The Why, When, How, What, and In How Far of European Employment Policy Co-ordination 235 political systems, labour market paradigms, social dialogue structures, and socioeconomic policy traditions stand out. As a result of these constraints, the first cycle of the programme “was, at best, a learning process for a limited community of labour market technicians and experts. It might have produced a degree of ‘tweaking’ of existing policies, but it hardly acted as a catalyst for policy transfer” (Casey/Gold 2005:36), limiting also the overall Europeanisation potential of the EES in this area. 3.4.3 What?: A New ‘Policy ID’ to Europeanise National Employment Policies – The Activation Paradigm’s Potential to Attain ?-Convergence With its focus on active labour market policies, the what–that is, the underlying ‘policy ID’ of the EES–roots in an integrated approach combining aspects of lifelong learning, employability, adaptability and preventive measures to bring unemployed persons back into employment and to create employment. Apart from its multidimensional focus on activation, including “an important terminological shift in relation to unemployment … understood in terms of lack of employability” (Serrano Pascual 2003:154), the EES has also been designed to be “an element in a job creation strategy, [even if it] .. cannot realistically provide a comprehensive solution in its own” (Begg 2004:3). Its strong focus on employment creation and macro-economic growth pays tribute to this aim. As a result of these shifts, its ‘policy ID’ turns economic participation into a core element of the understanding of European citizenship, making “social policy … a tool of economic development” (Serrano Pascual 2003:157). Regarding this specific ‘policy ID’ and aims, the EES owes much to the history of its path-dependent integration into the supranational treaty framework (cf. chapter 3.1). This integration took its starting point in social policies and, later on, amended as well as counterweighted macro-economic policy co-ordination within EMU. As a result, the EES reflects a compromise between a neo-liberal approach and the Nordic social welfare state paradigm and can be judged to be “a ‘discursive regulatory mechanism’…that redefines social policy in the light of economic performance” (Laffan/Shaw 2005:9). So, in view of its focus on “the labour demand side the EES, with its attention for entrepreneurship and adaptability, is inspired by the liberal model emphasising labour market deregulation and tax reductions; whereas on the labour supply side the EES is inspired by the Nordic model focussing on employability via training and active labour market policies” (Smismans 2004:15; de la Porte/Pochet 2003:42). Yet, the weight of the latter seems to prevail as the EES’s policy paradigm concentrates on “the transformation of social and labour policy analysis from demand to ‘supply’ focussed, from ‘passive’ to active” (Jenson/Pochet 2002:4). It, moreover, seeks to combine flexibility with security (cf. ibid.:9) with its inherent ‘flexicurity paradigm’ in which “the notion is not that of ‘work first’, or ‘any job is a good job’, in the North American sense. It is rather, that quantity and quality most go together” (Jenson/Pochet 2002:9). This approach links the employment related part of the EES with education and training, entrepreneurship as well as The Why, When, How, What, and In How Far of European Employment Policy Co-ordination 236 equal opportunities. In doing so, it creates a new policy paradigm relevant for national reforms (cf. Serrano Pascual 2003:149) within down-loading processes, that is, top-down Europeanisation. “This process of convergence entails a redefinition of the ‘social question’, with a tendency towards a reading of risk … in ‘moral’ rather than political or social terms” (cf. Serrano Pascual 2003:144). Yet, the first official interim evaluation of the top-down Europeanisation impact of the EES drew a mixed picture of convergence given that some areas, such as lifelong learning or female participation, were more successfully taken up than others, like the social partnership, the integration of older workers or quality of work issues, the latter being obviously subject to ‘thin’ rather than ‘thick’ learning (cf. chapter 2.1.2.3). The streamlining of the EES in 2003 and its welding with the BEPG in the Lisbon Action Programme in 2005 did not initiate major changes to the Europeanisation potential of the EES’s ‘policy ID’. While the four-pillar-six-objectives structure was abandoned, the new three overarching aims and ten priority areas largely contain all aspects of the former structure. The reform did, yet, simplify the design of the EES and refocus it in a more result- than structure-oriented way. It also re-emphasised the employability-activation focus of the strategy. With its ‘1997–2002’ four strategic building-blocks (employability, entrepreneurship, adaptability and equal opportunities), branding the ‘policy ID’ in the first period, the EES aimed “at reform in the short run with a gradual shift towards major restructuring in the long run” (Velluti 2002:2). This underlying paradigm constituted the European employment policy model to which member states had been encouraged to adapt during the first phase of the stand alone EES. With this intent, the EES stimulates ideational and ?