also provided financial assistance to non-profit organisations and social businesses that support migrant and refugee entrepreneurship and vocational training. Despite these attempts at cooperation, most trade union activity is based on social mobilisation and campaigning: in particular, the fight against the informal economy and the use employers make of clandestine labour and the employment of undocumented workers through subcontractors. Unions denounce outsourcing and ask for the harmonisation of worker conditions between companies and their subcontractors. Strikes have been organised against expulsions and police identity checks outside the workplace. Coalitions with immigrant associations and human rights groups have been set up to support undocumented migrants, fight racism in the workplace, sustain the right to family reunification, and revise the Dublin Regulation for asylum seekers. Local union branches set up committees for immigrant workers to give them a voice and become involved in the union. They also organised training for the social partners on recruitment methodologies to avoid discrimination and to encourage companies to negotiate agreements on diversity. Local employers, meanwhile, mobilised to ask territorial authorities to facilitate the delivery of work permits for asylum seekers and undocumented foreigners. Nevertheless, the subjects of diversity and immigrant integration are still a matter of discussion in the French context. Traditionally, there is a tendency to adopt the universalistic and egalitarian approach by public authorities which leads to migrants being considered as equal to all other workers, ignoring forms of inequality and practices of discrimination in

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all spheres of life. On the other hand, there is an increasing awareness of the necessity to recognise diversity and the specific needs that social groups have, migrants in primis (Lloyd 2000).

6.5.3 Gothenburg Traditionally, Swedish social partners took part in decisions on bilateral programmes to recruit foreign workers and, at a local level, managed migrant training and their integration into the workplace. Since the 1940s, unions have adopted an inclusionary approach within a strict framework of regulated immigration, allowing them to guarantee equal wages and conditions for all workers. This coordination changed after EU expansion in 2004, when it became possible for Eastern European workers to move freely to and work in Sweden without having to belong to a union and with the new inflows from non-European countries. In this period, unions began to see their influence over immigration labour policy undermined and the power dynamic between unions, the state, and employers altered. In the mid-2000s, the Confederation of Swedish Enterprise invoked more flexibility and the government overhauled labour migration regulations to encourage companies to hire more workers, low-skilled and high-skilled alike, for the IT and service sectors. New restrictions were introduced in 2016, during the migration crisis in Europe, when opportunities were limited for asylum seekers and their family members to be granted permanent residence permits. When Gothenburg was exposed to the exceptional influx of migrants in 2015, local social partners committed to ensuring the social inclusion of newly arrived migrants. Tripartite discussions with the municipality, PES and higher education and vocational agencies were set up to identify the sectors that were currently facing labour shortages, the adequate training needed and how to make the best use of valuable skills already possessed by immigrants, in order to match them more quickly with the needs of industries and enterprises. Local Development Agreements were also signed to counteract segregation.

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Concrete actions and services for immigrant inclusion were also launched. Göteborg’s LS Lokala Samorganisation (Gothenbur’s Local Communal Organisation—LS), an independent union organising workers in Gothenburg regardless of their profession, launched the Undocumented People’s Committee, seeking out undocumented and clandestine refugees working without a permit. Through information desks in hospitals they assisted people experiencing unfair working conditions. LO in Gothenburg encouraged different organisations to cooperate on this issue to create a network and to try collectively to improve working conditions around Gothenburg. New projects were also initiated to oppose far-right xenophobic discourse against immigrants and to raise awareness among native workers with regard to the inclusion of asylum seekers in the workplace. As previously mentioned, however, the refugee crisis represented a critical phase for the local governance of active inclusion. There was a move towards a more hardline approach, and restrictive rules to “defend” the national welfare state became part of local political rhetoric. The need to reduce social assistance costs led the municipality to use a strict activation requirement and limit social assistance claims shortening the passage to self-sufficiency, with specific programmes for newly arrived people. There was also a change in the attitude of the unions. The perception of losing power over migration management—partly influenced by the fact that an increasing number of union members started to vote for populist anti-immigrant parties (Neergard and Woolfson 2017)— led local unions to sustain restrictions on immigration and resettlement, especially after the outbreak of social conflict and episodes of violence in some Gothenburg suburbs. Unions also protested about being less able to fight against ethnic divisions and discrimination, resulting in deteriorating working conditions and lower wages for migrants. Local employers’ confederations, on the other hand, opposed stricter criteria and controls on migrant workers, since the increased number of immigrants had enabled firms to drive down labour costs through increased competition. Gothenburg remains one of Europe’s most welcoming cities for refugees and migrants, despite the fact that the great influx of immigrants has placed extra pressure on its inclusion model. The fieldwork has, in

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fact, highlighted the city’s complex experience of integration and, in political discourse, immigration is increasingly associated with nationalsecurity threats, terrorism and crime. In 2014, Prime Minister Fredrik Reinfeldt, in a public speech, called on Swedes to “open their hearts to asylum seekers”. Six years on, it is far more difficult to imagine a political leader of the country employing the same kind of rhetoric in order to win an election.

6.6

Policy Ideas and Local Interpretations: A Typology of Active Inclusion

As observed in this chapter, the three local case studies show that, despite the ostensible convergence towards the idea of active inclusion in European countries, its translation into regional and municipal policies is developed in locally specific fashions, reflecting particular features of the national social model, historical legacies, institutional conditions and the choices of actors involved in the local governance of active inclusion. The strength and capacity of different local actors to negotiate meanings and influence the political agenda varies considerably across territories. Nested relationships, expectations of trust between collaborating parties, and established or innovative local practices and orientations influence the ways in which common policy ideas are differently articulated and played out at the local level. Looking at commonalities between the three case studies, we see that the legacy of past policy, state traditions, administrative and welfare systems and cultural norms are independent variables that, in every context, influence the divergent patterns of how ideas make sense in specific contexts. What do vary considerably across case studies, instead, are the weight of economic constraints and the agency of competing actors involved in the governance of active inclusion. As we have seen, economic constraints and the extraordinary level of unemployment restricted decision-making in Catalonia by limiting the range of alternatives that political actors perceived. This led Catalan policymakers to take up reforms against the interests of collective actors,

