National Adaptation to the ‘Policy ID’ of the EES 405 the welding of the BEPG and the EES, the German ‘National Action Plan for Growth and Jobs’ (cf. chapter 3.2.3.4), the EES and the EGs lost the ‘stand-alone’ profile of previous years. Therefore, a step back in visibility and subordination of the EES under the broader macro- and micro-economic focus of the BEPG within the German NRP has to be confirmed as in the case of the 2005 UK NRP. 5.2.3 Interim Assessment: The EES’s Impact on German Employment Policy Priorities – Policy Transfer and Diffusion leading to ?-Convergence? German employment policies disposed over less favourable starting conditions for ?convergence (similarity towards a common model)93, that is, to adapt to the overall ‘policy ID’ of the EES (cf. chapter 3.2.2, 3.2.3.2.2 and 3.2.3.4). Regardless of the ‘anticipating-prophylactic’ supply-side reforms of the conservative-liberal Kohl coalition government until 1998 (cf. chapter 2.2.2.2), Germany was characterised by a stronger misfit to the EES than the UK in 1997/98. In terms of ?-convergence, German employment policy reforms were, hence, placed at a disadvantage compared to the UK. So, given that the EES, in line with the assumptions of the second guiding thesis, exerted stronger Europeanisation pressure on Germany than on the UK (cf. chapter 2.1.2.1 and 2.3.2), reforms were more cumbersome and timeconsuming. Regardless of this need for increased efforts, the 2002 interim evaluation of the implementation of the EES in Germany positively stated that the “European Employment Strategy was implemented in Germany in a comprehensive package of measures that caters to the Strategy’s fundamental concerns and goals. In most areas, the Strategy corresponds to the political guidelines also pursued by the Federal Government in its national policies” (RWI/ISG 2002:2). The overall analysis of German employment policies over the lifetime of the EES until 2005, yet, revealed a certain division of reform intensity into two phases. Activities during the first ‘stand-alone’ period of the EES (1998-2002), explicitly applying no reform “Crashkurs” (Deutscher Bundestag 1999:4654), strongly focused on reforms of the macro-economic, fiscal and entrepreneurial environment in order to consolidate public finances. They aimed at reducing non-wage labour costs and tax burdens on labour in order to foster job creation and at enhancing employability through various activation measures and national education as well as training programmes. The second phase under the synchronised, streamlined, and welded EES (2003-2005) was characterised by a significant boost of overarching reform concepts that focused on the broader context of employment and labour market policy reforms, combining elements of employability, entrepreneurship, adaptability and equal opportunities and, thereby, significantly enhancing ?-convergence to the ‘policy ID’ of the EES. 93 Results concerning the other types of convergence (cf. chapter 2.1.2.3.1) will be presented in chapter 6.1.2. National Adaptation to the ‘Policy ID’ of the EES 406 Within its overall reform approach–combining supply- and demand-side policies closely linked to the government priorities of the respective years–which, in terms of content, provides for evidence of the Council recommendations being responded to, Germany largely focused on • reduction of non-wage labour costs and promotion of job creation through various waves of tax reforms; • reduction of early retirement rates through the reform of the pension system; • improvement of the economic situation through structural reforms in East Germany; • flexibilisation of work organisation, albeit respecting the autonomy of social partners in this area; • support for entrepreneurial activities, particularly targeting at business start-up and SME; • reduction of youth and long-term unemployment through the increasing application of active labour market instruments; • further enhancement of training systems and promotion of the dual apprenticeship; • enhancement of female participation through increase of childcare provision/facilities; and • improvement of labour market participation of most disadvantaged groups (particularly fostered since 2001). Yet, the scope of employment policy reform concepts remained limited. Besides the 1998 ‘Employment Promotion Reform Act’ and the SGB III, the 1999 ecological tax reform, JUMP and ‘Women and Work’, the 2000 ‘Tax Reform 2000’ and ‘Modern State – Modern Administration’ and the 2001 SGB IX and ‘Equality Act’, more farreaching and overarching structural reforms have only been introduced in 2002/03 with the ‘Job-AQTIV Act’, the ‘Hartz’ concept and the ‘Agenda 2010’. In 1998, socio-economic and employment policy reforms concentrated slightly more on the employability pillar than on the others, even if the output under this pillar was rather balanced with that of the entrepreneurship and adaptability pillars (cf. table 41). Five key initiatives, inter alia the ‘Employment Promotion Reforms Act’, the ‘National Action Plan for Vocational Training’ and the SGB III, were adopted, and grouped under the thematic umbrella of employability. Grouped under the entrepreneurship pillar were three new policies, inter alia the ‘Contributions (Easing) Act’ and the ‘Company Tax Reform’. In view of adaptability, two new policies, among them the ‘Law on the Social Security of Flexible Working-Time Arrangements’ were adopted. To enhance equal opportunities the ‘Employment Promotion Reforms Act’ was also labelled to contribute to this fourth pillar. Thus, even if the output in terms of reform volume remained limited, the first year after the inception of the EES witnessed a balanced rapprochement towards ?