Final Conclusions 429 6.1.2 British and German Employment Policies under the EES: Proximity and Rapprochement to its ‘Policy ID’ – Converging Trends, Remaining Differences In the light of the second guiding thesis the present sub-chapter draws conclusions on the Europeanisation impact of the EES on the adaptation of British and German socio-economic and employment policies highlighting converging trends and remaining differences. The second guiding thesis assumed that Even though legally non-binding the EES –by means of policy learning and exchange of best practices–has an, albeit varying, impact on domestic employment policies in the UK and Germany. As part of supranational socio-economic governance, it primarily fosters ?-convergence by means of policy transfer and diffusion, leading towards Europeanisation of national employment policies. The empirical analysis undertaken to test the assumptions of the second guiding thesis provides evidence for the fact that the soft elements of the EES stimulated learning processes and the evolution of common understandings as well as ideas related to employment policy reforms. As a result of this development, British and German employment policies approached not only the overall ‘policy ID’ of the EES, that is, developed ?-convergence to the supranational provision (cf. chapter 2.1.2.3.1). They also became more similar to each other in terms of domestic employment policy instruments and problem-solving approaches. So, ?-convergence (increasing policy similarity) can be acknowledged, too. With this trend, in a horizontal cross-national perspective, British and German employment policies consolidated and increased proximity. In parallel, in the German case a certain destabilisation of past traditions and understandings was witnessed. With the ‘Hartz’ commission, also new ways of domestic employment policy deliberation, decentralised experimentation and the collective definition of employment policy approaches came to the fore. As assumed by the second guiding thesis, different degrees of Europeanisation were found in the UK and Germany given that employment policy misfit in the case of the UK–disposing over a greater ex-ante proximity to the EES’s policy paradigm (cf. chapter 3.2.2, 3.2.3.2.2 and 3.2.3.4) at t0, i.e. the year of the inception of the EES–was indeed weaker than in the case of Germany. Based on these more problematic starting conditions, the EES had a stronger impact on German employment policies as Germany–caused by a substantive policy misfit rooting in diverse domestic welfare state and policy traditions (cf. chapter 2.2.2.2)–needed to adapt its domestic employment policy approach more fundamentally to comply with the overall ideas of supranational employment policy co-ordination. The constraints of EMU membership added to the adaptation pressure (cf. chapter 3.3). So, as assumed by the second guiding thesis, adaptation to the EES was more cumbersome and time- Final Conclusions 430 consuming in Germany than in the UK. Yet, by and large, the two countries reacted quite similar to the stimulus of the EES, even if different results in terms of Europeanisation impact were found. Table 47: Indicators for Europeanisation of National Employment Policies in the UK and Germany UK D Consideration of the EES priority areas +++/++++ +++/++++ Focus on EES target groups ++++ +++/++++ National policy change instigated by European recommendations +/++ +++ Emulation, synthesis or influence inspired by the EES Influence Synthesis with a slight tendency to emulation ?-convergence (similarity towards a common model) +++/++++ +++/++++ -convergence (alteration of policy-related country-ranking) ++/+++ -convergence (worst performers pull alongside best performers) Missing (as UK belongs to the best performers) Missing / - (due to poor economic and employment performance of Germany) ?-convergence (increasing policy similarity) +++/++++ (due to rapprochement of Germany to the EES and proximity of the UK approach to the EES) Change of underlying cognitive / normative structures ++/+++ (due to overlapping national priorities) +++/++++ (due to huge reforms in 2002/03) weak = -; medium weak = +; medium = ++; medium strong = +++; strong = ++++ Source: Own compilation based on chapter 5.1 and 5.2 With a view to the consideration of the EES’s priority areas, both countries’ employment policies embraced the former four pillars of the EES and the later three overarching aims of the revised EES in a medium strong to increasingly strong way. While the UK already from 1997/98 to 2000, and, hence, partially before as well as parallel to the EES, implemented the most important policy reforms with the NDs and the Welfare-to-Work package, German reform activities were lagging behind during the ‘stand-alone’ period of the EES. They were only boosted in 2002/03 through the three huge reforms ‘Job-AQTIV Act’, ‘Hartz’ concept and the ‘Agenda Final Conclusions 431 2010’, showing greater signs of ?