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The Amsterdam Centre for Contemporary European StudieS SSRN Research Paper 2017/02 Basic income in the Union: a conundrum rather than solution Frank Vandenbroucke ACCESS EUROPE This work is licensed under Creative Commons Attribution 4 0 International License © 2017 University Professor of www frankvandenbroucke uva nl accessseurope org Abstract In Income A Radical Proposal Free Society and Sane Economy Philippe Van Parijs Yannick Vanderborght table two arguments that focus explicitly on Union Their first argument concerns strategies to introduce basic at national level: VP&V argue there tension between principle free movement; cope with threat selective immigration sustainability imposes ‘firm limits hospitality’ second introduction pan-European income: contend best answer social challenges created by integration this paper I develop three claims My claim are unclear about consequences movement: renders their case ambiguous regard core feature EU National seems incompatible consistent legitimate logic movement non-discrimination; support sketch normative framework non-discrimination VP&V’s If it true EU’s principal justice-related problem has diminished capabilities welfare states such as redistribution stabilization without adequately ensuring functioning higher level remedies essentially different from third both starting point compelling: we all benefit common inheritance which none us did anything However more needed why should be priority amidst competing ‘gift’ constituted past technological economic progress fact need add dimension project militates against favour or Keywords Social Justice Freedom Movement Reciprocity Wage Subsidies Investment Acknowledgements thank Robert van der Veen Erik De Bom Toon Vandevelde exchanges subject; usual disclaimers apply 1. Introduction overview new wide-ranging book (Basic Economy) (EU) (VP&V remainder paper) separate individual member (or Eurozone) our agenda Throughout will use ‘national income’ short-cut strategies; ‘pan-European short pursued simultaneously How does dual strategy relate well-known debates integration? developed (‘benefit tourism’) “firm hospitality” (VP&V: 222) Selective emigration citizens high earnings potential also discouraged solve problems pressure weighing systems consequence single market viability Eurozone large would contribute “saving extinction so-called model” 231) whilst bolstering future Admittedly lack clarity an not indictment per se Moreover constitutive make sacrosanct: needs justification if take seriously crux equality access employment opportunities just happy few Such egalitarian cannot mitigated nuanced: apart transitory arrangements long run either applies everybody meaningful sense These features them depart defining anything; was given freely nature capital accumulation organization civility rules so on; hence question arises how distribute gift fairly alternative ways via think cheap) excellent education health care; wage subsidies people whose productivity rated low market… More these when compare policy options funded Section 2 briefly presents proposal Sections 3 discuss workers 5 assesses idea important 6 returns rationale views could used 7 concludes 2. nutshell propose universal (it paid every irrespective any other sources) unconditional depend present behavior would-be recipient; i e counterpart) Recipients must members particular territorially defined community interpretation means fiscal residence permanent citizenship excludes tourists travelers undocumented migrants diplomats employees supranational organizations subjected local personal tax 9) do posted workers:1 remains home country (rather they posted) entitled one where philosophical can summarized follows real freedom “very stuff justice consists distributing fairly” 104) Real only sheer right but genuine capacity whatever might wish Being imply aim equalize cost For inequalities regarded everyone: go greatest those least provides material basis exercise obligation-free because distributes gift: “What ensure everyone receives fair share what today (…) And pitched highest sustainable ensures who receive much durably feasible ” 105) offered particularly labour market: facilitates saying yes job offer generates modest finds rewarding; no lousy degrading “the joint operation features” turns into “a paramount instrument freedom” 16) Thus condition underscore following caveat: “Contrary way sometimes characterized chagrin among its advocates want sell radical simplification understood being definition full substitute existing transfers less public funding quality care services 12) What relevant income? To fix ideas suggest picking amount order one- fourth current GDP capita lower poverty threshold 1 ‘posted worker’ employee sent his employer carry out service another state temporary Posted mobile remain host temporarily integrate maintain contract (‘sending’) have latter equal treatment nationals working conditions suffices get household falls adequate system unemployment insurance provide full-time worker average salary loses With qualifications flavour realism weaken key “getting rid trap” 25): far assistance levels above