-convergence to the ‘policy ID’ of the EES with very slight asymmetry towards employability (cf. table 41). National Adaptation to the ‘Policy ID’ of the EES 407 In 1999, the volume of reforms nearly doubled. New initiatives concentrated on three pillars with nine new policies adopted under each the employability and entrepreneurship pillar as well as six under equal opportunities (cf. table 41). The focus of new measures under the employability pillar, inter alia the ‘Vocational Training Counsellors’, the ‘Apprenticeship Procurers’, the ‘Developer of Training Places East’ and JUMP, concentrated on the improvement of vocational training and apprenticeship programmes in order to provide for sufficient opportunities to prevent youth unemployment. Activities to improve the entrepreneurial environment, such as ‘InnoNet’, ‘InnoRegio’, and EXIST, targeted also at regional development, while new programmes under the equal opportunity pillar, such as ‘Women and Work’, ‘Total E-Quality’, ‘Audit Family and Job’ or ‘Women and Family-Friendly Company’, focused on the improvement of a family-friendly environment to enable women to take up work. The overall picture in 1999, hence, provides for evidence of the continuation and enhancement of a rather balanced ?-convergence to the EES, even if, as in 1998, one pillar lagged behind. The 2000 reforms, due to the government focus to improve the overall economic performance, concentrated on the entrepreneurship pillar. Eight new programmes were adopted under this thematic umbrella compared to five under employability and one under adaptability (cf. table 41). Reforms to increase employability broadly focused on the modernisation of job placement through ‘Labour Office 2000’ and lifelong learning initiatives such as ‘Lifelong Learning for Everybody’. Activities to structurally adapt the education and training system built the focus under the adaptability pillar. The entrepreneurship pillar was supported by the ‘Modern State – Modern Administration’ reform to reduce administrative burdens on the economy and facilitate business start-up, while other programmes, such as EXIST-SEED and ‘Innovation Competence’ supported technology transfer and co-operation between universities and the economy. With this development, 2000 turned towards a certain asymmetry of ?-convergence, favouring entrepreneurship at an expense of equal opportunities and adaptability, while activities to improve employability took a medium-position. In 2001, the picture became more balanced. Seven policies were adopted under the employability pillar, compared to one related to entrepreneurship, five to adaptability and six to equal opportunities (cf. table 41). Initiatives to align German policies to the employability pillar comprised the ‘Act on Part-time Working and Fixedterm Employment Contracts’ or the ‘Learning Regions – Promoting Networks’ programmes to increase employability in the Länder. Activities under the adaptability pillar took up a combined approach to the reform of work organisation and the quality of work aspect. Policies related to equal opportunities concentrated on female participation and integration. While, with the low number of policies adopted under the entrepreneurship pillar, asymmetric ?-convergence seemed to shift, new initiatives turned towards a certain synergy approach, combining elements of different pillars and embracing a broader range of target groups. Moreover, given the strong focus on entrepreneurship in 2000, the overall ?-convergence to the EES can be regarded as rather balanced in 2001. National Adaptation to the ‘Policy ID’ of the EES 408 New reforms in 2002 again laid a strong focus on entrepreneurship with ten new policies adopted compared to four related to employability, four to adaptability, and five to equal opportunities (cf. table 41). Despite of the numerical concentration of activities on entrepreneurship particular targeting at regional development and female participation in business, activities under the employability pillar have to be regarded as the most important ones in 2002 as well as within the entire period under analysis. The ‘Job-AQTIV Act’ and the ‘Hartz’ reforms combined elements of all pillars and established overarching reform concepts comparable to the British NDs and Welfare-to-Work programmes. New elements grouped under the equal opportunities pillar supplemented the two huge reforms by the improvement of gender equality aspects of work and care. Taking a combined view on 2001 and 2002, ?