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promoting a restricted active inclusion strategy and adopting contradictory choices. On the one hand, practices of deliberative democracy were promoted by the local government in Barcelona, which opened up the political space and mobilised a broad group of public and private organisations—businesses, development agencies and civil society movements—to define a vision for the city and foster an inclusive model of policymaking. On the other, this approach clashed with the imbalance of power between actors and with the lack of resources due to austerity. The imbalance of power is represented by the increased marginality of social partners and the weakening of local social dialogue, which led to the implementation of a compelling activation. The weakening of unions apparently seemed to contribute to strengthening the role of other social actors as representatives of civil society, which also came about as the reaction to tackling the growing risk of poverty. It is a fundamental truth that third sector organisations, such as Caritas, the Red Cross and other voluntary associations, have always been important in this country, with its familial social policy and Catholic imprinting, and gained a growing role in brokering and trading locally to tackle long-term unemployment and the risk of social exclusion. This growing role has been also promoted by a specific national law (Law 43/2015) on the involvement of the third sector in Social Action. Together with street-level bureaucrats, they limited the effects of the criteria of conditionality, which was not applied in practice. These organisations and the social economy played a fundamental role during the crisis, also covering the political spectrum of trade unions and taking part in discussions on regional employment plans. However, this tendency to mobilise local stakeholders, especially civil society, did not mean a major involvement of these social actors in policy decision-making, but only in policy implementation. Contradicting the reduction of resources devoted to social inclusion, it revealed the limited capacity of local government to reduce poverty and guarantee long-term support to vulnerable groups. The result was individualisation of responsibility. Austerity weakens public power and makes it is difficult to create effective and inclusive policymaking (Table 6.1). The embedded active inclusion found in the Rhône-Alpes case study, clearly shows the relevance of institutional structure and historical legacy, while also demonstrating the profound socialisation of all political and

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Table 6.1 Local interpretations of active inclusion principles Activation Conditionality

Personalisation

Active Inclusion model

Catalonia

Rhône-Alpes

West Sweden

Compelling Not applied in practice. Tool to increase social exclusion Of responsibility. Personal situation depends on individual behaviour Restricted

Protective Proof of means to claim income support

Emancipating Proof of activation

Of measures in a framework of shared responsibility for unemployment

Of measures, increasing responsibility

Embedded

Capacitating

social actors to normative issues of social justice and to a particular understanding of the role of the state. This is reflected, on the one hand, in the strong attachment to the solidarity principle and collective responsibility. Social inclusion was thus led to become a primary political objective implemented through protective activation, combined with encompassing passive and demand-side policies. It was also reflected, however, in the local dirigisme enacted in the governance of active inclusion. The strong attachment towards, and deep-rooted socialisation of, values of solidarity and security also influence the interpretation of the conditionality principle as a proof of means to claim income support, which does not burden claimants with either strict obligations or sanctions. Moreover, these characteristics also affect the personalisation of measures, in the sense that targeted programmes are offered in a framework of shared responsibility for unemployment. The relevance of republican values does not mean that welfare and employment policies in Rhône-Alpes are immune from internal and international pressures, or from demands for a change in regulation, nor that this system offers sufficient support and effective provisions to all those in need. The social protests against recent reforms in France indicate that this model is in crisis and that there is a need to find new forms of welfare and labour market regulation that can represent a response to the emergency of inequality in the country.

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However, as we have seen, the response to internal and external pressures cannot be the adoption of supranational paradigms: it can only come from the incorporation of policy ideas and their adaptation to the specific social context, through a process of local interpretation which mediates local understanding and interests. This process of interpretation makes it possible for ideas to receive societal support and to be locally accepted. As we have seen, although a local form of governance based on partnerships and alliances can open up opportunities and mobilise territorial actors, this was not the case in Lyon, where the “pervasive state” represented by the prevalence of public–public partnerships exerted the strongest and most directive influence of the interpretation of active inclusion. Practically no space was given to local social and economic groups, which were consulted in relation to specific plans and projects mostly on the development of the city, nor to social partners, with whom cooperation was only carried out in the form of routine consultation on training and job-school alternance. This is, in practice, a selected openness of local government towards specific actors, based on an asymmetrical relationship, where power belongs to the public actor. Finally, the capacitating active inclusion carried out in Gothenburg shows a strategic behaviour enacted by political and social actors within a set of institutional traditions. Based on a deep-seated corporative system, in Gothenburg local actors decided to implement an emancipating activation, deriving from negotiated decisions and collaboration through an institutionalised social dialogue. Cooperation is carried out through a long-standing tradition of consultations that take place in relation to all the different projects for the city. Social partners play a dominant role and have the power to influence the cognitive definition of policy problems in urban governance. The result, in this case, has been the enhancement of human capital founded on a social investment approach, which aims at boosting productivity, economic growth and employment quality by better understanding the skills that employers need and by developing knowledge through training (Hemerijck 2017). This perspective is intended to concretely sustain the project of a knowledge society.

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As described, recent reforms of the welfare system, at national and local levels, which followed the economic crisis and the exceptional influx of migrants to Sweden in 2015, have tightened up the criteria of conditionality. It is interpreted as binding proof of concrete activation, tending to increase individual responsibility, in a context where targeted measures and support are implemented to empower individuals and guarantee the best possible matching between skills and job roles. These results show that domestic regulation is still extremely relevant, depite the weight of supranational regulation has grown greatly in recent years., as evidenced by the significance of the Troika and of the Memorandum of Understanding (MoU) in influencing reforms in some European countries.

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Crespo, S. E., & Serrano Pascual, A. (2004). The EU’s Concept of Activation for Young People: Towards a New Social Contract? In A. Serrano Pascual (Ed.). Are Activation Policies Converging in Europe? Brussels: ETUI. Crouch, C. (1994). Industrial Relations and European State Traditions. Oxford: Oxford University Press. Eichhorst, W., Kaufmann, O., & Konle-Seidl, R. (Eds.). (2008). Bringing the Jobless into Work? Experiences with Activation Schemes in Europe and the US. Berlin: Springer. Eichhorst, W., & Konle-Seidl, R. (2008). Contingent Convergence: A Comparative Analysis of Activation Policies. IZA Discussion Papers, No. 3905, Institute for the Study of Labor (IZA), Bonn, http://nbn-resolving.de/urn: nbn:de:101:1-20090107110. Gothenburg, City. (2015). Annual Report 2014. Newsroom: City Management Office. Gumbrell-McCormick, R., & Hyman, R. (2013). Trade Unions in Western Europe. Oxford: Oxford University Press. Halvorsen, R., & Jensen, P. H. (2006). Activation in Scandinavian Welfare Policy. European Societies, 6 (4), 461–483. Haus, L. (2002). Unions, Immigration, and Internationalization. New Challenges and Changing Coalitions in the United States and France. Basingstoke: Palgrave Macmillan. Hemerijck, A. (2013). Changing Welfare States. Oxford: Oxford University Press. Hemerijck, A. (Ed.). (2017). The Uses of Social Investment. Oxford: Oxford University Press. Hepburn, E., & Zapata-Barrero, R. (2014). The Politics of Immigration in Multi-Level States. London: Palgrave Macmillan. Johansson, H., & 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. Lloyd, C. (2000). Trade Unions and Immigrants in France: From Assimilation to Antiracist Networking. In R. Penninx & J. Roosblad (Eds.), 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. Lopez-Andreu, M. (2019). Neoliberal Trends in Collective Bargaining and Employment Regulation in Spain, Italy and the UK: From Institutional Forms to Institutional Outcomes. European Journal of Industrial Relations, 25 (4), 309–325.

