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Changing Accountability relations through Activation Policies: Preliminary Findings from the Reform of German Public Employment Services

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6th ECPR General Conference University of Iceland

(25th - 27th Aug. 2011) Section: Comparative perspectives on the management and organization of the public sector

Panel: Reforming welfare states; accountability, democracy and management

Bastian Jantz Research fellow

University of Potsdam Faculty of Economics and Social Sciences

Chair of Political Science, Administration and Organization bjantz@uni-potsdam.de

http://www.uni-potsdam.de/index.php?id=134&L=0

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Introduction In the past decade, pubic employment services in many European countries have been subject to a reform approach often labelled as ‘activation’ in order to encourage participation of jobless people in paid work (Wiggan 2009). Activation policies can best be described as a combination of demanding and enabling strategies. This means the enforcement of labour market participation of the individual through the reduction of maximum benefit duration or the impositions of sanctions on the one side and an increase of active labour market policies in order to promote employability and make jobless people more attractive to potential employers on the other side (Dingeldey 2007; Eichhorst/Konle-Seidl 2008). Benefit recipients are expected to engage in active job search and improve their employability in exchange for efficient employment services and benefit payments. These changing characteristics of passive and active labour market policies have been one of the core areas of social policy researchers (Lindsay/McQuaid 2009). The shifts to activation in labour market policies coincided with changing modes of governance in the administration, management and organization of these policies.

‘In the process of social policy reform, many governments have experienced that transforming welfare states requires institutions and agencies that actually implement and ‘produce’ these reforms, for example, by developing new social services, introducing new criteria for testing benefit eligibility, practicing new attitudes towards claimants, et cetera – and it is one of the objectives of new modes of governance to promote this process of institutional change.’ (Berkel/Borghi 2007: 280).

These changing modes of government include instruments such as decentralization, management by objectives, competition within government or with private contractors through marketisation and privatisation, customer orientation and so on (Berkel/ Borghi 2008b). Public employment services are more and more expected to cooperate with other public, private and not-for-profit organization involved in labour market policies. Furthermore, the political and public scrutiny has shifted from a focus on inputs towards a more performance oriented perspective and the influence of social partners in shaping labour market policies has been diminished.

These contemporary developments in the governance of labour market policy — towards efficiency, outcome, competition and quasi-markets, partnership, and customer orientation — have implications for the accountability of employment services which are traditionally based on the principles of a hierarchical and rule-based public administration. The different actors in employment administrations are still accountable through organisational hierarchies upward either to central offices and ultimately to respective ministers, or locally to local politicians or boards. But the emphasis on customer orientation requires accountability to users and local communities, while the increase of private actors in service provision leads to multilayered accountability flows or, in the worst case, to accountability vacuum (Newman 2004). Other authors even argue that the development of more networked and multilevel forms of policy making using different modes of governance produces accountability problems and weakens the democratic accountability of policy makers in general (Papadopoulous 2007).

The multiplication of actors also involves the multiplication of different and sometimes even conflicting coordination and legitimating principles. The relationships between the different actors are no longer ruled by a clear hierarchy. Traditional forms of accountability become less important and are complemented or even substituted by a complex web of accountability.

‘[..) monolithic system of hierarchical political accountability relations has been under serious pressure in a number of national states and is slowly giving way to a more diversified and pluralistic set of accountability relationships. New mechanisms of accountability are diagonal or even horizontal in character and include accountability to administrative forums, to citizens, clients, and civil society.’ (Bovens 2005: 196)

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But we still know relatively little about the consequences of new service provision models on accountability relations and mechanism, which might be due to the fact that the term ‘accountability’ is still a slippery concept. Furthermore, research on public sector reform in the past has mainly focus on questions of efficiency, performance, power distribution and control (Christensen/Laegreid 2011) and ‘many reforms have been proposed and undertaken with the presumption that, once the reforms are in place, accountability will somehow take care of itself’ (Romzek 2000: 22).

This paper will try to shed light on the relationship between reforms of service provision in public employment services and accountability relations. First, the concept of accountability should be elaborated and the different mechanism and actors of accountability relationships should be identified. In a second step, the concept of the ‘new’ governance of labour market policies, i.e. how labour market policy regimes are administered and policy is implemented, should be described. By taking the case of the reorganisation of the German employment administration since 2003 as an example, first hints should be given how activation reforms influence and alter accountability relations.

Accountability – a sketchy concept

There is no easy definition of accountability and a variety of different conceptual approaches of accountability exist in the literature. Dubnick is even contesting that ‘accountability has taken on a ‘life of its own’ as a symbol detached from any specific meaning, yet with the capacity to generate a response when put to rhetorical or iconic use.’ (Dubnick 2002: 11)

Accountability is a buzzword in public sector modernization like co-ordination or performance that can mean quite different things to different people. First of all, it is, with a few exceptions, not used negatively. Whenever a term carries only positive connotations, one should get suspicious. Everybody is in favour of co-ordination, on his own terms, everybody likes transparency, but of course also his own privacy and everybody likes to control and to hold other actors accountable.

At the same time, the term accountability is abstract and often associated with other concepts like responsibility, integrity, democracy, fairness and justice (Blind 2011).