-convergence, but also of ?-convergence in the second phase of the EES. This boost of reforms was, yet, not primarily instigated by the revision of the EES, even if it outlined the main direction of reforms that were also taken up by German policy-makers. It paid tribute to national developments, such as problems revealed by the German Court of Auditors in view of the FES’s placement practice (cf. chapter 5.2.1.5). Nevertheless, also before this decisive domestic turning point, German employment policy reforms rather positively matched with the priority areas of the EES (cf. 5.2.3). Due to these developments, the basic lines of domestic employment policy reform agendas became more consistent with the EES in both countries, pointing also at the EES’s potential to instigate ?-convergence. At the same time, national differences, nevertheless, continued to exist, such as problems related to the German early retirement scheme, high non-wage labour costs and problem to increase female participation or British imbalances regarding ‘flexicurity’, low basic skills levels, the ‘working-poor’ phenomenon or the stronger focus on de-regulation and flexibility of work organisation (cf. chapter 5.1.3 and 5.2.3). This remaining diversity owes to the differences in labour market and employment policy traditions as well as to the different degrees of involvement of subnational levels of government and political actors such as the social partners. The convergence of agendas, while vertically supported by the EES, was also influenced by the same set of problems both countries faced and the fact that both countries, during the period under analysis, were led by social democratic (coalition) governments emphasising the New Labour and Neue Mitte approach (cf. chapter 2.2.2.1 and 2.2.2.2). Political actors involved in the domestic part of the EES-PCN, therefore, concluded that the EES was supportive to approaches and reform proposals that were subject to reflection in the national arena (cf. chapter 5.1.3 and 5.2.3). However, no sea-change of domestic employment policy approaches was assessed to have taken place by a high level of policy transfer through emulation (cf. chapter 2.1.2.3.1) as a result of the EES alone. While in Germany signs of synthesis and a very slight touch of emulation are to be found for instance in the cases of job rotation or tax reforms, the UK largely opted for policy transfer by influence of domestic policies through other EU member states’ examples such as Denmark (cf. chapter 5.1.3 and 5.2.3). Regarding the focus on the EES’s target groups, Germany, like the UK, initially concentrated on young people and long-term unemployed and increased training programmes and the enhancement of their basic skills. As initial reforms proved to be successful in the UK, the domestic target group focus was extended to other disadvantaged groups, such as lone parents, older people, and disabled persons. This extension of scope was to be witnessed in Germany later than in the UK. It, yet, also increasingly embraced other disadvantaged groups, such as women, older workers, disabled persons, and immigrants since 2000/01. Therefore, the Europeanisation impact of the EES in this area is assessed to have been strong in the UK and medium strong to increasingly strong in Germany. Final Conclusions 432 In view of policy change instigated by European recommendations in both the UK and Germany, criticism was more likely to be accepted in the short-run if it was in line with national perceptions, policy priorities, and traditions. Recommendations that represented deviating positions to national traditions were partially countered by national priorities or results of the implementation of past policies. Therefore, the Europeanisation impact of the EES on policy changes introduced as a reaction to the Council recommendation was limited in the short-run by national preferences and past institutional and policy paths (cf. chapter 5.1.3 and 5.2.3). Thus, the Europeanisation impact of the recommendations was medium weak to medium in the UK and medium strong in Germany. These results provide for evidence of the recommendations not presenting a policy-reform-instigating-momentum or a powerful instrument to inspire policy changes through vertical policy transfer (cf. chapter 2.1.2.2) in case of conflicting national priorities. Nevertheless, the EES as well as the Council recommendations were assessed to be a useful source of inspiration for domestic policy change and for adaptation of underlying, albeit unsuccessful, national perceptions and ideas as well as a helpful support for national reforms in the long-run. In view of the four types of convergence, the empirical analysis provided for evidence of the EES instigating ideational and ?