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7 The Political Economy of Policy Ideas: Concluding Remarks and Open Questions

7.1

Ideas, the EU and Knowledge Regimes

The impact of ideas on social stability and change can be slight, but also extremely pervasive: we are only at the beginning of a better comprehension of the elements that account for the difference (Rueschemeyer 2006). What we do know is that, while ideas are subject to interpretation, manipulation and change, they are part of the political game (Rodrick 2014) and we can no longer keep them out of our analytical framework when we discuss the frontiers and relationships between society, politics and economy. We also know that the role of ideas can only be understood if they are placed in interaction with institutional and socio-economic contexts, with political and social forces, and with all the historical and social processes with which they are entwined. Organisational and institutional structures, interests and concerns in society foster them, support their propagation, struggle against them or preserve them. Ideas are supported by networks of people and institutions and the associated factors of communication and influence, which are of decisive importance for their creation, maintenance and impact on society. © The Author(s) 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8_7

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There is always a set of underlying cognitive or normative assumptions on which policy programmes, recommendations and analysis are based (Clift 2012). Renowned studies have disclosed how ideas founded in economic, intellectual or ideological paradigms, such as Keynesianism and neoliberalism, have affected policy-making in advanced capitalist countries (Hall 1989; Blyth 2002; Dobbin 1994; Campbell and Pedersen 2001; Schmidt 2008). Following the end of the Golden Age, the questions of what the adequate policies would be in order to pursue macroeconomic goals of long-term economic growth and full-employment became crucial and led many advanced countries to turn to the use of theories, data and policy principles as tools for political struggle. The socio-economic context may be different, but these questions continue to be asked and old and new ideas continue to be spread, revised, supported and discussed. This can be seen when public and political debates are analysed at macro level: politico-economic principles and new transnational paradigms, such as social investment, have become powerful frames of reference—ones that recur in political debates, influencing the action of international institutions and government agendas. Yet the same is also true at micro level: the dominance of ideational factors, embedded in public discourse, can be disclosed in the construction and legitimacy of everyday political, social and economic interests, in the values and actions of local actors and “ordinary” people. In recognising the significance of ideas, we also need to acknowledge the role played by institutional expertise and epistemic communities, connected as they are to the creation and spread of ideas, and their responsibility in providing, legitimising and reproducing a consistent cognitive structure through which not only policy makers, but all of us, come to understand, or to try to explain, the environment that surrounds us. As we have seen in Chapter 3, in relation to social inclusion and labour market regulation, over the last few decades the EU has been a highly influential institution in terms of orienting European political economy game plans, promoting policy ideas and solutions—substantiated by performance benchmarks and analysis—and fostering common strategies for member states’ economic and social governance. In spite of its limited competences for hard regulations in employment and social

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policy, where the national level still takes the lead, it is increasingly placing constraints on national authority. Since the 1990s, the European Commission, especially, has exercised an increasing influence over national policy-making, merging economic and social goals targeting the reduction of poverty, social exclusion, unemployment and inequality and designed to strengthen the role of social policy as a productive factor in the consolidation of economic growth and stability (Keune 2012; Morel et al. 2012). As Keune and Payton (2016) argue, in the past two decades, two mechanisms to exercise such influence have emerged: governance by ideas and governance by conditionality. Governance by ideas is a soft authority based on persuasion and on the agenda-setting power of the European Commission: it can be seen in action, for instance, during the OMC or the annual European Semester, where the exchange of ideas and experiences among the member states is followed by the identification of common objectives, benchmarking and recommendations. On these occasions, the European Commission promotes ideas and narratives (i.e. social exclusion, social inclusion, flexicurity, social investment, active inclusion) to frame the transnational debate on employment and social policy and to influence the vision of other European, national and local actors by offering them concepts, tools and solutions—which, as this book has shown, they can embrace, interpret and employ in their own contexts (Keune and Serrano 2014; Schellinger 2016; Crespo and Serrano 2005). Governance by conditionality, instead, is linked to the supranational allocation of funding. Its stronger version has been enacted through the Troika bail-out programmes developed after 2008. The financial support provided by the EU, the ECB and the IMF to the countries most hit by the crisis was conditioned by programmes—ratified in Memoranda of Understanding (MoU)—to reform national wages, pensions, labour markets, etc. Yet, the European Commission’s funding, in particular the ESF, is also allocated to projects which reflect and contribute to the priorities set by the European Commission itself and respond to the Europe 2020 Strategy goals. As already mentioned in Chapter 3, the European Commission sets the criteria for what type of activities can be financed with the ESF (which for 2014–2020 had a budget of nearly e113 billion, 24.8% of the entire European Structural and

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Investment Funds budget) and negotiates national and local operational programmes with domestic policy makers, steering national and local policies in certain directions (Keune and Payton 2016). As Vivien Schmidt (2019) has affirmed, at national level the EU has shifted from “politics without policy” to “politics against policy” in more contentious areas and this steering power has become increasingly manifest both in national discourse and politics—something pointed out by Euroskeptic populist forces throughout EU countries, which instrumentalise this coercive power of the EU in order to incite people against the European project. There are other international and research-oriented organisations (i.e. think-tanks, polling agencies, NGOs, intellectual, opinion leaders and activist networks) that also generate policy analysis and advice on domestic and international issues. They may be affiliated or independent institutions, yet, in their different roles and position, this specific set of actors, organisations, and institutions form what Campbell and Pedersen (2014) have called knowledge regimes—powerful systems that create policy ideas and alter the operation of policy-making. Knowledge regimes have gradually become central players, acting as a bridge between research and policy-making and between states and civil society. Producing models and endorsements and translating research into a language that is understandable, reliable, and accessible, they make sense of social and economic problems, strongly influencing public debate, business strategy and policy solutions. Over the past decades, knowledge regimes have enlarged their role and power, in part thanks to the new forms of communication that facilitate the dissemination and exchange of the content they produce on platforms and within networks that accommodate interaction and collaboration. Knowledge regimes are amplified in mediatic and public virtual spaces, which increase their capacity to affect democratic governance and politics, altering how government institutions operate, the way that political leaders communicate and decide, the manner in which political decisions are contested, and citizen engagement. On the one hand, this massively increases the potential for political information to reach citizens and creates new paths for public engagement. On the other, it runs the risk of weakening the role of knowledge through the

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manipulation of information and the proliferation of false narratives and faulty facts, leading to the paradox that greater connectivity and access to information can make for less transparency.