-convergence of German reforms again remained more balanced than in the case of the UK and further increased. With the synchronisation, streamlining, and welding the EES with the BEPG in 2003 and 2005 (cf. chapter 3.2.3.2 and 3.2.3.4), German reforms remained rather balanced between the former EES’s pillars, even if in 2004 and 2005 a stronger emphasis on employability is to be recognised. In 2003, eight new initiatives were adopted under the employability, among them the ‘Agenda 2010’ as one of the most important German reforms since the inception of the EES, and eight under the entrepreneurship pillar, compared to three related to adaptability and four related to equal opportunities. The year 2004 again witnessed eight new policies related to employability, none to entrepreneurship, two to adaptability and three to equal opportunities. In 2005 three new programmes were introduced, targeting at employability and one in each case of entrepreneurship, adaptability, and equal opportunities (cf. table 41). With this result, the earlier picture of a rather balanced ?-convergence to the EES revealed a slight tendency of misbalancing towards employability issues. With this record, German employment policy reforms broadly concentrated on employability, entrepreneurship, and–with a certain distance–also on equal opportunities, while adaptability, due to the autonomy of social partners in this area, was lagging behind in terms of policy output. This focus, by and large, mirrors the overall government priority of putting economic recovery and growth as well as education and training first. As a consequence, a slight asymmetry of ?-convergence has to be acknowledged over the entire period under analysis, yet, not as obvious and imbalanced as in the British case (cf. chapter 5.1.3). Under the employability pillar, 49 main activities were adopted and mentioned in the NAPs, followed by 40 main initiatives adopted under the entrepreneurship pillar, 26 under equal opportunities and only 18 adopted to enhance adaptability of the labour market (cf. table 41). With a view to the overall Europeanisation impact of the EES, the focus was, hence, more balanced than in the British case. It was, yet, also more strongly concentrated on employability and entrepreneurship. Given this particular focus on the improvement of labour market access, on the economic environment to enhance job creation and on incentives to take up work through tax and benefit reforms and the increase in training activities, German labour market traditions (cf. chapter 2.2.2.2) and government priorities seem to have been supportive to the adaptation to the EES as in National Adaptation to the ‘Policy ID’ of the EES 409 the case of the UK. The higher number of policies and innovations adopted in Germany compared to the UK indicates at the bigger misfit and distance of German labour market traditions to the overall ‘policy ID’ of the EES, indicating at the need to invest higher efforts to embed supranational ideas. Table 41: Number of Main German Socio-Economic Policies adopted under the EES’s Pillars and Thematic Focal Points from 1997/98 to 2005 1997/ 98 1999 2000 2001 2002 2003 2004 2005 Total Employability 5 9 5 7 4 8 8 3 49 Entrepreneurship 3 9 8 1 10 8 - 1 40 Adaptability 2 - 1 5 4 3 2 1 18 Equal Opportunities 1 6 - 6 5 4 3 1 26 Source: Own compilation based on chapter 5.2 and table 51. Due to the economic and structural burdens of re-unification, these medium strong to strong rapprochement to the overall ‘policy ID’ of the EES did, yet, not seem to have had the power to entirely eliminate persisting domestic shortcomings through policy diffusion or coercive policy transfer instigated by the Council recommendations. Main domestic bottlenecks constantly subject to supranational criticism since 2000 remained in the areas of • reduction of high levels of long-term unemployment, improvement of the active-preventive employment policy approach, increase of job creation in the service sector and elimination of strong regional disparities; • removal of work disincentives for older workers and increase their activity rate, including the reform of the German early retirement schemes and pension system; • flexibilisation of work contracts and work organisation as well as reduction of the persistently high tax burden on labour and high non-wage labour costs; • equalisation of the gender pay gap and need to promote childcare and care provisions/facilities; • enhancement of skills levels and need to implement a national lifelong learning strategy. Even if Germany reacted to the Council criticism more directly and stronger than the UK, shortcomings persisted largely due to the unfavourable economic development influenced by re-unification, which also hampered