First of all, it has to be distinguished between accountability as a normative concept or philosophy and accountability as an instrument or mechanism of collective action. Bovens (2010) describes this distinction as a dichotomy that consists of accountability as a virtue versus accountability as a mechanism.

In the former case, accountability is seen as a positive attribute of officials, government agencies or firms. It describes a state of affairs or the performance of an actor. Accountability as a virtue is hard to define because the standards for accountable behaviour vary depending on institutional context and political perspective (Bovens 2010: 949).

In the latter perspective, which will be followed in this paper, accountability is seen as an obligation to explain and justify conduct and more precisely, as an institutional arrangement where an accountee is held to account by a forum, or the accountor (Bovens 2010: 949). So accountability as a mechanism does not describe a somehow desirable condition but a social relation between at least two actors. This comes close to the definition used by Mulgan (2000). He argues that accountability includes three main elements:

1. ‘It is external, in that the account is given to some other person or body outside the person or body being held accountable

2. It involves social interaction and exchange, in that one side, that calling for the account, seeks answers and rectification while the other side, that being held accountable, responds and accepts sanctions

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3. It implies rights of authority, in that those calling for an account are asserting rights of superior authority over those who are accountable’ (Mulgan 2000: 555).

The external nature as well as the right of authority included in Mulgan’s concept is contested. Internal controlling functions within a public organisation and a firm can be classified as accountability relations as well even though they are not external. Furthermore, the rights of authority are not a necessary condition in order for accountability to exist. Professional peers held accountable one and another without a relationship of subordination. Superiority should not be mistaken with the power to sanction.

Nevertheless, Mulgan emphasized three aspects that have been be picked up by Bovens (2007) later in his now famous definition of accountability: accountability as a social relationship, accountability as debate and the possibility of sanctions as a constitutive element of accountability. According to Bovens ‘accountability is a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose questions and pass judgement, and the actor may face consequences’ (Boven 2007: 450). In this context, the actor and the forum can be an individual or an organisation. The following graph visualizes Bovens’ definition:

Source: own compilation

Based on this basic definition, some amendments should be made (Bovens 2007; 2010; Brandsma 2010; Brandsen et al. 2011).

The forum can have superior authority or even hierarchical power over the actor; in this case the relationship would have the characteristics of principal-agent. However, many accountability relations involve several stakeholders with no hierarchical relationship between forum and actor.

The obligation of the actor to explain and justify his conduct might be mandatory or voluntary1. Government agencies often will have formal obligations to render account to their parental ministry or parliament. But there are other forms of accountability like press conferences, certifications and audits that are voluntary in nature.

The criteria for the judgment of the actor can vary ranging from cost effectiveness and legality to performance standards. The information provided to the forum normally corresponds with the criteria for judgement and range from pure financial information and allocation of resources over legal aspects to performance data and detailed evaluations.

1 Bovens (2007: 451) is speaking of formal and informal obligations.

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Sanctions and consequences can also take different forms. First of all, sanctions can be positive and negative as well as material or immaterial in nature. Positive sanctions include compliments, financial rewards and promotions. Negative sanctions include annulations of decision, redistribution of power, tightened regulations, dismissal, penalties and fines or even termination of the whole organization.

In this section, the focus has been on a singular accountability relationship between one actor and one forum. As already mentioned, public organisation are confronted with multiple accountability relationships (Romzek 2000). This results in overlapping, sometimes co-existing, sometimes conflicting expectations that public organisations have to balance. In practice, public organization will often deal with expectations of the different stakeholders by a pragmatic or even hypocritical strategy of providing a particular type of information to one stakeholder group while giving different information to another group. This leads to the consequence that the different accountability relations are only loosely coupled with each other and that ‘being accountable in one form often requires compromises of other sorts of accountability’ (Sinclair 1995: 231). Koppel (2005) describes this phenomenon as ‘Multiple Accountabilities Disorder’ and asserts that ‘Organizations trying to meet conflicting expectations are likely to be dysfunctional, pleasing no one while trying to please everyone. Ironically, this may include failures of accountability—in every sense imaginable.’ (Koppel 2005: 95). Besides problems of accountability overload and accountability failure, the accountability arrangements shed light on the power relations within a public organisation or a policy field. The ways in which different accountability relations are structured provide some stakeholders with channels to influence the behaviour of public organisations while disempowering others. ‘Changes in accountability arrangements therefore alter the array of relationships and mechanisms by which different stakeholders shape managerial action, staff behaviour, and—in turn—program outcomes.’ (Page 2006: 194). The next section will describe different classifications of accountability relations and elaborate a scheme that includes the mayor questions of accountability relations: Who is accountable to whom? For what? And how? (Romzeck 2000)

Classifications of accountability relations

The simplest way in order to classify accountability relations is a dichotomisation (Moes et al. 2008). Some authors are differentiating between political and managerial accountability (Mattei 2007; Newell/Bellour 2002). Political accountability according to Newell/Bellour (2002) is characterized by elections that determine who should run the government and the obligation of these official to explain and justify their conduct. The most important aspect of political accountability is the concept of individual ministerial responsibility ‘in virtue of which ministers should answer for their activities in Parliament and to the public more generally.’ (Mattei 2007: 369). In a broad sense, political accountability is applied to all public officials, in a narrow sense it only applies to elected politicians. Managerial accountability is the responsibility according to agreed performance criteria. One mayor aspect of managerial accountability is fiscal accountability, i.e. responsibility for devolved budgets and funds (Mattei 2007: 370; Newell/Bellour 2002: 9-10).