-convergence (similarity towards a common model) by amending domestic employment policy traditions and approaches through emulation, synthesis, and/or influence in the process of top-down Europeanisation (cf. chapter 2.1.2.3.1 and 2.3.2). As a consequence, EU member states’ employment policies are subject to change of targets, standards, instruments, problem-solving approaches, as well as underlying policy narratives and traditions (cf. chapter 2.1.2.3). This approach inspires policy and institutional learning, policy transfer and the catching up of worst performers (impacting on country-specific rankings) to achieve ?-convergence in the long-term perspective. In this perspective, “the EES is promoting and popularising a certain diagnosis of the problem (interpretation of the cause of the problem), legitimisation principles, targets of intervention and definition of the role played by the state” (Serrano Pascual 2003:151). The Why, When, How, What, and In How Far of European Employment Policy Co-ordination 237 Table 24: Convergence and Europeanisation Potential of the EES Type of Convergence Convergence Potential of the EES Europeanisation Potential of the EES ?-convergence Increasing policy similarity through policy diffusion by the peer review/mutual learning programme and the overall focus on ?-convergence that instigates policy learning and transfer by vertically ‘pushed’ horizontal cross-loading Medium to strong Intended aim given that fostering ?-convergence leads to ?convergence in the long-run -convergence Measured by the EES’s indicators, worst performers pull alongside best performers given that the EES’s quantitative targets are the same for all member states setting up a common aim to adapt to regardless of individual starting positions Likely and necessary, as the aim to become the ‘most competitive and dynamic knowledge-based economy in the world’ strongly relies on homogeneity among EU member states in order to prevent external shocks. Positive side-effect of ?-convergence -convergence Alteration of policy-related country-ranking over time as -convergence is likely to take place; is measured by the extensive set of EES-indicators and presented in the JER Not necessarily, as both best and worst performers try to improve their employment records by policy reforms adapting to the EES; Yet, not unlikely as EU member states should become more homogeneous in view of their employment records adapting to the EES’s quantitative targets in the long-run. No specific aim of the EES, but a possible outcome of ?-, ?- and ?-convergence ?-convergence Bench-marking by annual reporting, monitoring and peer review in order to measure change of similarity among member states and their adaptation to the overall ‘policy ID’ and model of the EES by means of down-loading, that is, top-down Europeanisation Medium to strong, depending on the domestic misfit and national ex-ante deviation from the EES’s ‘policy ID’; Intended aim and focus of the EES Source: Own compilation based on chapter 3 and Knill 2005:769. The Why, When, How, What, and In How Far of European Employment Policy Co-ordination 238 With a view to the empirical analysis of the Europeanisation impact of the EES on both the UK and Germany, missing ?-convergence would indicate both at a malfunction of the peer review/mutual learning programme and at a failure related to the achievement of the overall aim of the EES, that is, the adaptation to its ‘policy ID’. Absent -convergence would be a sign of overall mismatching quantitative targets not realisable by the member states and, hence, in need for reform. It, moreover, would point at persistent economic mal-performance of the respective member states. The Lisbon focus to become the ‘most competitive and dynamic knowledgebased economy in the world’ would not be met and homogeneity of economic performance would be unlikely. As quantitative targets and the overall policy approach are the same for all countries, changes in performance and, thus, in country-specific ranking would not be likely to occur. Lacking -convergence would not necessarily indicate at a failure of the EES as best and worst performers seek to improve their employment records while adapting to the EES. It would rather hint at potential problems related to -convergence or to equal progress of all member states, keeping their initial distance while adapting their employment policies and performances. It could, moreover, indicate at the inadequacy of the EES’s key/structural82, context83, and trend84 indicators to measure such convergence and compare member states’ performance. Finally, missing ?