inactivity traps continue exist albeit lower-level consequential budgetary feasibility relief objectives resources benefits totally ‘recycled’ income; pursue discussion here 200 euro month countries living 236); represents 5% Depending create transfer purchasing power richer poorer 3. cross-border mobility start premise international migration constitutes redistributive functions “[t]he open borders generous schemes conditional stem likely net beneficiaries 219) creates “cruel dilemma” committed affluent parts world torn generosity towards ‘own poor folks’ hospitality ‘strangers’ knocking door They recognize disturbing basic-income supporters “as appeal endears firm OECD (2017) simulates impact scheme non-elderly population UK France Italy Finland neutral (with itself taxed) effect shifts composition income-poor some moving line while others fall below Overall rates increase significantly extent little Obviously mechanical calculations account behavioral changes But conflict components handled [T]here absolute 221) mainly governed threatened From empirical view ‘welfare magnet’ hypothesis centrally disputable defense Boso Vancea (2012) validity tourism Howard (2006) nuanced assessment underscores political salience context (see footnote 3) As matter intra-European motivated differences non-active individuals Martinsen Rotger show vastly overstated Denmark archetypal universalistic relatively state: positive observations limited reality today’s Europe settle legal understanding non-discriminatory non-nationals accommodate pure ‘benefit tourism’: Member States refuse subsistence upon arrival Danish illustrates implement exclusionary principles very effective restrictive sense: restricting Germany traditionally seen ‘insurance state’ (Martinsen Werner 2018 forthcoming) Yet like supports refused non-nationals: reason reject ‘soft’ waiting periods restriction rejection premised recognition may dilemma liberal egalitarians migrate example already 1992 (1992: 162) wrote: “There survive old sick lazy came running advantage been discussed addressed Jordan (2007) actual pull-effect expect makes expected saliency migrants’ welfare; he therefore mix fight entitlements restrictions find ‘middle way’ applied within same encountered advocated (who moreover income) survey factors affecting intra-EU adds lot nuance see Commission (2016) period requirement always unacceptable discrimination kind benefit; contradiction fundamental “it involve major distortion end able turn down jobs thanks entitlement forced accept bargaining confers” 223) categorically “two categories residents” conclude logically: “Once place hand 223-224) Hence ‘harder’ necessary avoids dissociating Having said silent comprise silence happenstance: limiting markets indicated section ‘fiscal residence’ constitute generic set ‘selective migration’ feared VP&V: normally residents regular profile (posting exception based country) Would bury return old-style policies regulated governments ‘economic needs’? hardly plausible goes grain citizenship; huge ‘real freedom’ Europeans having ample cross purpose finding interesting hard come up concrete ‘exclusionary strategy’ pass test understand establish balance creating (due attractiveness beneficiaries) unattractiveness contributors capacity) Apart promotion patriotic ethic practical suggestions operational proposals tackle emigration; suggestion individual’s emigrate conditioned paying back investment human made : highly-educated pay economically unsuccessful highly-skilled improve situation So left conundrum: signaled clear say Whilst active generate In-work development low-wage sector earn decent net-income top-up purse An State pursues attract disproportionate less-developed offers net-incomes low-skilled supply-effect: boosts low- skilled infamous now defunct Brexit-deal negotiated former British Prime Minister David Cameron one: theoretically conceivable boosting in-work attracts puts pursuing Whether empirically moot nuances whether government – perceived allow discriminate confronted type challenge difference: redistribute incomes call notion reciprocity: effort productively even value contribution low: ‘earn’ Although backlash immigrants benefiting domestic opinion ready ‘earned’ migrant participation Public acceptance become stronger strictly proportional hourly subsidy; elaborate non- ‘earned citizenship’ perspective EU: (2018 significant number Germany; terms numbers percentage indeed simply assume stand chance publicly accepted 4. Can ‘nuanced’? defender root nexus nationality foundational independent justify clarify issues distinguish questions: 1) movement? 2) move? difference application (1) (2) citizenship? 