7.2

Ideas, Institutions and Actors

What we have also seen through the analysis reported in this book is that ideas are not generated once and for all. Ideas are neither static nor immutable. Since they are not detached from the institutional and social contexts in which they spread, they are not immune to the actions, interests and interaction of subjects. On the contrary, ideas are socially and politically constructed interpretations of phenomena and have a contested nature (Clift 2012). They are characterised by a malleable and dynamic structure. Their nature is to be transformed, and mutations occur as they circulate and spread in top-down, bottomup and horizontal processes. As the three case studies developed in this volume have confirmed, ideas are subject to processes of interpretation, are space-, time- and context-dependent and are the results of power struggles and negotiation between different competing actors (Keune and Serrano 2014). This book, therefore, adds empirical evidence to the stream of literature that argues for the inclusion of ideational factors into the analysis of comparative capitalisms. More specifically, it integrates the role of ideas within a framework that sets them in relation to one of the long-standing dualisms in social sciences, the interplay between structure and agency. The argument put forward here is that to understand the social construction of policy ideas, and the variety of their interpretations, it is necessary to bring into focus the relationship between structure and the agency of actors. Here structure and agency have equal weight. On the one hand, enduring social structures constrain human action and determine existing regularities of social, economic and political life. This book has focused on institutional structures, historical legacies and path-dependency, as extensively illustrated in neo-institutionalist literature (Amable 2003; Morgan et al. 2010; Pierson 2001). Institutions structure and define feasible courses of action, stabilise solutions to social

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problems and set the context in which social life takes place (Grafstein 1988). This approach is very much influenced by comparative historical analysis (Mahoney and Thelen 2015) and underlines how the institutional arrangements of certain regulatory arenas constitute a set of constraints and opportunities for future strategies and actions that can be put in place by actors. Of course, this does not mean that a given institutional configuration creates insurmountable constraints for change. However, past regulatory structures do influence the main characteristics and paths of change. This book shows many examples of this historical rootedness of capitalist models. As we have seen, for instance, the distinction between occupational and universalist welfare models, despite processes of hybridisation between systems, continues to have a significant influence on the configuration of social protection arrangements. Certain historical legacies, therefore, condition the paths taken by different types of capitalism, without preventing change—change that can even, in some cases, be radical. On the other hand, actor agency also serves to provide a better understanding of the specificities of the various models of capitalism. This agency refers to the degree of autonomy and reflexivity granted to actors, and to the power that human intervention and experience have to shape and change the environment around it. Compared to institutions, agency has been much more overlooked in the recent political economy debate. Constraints and opportunities bind action, however, it is precisely by looking at this tension between structure and agency that we can better understand how ideas are shaped, why they are differently understood, and why some of them have the power to stimulate social change. Thus, if we want to understand through which dynamics processes of change are, or are not, affirmed it is important to consider the role played by collective and individual, public and private actors, in influencing the regulatory mechanisms and their outcomes. This book has highlighted the role that interest representation organisations have played in supporting labour market reform processes or the influence they have had on changing the paths of some of the continental welfare systems. At the same time, individual actors occupying key positions in specific moments in history can also promote change or influence the institutional arrangements of some contexts in a significant way. One example

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of this commonly cited in the literature is the long series of interventions by the conservative governments led by Margaret Thatcher in the 1980s. These, modifying the rules of collective representation and bargaining and reducing trade union resources, progressively weakened associative regulation, favouring a manifest shift of UK capitalism in a neoliberal direction, to the extent that the state has been defined as a “neo-liberal interventionist state” (Marchington et al. 2011; Wren 2001; Howell, 2007; Burroni 2016). The study of institutions and actors in the expansion and regulation of capitalism over time has produced extremely significant results. However, as demonstrated by exemplary works that have developed interpretative models and inspired the whole course of studies on varieties of capitalism, the key to this approach is the adoption of a comparative perspective—an essential tool to focus more clearly on the characteristics of contemporary capitalism (Shonfield 1965; Dore 2000; Whitley 1999; Hall and Soskice 2001; Amable 2003). Comparative research on the frontiers of interaction between politics, society and economics, and on the role of political actors, institutions and interest groups, has provided a greater understanding of how different institutional settings shape diverse models of democratic capitalism and of the role of institutions and actors in determining the different arrangements found in capitalist countries. The comparison of the processes underway in a given country with other national cases helps to better identify its specificities as well as the trends and challenges it faces. It also makes it possible to recognise groups of countries with common characteristics, models with which to interpret the many variants of contemporary capitalism. As the different chapters of this work have confirmed, it is the comparative outlook that allows us to understand the effects that diverse regulatory structures produce and their capacity to promote certain combinations between economic competitiveness and social cohesion. The selection of the national cases explored here has made it possible to compare socio-economic realities which, although with some significant differences, are exposed to a similar set of external pressures and placed in the same context of multi-level regulation, as well as sharing certain traits of a historical heritage. Studying the recent transformations

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in these countries can therefore help to focus not only on the characteristics of their regulatory models but also on the impact they have on their ability to create cohesion and competitiveness. At the same time, limiting the analysis to a group of countries means we can dedicate to each case the necessary attention to highlight their historical trajectories, recent features and future challenges: this brings a level of depth that clearly reveals the similarities and differences between the various cases, as well as their respective strengths and weaknesses. This is obviously a selection of cases that does not claim to be exhaustive, given that it leaves out many other European countries, which, however, have gone through a set of recent transformations so specific as to require, in order not to run the risk of generality and superficiality, the sort of broad, in-depth analysis that some research has provided (Bohle and Greskovits 2012). Another key aspect to many recent comparative studies is the acknowledgement of the importance of the multi-level dimension, which refers to the presence of a plurality of interacting levels of regulation: supranational, national and regional. One of the objectives of this book has been to indicate the importance that this dimension has acquired in recent times. The analytical approach adopted, focused on the multilevel governance of active inclusion, addresses European, national and territorial levels and the extent to which there is horizontal and vertical coordination between policy arenas, between actors and between the three levels of governance. The multi-level dimension is a product of the European integration process through which the multiple linkages between the EU, national and sub-national levels increase their interdependence, providing additional and combined institutional constraints and opportunities and multiplying actors and options for actions and interventions. Finally, the unit of analysis that this work has aimed to underline, the local dimension, has also displayed its significance. This book has explored what occurs to supranational policy ideas when they reach the local level of regulation and need to be implemented. To this end, it made use of regional case studies in order to show the relevance of local regulation in the European multi-level governance system—a layer that is usually underestimated in multi-level governance.

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Indeed, the empirical analysis reported here testifies that the study of the most influential policy paradigms and of the knowledge regimes that generate them, especially the EU, needs to be counterbalanced by the analysis of bottom-up processes. The normative framework that underlies supranational policy ideas and the terms in which problems are conceptualised at supranational level are reinterpreted in national and local contexts, where decisions must be taken and ideas are implemented. Few studies have sought to analyse the local process from a cross-European perspective (Saraceno 2002; Ranci et al. 2014; Johansson and Panican 2016), despite the fact that local governments across Europe have autonomy and responsibility for many income support schemes and labour market service delivery and local actors have become increasingly involved in welfare delivery and support. The action of regional and municipal governments often supplements national employment and social policies with various autonomous initiatives intended to create opportunities and contributing to the functioning of the local labour market, mediated through established local practices and orientation. We have acknowledged here the great relevance of this level of regulation, observing that local regimes preserve distinctive features characterising their institutional structures and different forms of compromise between actors. Local regimes in Europe differ in terms of institutional structures, political orientation and cultural traditions and are strong and persistent. However, they are not static. Change and recalibration take place both in varying external and internal conditions and in the choices and actions of political and social actors. Such a process reflects the different forms of compromise between market transformation and social cohesion that characterise European capitalisms. The institutional and regulatory context of contemporary capitalism is, therefore, characterised by the presence of multiple levels of regulation, the importance of specific historical legacies and the role played by individual and collective actors. All this implies that it is very difficult to identify simple and linear causal processes in the trajectories and transformations explored. On the contrary, the methodological approach proposed here is based on the identification of the joint action and interactions between different factors that can favour or hinder certain paths and changes. We have seen how the performance in terms of cohesion