There are two mayor problems with this dichotomisation. First of all, it is an oversimplified model that reduces the different accountability relations too much. But even more important is the point that an artificial inconsistency between political and managerial is created. It remains unclear why political accountability could not encompass accountability for performance or accountability for financial result that are a prominent feature of managerial accountability. From this perspective, managerial accountability can also be considered as a sub-type of political accountability.

Another dichotomy is presented by Schillemanns (2008; 2011) who distinguishes between vertical and horizontal accountability. The distinctive feature between these two types is the character of the relationship between the accountor and the accountee. Whereas in traditional, vertical forms of accountability, a superior usually demands accountability from a subordinate, horizontal

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accountability is characterized by a relationship among equals ‘where the accountee is not hierarchically superior to the accountor’ (Schillemanns 2011: 4). Even though there are no direct chains of delegation and control, it is nevertheless possible that horizontal accountability relationships are asymmetric and include the possibility to impose sanction. The following graph shows the difference between the two types.

Source: Schillemanns 2011: 5

What is important about the classification proposed by Schillemanns is that accountability is no longer ensured only by linear chains of delegation and hierarchical relationships but by a variety of actors outside the narrow limits of delegation.

A further approach is the fourfold typology of accountability proposed by Romzek/Dubnick (1987). They differentiate between two factors, the source of control (internal or external) and the differing degree of autonomy that is conceded to administrative actions (high or low). As a result they identify four types of accountability (see table).

Sources of accountability

Internal External

Degree of

Autonomy

Low Hierarchical Legal

High Professional Political

Source: Romzek/Dubnick 1987

In a further development, Romzeck (2000) has added the different values and behavioural expectations that are associated with the four different accountability relationships.

Accountability Value emphasis Behavioural expectation

Hierarchical Efficiency Obedience to organizational directives

Legal Rule of law Compliance with external mandates

Professional Expertise Deference to individual judgement and expertise

Political Responsiveness Responsive to key external stakeholders

Source: Romzek 2000

It is important to note that these four types of accountability relation are neither elusive nor static. Each of these types can be present within one organization, even though with differing relevance and priorities. These priorities are dynamic and the sources of accountability as well as the degree of autonomy may switch over time. ‘As a result, the same actors can be involved in different

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accountability relationships at different times, sometimes emphasizing obedience, and, at other times, deference to expertise, rule of law and/or responsiveness.’ (Romzek 2000: 29).

Influenced by the development of New Public Management ideas and the transfer of private sector principles to public organisations, Page (2006) has refined the model through adding market accountability and the corresponding value of service provision.

The most extensive typology of accountability is provided by Bovens, who identified 15 types of accountability relationships, based on the nature of the forum, the organisational form of the actor, the aspect of conduct under investigation, and the nature of the obligation (see table).

Nature of the forum Nature of the actor

• Political accountability • Legal accountability • Administrative accountability • Professional accountability • Social accountability

• Corporate accountability • Hierarchical accountability • Collective accountability • Individual accountability

Nature of the conduct Nature of the obligation

• Financial accountability • Procedural accountability • Product accountability

• Vertical accountability • Diagonal accountability • Horizontal accountability

Source: Bovens 2007

Even if this classification gives a valuable overview, it is doubtful if this model is practicable for the analysis of real world phenomena of accountability. Biela/Papadopoulous (2010) point out that it is questionable that all possible 180 combinations can be observed empirically. Just to give two examples: Is there any legal accountability that is horizontal in nature? Furthermore, is collective guild compatible with the rule of law? Secondly, it is debatable if it is necessary to subdivide accountability into four dimensions that should each be assessed separately in order to cover accountability relationships.

It is interesting to note that none of the presented classifications has taken Bovens definition of accountability seriously and tried to map the different accountability relationship along the elements who is the actor, who is the forum, what kind of explanation and justification is provided and what are possible sanctions or rewards. The following proposed classification is not based on the public administration literature of accountability but on an article dealing with accountability relationships in international politics (Grant/Keohane 2005) which has latter been further developed by Moes et al (2008). The following table gives a first overview about the different types of accountability which will be described more detailed in the following:

Type of accountability relationship

Who is accountable?

To whom? About what/how? Rewards and sanctions

Political/electoral Elected officials Voters Policy choices/elections Approval or voting out

Hierarchical/ administrative

Public officials Superiors Implementation/monitoring Restraints on ability to act, loss of office

Legal Individual official or agency

Courts Legality/judicial review Fines, penalty

Financial Funded agency Funding agencies

Allocation of resources/book-keeping

Budget restrictions

Professional Professionals Peer group Satisfaction of professional norms/individual and collective appraisal

Esteem, status, exclusion. penalties

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Market Provider Purchaser Price, quality, performance/competitive contracting

Change of provider

Supervisory Agency Board of governors/ advisory board

Strategic direction; quality of services/recurring formal meetings

Agreement or non-agreement to important decisions/ Public (dis) approval

Public Individual or agency

Public Diverse/press conference, interviews, public relations etc.