-convergence, pointing at the successful ‘implementation’ of the EES’s primary intend (cf. chapter 3.4.3). Compared to this positive result, -convergence, as a measurement scale for country rankings regarding a special policy, was medium to medium strong. This degree was the result of increased ?-convergence and indicated at certain problems related to -convergence of worst performers pulling alongside best performers in relation to the UK’s and Germany’s employment performance, which was missing to weak due to the poor economic performance of Germany, but not in view of the direction of policy adaptation. Finally, ?-convergence has to be acknowledged and was medium strong to strong with the two countries indeed ‘gotten closer together’–indicating at a successfully transposed intend of the EES in view of the peer review exercise (cf. chapter 3.4.3). The EES has, hence, achieved convergence insofar, as, on the basis of peer pressure and given the political impetus behind it, obligations deriving from the (multi-) annual EES process have been taken rather seriously by both the UK and Germany and the ‘policy ID’ of the EES shines through in domestic reforms. This compliance was not less caused by the British and German governments feeling obliged to demonstrate their engagement to decrease unemployment before their ‘European peer’ in order to avoid ‘naming, blaming, and shaming’ mechanisms. In this sense, the EES, as far as the exchange of best practices and information is concerned, has led to Europeanisation. It, moreover, caused the British and German government to invest more than before in policy learning from other EU member states. The EES, thus, stimulated the broadening of perspective across national and policy boarders given that exchange provided for evidence of the vast commonality of problems. Over the entire lifetime of the EES both countries, yet, developed trends of asymmetric ?-convergence regarding the overall ‘policy ID’ of the EES. In the case of the UK, this asymmetry was more imbalanced towards employability, reflecting Final Conclusions 433 the initial focus of EU member states during the negotiation of the integration of the Employment Title into the Amsterdam Treaty (cf. chapter 3.1.2.1). Germany adopted a more balanced approach to address the different thematic topics of the EES, albeit also moving reforms stronger towards the employability, entrepreneurship and to a lesser degree to the equal opportunity pillar. The lesser output under the adaptability pillar in both cases points at the, albeit differently strong institutionalised, influence and autonomy of the social partners in this area (cf. chapter 2.2.2.1, 2.2.2.2, 5.1 and 5.2). Table 48: Number of Main Socio-Economic Policies Adopted in the UK and Germany under the EES’s Thematic Focus UK Germany Employability 43 49 Entrepreneurship 19 41 Adaptability 11 18 Equal Opportunities 17 27 Source: Own compilation based on 5.1 and 5.2. Higher output figures of policy reforms in Germany than in the UK point at the need to overcome a deeper gap based on bigger domestic policy misfit. Yet, in terms of convergence these efforts did not prove to be successful as due to the persisting German employment mal-performance, caused by an unfavourable intervening macro-economic climate. In view of ?-convergence, when comparing the adoption dates of functionally equivalent policies, alignment of national policies was to be witnessed within the empirical analysis not only in view of Germany getting closer to British approaches. While the NDs and the Welfare-to-Work package were adopted before the ‘JUMP’, ‘Job-AQTIV Act’, the ‘Hartz’ reforms and the ‘Agenda 2010’, which show proximity to the former British policies, the early German vocational training programmes of 1998/99 were adopted before similar British initiatives. At the same time some important reforms, such as national equality legislation, the British ‘Jobcentre Plus’ and the German ‘Jobcentre’ or enterprise promotion and business start-up legislation were adopted rather in parallel, pointing at the agenda-setting potential of the EES as well as potentially also at the party political and domestic problem proximity of the two countries. Yet, in most of the cases of functional equivalence, British policies were chronological forerunners of German reforms, having at least had the opportunity to inspire synthesis or even emulation, as could be assumed in the case of the British 1998 tax reforms and the German ‘Tax Reform 2000’ (cf. table 49). Final Conclusions 434 Table 49: Main Examples for ?