a more proactive approach to labour market policies (interview EU-2). Yet, as one German official stated, the shortcomings highlighted by the recommendations, such as especially long-term unemployment, activity rates of older workers or the gender pay gap, would have been subject to national reforms even without the recommendations (interview D-1, D-2, D-4). Nevertheless, by repeatedly pointing at domestic bottlenecks, the supranational level was also assessed to have set incentives to foster reforms, even if it National Adaptation to the ‘Policy ID’ of the EES 410 would not have caused reforms in sectors that were not subject to the national reform agenda (interview D-2). In view of the reaction to the single recommendations, a mixed picture has to be drawn. While the German government for instance increasingly responded to supranational criticism related to the gender pay gap by enhancing programmes to improve childcare provisions ever since 2001. The same holds true for the integration of older workers into the labour market to be instigated by the pension reform. Finally, Germany did not always take a proactive approach to the supranational recommendations. Some areas, in which the domestic assessment differed from the supranational perception, such as the improvement of the active-preventive approach or the reduction of non-wage labour costs in 2000 and 2001 were responded to by mere reference to past policies such as the 1998 ‘Employment Promotion Reform Act’ or the 1999/2000 tax reform framework. 411 National Adaptation to the ‘Policy ID’ of the EES interest in demonstrating compliance exists given that existing national employment in line with the EES’s ‘policy ID’ and to , that the UK–due to the proximity of the overall ‘policy ID’ of the EES–found it easie in other EU member states, because–already EES–the domestic employment policy approach was rather close to its overall ‘policy ID’. So, less structural reforms were necessary and made in order to meet the EES, the UK was also assessed to have “become more ambitious since the beginning phasis is placed on making employment opportunities more inclusive” (Council of the EU/European Commission 2003:273) and on improving transition from benefit main lines of the EES have been taken up in national policies. Reforms have “to a Employment Guidelines” (ECOTEC 2002:1). Nevertheless, it can be assumed that Labour introduced changes “promoting flexible working practices, ensuring minitivity” (Council/European Commission 2003:273) During the lifetime of the EES until 2005, British employment policies developed ?-convergence to the overall ‘policy ID’ of the EES has to be considered Na tio nal Ad apt ati on to the ‘P oli cy ID ’ o f th e E ES T ab le 4 2: R ec om m en da tio ns a dd re ss ed to G er m an y un de r th e E E S fr om 2 00 0 to 2 00 4 20 00 20 01 20 02 20 03 20 04 G er m an y 5 - S tre ng th en p re ve nt iv e m ea su re s f or p ol ic ie s ta rg et in g lo ng -te rm un em pl oy m en t - P re se nt at io n of a co he re nt str at eg y in o rd er to fa ci lit at e jo b cr ea tio n in th e s er vi ce se ct or - R ev ie w o f t he ta x an d so ci al se rv ic e sy ste m ; re m ov e w ork d isi nc en tiv es fo r o ld er w or ke rs - R ed uc tio n of th e t ax bu rd en o n la bo ur (e sp . n on w ag e l ab ou r c os ts) - I m pr ov e t he st at ist ic al sy ste m 5 - F ur th er st re ng th en pr ev en tiv e m ea su re s f or po lic ie s t ar ge tin g lo ng -te rm un em pl oy m en t - R em ov e w or k di sin ce nt iv es fo r o ld er w or ke rs - T ac kl e s ki lls g ap s i n th e la bo ur m ar ke t i nc lu di ng in ce nt iv es fo r c on tin uo us ed uc at io n, tr ai ni ng an d ap pr en tic es hi p - R ed uc tio n of th e t ax bu rd en o n la bo ur (e sp . n on w ag e l ab ou r c os ts) - S tre ng th en th e d ou bl epr on ge d ap pr oa ch co up lin g ge nd er m ai ns tre am in g an d sp ec ifi c m ea sur es for equ al op po rtu ni tie s; re du ce th e ge nd er p ay g ap 5 - D ed ic at e fu rth er e ffo rts to th e p re ve nt io n of th e in cr ea se of longte rm un em pl oy m en t; re du ce lo ng -te rm u ne m pl oy m en t - R em ov e w or k di sin ce nt iv es fo r o ld er w or ke rs - M ak e w or k co nt ra ct s a nd w or k or ga ni sa tio n m or e fle xi bl e; ta ck le sk ill s g ap s i n th e l ab ou r m ar ke t i nc lu di ng in ce nt iv es fo r c on tin uo us ed uc at io n, tr ai ni ng an d ap pr en tic es hi p - R ed uc tio n of th e t ax es o n la bour a nd so ci al se cur ity co nt rib ut io n (e sp . n on -w ag e la bour c os ts) a t t he lo w es t le ve l o f t he w ag e sc al e - S tre ng th en ef fo rts to re du ce th e g en de r p ay g ap ; pr om ot e ch ild ca re p ro vi sio ns 5 - I m pr ov e e ffi ci en cy of job pl ac em en t a ss ist an ce an d ac tiv e la bo ur m ar ke t pr og ra m m es - S ys te m at ic re vi ew an d re m ov al o f r eg ul at or y ba rri er s; in cr ea se jo b cr ea tio n; m ak e w or k con tra ct s a nd w ork or ga ni sa tio n m or e f