Praise and blame, loss of reputation

Source: Own compilation based on Grant Keohane 2005; Moes et al. 2008;

Political/Electoral Accountability

Elections are the classical legitimating mechanism in representative democracies. Voters delegate their sovereignty through election to representatives, who, in turn, at least in parliamentary democracies, delegate the majority of their authorities to a cabinet of ministers. If the policy choices and actions of the political office holders do not meet the expectations of the electorate, it results in their replacement and substitution, including different governing coalitions.

Hierarchical accountability

Hierarchical accountability is a characteristic of public bureaucracies and of any large organization. Superiors can remove subordinates from office, constrain their room for discretion, or, in the most serious case, remove them from office. Hierarchical accountability takes place along the lines of an undisrupted chain of command and the middle range is both accountee and accountor. Hierarchical accountability is mainly based on an unquestioned relationship between a superior and a subordinate and close supervision or clear rules and regulations.

Legal accountability

Legal accountability refers to the requirement that, if agencies or officials step outside constitutional or legal limits, they have to justify their actions in courts or quasi-judicial arenas and will thus be held accountable. Based on the principle of the equality of law, public officials, like anyone else, can be held accountable for their actions both through administrative and criminal law. According to Bovens (2007), legal accountability is of increasing importance to public institutions as a result of the growing formalisation of social relations, or because of the greater trust which is placed in courts than in parliaments.

Financial accountability

Financial accountability describes mechanisms through which funding bodies can demand reports from agencies that are recipients of funding. Financial accountability is an important mechanism within and between public organizations but also when governments and their agencies are the main funders of certain public services but do not deliver these services themselves (contracting out).

Professional accountability

Professional accountability is characterized by the existence of set of technical and professional norms and practices that govern the actions of members of a certain profession. Professions have their own code of conduct and their own perception of appropriate behaviour as well as their own mechanisms for control. These mechanisms are e.g. professional supervisory bodies or peer reviews.

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Supervisory accountability

Supervisory accountability comes close to Schillemanns concept of horizontal accountability and can be described as a non-hierarchical but formalized relationship between an agent and an independent third party, in which the agent is obliged to explain his conduct (Schillemanns 2010). Examples of these relationships are boards of stakeholders, board of commissioners or advisory boards. But also regulatory agencies in the utilities sector are supervisory accountability holders to the companies in their sector.

Market accountability

Accountability in products or service markets is provided through the responsibility of producers to consumers for the quality of the sold product. Through the competition of different suppliers, the supplier can be held accountable by the customers either positively, through the willingness to buy the product again or negatively through the substitution of the product or a change of provider. Even though, competition is not so widespread within the often monopolistic “public market”, recent attempts to create quasi-markets or tools like benchmarking make market accountability more and more important for public organizations.

Public accountability

Public accountability qualifies a situation when an actor is hold accountable to the public in general as forum. The enforcing institutions might be the media or other actors like non-governmental organisations, interest groups or customers. The category of public accountability applies to ‘situations in which reputation, widely and publicly known, provides a mechanism for accountability even in the absence of other mechanisms as well as in conjunction with them’ (Grant/Keohane 2005: 37). Instruments of non-binding citizen participation like public reporting, citizen and stakeholder panels can also be summarized under this category.

The listing of the different accountability mechanisms makes clear that accountability is a multidimensional concept. Dichotomous concepts that differentiate only between two manifestations like managerial and political accountability are too narrow to describe the various dimensions of accountability and the complex context of public accountability (Romzeck 2000). On the other side, the extensive classification proposed by Bovens (2007) is too broad to be applied empirically. The proposed perspective is a middle-way between a reductionist and an all-encompassing typology and portrays the main accountability structures that have evolved over time.

Accountability is not only multidimensional, but also dynamic. Most public organizations are still heavily influenced through the mechanism that has been labelled as administrative accountability and which is based on the subjection of public official and agencies to a wide set of rules that determine their actions and the obedience to instructions issued by officials or organisations superior in the hierarchy. But several scholars have pointed at important changes in accountability systems resulting from New Public Management and Governance reforms (Behnke 2009). Classic principles like compliance with administrative procedure or subjection to hierarchy are reversed by the New Public Management through the focus on results of administrative actions or the autonomy of administrative units. The changes of accountability modes can be characterized in terms of growing importance of ex post result oriented accountability while weakening input- and process-oriented accountability based on ex ante control systems. More and more, economic values are stressed as criteria of accountability, rather than traditional values like legality. Concerning the accountability actors, it has been stressed that public organizations and servants become more accountable to customers and peer organizations, besides to politicians and citizens (Verhoest et al.: 2006). Furthermore, the increased importance of network governance, in which responsibility for policy making and delivery is shared across organisational boundaries and involves public actors (politicians and administrators) belonging to different levels, together with various non-public actors (economic

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agents, interest representatives and stakeholders, experts) makes traditional, especially hierarchically based concepts of accountability problematic (Romzeck 2000). Network governance systems have not evolved in order to strengthen accountability but they were expected to produce ‘technically more adequate and politically more realistic decisions’ (Papadopoulus 2007: 472). These changes do not necessarily mean more or less accountability for public organizations but simply a shift in the relative priority assigned to different accountability expectations. Formerly stable pattern that have produced certain predictability are now supplemented or overruled by other accountability relationships that have not been present in the past. New arrangements are added to accountability relationships already in place and results in numerous opportunities for holding public organizations and employees answerable for their performance.