4.1. Why citizens? previous debate It obviously enlargement regime (but workers) agreed limitations transitional corollary goods refers associated posting (which delivery) regimes each well-balanced whole Posting7 controversial issue widespread feelings difficult control disruptive phenomena dumping sectors drawbacks taken notoriously thought transition See heart reform 8 Notwithstanding dispense regime: integrated requires short-term projects employed affiliated security receiving Simultaneously seeking contracts explained highly stylized theoretical counterfactual B socially Imagine construct (say specific certain g possible mean activity (in implies guarantees safeguard practices dumping; contrast sending allows deviations prevailing B; Limiting implies) allowing unfair since impossible imbalance enhance dynamic dumping: ‘non-dumping’ option prefer (compared ‘posting’ option) unavailable yet words well-delineated refer sees (This distinct traditional enhances efficiency allocation ) specification: recognized Commission; put forward Commissioner Thyssen step respect Commission’s Press Release March 2016 (http://europa eu/rapid/press-release_IP-16-466_en htm) led resistance leading ‘yellow card’ procedure At moment writing settled my most robust opportunity larger sets 9 One note position worst-off 10 status conception comparable Rawls’ ‘fair opportunity’ ‘difference principle’: Rawls positions offices) respected limit scope 11 conceived trade-off envisaged (between formal European-wide ‘maximization continuum possibilities; possibilities ‘equal opportunities’ across There congeniality formulate de Witte’s ‘transnational solidarity’: good life beyond nation (de Witte 2015) people’s notably reference ‘the life’ tries interpret backdrop communitarian philosophers fail term (for instance liberalism) sufficient plurality conceptions admit available realize (quantitatively) moves Romania Netherlands excluded Romania; Rawlsian enlarging choice migrating increases primary (unchanged) framing constraints thus deficit liberalism ‘exit options’ obtain societies heterogeneous availability similarly body text enlarged formally (i necessarily sense) private communication points liberal-communitarian wants emphasize importance self-realization motives (a ‘qualitative’ ‘quantitative’ satisfaction lives): exit ‘breaks hold cultural societal patterns over individual’s herself her ’ further elaboration et al don’t reformulation affects critical comment space forbids priori exclude ceteris paribus negative outflows reduces worst- off matter: crucial factor comparison inspired Boer (2013) endorses postponing during period): high-skilled kinds misunderstood: I’m arguing focusing occupations following: imagine ‘in between’ contradict 4.2. Non-discrimination denying often grounds efficient production) defended discriminatory tabled addition promoted incorporated solidarity circle she works Without broadly cosmopolitan theories justice) union Polish enjoys rights Belgian Belgium justifies contributions revenue sustains tolerate competition taxation territory: recipe establishes reciprocity guarantee States; including protects circles own territory 12 Milanovic (2016:154) argues global currently exists legally mild foreign labour” better “keep flow fiction facto differential ‘illegals’” purchase mature grant cash services; exerted services? Access successful Differential severe tensions aspire counterproductive longer segmented underclass housing kids 4.3. Earned coexistence (Kramer me expression) That evolved: dominated progressively expanding followed law became increasingly restrictive; degree continuity Historically inherent bounded reconciled granting move (and dependents) exclusion inactive establishing coordination 13 simple dichotomy tenable were granted Elaborating Sangiovanni convincingly wrongfully demeans stigmatizing general moral non-EU (2016: 15) mentions “demands cooperating maintaining reproducing EU” His reciprocity-argument scenario Britons denied simplify exposition sentence abstraction reasons study throughout unreasonable burden State” 14 2014 Dano- judgment Court stresses possibility refusing solely State’s assistance” 15 Kramer sketches combination change evolution situates broader “neoliberal communitarianism” “combines neo-liberal emphasis responsibility achieve membership community” 2016: 277): labels ‘neo-liberal’ becomes expressed form ‘earning’ convert values” dangers traits language risks pushed confines similar vein Verschueren (2015) warns viz-à-viz vulnerable leeway Dano interpreted Thym uncertainty taking board cautionary notes reading oblige comprehensive minimum protection avoided carefully delineated domains compassion dominate (such assistance) duty protect vulnerability ‘European Union’ complementary logics legitimately conjointly: Economically Art Directive 2004/38/EC C-333/13 C: 2014:2358 para 78 added involuntary (unemployment illness) regulations fairness fully serves cohesion citizen rely her) choice: determines foremost responsible Under bond allowed citizen’s ‘unreasonable burden’ (these substantiate absence link exercised state’s ‘unreasonable’ causes dependence setting boundaries complex task raises many questions as: grants range non-nationals? exact role played criteria ‘integration country’ link’ country? Which facilitating job-search restricted nationals)? demand judiciously Also next act constraint importantly lead ‘enter your risk’ (whereby tolerated protection) precariousness marginalization concern articulated illustrated subject Heindlmaier Blauberger avoid misunderstanding am implying complimentary consistently: mobility’ non-mobile complexities illegitimate regulating expedient popular defensible sits uneasily purposes (basic) active: identical ‘no asked’ Reconciling giving ‘reciprocity’ firmly emigrating explains fit conclusion famous concept ‘embedded liberalism’ signals openness’: openness regional communities politically 5. Pan-European appropriate predicament? “can tread several paths simultaneously” 244): steps complementarity (the project: earlier (Van expanded Viehoff (Viehoff) considers answer: maintenance wages then Viehoff’s wages; 5.1. built-in automatic stabilizers smooth cyclical shocks: progressive character play currency areas United Monetary lacks central (though unanimous) agreement experts Different formulated Unemployment Benefit Scheme re-insurance 16 Viehoff) First stabilizer replacement kicks lose hit stabilization: steady stream loss one’s compensated Therefore compared sub-optimal main precisely VP&V) sobering argument: upward adjustment parities) qua too economies shock Even (adjusted downward standards) although marginal macro-economic features: kick it’s relation operate re-insurance; Beblavy literature assess stabilize diverse exactly opposite additional remark proposed Viehoff): opt VAT scale criticism useful observation institutions versus linear related consumption expenditure reduce crisis (Keynesian) declines (basic directly mitigates hitting react non-linear shocks complexity sensitivity linked observation: “Personal taxes means-tested prerogative” 2015: 239) flip side interwoven prerogative equipped device (i) (ii) provided intergovernmental ‘re- insurance’ agreement: interstate direct links fund operates purely designed beneficiary 2015); objection “richer beneficiaries” “plant seed conflict” 234) surprising plea minor stabilizing impact; cooperative mutual 17 5.2. subsection draw congenial answered respective merits 18 contends “does indirectly introducing regimes: after reserve price cheap (Viehoff 19) VP&P disputable: suggests relationship ‘reservation wage’ complicated standard analysis reservation lowest rate willing determinant combined earning simplified representation discarding variables influencing search weekly decision reduction clear-cut presentation sure called ‘income effect’ supply function worker: worker’s result forces exploration Rogers forum topic reaction (2014) explores references Juliana Bidadanure drawing attention Rogers’ ‘floor’ universally accessible X unemployed (sticking problem); ask extra offer) fraction work’ bottom ‘No society review refuses attached he/she like) extreme examples Let suppose sake corresponds ‘subsistence level’: pays hour accepting hours (let’s unemployment’ calculated 40 minus worked basis) choose behavioural scenario? monthly prefers job’ option’ still losing floor hour: depending hypotheses here: essence qualified ‘work conditionality’ takes jobs; generated variant consist implementing employers presented floor; however practice well-organized floors wages) earned before lost (hence skill level); surpass disadvantage trap: gain trap hand: work-conditionality defenders fundamentally strengthens affirm favourable incentives matter) Next emphasizing ‘superiority’ incentive effects 19 disincentives one-sided this: historically explicit aims Returning discussion: believes ‘social ‘ readiness badly uniform According activation “get traps” “Being help ‘de- commodify’ labour; helps ‘commodify’ otherwise 27) stressed 6) prevent happening considered Job supported conditionality force Decent country-specific: foregoing holds fortiori 20 Worse someone Given probability actions are: improving generalizing reforming 21 5.3. “[c]ross-border generally plausibly excessive organizing 22 low-income high-income countries? shows (low systems) overall according Eurostat Bulgaria (235 euro) (318 Latvia Lithuania (both 380 (data 2017S2 accessed July 2017) pull push explaining predict relative reorientation disincentive se? Since supplement packages contributing pan- motivate somewhat reduced Differences affected orientation migration) established research: 23 upshot (selective) prospects transferring money 6. distribution all’; ‘maximin’ ‘gifts’ (by freedom) sophisticated various publications 1995 All: (If Anything) Justify Capitalism? promises non-partisan synthesis unsatisfactory counts weakness NAFTA (2007: 17) decreasing regions: give poorest Both weaknesses reflect alternatives 6.1. kind? confined healthcare child elderly care… flourishing distributed unconditionally (without allocated substratum delivered cash’ kind’? adamant “quality services” decide hand? mentioned cursory hint gets “[I]t allocate part heavily subsidized provision healthy enjoyable environment total shared components? neat experiment rough guidelines: Suppose had nothing knew expectancy spread lifetimes earmarked expenditures?” passage reveals hypothetical behind veil ignorance inequality handicaps remedying Education intellectual physical autonomy bound increase: persistent medical science technology necessitates foreseeable objective 24 keep affordable perfectly increasing GDP) spent health; rationally attach early childhood large) message Esping- Andersen’s state? (2002) meanwhile investment’ Hemerijck recent survey) income25 implicit expansion states: unwarranted reversed: inherit capacitating future? Arguably quantity (think housing) socialization children) success valorization par excellence 6.2. subsidies? 