-convergence would point at the overall failure of the EES not achieving its prime intent. The overall ‘policy ID’ would not inspire national adaptation and change. Policy and institutional learning as well as policy transfer would be absent and, as a consequence, other forms of convergence would be missing. The EES would be in need for re-shaping, re-focusing and re-structuring within a bottom-up Europeanisation process, giving all actors involved the opportunity to re-adapt the EES to their preferences and demands. Such an overall failure of the EES could primarily be caused by too strong ex-ante deviation of domestic employment policy traditions and approaches from the overall policy paradigm of the EES. Such mismatch could also be the result of failed up-loading of national priorities during the inception of the EES into the supranational treaty framework. Yet, failure with a view to the four convergence types could also be caused by strong domestic intervening variables (cf. chapter 2.2.1 and 2.2.2) blocking adaptation or missing economic performance and growth. 82 Hard indicators that are suitable for comparison among member states, such as employment level, unemployment level, GDP/GNP. 83 Softer indicators that are not entirely suitable for country-rankings. 84 Focussed on diachronic analysis of domestic developments and not suitable for comparison, such sickness quota, incidents at work. The Why, When, How, What, and In How Far of European Employment Policy Co-ordination 239 3.4.4 In How Far?: A New Mode of Governance Constrained by the Supranational Macro-Economic Integration Paradigm Curtailing this rather positive assessment of the Europeanisation potential of the EES, the analysis of its embeddedness into supranational economic policy coordination shows in how far its impact is constrained by the European macroeconomic and monetary integration focus and by other international multilateral surveillance activities, even if the EES itself forms one of the core building-blocks of the supranational socio-economic governance architecture. The interweavement of these areas creates limitations that derive especially from the dominance of supranational monetary integration within EMU as the most powerful intervening variable (cf. chapter 2.2.2.3). Owing to its path-dependent institutionalisation and constitutionalisation as well as to the predominant macro-economic integration approach at the time of its inception, the EES “was both a supplement and subordinated to EMU … [given that] more ambitious, employment-creating initiatives were circumscribed by the importance attached to sound money and the credibility of maintaining price stability. Therefore, employment policy [for a long period] was residual in character” (Schäfer 2004:8; cf. ibid.:12). This subordination was even strengthened by the missing influence on all policies decisive for a high level of employment by the ‘policy ID’ of the EES, with aspects such as collective bargaining, monetary, fiscal and regulatory policy (cf. Jenson/Pochet 2002:12; cf. chapter 2.2.2.3, graph 5) outside its co-ordination competences. Thus, the missing integration of macro-economic policies and the EES’s focus on merely “a subset of labour market policies, such as employability” (cf. Begg 2004:3) left it with only limited influence on important macro-economic aspects of employment and labour market reforms. More importantly, EMU deprived EU member states of their potential to react to rising unemployment by, inter alia, rendering excessive deficit spending to create new jobs impossible. This reduction in scope also impacts on the ‘policy ID’ of the EES by clearly identifying ‘no-go-areas’ for employment policy co-ordination. EMU’s provisions establish a dominant supranational monetary policy paradigm and substantially restrict autonomous national reactions to economic crisis, domestic solutions to decrease unemployment and external shocks (Boltho 1998:148; cf. Barrell/Dury 2000:634; Dyson 2000a:646; Serrano Pascual 2003:162). They rule “out fiscal and wage policy as sources of expansionary stimulus” (Foden/Magnusson 2003:9) and make “some traditional employment policy tools obsolete: … competitive devaluation, adjustment of national interest rates, public deficit policies, and state aid” (Goetschy 2003:70; cf. Jenson/Pochet 2002:3; Kasten/Soskice 2001:39ff.). Especially “the move toward the final stages of EMU have altered the rules of the game, and have rendered any return to Keynesian or other forms of demand management and traditional social policy thinking very unlikely” (Jenson/Pochet 2002:4). The only socio-economic policy instrument remaining at the hand of national policy-makers are, hence, labour market and employment policies that, never-