‘[Public] managers confront different sets of rules and norms - those, for example, flowing from hierarchical accountability, from consumerist logics of service delivery, from a results oriented, target driven policy field, from the injunction to involve the public in setting local priorities, and from intensifying discourses of organisational failure and success. These each give rise to different logics of appropriate action *...+.’ (Newman 2004: 20)

This plurality can become critical when different accountability relationships collide and conflict. This is more the rule than the exception as new relationships are normally layered to accountability relationships already in place instead of replacing them (Romzeck 2000).

‘It is challenging enough for an entity to be controllable when multiple entities are issuing directives. In some cases, an organization cannot concomitantly satisfy hierarchical superiors, behave consistently with all laws, norms, and obligations, and respond to the demands or needs of constituents.’ (Koppell 2005: 99)

As described, these challenges to balance different accountability expectations have intensified through recent reform efforts in the name of New Public Management or Governance. The problem consists in defining the importance and the consequences of new accountability relationships but also find the balance that should exist between the new forms of accountability that every reform approach has tried to introduce and the classic mechanism of control. The following table shows the different emphases and approaches to accountability of ‘old’ public administration, New Public Management and Governance.

Old public administration New public management Governance

Approach to accountability

Hierarchical—administrators are

responsible to democratically elected

political leaders

Market-driven—the accumulation of self-interests

will result in outcomes desired by broad groups of

citizens (or customers)

Multifaceted—public servants must attend to law, community

values, political norms, professional standards, and

citizen interests

Source: Denhard/Denhard 2000

Recent reform approaches towards activation in labour market policies in Western European countries can be defined as a hybrid between New Public Management and Governance combining ‘processes of decentralisation, individualisation, personalisation, contractualisation, marketisation, together with the emergence of network based and collaborative forms of governance’ (Newman 2007: 364) including local actors, third sector associations and private firms, that should be given more room for manoeuvre in order to tackle individual problems (Bonvin 2008). These attempts had implications for the accountability relationships within labour market administration. In the following, the concepts of activation policies and their expected impact on accountability relationships in labour market policies will be described.

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The governance of activation and accountability

The reform wave that aimed at making labour market policies more active consists of two, sometimes intertwined sometimes separated, elements:

Formal policy reforms that are focused on the content of labour market policy like changes in entitlements, tighter benefit regimes, activation programmes and instruments workfare policies etc. (Larsen/Berkel 2009; Bredgaard/Larsen 2009).

Operational policy reforms that focus on the governance structures for implementation and administration of benefits and the provision of services.

Both reform elements are linked with each others. Changes in the formal policies produce pressures on the operational policies. The provision of services that aim at the activation of unemployed rather than just paying out benefits requires different human resources, different organisational structures and more discretion for front-line service providers in order to make services more tailor-made and take individual as well as local circumstances into account. But the reorganisation of employment services is not an apolitical and technical exercise as operational policy reforms have implications for the content of social services. In fact ‘the service provision models through which activation services are delivered do – or at least may – have an impact on what activation looks like in practice: the clients that are being served, parked or excluded; the treatment of clients in activation; the activation approach that is being adopted.’ (Berkel/Borghi 2008a: 349).

The following table gives an overview about the two reform elements.

Formal policy Operational policy

Definition The content (substance) of legislation, programs, schemes and instruments for delivering benefits and providing services.

The governing of the implementation structure for administration of benefits and provision of services.

Indicators Changes in entitlements, rights and responsibilities, target groups, instruments, programs and schemes.

Changes in interagency cooperation, decentralisation, new public management techniques and instruments, marketization, reduction of the influence of social partner etc.

Source: Based on Bredgaard/Larsen 2009: 48.

The question remains if reform attempts in operational policy have any implications for the accountability relationships in labour market administration, an effect that has been stressed by several authors (Papadopoulous 2007; Page 2006; Romzeck 2000). In the following, the mayor elements of operational policy reform in the governing of labour market policies (decentralisation, marketization, changing role of social partners) should be described and their expected impact on the different accountability relations be elaborated. By taking the intensive reform of German labour market policies since 2003 as an example, first hints should be given how operational policy reforms influence accountability relationships.

Decentralisation

Decentralisation of labour market policies has been a strong trend in many Western European countries in the last two decades (Mosley 2009). In the most general terms decentralisation is the transfer of decision-making power and responsibility over policies from the national to the regional, sub-regional or local level. (Mosley 2009). Arguments in favour of decentralisation stress the greater flexibility of local service provision, the possibility to take local conditions into account, more room for tailoring activation programmes and the proximity to local needs. It is argued that through bringing policy-makers and service providers closer to the users, localised service delivery results in increased efficiency, greater accountability and equity, and more democratic decision-making. But the risks of decentralisation are also well known: unequal treatment of unemployed between regions and capacity problems of local governments just to name a few.

