To what extent are there policy convergence and/or divergence in the employment policies of Germany and the United Kingdom?

Index

Abstract

1. Introduction
1.1. The subject
1.2. The methodology

2. The debate on EES

3. The Employment Policy Reforms in the United Kingdom and in Germany
3.1. Public and Private PES
3.2. Linking AEM and unemployment benefit schemes
3.3. Convergence and integrative effectiveness

4. Conclusion

Index of tables

Table 1 Unemployment in the EU-15 1988-1998

Table 2 Long-term unemployment in the EU-15 in 1997

Table 3 Overview Old System and New System of employment benefits

Table 4 The four laws on modern services in the labour market (Hartz I-IV)

Table 5 System Changes in PES in Germany and the UK since 2003

Table 6 Unemployment in the UK and Germany by level of education 1999-2005

Table 7 Unemployment in the UK and in Germany by age groups 1999-2005

Abstract

After investigating the active employment measures of the United Kingdom and Germany as well as their reforms of the Employment Services since the creation of the European Employment Strategy in 1997, it can be said that Germany adapted huge parts of the British system. The British set the Euro­pean Employment Strategy’s agenda and extended their policy model to the European level. Via the European Employment Strategy, the British system significantly changed the German one from a highly protective to a liberal model. The German state transferred the responsibility for protection from employment related “common risks of life” to the citizens, reducing its own measures to supporting services and a mere “guarantee of survival”.

Although this convergence of Employment Policy was caused by the European Employment Strategy, it did not contribute to the emerging of a unified European Employment Policy or to a public awareness of the European Union’s role in this policy area. While Germany obviously respected the European Employment Strategy as a “superior guidance” and treated it as a self standing “European Policy”, the British used it to extend the reach of their national policies. A real integration of national policies into an EU-policy did not happen. In the United Kingdom as well as in Germany, the reforms of the em­ployment policies have not been determined and implemented in a process of broad public participation but mostly as a “top-down” process, with decisions made by a professional elite.

The European Employment Strategy with its set of policy methods (Open Methods of Cooperation) had not been able to reach its goals of a more democratic policy making and more public awareness of an independent role of the European Union in employment policy.

1. Introduction

1.1. The subject

The thesis of the essay is that convergence of German and British employment policy was mostly a “one way street” of Germany adapting instruments of the United Kingdom – UK- (Büchs, 2004) ¹. The UK set the European Employment Strategy’s (EES) agenda and extended her policy via the EES in a “two-level game” (Büchs, 2008). The public debate in Germany on the changes was hardly ever linked to the EES. Therefore, although convergence might be a result of German “EES policy-learning” it can be doubted that it contributed to the emerging of a European Employment Policy (EEP) or to a public awareness of the EU’s role. The essay focuses on a comparison of the British and German “active em­ployment measures” (AEM) and the Employment Services’ (PES). “Modernization” of PES was and is an EES key objective (van Bekkum, 2002). From the variety of EES’ objectives the “implementation of a mixed market of public and private PES” and “linking AEM with the operation of unemployment benefit schemes” (European Commission, 2008) were chosen because Germany undertook many changes in these areas since the EES was started, with especially significant changes from 2000 on­wards.

1.2. The methodology

The OMC is of two-folded value for the European Union’s (EU) priority in building “ever closer un­ion”. Its overall goal is to achieve more public involvement on all levels of society in policy-making, thereby diminishing the often lamented “democratic deficit” of the EU² (Friedrich, 2006). While deci­sion-making in the “Community Method” tends towards “elite-models” or “expert-models” of institu­tionalism the OMC shall be a more “group model” or “public choice model” oriented³ system (Dye, 2008 pp. 11-27).

It is also an “entree” for the EU in policy fields, e.g. employment, which so far the Member States (MS) refuse to give up to the supranational level (Büchs, 2008). Therefore the OMC’s effectiveness can also be judged by its success in creating EU-integration⁴, i.e. convergence of national policies.

