Governance of activation policies and the challenge of the crisis: illustration on the Czech case

FLEXWORKinternational conference

Amsterdam 24-25 October, 2010

Tomáš Sirovátka and Rik van Berkel

Focus of the paper

• Trends in governance of activation policies in 9 countries (2000-2010)

• The effect of the reforms• The crisis as challenge – continuity of the

trends ?• The trends in the Czech Republic: substance

and governance of activation

Governance of activation - key trends 2000-2010 (9 countries)

• Governance reforms typically enable or underpin the substantive reforms in activation and often come in one package

• Substance of activation – rather labour flexibilisation, work first than human resource development (the overall trend of re-commodification, WS retrenchment)

• Governance of activation:• Marketization – competition, efficiency and

effectiveness of service, quality and flexibility, responsiveness to client needs (competitive markets?, creaming and parking?, work first, administrative burden)

Governance of activation - key trends• Decentralization + (re-)centralization –

tailored and innovative solutions in local conditions (?coordination of actors, accountability standards)

• New public management - concentration on the results and effects, new forms of control, regulation and strategic management (? appropriate choice of performance indicators and the managerial and administrative capacity of the principal of performance steering and incentivizing)

Governance of activation

• Network governance - exchange of information, service coordination and integration, services more accessible and user-friendly (? diverging objectives or different cultures, management styles and ways of service delivery)

• The role of implementation conditions in shaping the real trends of governance of activation policies is pivotal

Overview of governance reformsTrends in governance regimes (as distinguished in

Considine 2001): Seem to continue during crisis even in 2010-2013 1. Procedural governance (central regulation – more

or less, universality): most countries show a decrease, decentralisation (+ rec-centralisation)

2. Market and corporate governance (outsourcing and steering on goals/targets): most countries show an increase

3. Network governance (cooperation between social partners and interagency cooperation, empowering clients): mixed developments across countries

(All countries are mixed regimes, different mixes)

The EffectsProcess effects: voice and choice

individualised services rights and responsibilities

Output effects: coverage and reach service content/quality range and variety

Outcome effects: job placement (job retention and quality) (cost effectiveness)

Overview of effects1. Outcome net effects are rather disappointing,

mostly aiming at quick reintegration (cost containment, lack of professional quality and case-loads)In some cases public services have better outcomes than private

2. Output effects: more persons covered but effects differ for different groups. Especially creaming/pre-selection is disadvantaging vulnerable groupsQuality did not increase, rather investment in training is decreasing (as well as job subsidies)

Overview of effects3. Process effects: in some countries more

individualised attention, but also diminishment of rights (stricter conditionality of benefits)

All in all, the results don´ t convince that the expectations to the gov. reforms are met

Learning in governance (less marketisation, recentralisation, experimentation)?

Implementation needs capacities, regulation… problem of costs

Some countries learn better, some learn less: divergence during the crisis ?

Several studies: strong path dependency in substance of employment policies

10

Czech Republic: crisis and acceleration of the trends

• The center-right governments tried to push the country down a more market-liberal path (2008-2013)

• Crisis - window of opportunity for changes which were intended anyway

• Given lack of popular support to radical neo-liberal - rather than systemic change -

• Series of chaotic reforms implemented (accompanied with a rhetoric of systemic change)

• That would help the situation decompose and build more fertile ground for a more systemic change in the future

• ‚Compost model of policymaking‘ (Saxonberg and Sirovatka, fortcoming)

Activation reforms: substance • Substance – from protection towards

activation, workfare

• Classen et al. (2012): the Czech Republic has not recognised the crisis as a structural challenge

• employment policy does not pay so much attention to the ‘outsiders’, rather protection of the existing employment is a priority

• Kurzarbeit + labour market training on workplace in 2009-2010, with great numbers of the participants, close to 4% of labour force. A similar scheme was started in 2012

Towards workfare• In August 2007, the authomatic revaluation of

subsistence and existence minimums was cancelled and is now only at the discretion of the government

• From January 2009 after six months, the social assistance benefits recipients were automatically entitled only to an existence minimum instead of a living minimum (one third lower)

• if they participated in public works for a total of 20-30 hours per month were they entitled for a living minimum plus a supplement in the amount of 30% of the difference between an existence and a living minimum,

• if they worked more than 30 hours, they received a bonus to the existence minimum in the amount of half the difference between the living and existence minimum

Activation: workfare

• most of municipalities did not offer sufficient opportunities to the social assistance recipients to participate in public service jobs: in 2009, only 10% of the municipalities organised these activities (MPSV, 2010).