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Even though decentralisation of labour market policies is a common trend, there are differences in the concrete implementation. In the case of labour market policies, mainly two different forms of decentralisation can be observed: devolution and deconcentration (Berkel/Borghi 2008b). Devolution or political decentralisation shifts responsibility and authority for the formulation and implementation of labour market policies from the central government to separate political and administrative structures (e.g. regional governments, municipalities) that have a certain autonomy and independence. Deconcentration, by contrast, is defined as shifting power from the centre to peripheral offices of the same administrative structure through which managers in regional and local offices receive greater operative flexibility in implementing national policy objectives. So, deconcentration is ‘a form of organisational flexibility within a national PES [public employment service] that is basically managerial rather than political’ (Mosley 2009).

Even though advocates of political decentralisation stress the increase of at least electoral accountability through the transfer of competences to local elected politicians that are closer to the citizens, the overall connection between decentralisation and accountability is far more complex. First of all, even in highly decentralized systems, the authority for setting minimum standards and the main funding responsibility for labour market policies remains at the central level or their will be some sort of cost sharing between central and the local level. In practice this means that in order to maintain accountability, application of funds and policy outcomes still need to be reported to the central government (Giguère 2003). Berkel/Borghi point out that ‘rather than solving this problem by rules and regulations, several national governments nowadays use other means to influence regional or local decision making, for example by introducing performance indicators.’ (Berkel/Borghi 2008b: 396). So, political decentralisation at least in labour market policies implies a sharing of responsibility for decision-making among a number of actors and makes accountability relationships more complex. It is difficult to find an accountability framework politically acceptable to the various government levels concerned and the complaints of local governments about extensive reporting requirements to the central level are widespread. The expectation of greater accountability of local politicians can in practice result in the opposite as national office holders are normally subject to more intensive public scrutiny and media attention than local politicians. Moreover, voter turnout in local elections is lower than in national elections, which reduces electoral accountability rather than increasing it.

In Germany, the introduction of the unemployment benefit I and unemployment benefit II in January 2005 has created a new division of competences between the federal and the municipal level. The Federal Work Agency deals with recipients of the contribution-based unemployment benefit in newly created customer centres. The tax funded unemployment benefit II for all unemployed that are not eligible for unemployed benefit I is usually administered by consortia, called ‘ARGE’ (Arbeitsgemeinschaften) for employment associations, with the Federal Work Agency working with municipalities. The employment associations are established through a contract between the local authority and the local Employment Agency and the responsibilities for tasks and funding within the ARGE are clearly separated (see table below). Furthermore, 69 municipalities2 have been licensed to administer the new unemployment benefit II out on their own, the so called opt-out municipalities.

2 The number has been increased through a change in the law to 108 in 2010.

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Responsibilities within an employment association

Responsibilities of the municipalities Responsibilities of the Federal Employment Agency

Funding of housing benefits and heating payments Funding of unemployment benefit II

Specific integration services (child care, debt, addiction, and psychological counseling)

Placement Services

Payments for furnishing a flat for the first time, clothing, as well as school trips which last longer than one day

All other services connected with ensuring that the basic needs for survival of the unemployed are met.

The new structure has created accountability problems in practice. Especially the municipal option has proven to be difficult as the responsible Federal Ministry of Labour and Social Affairs has only limited supervisory authority over the municipalities even though the biggest amount of funding is provided by the federal level. As an example, the municipalities are not included in the performance management system of the ministry and the ministry faces limitations in exercising financial controlling due to constitutional provisions (Mosley 2009). So this hybrid model has blurred accountability between municipalities and the Federal Unemployment Agency also resulting in a blame-game when problems arise.

Deconcentration of labour market services has been supported by new public management ideas in order to allow the regional and local public employment offices greater flexibility. In conjunction with greater flexibility, systems of management by objectives have been introduced in order to hold deconcentrated actors to account. Greater flexibility does not necessarily mean less accountability. In contrast to traditional bureaucratic administration, accountability is about outputs or outcomes against targets rather than on controlling inputs and adherence to detailed regulations. So what can be observed is a greater discretion for local public employment offices in the use of funds and the implementation of active labour market instruments accompanied by targets or goals that trickle through from the national level (contract between the responsible ministry and the top management of the Public Employment Service) to the local level (Mosley 2009). What this means in practice varies between countries. Wiggan analysed for the British case that the shift from input to output based models of control ‘does not disrupt the traditional British pattern of top down hierarchical control of employment and social security. Instead it refashions the nature of this hierarchical control to increase management, through targets and contracts with third and private sector providers, while ensuring that control is exercised from the centre’ (Wiggan 2009: 1027). For the German case, Schmid (2006) has identified a form of creative interpretation and adaptation of new mechanism of control and accountability. Systems of accountability for results are formally introduced but applied in a bureaucratic manner, i.e. formal granting of autonomy to deconcentrated entities combined with detailed standards and reporting requirements. Schütz (2009) goes one step further noticing that the initial intention of a deconcentrated organisational model with more autonomy for local offices of the Federal Employment Agency produced an adverse effect. The result is a detailed system of performance indicators for input, output, outcome and processes with corresponding reporting requirements.