-Convergence in Terms of Functional Equivalence UK Germany NDs/Welfare to Work package (1997/98 ff.) Employment Promotion Reform Act (1998) Job-AQTIV Act (2002) ‘Hartz’ reforms (2002) Agenda 2010 (2003) NDYP (1997/98) JUMP (1999) Development and Opportunities for Young People in Social Hotspots (2001) Reducing Youth Unemployment (2002) Jump plus (2003) ND 25+ (1997/98) Programme for the Long-term Unemployed (1999) Jobs for the Long-term Unemployed (2003) Re-Entry of the Long-Term Unemployed over 25 into the Labour Market - Work for the Long-term Unemployed (2003) NDDP (1997/98) Disabled Persons Tax Credit (1999) Disability Discrimination Act (2000) Act to Combat Unemployment of Severely Disabled People (2001) Social Code, 9th book (SGB IX) (2001) Act on the Promotion of Training and Employment of Persons with Severe Disabilities (2004) ND 50+ (1999) 50+ Die können es (2000) Act on Income of Older Workers (2005) Job Seekers Allowance (1998) SGB III (1998) Working Family Tax Credit (1998) Child Tax Credit (1998) Working Tax Credit (2004) Tax Reform 2000 Small Firms Training Loans (1998) Work Based Learning for Adults (1999) Workforce Development Loans (2000) Workforce Development Strategy (2002) Employer Training Projects (2002) National Employer Training Programme (2005) Proficiency Development for Economic Change – Structural Changes of Further Training in Companies (2000) Culture of Learning and Development of Competence (2001) An Enhanced Culture of Learning (2001) Graduate Apprenticeship (2000) National Action Plan for Vocational Training (1998) Training Places Programme for the new Länder (1999) Special Programme for the Provision of Initial Vocational Training for Young People (2003) Training Offensive 2003 (2003) National Pact for Training (2004) Vocational Training Act (2004) Local Strategic Partnership (2001) Neighbourhood Renewal Fund (2001) Community Empowerment Fund (2001) Community Chest (2001) InnoNet (1999) InnoRegio (1999) Bio-Regio-Initiative (2000) Innovative Regional Centre of Growth (2001) Final Conclusions 435 UK Germany Promotion of Job-Creating Infrastructure (2001) Promotion of R&D in Innovative Organisations with a Potential for Growth in Disadvantaged Regions (2003) Part-time Work Directive (2000) Law on the Social Security of Flexible Working-time Arrangements (1998) Act on Part-time Working and Fixed-term Employment Contracts (2001) Jobcentre Plus (2002) Jobcentre (2002) ‘Hartz’ reforms (2002) Employment Bill (2002) Employment Promotion Reform Act (1998) Skills for Life (2002) Skills Strategy for England – 21st Century Skills Realising our Potential (2003) New Deal for Skills (2003) Innovation and Jobs in the Information Society of the 21st Century (1999) Lifelong Learning for Everybody (2000) Lifelong Learning – Further Education as a Basic Need (2000) Strategy for Lifelong Learning in the Federal Republic of Germany (2004) Women in Science, Engineering and Technology (2004) Women in Higher Education and in Research Institutes (2001) Women in the Information Society and Technology (2001) Equal Opportunities of Women in Research and University Teaching (2001) Women Physicists Campaign (2002) Source: Own compilation based on chapter 5.1 and 5.2. The more important facet of the Europeanisation impact of the EES might, yet, have been the change of cognitive/normative structures of domestic employment policies inspired by the instruments of the OMC. British and German employment policy approaches have proven to be open to change instigated by exchange of practice and information also in areas of mismatching national traditions, such as the greater focus on the reduction of the gender pay gap, the new focus on female participation or the changes related to the British social partnership paradigm in 2003/04. This openness can be assessed to have resulted in a medium to medium strong impact in the UK and a medium strong to strong impact in Germany. In both cases, the EES ‘made it more popular’ among actors involved to reflect on topics such as lifelong learning, gender equality, older workers, flexibility of working arrangements or activation measures. The lesser degree of impact in the UK is largely caused by the ex-ante proximity of the domestic approach to the overall ‘policy ID’ of the EES. In Germany the medium strong impact was strengthened and became strong with the 2002/03 reform boost of the ‘Hartz’ reforms and the ‘Agenda 2010’, initiating a substantive change of domestic policy paradigm towards the ideas embedded in the EES. Final Conclusions 436 So, the overall Europeanisation impact of the EES on German employment policies, due to the huge reforms adopted in 2002/03, tends towards transformation. The impact on underlying cognitive/normative structures are to be located within the area of transformation given that these 2002/03 reforms embraced the overall ‘policy ID’ more profoundly than previous reforms. The impact of the EES on British employment policies lies within the field of absorption. The impact on cognitive/normative structures in this case leans towards accommodation/upgrading given that national policy shortcomings, such as the enhancement of social partner integration, insufficient