44-45) remarks Edmund Phelps Phelps’ dismiss contradicts neutrality life; Taking slightly (2004) thorough instruments advantaged maximized metric income-leisure years (Hall Jones 2007; Murphy Topel 2006) Increasing spending well source facing 25 knowledge mostly forms ‘basic kind’ White (2010) discusses ‘Basic Capital’ young adult idea) light White’s address priorities proponents investment; subsidization (any trade-off: sacrifice leisure) taxing enlarge adding information happens 26 model match measure ‘effort’; subsidy received held worked) compensates array besides maximizing unique unambiguously ‘optimal’ guided supplementary compatible actually select zero endorsing ‘egalitarian reciprocity’: “entitlements cooperation confers maximin willingness productive ”(van 2004 p 162-163) 27 thesis dispensing uniquely justified ideal incorporates considerations Contra emerges strongly brief asserts breach elaborates optimal (2001) 1997 1999; discussions (2003) finally indicates reciprocity-objective decisive subsequently conclusions invoking propensity invest skills safety nets He preferred typically asked whereby mitigated) normatively subsidies) typical baseline fulfilled conjunction assumptions lifetime participants contemporary unnecessarily curtailed instead mind (van 2004: 180) 28 OECD’s simulations revenues (OECD 2017: refinement argument) ‘effort’ differentiates Before caveats noted evolutions rise types atypical harder ‘working time’ derives plausibility tie social-protection impossible: applicability fine-grained activities Veen’s company issue: sources secure captures unequal Parijs’ point) sharing yield include work- component rule largest 2011) 29 coupling caveat wages: compensate freed respecting amounts and/or deliberation EU-wide playing field obliging bear costs (if extent; due exceptions engaged protected employment) pressures caused automation outsourcing combinations benefits) toolkit’30 ‘Earned Tax Credit’: Credit tied 31 legitimacy calls toolkit 32 ‘service vouchers’ sectoral implementation hours’ unproblematic metric: cleaning Yurovich Marx 30 borrow expression Anderson (2008) (40-43) EITC; EITC minimum- suboptimal condemn stand-alone “doing jobless” “only boon employers” (quoting approvingly Andy Stern “If jobs”) 42) cf Kenworthy democratic America’ emphasises sufficiently low-productive therein 7. Conclusion: Is EU? sketched distinguishes assigns broad notions inner risks; nor consistently reconciling require seemingly ‘liberal’ (real all) ends unlimited sustainable; embedded unconvincing Nonetheless demographic ageing scientific impacts domain aspiration ‘Union Welfare States’ reconciles Finally improved research (e doubtful easily outperform Reference List E Expanding toolbox: Equality bureaucracy Aristotelian Supplementary Volume 82 1: 139-160 M Marconi G Maselli ahead CEPS Special Report 119 Immigrants? Pull Effect Benefits Migration Studies 7(1): 1-24 N Fundamental internal Just treaty freedoms? enquiry John Rawls’ philosophy Utrecht Law Review January 2013 Vol 9(1) pp 148-168 F Emergence Transnational Solidarity Oxford: Oxford Bauböck R Shaw J attack: worth defending EUI Working RSCAS 2016/69 Esping-Andersen (ed New Employment Developments 2015 Brussels: Hall C Quarterly Journal Economics 112: 39-72 Enter risk: West Politics DOI: 1080/01402382 1294383 Uses W Dividend: Guaranteed Minimum North America 2(1): 1-23 Policy: Moral Dilemma? 1(1): 1-22 Economic Integration 2(2): 1-13 L Democratic D Earning Citizenship Assistance Reconstructed Cambridge Yearbook Legal 270-301 S P tax- financed testing e-pub No magnets Policy Global Inequality Mass Belknap Pres Harvard K longevity Political 114: 871-904 Option: up? Brief Future Work Paris: Raz-Yurovich state-subsidized women’s employment? voucher June Work: Laws Texas 92(6) 1543-1598 Boston May http://bostonreview net/forum/brishen-rogers-basic-income-just-society Theory Epub print 1177/1474885116654636 Elusive Limits Solidarity: Residence Rights Inactive Citizens Common Market 52:17-50 Subsidies: Competing Instruments Optimal Model Maximin Objective Philosophy 147– 183 (2011) auntie’s boring tea parties gifts in: Axel Gosseries Arguing Essays Presse Universitaire Louvain 2011 329-339 (1991) Surfers Should Fed: Liberal Case Unconditional Affairs 20(4): 101-131 (1992) Comment: Exploitation Unequal Exchange Breakdown Popular Sovereignty In: Barry Goodin RE (eds Movement: Ethical Issues People Money Park: Pennsylvania 155-165 (1995) Y Globalized Hasmath Inclusive Growth Development Critical Assessment York: Routledge 229-247 Individual Ethics Open Responsibility Incentives Berlin: Springer Dienstencheques: een vraagstuk erkenning S&D Jaargang 72 nummer Februari 32-41 December submitted publication introductory chapter Catherine Barnard Geert Baere After Crisis Cambridge: Press; Risk Reduction Sharing Hazard: Vaccination Metaphor Intereconomics 52 May/June Number 154-159 H Preventing ‘Benefit Tourism’ Narrow Broad Interpretation Possibilities Offered ECJ Dano? 52: 363-390 Maximum convergence minimum: pluralist 1177/1474885116654695 Fair Reeve Williams Libertarianism Assessed Palgrave Macmillan 136-160 proposal? vs Relations 37-55 Objection Valid Decisive Available http://basicincome org/news/2013/09/stuart-white-an-objection-can-be-valid-without- being-decisive/ (accessed August 2016) Capital Egalitarian Toolkit? Applied doi: 1111/japp 12129 Biographical Notes studied economics Leuven Phil Security Health Insurance Pensions Federal Government (1999-2004) Flemish Regional (2004-2009) professor (KU Leuven) until October (UvA) teaches Antwerp (UA) chair “Herman Deleeck” focuses nl/publicaties Corresponding Author Contact Details Universiteit Spui 1012 WX Email: Vandenbroucke@uva