Next to these changes within the administrative accountability mechanisms, the introduction of management by objectives has also lead to a new form of profession and professional thinking within the Federal Employment Agency. Social worker norms and attitudes have been displaced by norms like individual responsibility of the unemployed, economy, efficiency, value for money and effectiveness, as well as orientation on performance indicators and not on the individual fate of the unemployed. In their analysis of placement services in the reformed Federal Employment Agency, Hielscher/Ochs (2009) labelled controlling as the language of the organisation. As productivity and efficiency are now emphasised as organizational objectives, controllers as well as controlling practices have tent to gain a new importance in the reformed Federal Employment Agency. More professionally qualified controllers have been recruited giving ‘controlling’ and ‘controllers’ a new

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recognition within the Federal Employment Agency. Controlling is seen as a mechanism that was useful in articulating changed organizational priorities and promoting the related vocabulary. The value system that had been evolved within the Federal Employment Service during the reform period emphasised the importance of the performance aspects of organisational functioning and often leads to conflicts between organisational and user or custom-centred goals. The changing value system had two implications for professional accountability. First of all, the controller has evolved as new profession within the Federal Employment Agency. Secondly, the norms and the perception of appropriate behaviour of frontline workers have changed. A recent survey (Osiander/Steinke 2011) has shown that the self-assessment of frontline workers of the Federal Employment Agency has in fact changed within the last decade. In 1999, 21 % defined themselves as social workers; in 2009 this value has decreased to 12 %. The changing values are also shown by a recent debate within the Federal Employment Agency. In an internal letter to the chairman of Federal Employment Agency in 2009 that became public, the leader of the main staff council has complained that the ranking in the internal benchmarking of the Federal Employment Agency is now the main frame of reference for successful work. Furthermore, he is arguing that there is the impression that not the activation of the unemployed is the core business of the Federal Employment Agency but controlling and quality management that has developed into an end to itself.

Of course these are only preliminary hints and future research is needed but it gives a first insight that the norms of professional accountability have changed over time.

Marketization

The contracting out of job brokerage and case management services and the increased use of market mechanisms has been a major trend in the reform of the Public Employment Services (Bruttel 2005). Contracting-out means that Public Employment Agencies assign private contractors with the delivering of services and only take the responsibility that services are delivered without taking operative actions. The expectation is that through the creation of a quasi-market services will be delivered more efficient and effective (Bredgaard/Larsen 2008). E.g. for placement services this would mean that Employment Agencies no longer offer placement services to jobless people but delegates this functions to private contractors. Private contractors in this context is an umbrella term that includes private employment agencies as well as rehabilitation and training providers that can be both, for profit or not for profit. Of course, contracting out is nothing completely new. The German Federal Employment Agency for example never delivered training programmes itself and always contracted private providers but ‘this process was often carried out without public tendering and based on familiarity with the provider. In particular, many observers claimed that training providers operated by the social partners had been preferred by local offices, which also were governed by a tripartite board.’ (Kemmerling/Bruttel 2006: 95).

The effect of contracting out toward accountability is disputed (Mulgan 2006). Some authors argue that markets in general have a weak legitimacy (Newman 2007). In contrast, supporters of outsourcing argue that there are no negative effects on accountability through contracting out because ‘public agencies even when purchasing services from third parties remain accountable for the services they agree to buy’ (Mulgan 2006: 48). The public still has the right to blame public agencies or even ministers for bad public services even though they are provided by private contractors. Independently of the question if outsourcing leads to more or less accountability, the accountability mechanisms and instruments are altered through outsourcing. The main accountability mechanism is the contract between the public agency and the private provider which sets out the services to be provided, performance criteria and the accountability procedures like reporting requirements. Nevertheless, ‘private contractors, like other private companies, operate under a different accountability regime from public servants. Ultimate accountability is to their owners rather than to the public and they are not subject to the range of accountability pressures

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that face public officials from the legislature, government auditors, ombudsmen and the media.’ (Mulgan 2005: 64).

This becomes problematic assuming information asymmetries between purchaser and provider. The consequence can be that the public purchaser is unable to observe the actions of the contracted private provider and, at the same time, the private providers rather work to maximize their own utility rather than work for the goals of the public good (Bruttel 2005). Bruttel identifies three instruments to deal with this principal-agent problem: the definition of successful outcomes and earmarked payments in the contract, information mechanism and control mechanism. However, these mechanisms can also have their dark sides. If the defined successful outcome in the contract is to place participants into a job as soon as possible, creaming effects might lead to the result that the people most difficult to place are likely to receive no adequate support (Berkel/Borghi 2008b). Control mechanism through rules and regulation might have negative effects for the flexibility of service provision. Information mechanisms that should increase transparency to overcome the asymmetric information between parties also are often difficult to achieve and have some limitation. Private contractors will never have the same demands for information as public organization as information hold by private business is normally confidential. ‘How much individual contractors themselves spend in carrying out their contracts is looked on as their own affair and not a matter of public interest, even though taxpayers’ funds are involved. (Mulgan 2006: 51). So, the internal financial details of contractors are normally kept confidential and are not subject to government audit.