• From January 2009, after five months of unemployment, the employment offices are obliged to implement individual action plans with the unemployed (but only formal).

• A failure to fulfil the obligations of this individual contract (or a refusal of it or a refusal of the vocational training programme) implies a removal from the register and reduced entitlements for social assistance benefits (at most the existence minimum).

Activation: workfare• The period covered by unemployment benefits was

shortened from 6 to 5 months (and from 9/12 to 8/11 months in case of the unemployed over 50/55 years of age) while the level of benefits was increased in two first months from 50% replacement rate to 65%, left at 50% for the second two months and 45% for the remaining month(s).

• period spent on studies is not recognised more as a substitute of work record for the purpose of unemployment insurance entitlements: this measure excluded school leavers from the entitlements for unemployment benefits.

• In 2011 positive incentives in the form of bonuses to the living minimum or to existence minimum in case of participation in public service (30 or 20 hours per week) were cancelled

Activation: workfare• instead, all unemployed (not important if they are

social assistance recipients or unemployment benefit recipients) may be obliged after 2 months of unemployment to participate in public service in amount up to 20 hours per week (which in fact corresponds to part-time job)

• The refusal leads to exclusion from all entitlements to unemployment or social assistance benefits.

• since the beginning of 2012 nearly 61 thousand have participated, but in November 2012 the Constitutional Court has cancelled the institute of public service as compulsory activity of the benefit recipients

Deterioration of ALMPs

• The scope of ALMP measures was rather modest before the crisis (2008)

• Crisis did not bring contra-cyclical reaction • In 2008, the participants in active

employment policy measures accounted for 26.3%, in 2009 it was 19.1%, in 2010 22.5%, in 2011 19.1%, and in 2012 9.6% of the unemployment stock.

• due to cuts in ALMP expenditure and due to governance reforms of Public Employment Service implemented during 2010-2012

Governance reforms

• Governance - chaotic reforms, drastic deteriotation of implementation conditions, administrative capacity, budget cuts

• objective of re-centralisation, this is stronger subordination of local employment offices to the centre of PES and shifting more competences from local/municipal to regional level in order to control better the expenditure

• in 2012 streamlining services through institutional integration with social assistance, as well as through outsourcing job mediation to private providers.

• the reduction of staff in 2012 was more than by 60% compared to 2011 when it was in competence of municipalities in area of social assistance

Governance reforms

• Failures in basic functions like delivering the benefits were emerging not speaking about individual case work (IPPs)

• The 2012 draft state budget counted on staff cuts in Employment Offices to 6,565 employees – it foresaw cost savings of CZK 400 million and staff cuts of 1,953 people.

• New forms of controls - in the second half of 2011 the duty was imposed on the selected unemployed to show themselves in given time periods at so called Czeck Points (established at post-offices) in order to make illegal work for them impossible.

A turn-off in 2013?

• weak position of vulnerable groups in the labour market is recognised there as well as some negative impacts of the governance reforms

• the claim to increase the personnel capacity of employment offices by about 500 employees, and strengthening of the individual approach to the unemployed.

• (Employment Plan), see MLSA (2013): employment opportunities (in the form of work experience 12 months) for the youth and to protect employment in companies threatened by the crisis by support to part-time working (Kurzarbeit) combined with vocational training, and other.

• ALMP expenditure are provided in amount 7.9 billion CZK.

Conclusions• Common trends in governance reforms (also

similar substance reforms)• Still differences between countries, path

dependency and policy learning• The crisis: continuation or diversity ?• Czech Republic: continuity in key trends, some

become even stronger• Discontinuity: radical activation, chaotic

governance reforms, reversals in policy ?

• Thank you for attention