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EUROPEAN ECONOMY Economic and Financial Affairs ISSN 2443-8022 (online) Frank Vandenbroucke DISCUSSION PAPER 065 | JULY 2017 Structural Convergence vs Systems Competition: Limits to the Diversity of Labour Market Policies in EMU FELLOWSHIP INITIATIVE “Challenges Integrated Markets” Fellowship Initiative Papers are written by external experts commissioned write research papers retaining complete academic independence contributing discussion on economic policy stimulating debate The views expressed this document therefore solely those author(s) do not necessarily represent official European Commission Authorised for publication Mary Veronica Tovšak Pleterski Director Investment Growth Reforms DG ECFIN’s 2016-2017 “Challenges integrated markets” culminates comes a successful conclusion with fellows’ contributed our Discussion paper series Against background increasing strains integration at both global level has brought together group outstanding scholars re-examine challenges current juncture explore options address these discursive interaction process between fellows services themes have spanned broad area including topics political economy globalisation issues macroeconomic making zero lower interest rate bound market least view deepening LEGAL NOTICE Neither nor any person acting its behalf may be held responsible use which made information contained or errors despite careful preparation checking appear This exists English only can downloaded from https://ec europa eu/info/publications/economic-and-financial-affairs-publications_en Europe Direct is service help you find answers your questions about Union Freephone number (*): 00 800 6 7 8 9 10 11 (*) given free as most calls (though some operators phone boxes hotels charge you) More available http://europa eu Luxembourg: Publications Office KC-BD-17-065-EN-N KC-BD-17-065-EN-C (print) ISBN 978-92-79-64921-9 978-92-79-64922-6 doi:10 2765/38194 2765/465156 © Reproduction authorised provided source acknowledged For reproduction photos other material that under EU copyright permission must sought directly holders Directorate-General versus Competition Monetary Abstract executive summary Does monetary union it impose limits diversity labour policies institutions member states? I argue one should overstretch functionalist arguments matter; problem hand challenge identify common standards rules functionally relevant (taking board combination what wellfunctioning requires) legitimate shared aspirations across states What ‘needed’ ‘imposed’ unification depends fundamental drive project large Already 1990s reform markets was justified advent Employment Strategy emphasised supply-side flexibility: an agenda flexible interwoven investment individual opportunities development ‘enabling’ essay develops broader argument: sustain serves EU’s we need consensus support symmetry stability Therefore collective action ‘protective’ order Enabling protective mutually reinforcing creating resilient social systems With regard deliver wage coordination; cohabiting since excludes totally decentralised uncoordinated bargaining Institutions monitor competitiveness embedded dialogue distributive concerns mainstreamed monitoring Mainstreaming into makes ‘assignment’ national partners complex challenging but such encompassing approach stand better chance achieve legitimacy Simultaneously avoid interfering details argument raises existential question unions employers’ organisations Europe: they commit themselves coordination dual perspective fair distribution? Paper concern entails cluster principles effective stabilisation capacity each state: sufficiently generous unemployment benefits notably shortterm; sufficient coverage rates benefit schemes; no segmentation leaves part force poorly insured against unemployment; proliferation employment relations insurance; activation unemployed individuals; constitution budgetary buffers good times so automatic stabilisers their work bad These become fortiori imperative quid pro quo if Eurozone would equipped reinsurance insurance systems; even without figure Eurozone’s draw comparison vaccination make point In addition competitive goods cross-border mobility turn corollary Next regulation posting minimum regimes transparent predictable universal reinforces case total decentralisation Also legacy Viking judgment Court Justice clarified An upshot carefully distinguish (i) ‘social corollary’ (ii) Single Market; partly overlap also different Moreover exhausted consider logical corollaries Reflection Social Dimension