The most important step toward marketization in Germany has been the abolition of the monopoly of the Federal Employment Agency to provide placement services to the unemployed. Since 2002 it is possible to contract out the entire placement service to private providers, a partial contracting-out has been possible since 1998. Furthermore, also in 2002 a voucher system for placement services has been introduced which has been terminated at the end of 2010 (Kaps 2009). These measures provided new possibilities for the co-production in placement services and have increased mechanisms of market accountability in public employment services. Nevertheless, these market mechanisms have created problems like the non-achievement of agreed integration quota, abuses and deadweight effects (Gülker/Kaps 2007). The present incentive structure has encouraged creaming and parking, monitoring costs for the local employment agencies remain high and overregulation with contracts of more than 100 pages are not seldom (Schmid 2006). According to Kaps (2009) there are repeated conflicts between the Federal Employment Agencies and the private providers about which placements should be recognized and paid for as clear standards are lacking. Furthermore, the monitoring and control of the contracts has been passed to the frontline workers that spent considerable resources for negotiating quality problems with private providers. These time resources then are lacking for their own placement activities (Kaps 2009). So the efforts to remain accountability within contracting out relationships have resulted in high transaction costs that, as a consequence, reduce the efficiency of the contracting out.

Involvement of Social Partner

Even though great differences remain between European countries how the social partners are involved in the governing of labour market policies, a common trend at least in Bismarckian and Nordic welfare states is a decrease in the role of social partners in policy making and implementation of labour market policies. When analysing the role of social partners, it must be distinguished between the involvement in the policy formulation (through corporatist negotiation processes or regular consultation in hearings etc.) and their role in the implementation of labour market policies through the participation in the management of Public Employment Agencies or even through their role as provider of training and other activation measures.

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In all three areas, social partner have lost considerably in influence but concerning accountability issues, it is especially interesting to look at the changing role of social partners in the management of Public Employment Agencies because here their role as account holder becomes most visible.

In Germany, the organisation of the Federal Employment Service is structured along three tiers of governance: national Headquarter, ten Regional Directorates, and 176 Employment Agencies (plus some 660 additional business offices) that are responsible for the administration of the insurance-based unemployment benefit I.

Before the reform of the organisational structure of the Federal Employment Agency from 2003 onwards, the social partners have had been present in the supervision and management of the Federal Employment Agency at all levels. There has been tripartite board of governors and a tripartite management board on the national level. The social partners had not only wide-ranging competencies in the supervision and for strategic decision but also, through the management board, for operational policies as well as staffing policy. On the regional and local level, social partner have been involved through tripartite administration committee.

This situation has changed extensively. The social partners are still members of the board of governors at national level which is the main monitoring, advisory, and legislative body, but they have lost any influence on operational policies as the day-to-day business has been transferred to a full-time management board. Furthermore, the final decision for the nomination and dismissal of the members of the management board has been transferred to the federal government. At the regional level, social partners are no longer involved at all, as the administration committees of the regional directorates of the Federal Employment Agency have been abolished completely; tripartite administration committees are now only present at the local level. But the introduction of a full time management board and the removing of a tripartite body at the regional level have not been the most serious retrenchment of social partner involvement. With the introduction of the benefits reforms that came into force in 2005, social assistance (about 1,6 million people; formally administered through the municipalities) and unemployment assistance (about 2 million people; formerly administered through the Federal Employment Agency) have been merged to the new unemployment benefit II (Brussig/Knuth 2009). The responsibility for unemployment benefit II recipients has been assigned to newly the established ARGEn.

With respect to the operation of the jointly run ARGEn, the Federal Ministry of Labour and Social Affairs contracts the Federal Employment Agency as delivery agency and negotiates strategic targets directly with the management board. The board of governors – and thus the social partners – play literally no role: the board of governors has no advisory function and no rights of information. (Weißhaupt 2010)

Concerning accountability relations, it can be observed that the role of the social partner has been reduced to a supervisory function for the administration of the unemployment benefit I and the respective activation measures. Since the introduction of the unemployment benefit II, the bigger parts of active and passive labour market policies are implemented and administered without involvement of the social partners. This was a deliberate political choice in order to diminish the influence of the social partners. At the same time, the political accountability for the implementation of labour market policies has been increased. It is no longer possible to shift blame and responsibility to the social partners as it has been usual in the past, when the social partners ‘were blamed for ‘misusing’ social security as a labour-market exit strategy, and for impeding reforms aimed at making welfare states more activating.’ (Berkel 2010: 28).

Outlook

The aim of this paper has been to shed light on the relationship between reforms of service provision in public employment services and accountability relations. It has been shown that the trend towards

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activation in public employment services and the corresponding reforms in operational policy have not only impacted on performance or power distribution but also have altered accountability relationships in labour market policies. Long-established mechanisms of accountability like the supervisory accountability to social partners have lost in importance whereas other mechanisms like market accountability through contracts have taken greater significance. New actors that have to be held to account have evolved like private contractors, the newly established employment associations or the opting-out municipalities which make accountability relationships more complex and even reduce transparency and the attribution of responsibility. The example of contracting out signifies that several actors (in this case the Federal Public Agency) have growing problems to claim accountability and shows the problems that evolve when different rationalities come into conflict. The paper has described exemplary the juxtaposition of different accountability relationships in one policy that evolve over time and are the result of continuous negotiations and conflicts between the involved actors.

Of course, only a limited picture has been drawn and future research and especially more empirical evidence is needed in order to analyse the changing accountability relationships in labour market policies more systematically and to provide for a comprehensive accountability mapping.

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