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and competitiveness of the various models of capitalism is the result of many interconnected features, and, among many others, the variable combinations between the regulation of welfare, labour market and industrial relations. The comparative analysis of these arenas, and the focus on active inclusion developed in this book, have highlighted that convergence in policy paradigms does not necessarily imply convergence in the policies that are adopted and in policy outcomes. As we have seen, an apparent convergence may be present in some policy arenas. External flexibility, activation mechanisms and recalibration welfare reforms can be found in all the analysed contexts, but diverse paths to flexibility, different activation models and a variety of ways to welfare reform generate a different degree of (in)security for those most affected by these processes. This means that common external pressures have differentiated impacts on contexts with dissimilar institutional and regulatory characteristics and can be addressed in different ways and through diverse responses by actors. The way in which a policy idea is transformed into policies is the result of a path characterised by conflict, power relations, mediations between positions and interests which can lead to outcomes that vary greatly from country to country. The transformation from ideas into implementable policies is a very complex process, influenced by the characteristics of the institutional context in which it takes place, as well as by power relations, conflict and the role of some actors who try to influence the outcomes of these processes. It is a process of political and social construction that can lead to very different results.

7.3

The Multi-Level Governance of Active Inclusion

A transversal outlook on the multi-level governance of active inclusion permits some final considerations with regard to the logics that lie behind this policy idea, the role played by the main actors in this field and the coordination between levels of governance. As we have seen, the EU idea of active inclusion is present in national contexts where many employment and upskilling policies directed at “those furthest away

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from the labour market” are delivered, combined with income support programmes. These policies are based on common principles promoted by the EU and shared at national and regional levels. As Chapter 6 has demonstrated, concepts such as activation, conditionality and personalisation are adopted across countries with different meanings, depending on local reinterpretation, and thus have diverse social and economic implications. The idea of active inclusion can be found in all the different contexts with diverse connotations. In Sweden and France, focus appears to be on the excluded, and the sense attributed to activation is to expand social inclusion and participation in society through employment and social policies, in a context based on reciprocal engagement. In Spain, however, but also in the EU debate, the focus is specifically towards unemployed people and the aim is mainly to increase participation in the labour market, as a tool for economic growth and stability. A universalistic model of active inclusion based on encompassing income security together with active measures is juxataposed by a selective model of activation (Johansson and Hvinden 2007) focused on the individualisation of responsibility for being unemployed and “excluded”. Ambiguities and contradictions emerge from the discourses both in the EU and domestic public spheres. The ideals of “equal and good” and “socially sustainable” societies and the goal of combating social exclusion often clash with the more limited and pragmatic objective of shortening the route for people to arrive at self-sufficiency in order to unburden social assistance dependency, based on the general idea that everyone, given suitable support and training, can find employment (Halleröd 2012). Contradictions permeate political action in European multi-level governance, beyond ideas and concepts. We have seen that the EU coordinates national economic and employment policies through the European semester, the OMC and the exchange of practices, recommendations and funding. In particular, the ESF is directed at projects which follow EU objectives, co-founded and carried out by local actors. The ESF, linked to activation projects, has emerged from the analysis in all the contexts studied. This is especially true for countries where fiscal austerity, cuts or scarcity of national funds make EU funds essential. However, the EU has a double and contradictory effect: on the one hand, it provides these resources in order to support vulnerable

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groups, bringing them into the labour market and improving training and educational arrangements; on the other, it has developed a complex surveillance system of member states, monitoring their economic performance through stability and convergence programmes and assessing how they perform in relation to the Europe 2020 strategy. In this respect, the European Commission issues clear recommendations, addressing the member states on both their economic policies (including national public debts) and their National Reform Programs, in which they have committed to contribute to Europe-wide headline targets. The review of countries’ public spending which followed the economic and financial crisis of 2008 led to budget cuts in order to contain growing public national debts and to forestall low economic growth, thus encouraging the reduction of resources devoted to health, social protection and public services—the effect being especially felt by the most vulnerable. Another consideration that emerges from the analysis reported in this work refers to the role of the state. The state still plays a very important role in influencing a country’s trajectory of inclusion and growth. This influence emerges not only in terms of labour market policies but also of other types of policies that directly or indirectly affect the quantity and quality of employment, such as innovation and education policies. As Chapter 4 has shown, the Swedish case demonstrates that when the state invests extensively in policies that support research and development and deliberately fosters social investment measures through high public investment in education and active labour market policies, as in the Nordic model, it enhances preventive measures which reduce the level of unemployment and consequently reduces the need for interventions in terms of social protection. In continental countries, such as France, the state has followed a logic of intervention to sustain larger firms, especially in the field of financial service activities, logistics, communications and transport, but also manufacturing, where support involves massive funding for the research and development activities that are crucial for the competitiveness of these sectors (Burroni 2016). Regarding employment policies, Continental countries invest more than the European average in both ALMPs and passive measures. It is important to consider that this investment went hand in hand with a process which led to substantial flexibility at

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the margins of the labour market through the use of atypical contracts for specific groups, with the overall effect of producing new jobs but also increasing labour market dualism. In contrast, public spending in Mediterranean countries is low in the field of innovation, active and passive labour market policies, social protection and education. Such a low level of financing constitutes a historical feature of this model which, in recent years, has been reinforced by the growing pursuit of macroeconomic stability through austerity, as the Spanish case exemplifies. The comparative analysis of active inclusion carried out in this book shows that the state has a prominent role. Although the EU has an impact on national policies, and regional governments, too, have some autonomy in this arena, and other actors, like social partners and third-sector organisations, intervene in the design and delivery of active inclusion measures, the case studies highlight that it is the state that steers the active inclusion strategy adopted. State agency and logic of action make the difference. In particular, the state can adopt a pro-market logic, sustaining market regulation, or it can support regulation where there is some space for the third sector, as in the Spanish case. The state can also support associative regulation, by sharing the political space with social partners, as in Sweden, or it can act in favour of public regulation, as the French state does. Over the last few years, especially in times of austerity, a trend of (re)centralisation of labour market policies can be observed in many European countries. These are steered by a strong executive and regulated mainly through unilateral policy-making, with weak or mostly formal consultation with social partners. Although the space guaranteed to industrial relations and to social dialogue depends on the different types of state behaviour and government openness, the general trend both at national and regional level is that, apart from forms of consultation with social partners, policies in this field tend to be generally unilaterally approved. However, the comparative analysis shows that the importance of industrial relations is also related to historical features in terms of the associative governance of European countries. The cooperative model of active inclusion governance identified in Sweden shows that social partners play a pivotal and proactive role as economic institutions,