April insufficiently clear JEL Classification: E02 J38 J88 J65 O52 Keywords: movement Acknowledgements: like thank Jonathan Zeitlin Anton Hemerijck Sjoerd Feenstra André Sapir Georg Fischer Jozef Pacolet ECFIN staff criticism comments exchanges previous versions Contact: Professor University Amsterdam; f i g vandenbroucke@uva nl CONTENTS 1 diversity: Bridging 5 2 A heart 3 Fundamentals multiple equilibria: 4 visible hand: Wage 12 possible way forward; mainstreaming 15 Risk reduction risk sharing moral hazard: metaphor 21 Enhancing responsiveness 26 Posting workers adjustment mechanism: proper 29 wider dimension 32 Conclusion: Policy pointers fundamentally 33 REFERENCES 37 LIST OF FIGURES Figure countries 2000-2004 2010-2014 16 Nominal unit costs (adjusted) share Germany Netherlands Spain Italy 19 Effective short-term 25 Net replacement after months Fundamental features beneficial 27 2a Strictness protection dismissals regular contracts 28 2b temporary CONVERGENCE AND DIVERSITY: BRIDGING FUNCTIONALIST ARGUMENTS ASPIRATIONS We cherish welfare states: reflects preferences rooted history culture; allows healthy dose ‘systems competition’ mutual learning On backdrop general focus specific question: agree Union? expression ‘common standards’ precise meaning; discussing objectives outcomes poverty; set constraints inputs generosity wages Common create procedural similarities Thus direct impact They define areas evidence-based analysis past yielded ‘what works’ competition excluded basic consists ten sections section contextualises ‘limits-to-diversity’ preliminary considerations how abstracto; currency second reconnect inspiration founding fathers combine pull directions incompatible sets scene proposals developed Sections coordination: why needed sixth considers consequences risk-reduction risk-sharing scenarios accommodated Section discusses role flexibility next necessary balance freedom principle ‘posting’ workers: efficient well-regulated; suggested Market: different; limited implemented briefly difficulty conclude summarising based return central theme first section: ‘limits social-model diversity’ cannot functionalist; deeply addressed new emphasis (launched 1997) did call harmonisation But aim guidelines convergence markets; orientation thereby ‘flexicurity’ Flexicurity among upshots guarantee aftermath financial crisis functioning gained momentum circles called ‘structural reform’ structural became pivotal concepts Five Presidents’ Report Completing Europe’s See Pochet (2005) Rhodes (2015) moreover intimately linked report: “Sustainable requires come heading reforms’ e reforms geared modernising economies more growth jobs That means product stronger public ” sees condition sine qua non via fiscal euro developing risksharing binding explicit useful quote length: “[A process] achieved agreeing high-level defined legislation sovereignty over strong decision-making established will involve further where lead similarly performance mean finding countryspecific solutions primarily business environment administrations well certain aspects tax (e corporate base) presented proposal Pillar Rights: “20 key rights well-functioning (…) designed compass renewed upward towards working living conditions Europe” fact “primarily conceived applicable all wishing it” signals same idea: limit models Some simply too ‘variety capitalisms’ Finland intrinsically ill-fated project; solution put end Hence there Council (2017b); quotations press release accompanying Among analysing capitalism Scharpf (2016) disintegrated Scharpf’s refer authors whose (in various degrees) congenial ‘varieties capitalism’ paradigm Johnston Hancké Regan Carlin Boltho originally proposed Hall Soskice (2001) Space forbids in-depth literature understanding explained (2012 2014) Hassel (2014) (2014 p 1226) summarises follows: side ‘Coordinated Economies’ ‘northern’ operating export-led built high levels sophisticated vocational training inter-firm operate collaborative intra-firm relationships promote continuous innovation quality control include Belgium Austria Another ‘southern’ described ‘Mixed apart periodic pacts’ difficult coordinate because trade relatively vie another allegiance workforce right negotiate bargains Employer associations sometimes coordinated were less institutionalised than northern counterparts schemes variations sectors Greece Portugal argues vein “two kinds entered removed mechanisms vis-à-vis foreign depreciation gave governments mixed access cheap credit Because rested compensation state used resources compensate losers closer explains lack trust basis: “Understanding [this] helps explain Southern particularly vulnerable exploding debt makers persistently preferred austerity mutualisation compensatory mixed-market undermines effectiveness bail-outs strategies However shows hard indicators ‘compensation’ feature economies; data idea Liberal Economies Coordinated Mixed hand; France displays several while diminished significantly many beginning 1990s; cf below pessimistic version optimistic (or rather ‘voluntarist’) subscribe thesis: interpretation differences states’ static deterministic (see footnote 4) does institutional constitute important obstacles Recently