balancing of flexibility and security or low skills levels, were increasingly tackled in a long-run perspective. Even if in the case of the UK the results point at largely superficial changes, the country, nevertheless, shows elements of ?convergence to the overall ‘policy ID’ of the EES. The assumption of a higher Europeanisation impact of the EES in Germany than in the UK has, thus, been verified. Reforms of the late first and early second phase of the EES, explicitly referring to the EES in their wording, balanced policy misfit and aligned Germany’s employment policies more closely to the EES. Final Conclusions 437 Table 50: Europeanisation of Employment Policy-Making and Policies in the UK and Germany – The Final Picture and Result Domain of Europeanisation Europeanisation impact Category of Europeanisation Domestic structures Public Policy Cognitive/ Normative structures Retrenchment (becoming less European) Inertia (absence of change) Absorption (largely superficial form of change) Accommodation / Upgrading (moderate form of adaptation) Missing (adaptation pressure too strong) High (changes of fundamental logics) Transformation (fundamental change) Source: Own results and compilation; own design based on the contents of Radaelli 2003b:35, Börzel/Risse 2003:70 and Meyer/Umbach 2007:94f.; partially inspired by the design of Mittag/Wessels 2003:414. The overall result of Europeanisation of British and German employment policies points at a medium to medium strong impact of the EES. It shows a slightly asymmetric integration of its underlying ‘policy ID’ into the NAPs, a cross-national and cross-level convergence of policy instruments and an adaptation of cognitive/normative structures towards the ideas of the EES. Hence, as assumed by the second guiding thesis, not only policy instruments, but also underlying policy ideas and paradigms as well as partially also national traditions were adapted in a process of ‘creeping’ Europeanisation. Political actors used the opportunities of the EES to exchange information through peer review, bench-marking exercises and the exchange of best practices in order to apply policy learning, transfer and diffusion to reform domestic employment policy approaches (cf. chapter 2.1.2.3.1). Yet, given that no overall strong Europeanisation impact was found, the analysis leaves room for the assumption that the change of domestic employment policies D UK D D. Structures UK D. structures UK D D Policy UK Policy Final Conclusions 438 was also based on similar domestic constellations and party political priorities with the policy agendas of the social democratic (coalition) governments of the two countries dominated by similar problem perceptions and policy priorities. Finally, it needs to be highlighted, that the EES seems to probably be the most realistic way to slightly converge national employment policy approaches. Acknowledging that no common European labour markets exists and that the performance of national labour markets is largely based on a combination of domestic economic and structural problems, the EES offers a flexible framework for employment policy coordination, which can be adapted to national priorities. So, even if at first the EES must have seemed slightly ‘absurd’ a remedy for the European unemployment disease of the 1990s, European policy-makers proved to not have only been (roughly) right in deciding to co-ordinate EU member states’ employment policies in order to create common problem perceptions and understandings through supranational priority setting and ‘creeping’ Europeanisation of domestic employment policies. If European policy-makers had not taken this opportunity to amend the European socio-economic policy armoury by soft policy coordination through OMC, they would have actually indeed been precisely wrong in missing the chance to respond to common and internationalised problems, which were increasingly undermining the legitimacy of the European integration construction, its socio-economic foundations and its political institutions (cf. chapter 1.1). 6.2 The Europeanisation Approach, the EES, and the OMC: Theoretico-Analytical Mission Accomplished? In the light of the assumptions of the third guiding thesis, the final sub-chapter draws conclusions on the applicability of the Europeanisation approach to the analysis of domestic adaptation to the EES applying the OMC. The third guiding thesis assumed that The EES impacts on the Europeanisation of British and German employment policies and policy-making via down-loading that initiates cross-loading, aiming at both vertical and horizontal policy transfer. Yet, the Europeanisation approach analytically strongly relies on the existence of modest domestic misfit and adaptation pressure to explain change. This ex-ante limitation impedes its analytical depth, and applicability in the case of the EES/OMC.