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carrying out industrial relations by means of negotiations. Local governance in Gothenburg reflects, on the one hand, the nation-state system, but, on the other, the method and degree of inclusion of organised interests in urban governance that are embedded in the local institutional, normative and organisational context. Social partners can also have different roles by carrying out diverse types of actions, sustaining active inclusion directly—through services (i.e. both trade unions and employers’ associations offer services directly linked to active inclusion, such as training and foreign-born integration measures) and through participation in policy-making (i.e. social dialogue, collective bargaining, planning of specific measures, participation in bilateral bodies)—or indirectly, through political influence, lobbying, pressure or social mobilisation. The case studies show the diverse forms and effectiveness of social dialogue, when it is enforced through information (i.e. when the state informs social partners about its plans, but there is no cooperation or exchange regarding the content of its policies), consultation (i.e. when the state asks social partners for advice but with no obligation attached), or participation (i.e. effective dialogue and co-decision). In some cases, the weakening of industrial relations has corresponded with the strengthening of other actors that entered the arena of social and labour market policy-implementation, gaining more and more importance. This is the case for NGOs, charities and third-sector associations, new players that respond to the emergence of social suffering related to job insecurity and long-term unemployment. Yet, as both the quantitative Chapter (3) and qualitative Chapter (6) analysis reported in this book show, there are different outcomes in terms of quantitative and qualitative inclusion in European labour markets. Obviously, there are many elements that affect these outcomes (i.e. level of expenditure on the different policies) but the role played by industrial relations contributes to explaining some of the dynamics taking place in the countries and provides important elements towards a better understanding of the multiple relationships between the EU and national and regional levels in the field of active inclusion. Lastly, one of the main challenges of the empirical analysis has been the understanding of the different forms of coordination between the territorial levels, complementarity between policies and cooperation

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between actors involved in the multi-level governance of active inclusion. As already mentioned, the EU’s influence on national and subnational regulations increased in the aftermath of the crisis, due to the different forms of political impact and financial support to national and local policies bounded by strict supranational conditions. EU governance by conditionality, however, cannot be defined as a form of vertical coordination between policies, but rather as an attempt to enforce goals and tools in member states. In this framework, national and local actors have carried out their own strategies, shaping their policies by re-interpreting the input from above and producing different outcomes which depend on national and local contexts. Therefore, rather than a vertical coordination between the levels of governance, bi-directional dynamics have emerged: top-down and bottom-up processes have taken place within a dialogic dynamic, where concepts and practices moved both down from EU to national and regional levels but also up from below to European level. The different outcomes and forms of inclusive labour markets in Europe highlight that there is no one best way related to active inclusion and that any measure may fit well with all contexts. Concerning vertical coordination between state and regions, this is differentiated in the various countries analysed, depending especially on the division of competences between administrative levels and the efficiency of the branches of the state. From the countries studied here, as we have seen, the result is particularly weak in the case of Spain, due to disorganised decentralisation and institutional conflict between levels, and stronger in Sweden and France. Horizontal coordination and complementarity between policies also appears weak, due to a strong fragmentation of policies, measures and actors involved. Only the Swedish case study is the exception, but here, too, however overlaps and mismatches have also been found. Forms of horizontal coordination at local level around regional- or city-plans, or around individual projects upon which different local actors agree, are more common. At local level, established practices for territorial policies and local traditions of collaboration also play a significant role. Horizontal and vertical coordination, however, represent a central tool to avoid problems of mismatch or the duplication of national and local programmes. Attempts to reinforce the articulation between labour

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market and social policies do take place, especially through the conditionality system, but the link between income support and labour market policies in some contexts remains extremely feeble. This is particularly the case in the Mediterranean countries, where labour market and social policy are often not harmonised. Finally, the comparative analysis of the idea of active inclusion in context reveals the effective impact of the European level of regulation on domestic policy and how this interacts with the different regulatory architectures and agency of actors. EU influence over member states’ policy-making certainly grew in importance from the end of the 1990s on, through its hard and soft policy tools, and increased with the economic crisis, reinforcing the economic perspective over the EU social agenda. The presence of active inclusion and its three core principles, activation, conditionality and personalisation, in all the contexts investigated, is an example of the supranational influence on national social and employment policies. The different meaning associated to these principles, and the different policy tools adopted, are, however, of particular relevance if we want to reflect on the possible processes of convergence and differentiation of European capitalisms. Forms of convergence in the adoption of certain ideas or in the actions carried out by the state can be found, but forms of divergence are also highlighted in the country studies regarding the measures, policies, logics of action, actors involved, etc. Looking more deeply into the case studies allows us to observe that convergence is limited, and although processes of hybridisation are taking place, domestic distinctiveness in labour market and social policies, as well as the endurance of national institutional structures and systems of industrial relations, prevail. Competing international ideas influence domestic political action and the EU is surely one of the principal sources of guiding principles adopted to tackle common issues in member states. However, the typology of active inclusion presented in this book explains how common policy ideas are translated into locally customised policies, reflecting local priorities and power struggles on social- and labour-related issues. Domestic approaches do not reflect the comprehensive EU strategy but combine its policy principles in locally defined ways, leaving space to local political and social actors, embedded

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in cultural heritage, institutional traditions and political and economic constraints, to negotiate meanings and shape localised policy practices. In this book, the focus has been especially addressed to the characteristics of industrial relations at local level and to the power and openness of the local government in cognitive bargaining with civil society and streetlevel bureaucrats. It paves the way, however, for new lines of research that can include other actors, such as political parties, or that can explore the role of new and traditional classes, connecting ideational factors to power resources theory, interest-based, and institutional approaches. These complementary perspectives would surely contribute to further investigation of the interrelationship and mutual interdependence between ideas, interests, and institutions and their embeddedness in larger international structures.

7.4

What Ideas for the Post-COVID-19 World?

The interplay between ideas, institutions and agency affects politics and can have profound and long-term consequences for society, influencing the socio-economic progress and path of capitalist societies. In the face of a crisis, the role of, and need for, new ideas become of considerable importance. We saw this in 2008, when politics was searching for an economic paradigm or political recipe, whether new or old, that would pull us out of the deep economic downturn that had assailed the world. The COVID-19 pandemic is currently leading to the worst global crisis since the Second World War. It is exposing our societal and economic systems all across the world to an unprecedented emergency, revealing major weaknesses within capitalist countries. This pandemic-induced health and socio-economic crisis, in conjunction with the ongoing global warming emergency, is a situation that states will not be able to address as they have done in the past, and there can be no going back to business as usual. Like climate change, the pandemic profoundly questions the way in which our societies are organised. More than ever, there is a collective need for new ideas. In that perspective, the COVID-19 crisis reinforces the necessity for a transformative paradigm that will put quality public