le xi bl e - D ev el op a nd im pl em en t lif el on g le ar ni ng st ra te gy - I m pr ov e f em al e pa rti ci pa tio n; st re ng th en ef fo rts to re du ce th e g en de r pa y ga p; p ro m ot e ch ild c ar e pr ov isi on s - R ef or m o f t he ta x an d so ci al se cur ity b en ef it sy ste m ; r ed uc tio n of n on w ag e l ab ou r c os ts, co up le ac tiv e j ob se ar ch an d be ne fit el ig ib ili ty 8 - R ef or m o f t he ta x an d so ci al se cur ity b en ef it sy ste m ; r ed uc tio n of n on w ag e l ab ou r c os ts - F le xi bi lis at io n of w or k or ga ni sa tio n an d fo cu s o n re gi on al , l oc al and se ct or al di sp ar iti es - S im pl ify b us in es s re gu la tio n an d av ai la bi lit y of c ap ita l - I m pr ov e f em al e pa rti ci pa tio n; st re ng th en ef fo rts to re du ce th e g en de r pa y ga p; p ro m ot e ch ild c ar e pr ov isi on s - E sta bl ish a ac tiv e ag ei ng str at eg y - In te gr at e Im m igr an ts - I m pr ov e o ve ra ll sk ill s le ve ls an d pa rti ci pa tio n in lif el on g le ar ni ng pr og ra m m es - M od ern ise th e du al vo ca tio na l s ys te m S ou rc e: C ou nc il of th e E U 2 00 0b :2 4f ., 20 01 :3 0, 2 00 2b :7 3, 2 00 3e :2 4; 2 00 4b :5 0f .. Na tio nal Ad apt ati on to the ‘P oli cy ID ’ o f th e E ES T ab le 4 2: R ec om m en da tio ns a dd re ss ed to G er m an y un de r th e E E S fr om 2 00 0 to 2 00 4 20 00 20 01 20 National Adaptation to the ‘Policy ID’ of the EES 412 As in the case of the UK, supranational criticism was more likely to be taken up when in line with the government priorities. Criticism presenting dissenting positions was partially blocked-up by reference to national priorities or past policies. Hence, the Europeanisation impact of the EES was, as in the case of the UK, visibly limited by national priorities and past institutional and policy paths (interview D-1). So, as in the case of the UK, due to strong domestic intervening variables, the Europeanisation pressures of the EES did not lead to ?-convergence with the entire ‘policy ID’ of the EES in the short-run. Even if the German government seemed to have responded to the soft elements of the EES and the recommendations more strongly than the UK, due to unfavourable characteristics of the German labour market (cf. above), reforms partially remained without success. Some German officials interviewed for this study shared the perception of some of their British colleagues on the EES and the NAPs: Despite the enormous efforts to be invested in setting up the NAPs under the ‘stand-alone’ EES, the strategy was assessed to not provide for a powerful tool to force change in case of deviating national priorities (interview D-2, D-3). The NAPs are understood as a document compiling and presenting past, present, and future government policies, without providing for an arena to settle domestic conflicts on difficult reforms or to discuss national reforms. Thus, they are not perceived to be a political document that drives policy reform or a ‘policy-delivery mechanism’ (interview D-3, EU-2). Yet and again in line with British officials, the EES and the NAP procedure are rather perceived to be a good source of inspiration for the domestic arena and for the adaptation of national approaches and ideas. In this way, they provide for a useful reservoir for information on best national practices within the EU and, hence, a supportive element for the justification of national reforms (interview D-1, D-2, D-3, D-5). Yet, as in the case of the UK, the analysis of German reforms provides some evidence for the conclusion that the EES, in the long-run, seems to have impacted on the cognitive/normative dimension of problem perception and understandings (interview D-1) in areas such as gender equality and female participation in the labour market. As a result, these areas were increasingly tackled since 2000/01 as was the integration of disadvantaged groups (interview EU-2), the increased turn towards activation or the reform of social security and tax systems (cf. interview D-2). Finally, the most important reason to support the EES was assessed to be the enhancement of horizontal cross-loading through voluntary policy transfer through synergy, as in the case with the Danish ‘Job Rotation’ or the British ‘Jobcentre Plus’ (interview D-2, D-3), rather than through influence (as in the British case) or emulation. Resulting from the analysis it can be summarised that the EES had more impact on Germany than on the UK, given that stronger Europeanisation pressure was exerted to overcome domestic misfit and adapt employment policies. Nevertheless, even though Germany showed a higher quantitative record in terms of policy reforms to respond to the thematic pillars of the EES than the UK, rapprochement to the EES was more cumbersome and boosted only towards the end of the ‘standalone’ period of the EES. Hence, the German reform output showed thematic alignment with the EES, tending towards a rather balanced ?-convergence.