The EES strives for EU-integration not by transferring national sovereignty to the EU institutions with subsequent EU-legislation (federalism by “rule of law” as the strongest form of integration) but by an intergovernmental approach. Since the OMC has been created as a multi-layer governance instrument of EU-social policy, it is the set of methods of the EES⁵. Although it does not produce legally binding measures, the process of monitoring MS’ implementation of the “soft rules” by given indicators is ex­pected to achieve convergence of national employment policies (Büchs, 2008 p. 21).

EES works⁶ on guidelines passed by the Council of the European Union (Council) by which the MS should (but need not necessarily) reform their national policies. In EES’ “mutual learning” examples of “best practice” and “benchmarks” which every MS should reach⁷ are published. MS are obliged to formulate National Reform Programs (NRP)⁸ in which they describe their strategy for the implementa­tion of the EES. They have to give annual reports which measure NRP’s progress by given indicators (European Commission, 2007a). The Council subsequently passes “recommendations” with com­ments on MS’ conduct (Council of the European Union, 2007). These recommendations with “scorn and praise” should put pressure on MS by “public shaming”. This assumes that there is a rather high degree of public awareness of the EES as an important policy instrument (Büchs, 2008 p. 24) which is, in theory, achieved by the broadly inclusive process of OMC policy making (Friedrich, 2006 p. 370).

2. The debate on EES

EU-15 MS started to consult each other on solutions for unemployment in the early 1990s when eco­nomic crises of an international scale had caused low employment rates. National countermeasures failed and many of the EU-15 kept high and enduring unemployment rates. In 1997 many MS had problems with long-term unemployment (1 year or more).

Table 1 Unemployment in the EU-15 1988-1998

illustration not visible in this excerpt

Table created by the author using Eurostat, 2008 - Database

Table 2 Long-term unemployment in the EU-15 in 1997

illustration not visible in this excerpt

Table created by the author using Eurostat, 2008 - Database

As enduring unemployment put the success of the Single Market at risk by endangering social cohesion and citizens’ acceptance of the “EU-project”⁹, fighting unemployment became a major issue on the EU’s agenda.¹⁰

[...]

¹ Full Text was not available

² based on a White Paper of the COM on EU-Governance in 2001 which suggested better involvement of all levels and groups and better transparency of EU decision-making, better policy by content and imple­mentation, an EU contribution to world policy and a better balance between economic and social issues and policies (Goetschy, 2003 p. 10).

³ The word “oriented” seems adequate as none of the policy models really applies for the EU decision mak­ing. The Decision making processes can be better described as a “mixture” of different models, with the combination differing from policy field to policy field.

⁴ “EU-Integration” is defined as the EU-Member States (MS) voluntarily foregoing their power to inde­pendently formulate only national political and legal measures. Instead they formulate common policies which are found in a cooperative process of decision making. Cooperation can either take place in an in­tergovernmental framework without transferring national sovereignty to the EU’s supranational institu­tions or by transferring national sovereignty to the EU-institutions with the subsequent submission of na­tional under European law.

⁵ The EES was in fact a „model“ on which the OMC was shaped (Friedrich, 2006 p. 368)

⁶ For that EES developed its own institutional framework with the Employment Committee EMCO (Art. 130 TEC and council decision in January 2000), the EURES-Network of PES, the macroeconomic dia­logue etc. (European Commission, 2007a)

⁷ In 2005 “mutual learning” substituted the former “peer review” which had started in 1999 (European Commission, 2007a). Peer review meant that MS should control each other and compete with each other. This should put political pressure on MS hesitant to implement in EES by the “public shame” of con­stantly falling behind in this competition.

⁸ Until 2004 the documents were called National Action Plans (NAP)

⁹ According to Blichner (2004 p. 1) “Cooperation among European States, as long as it is beneficial to all in economic terms” would be supported, while economic failure could undermine people’s acceptance of the renunciation of national political independence (Jaeger, et al., 2005 p. 11).

¹⁰ The „Social Dimension“ of EU-policy and EU-integration as a necessary counterweight to the predomi­nance of economic integration and “opening up” of MS’ markets including labour markets was strongly supported by Germany, France and other MS during the negotiations of the Maastricht Treaty on the EU. The United Kingdom, however, attacked the concept and achieved to keep it out of the actual Treaty by placing it into a protocol of which Britain then opted out (Siskos, 2004 p. 1)