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services—above all in the health sector—the environment and collective interest at the centre of more sustainable and equal societies. Between March and May 2020, the COVID-19 pandemic expanded in terms of its global reach, with a huge impact on collective health and unprecedented shocks to economies and labour markets. The effect of lockdowns and related business disruptions, travel restrictions, school closures and other containment measures on workers, enterprises and people’s lives in general has been sudden and extreme. Unforeseen reductions in economic activity are triggering a dramatic decline in employment and wealth. It is too early to know how the labour market will develop over the next few months, yet the International Labour Organisation (ILO) monitor of April 2020 estimates that 1.25 billion workers, representing almost 38 per cent of the global workforce, are employed in sectors that are facing a severe decline in output and a high risk of workforce displacement. In low- and middle-income countries, hard-hit sectors have a high proportion of workers in informal employment and workers with limited access to health services and social protection who risk falling into poverty and who will experience greater challenges in regaining their incomes after the crisis. We can expect a deepening polarisation of the labour market between high and low-paid jobs, with a decline in medium-pay occupations, and increasing inequalities between generations and social groups, who are unequally protected by the welfare state. Although current policy responses across countries are trying to provide support to workers and enterprises in order to protect livelihoods and businesses, with governments taking unprecedented measures in order to compensate for temporary drops in income, this cannot be the policy response for the near future. While urgent measures are required to alleviate the damage caused by the shutdown of the economy and to protect workers in this extraordinary situation, it is essential to start thinking about the world after the COVID-19 crisis. Can this crisis be a catalyst for fundamental change? Can this forced pause accelerate the rethinking of priority in our socio-economic model? Can it bring about a more sustainable and fairer system? Can it lead to a new role for the state, for international organisations, for civil society, and to the spread of new ideas?

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The crisis can present the circumstances that allow new ideas to emerge and to create impactful change. It can produce the conditions that will give rise to the opportunity to innovate, as we find ourselves forced to confront the reality of how our societies work and of how things could be done better, to think outside the box, to develop new concepts and policy solutions. New ideas can reverse the prevailing political direction of the last decades and the state can regain a more active role, investing in public services and restoring strength to a broken labour market. At the same time, this crisis has shown that, to deal with this kind of emergency, we need not only the state authority, but also coordination with local and supranational institutions. National financial help to hospitals, households, businesses and workers can only be implemented through a common solution with local governments and within the EU and the IMF. Without cooperation with local, as well as international, authorities, national policies will fail. Thus, if, because of border closures, nationalist forces seemed to hold the advantage at the beginning of the crisis, we can actually see that, without transnational cooperation, situations of this kind cannot be tackled. We have also seen the importance of cooperation through local practices of solidarity in the communities across various countries, support networks and the action of civil society organisations to help others, as well as the acceptance of restrictions on personal freedom to protect ourselves and our neighbours. Philippe Pochet (2020), general director of the European Trade Union Institute, reflecting on the post-COVID-19 EU foundation, has depicted four possible scenarios based on different ideas. The first is the possible return to the idea of neoliberal orthodoxy. This would be to react as we did after the 2008 crisis, when we restored neoliberal principles and relaunched policies of economic liberalisation including privatisation, deregulation, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society. Yet going back to austerity policies would be very short-sighted indeed after the lesson we have been given on the importance of public health services.

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The second is the idea of monitoring by an authoritarian state, or what Pochet calls the Chinese or Hungarian hypothesis. In this scenario, which he sees in a context of radical deglobalisation, the state controls its population through artificial intelligence tools and people’s freedoms are restricted in exchange for the country’s territorial protection. This idea is based on the possibility that health crises could become recurrent events and authoritarian governments should become “guarantors” of their citizens’ safety and security. The third idea is the return to growth at any price—something that would mean going back to high levels of consumption, employment and economic growth without any consideration of the consequences for the environment. As Pochet writes, “this would be nothing less than an endof-the-world party” and “the calls of certain governments or players to forget the Green Deal underline the strength of this scenario”. Finally, the fourth idea is ecological transition. This entails a rapid rethinking of our socio-economic systems and growth model, “returning public services, common goods and solidarity to the heart of the economy and social affairs”. To undertake ecological transition does not simply mean greening the current system, but adopting a new economic and social model and changing the way we consume, produce, work, and live together. According to Pochet, we can see the seeds of this idea in the current situation, but the transition could be very difficult in terms of unemployment and economic downturn. Yet, if we do not do it, climate change and the depletion of natural resources will trigger increasingly dramatic change. The COVID-19 crisis we are facing today is often compared, in public debate and the discourse of political leaders, to what Western countries have experienced in the post-conflict economy. However, the Great War and the Great Depression gave new impulse to the further development of the social protection of the population and the restoration of economic and living conditions destroyed by the conflict and by the dramatic conditions of the 1920s. The desire for change led to political change. In the US, after the Republicans had controlled the White House for ten years, Democrat Franklin D. Roosevelt was elected and he ushered in what would become known as the New Deal, which provided

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unemployment insurance, a national minimum wage and a programme of retirement and disability insurance. Where did these new ideas come from? They came from the local context. Most federal labour and social legislation was first imagined, developed, and tested at the state level and/or in private-sector settings. These programmes were initially developed by academics from the University of Wisconsin under the guidance of Professor John R. Commons, who was known as the “Father of the New Deal”. Many of his ideas, carried forward by his students, found their way to Washington in the Roosevelt administration (Kochan 2015). This was not the only time that ideas from below led to change, and there will be others.

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Index

A

Access to quality services 71 Activation 13, 72, 140 Activation programmes 183 Active inclusion 3, 25, 67, 140, 169 Active labour market policies 90 Adequate income support 71 Adult education 191 Agency 154, 217 Agreements 203 Amable, Bruno 102 Amsterdam Treaty 69 Anderson, Karen 69 Anglo-Saxon capitalism 48 Anglo-Saxon model 34, 36, 39 Assimilationist model 161 Associative regulation 48

Asylum seekers 196 Austerity 72

B

Baltic countries 58 Baltic model 34 Barcelona 170 Barroso, José 73 Bonoli, Giuliano 70 Bottom-up processes 221

C

Capability(ies) 30, 197 Capacitating active inclusion 209 Capitalism 26

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 G. Scalise, The Political Economy of Policy Ideas, Palgrave Studies in European Political Sociology, https://doi.org/10.1007/978-3-030-55750-8

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Index

Case studies 153 Catalan case study 105 Catalonia 154 Charities 178 Citizenship rights 37 Civil servants 186 Civil society 69, 207 Civil society organisations 27 Coefficient of variation 31 Collaborative social dialogue 189 Collective bargaining 31, 226 Collective bargaining coverage 85 Collective goods 118 Collective responsibility 208 Commission Recommendation 2008/867/EC 75 Comparative historical analysis 218 Comparative political economy 29 Compelling activation 174 Competitiveness 26 Conditionality 13, 72, 125, 140 Confederation of European Business 84 Consensual democracy 126 Consultation 182 Continental model 35 Contributory system 117 Convergence 27, 32 Convergence-divergence 29 Coordinated market economies 102 Corporate-conservative welfare 117 Corporate governance 28, 54 Corporative system 189 COVID-19 15 Cross-case comparison 154

D

Decentralisation 49, 188

Decentralised bargaining 126 Defamilisation 124 Deliberative democracy 174 Delors, Jacques 68 Demanding activation 138 Deregulation 67 Development agencies 27 Digital platform workers 77 Dirigisme 181 Discretion 195 Discrimination 105, 161 Discursive institutionalism 5 Divergence 32 Dualised labour markets 77 Dualism 49

E

Economic constraints 172 Economic crisis 76 Economic growth 27, 215 Education 31 Emancipating activation 192 Embedded active inclusion 207 Empirical analysis 154 Employers associations 48 Employment protection 76 Employment quality 76 Employment quantity 78 Enabling activation 139 Epistemic community(ies) 8, 214 EU 67 Europe 2020 171 Europe2020 Strategy 151 European Central Bank 130 European Commission (EC) 3, 68, 215 European Employment Strategy (EES) 2, 68, 151

Index

239

European Parliament (EP) 71 European periphery 72 European Semester 151 European Social Fund (ESF) 72 European Social Model 71 European Structural and Investment Funds (ESIF) 144 European structural funds 71 European Trade Union Confederation (ETUC) 84 Eurosclerosis 105

Hall, P. 30, 102 ‘High way’ of development 61 High-tech 36 Historical institutionalism 5 Historical legacies 27, 29, 206 Historical tradition 42 Horizontal coordination 148, 175 Human capital investment 138, 192 Human rights 191 Hybridisation 149

F

I

Familistic welfare system 148 Family 204 Female employment 103 Fieldwork 153 Financial sustainability 111 Firms 27 Fiscal consolidation 72 Fixed-term employment 105 Flexibility 36 Flexibility ‘on the margins’ 45 Flexicurity 122 France 155

Ideal types 29 Ideas 25, 142 Ideational factors 1, 25 Immigrants 202 Implementation 153 Inclusive growth 60 Inclusive labour markets 71 Income redistribution 45 Income support measures 108 Indemnification 67 Indicators 151 Indignados 113 Industrial relations 26, 155 Industrial relations actors 84 Inequality 37 Innovation 48, 129 Insecure temporary contracts 77 Institutional context 42 Institutionalisation of dualism 117 Institutionalised social dialogue 209 Interest representation 119 Interest representation associations 27 International institutions 214

G

Ghent system 127 Globalisation 69 Golden Age 214 Gothenburg 188 Governance by conditionality 215 Governance by ideas 215 Governance by indicators 151

H

240

Index

Job insecurity 77 Job quality 76 Job-school alternance 181

Local interpretation 169 Local level 2, 191 Local level of governance 137 Local practices 206 Local regulation 220 Local understanding 209 Logic of compensation 3 Logic of prevention 4 Long-term unemployed 110 Long-term unemployment 78 ‘Low way’ for development 61 Low-wage earners 78 Lyon 186

K

M

Keynesianism 1 Knowledge economy 58 Knowledge regimes 216

Making work pay 125 ‘Male breadwinner’ family 121 Manufacturing 36 Mediterranean capitalism 37, 102 Memorandum of Understanding (MoU) 28 Metropolitan regions 156 Michel Rocard 116 Micro-level analysis 155 Migrant workers 110 Minimum income schemes 71 Minimum wage 119 Mixed-market economies 102 Mobilisation 119, 180 Models of capitalism 26 Multi-level governance 2, 132 Municipalities 147

International Monetary Fund (IMF) 76, 130 International organisations 146 Interviews 155 Involuntary temporary employment 78, 82 In-work poverty 162

J

L

Labour-intensive sectors 108 Labour market 2 Labour market governance 154, 156 Labour market policies 121 Labour productivity 32, 78 Learning organisations 54 Learning societies 124 Legitimacy 200 Liberalisation 41 Liberal market economies 102 Lifelong learning 145 Lisbon Strategy 69 Local actors 132 Local autonomy 147 Local governance 206 Local governments 132 Local implementation 72

N

National level 28 Negotiated flexibility 50 Neocorporativism 49, 126

Index

Neo-institutionalist 27 Neoliberalism 1 New social risks 4, 38, 67 Non-standard jobs 188 Nordic model 37 O

Open Method of Coordination (OMC) 2, 68 Operational Programmes 144 Organisational capacity 180 Organised interests 189 P

Part-time work 184 Passive policies 122 Path-dependency 2, 142 Performance indicators 150 Personalisation 13, 140 Place-based governance 156 Policy complementarity 176 Policy coordination 177 Policy ideas 2, 206 Political economy 155 Poverty 30 Poverty reduction 118 Precariousness 107, 129 ‘Proactive’ logic 60 Process-tracing 154 Proof of means 186 Protective activation 183 Public–public partnership 180 Public Employment Services (PES) 137 Q

Quality employment 71

241

R

Refugees 196 Regulatory structure 28 Reinfeldt, Fredrik 206 Republican values 208 Restricted active inclusion 207 Restrictionism 202 Retrenchment 67 Rhône-Alpes 154 Risk of poverty 38

S

Schmidt, Vivien 216 Second capital cities 156 Segmentation 49 Segregation 159 Social assistance 191 Social cohesion 27, 41, 191 Social concertation 188 Social dialogue 112 Social economy 207 Social inclusion 26, 75, 186 Social investment 4, 43, 125, 209 Social Investment Package (SIP) 73 Socialisation 207 Social model 190 Social partners 69 Social policy 67 Social protection 43 Social services 71 Social transfer 118 Social workers 195 Soft governance 71 Solidarity 181 Solidarity welfare system 117 Soskice, D. 102 Southern Europe 102 Spain 155

242

Index

Stakeholders 177 State 27 State aid 59 State-aided jobs 183 Stigmatisation 201 Street-level bureaucrats 141 Structural characteristics 27 Structure 154, 217 Subsidiarity 70 Supply-side policies 174 Supranational paradigms 209 Supranational regulations 28 Sweden 155 T

Territorial fragmentation 156 Thatcher, Margaret 219 Think tanks 27 Third sector organisation 174 Third Way 70 Trade unions 48 Training policies 181 Transatlantic Trade and Investment Partnership (TTIP) 28 Transnational paradigms 1 Trilateral negotiation 173 Tripartite discussions 204 Troika 28

Universalistic model 108 Universalistic welfare 120 V

Varieties of capitalisms 10, 219 Vertical coordination 175 Visegrad countries 47 Visegrad model 38 Vocational training 118, 182, 192 Vulnerable groups 110, 197 W

Wage moderation 120 Welfare 26 Welfare mix 148 Welfare state 67, 155 Welfare-to-work 181 Welfare without work 130 West Sweden 154 Work first principle 190 Work first strategy 138 Workforce 201 Workplace 203 X

Xenophobic 205

U

Y

Undocumented migrants 203 Unemployment Assistance Benefits 110 Unemployment protection benefits 112 Unemployment trap 186 Unionisation 31, 49 Union membership 85

Yellow vests 188 Young people 110 Youth employment 103 Youth Guarantee 103 Z

Zapatero, José 111