radically thesis been formulated Schelkle (2017) theories international sharing: contrary creates already inconspicuous area: yet potential cooperation offers exploited paradox: diverse larger gains pooling realise politically justice Schelkle’s subtle (note 40) date back long before run-up When launched 1980s people – president Jacques Delors believed had Setting promoting wanted inevitably extent existing regulations turned out partial weaker proponents hoped exercise soul-searching personal note attached it: whether organise degree exercised me lot when able contribute colleagues academia implementation Open Method Coordination (a methodology time seen innovative accommodate whilst pursuing objectives) Have formulate solid doctrine conundrum basis experience gathered years? am defender seems answer limits-to-diversity matter ‘hard science’: provide policy-makers clear-cut unambiguous beyond reasonable doubt obvious reason scientific evidence yield opinion divided predicament remedied forces adopt (sound) eclecticism: think B C carry weight definitive assessment relative strength predict changed ‘Varieties criticized (among others) Crouch Herrigel empirical grounds (the classifications applied simple) meta-theoretical Its functionalism produces “models embodying heavily determined logics path dependencies” precludes existence “functional equivalents” “alternative ways producing similar outcomes” (Crouch 2005 63 65) It develop account system change structuralist negligence actor creativity (Herrigel 2010) Whilst insights helpful highlighting ‘institutional assets’ weaknesses southern 3) path-dependency prevents evolving aims evolution constituting There equivalent “institutional complementarities” preclude emergence (as contend) concluding ‘intrusive’ terms micro-governance heterodox could allowed dominant discourse today found Chalmers Jachtenfuchs Joerges Bronk Jacoby (2013) (1999; 2002) circumstances future safest bet compatible rationales flavor: examines ‘spill-over’ unification; triggered functional needs try assess framed irresistible imperatives Analytically impasse possibility equivalents realm ‘re-combinations’ As (2005 pp 61-68) kind impossible understand change: applying embody “heavily dependences” societies being constituted active human agents identities interests shift power compromises Politically ‘there-is-no-alternative’ discourses counterproductive My original purpose choice Innerarity puts ‘Politics conditional liberty choices midst Politics always context within frameworks EU’ Affirming ‘functional necessity’ dictated earlier decisions precluding alternative weak argument; saying attractive supports Summarising (limiting Union) (possibly incompatible) (given aspirations) words focusses dissociated exhaust sound unrelated reference Commission’s Europe8 MONETARY UNION AT THE HEART PROJECT abstracto: serve ambitions who prepared Treaty Rome convinced prosperous leaving essentially optimistically assumed growing cohesion reached supranational instruments raising standard (which later ‘economic territorial’ policy) organised boost convergence; domestic redistribute fruits progress remaining (2017c) prerogative essence confined security mobile citizens non-discrimination Act 1986 game-changer: internal implied step capital To prevent regression pan-European floor might operational ‘hard’ emerge main exception developments health safety place Dialogue launched; opinions delivered diverge say produced tangible results sure 60 years piecemeal acquis encompasses shifted impressive body anti-discrimination redistributive education remained theory firmly anchored Nevertheless hindsight proven wrong belief until mid-2000s: led advanced signs large-scale dumping absence speak (admittedly exceptions work) seemed contradiction market-driven mid-2000s witness inequality outbreak 2008 divergence us reconsider enlarged union: flourishing ‘welfare ‘union’ formulating happenstance First aspire Member States whatever tradition core modern prosperity sustaining providing volatility incomes helping individuals supporting created varying degrees success periods stress individuals: mitigating income reducing go goals poverty alleviation synonymous served types (progressive taxation benefits) If aspiration Secondly form federal foreseeable instance language Below cost divergences; rely invisible Such exist true federations areas) United Why then Europe? Euro them intrusive sensitive domains (such setting) attachment own country scale migration mechanism owe Wolff never budget redistributes massive depressed Admittedly constellation unchartered territory Can viable light large? believe ‘visible hand’ symmetrical guidance ‘invisible pressures (iii) (some) policy-domains presupposes model inspires referred often asserted exclude protectionist devaluations elaborate upon assertions except affirm ingredient sustainability alongside setting playing field) qualitatively overlap: thrive parcel FUNDAMENTALS MULTIPLE EQUILIBRIA: COMBINATION Mainstream drawbacks trade-offs members confronted trade-off Symmetry refers movements output prices Flexibility relates interregional determine country’s so-called asymmetric shock Less necessitates according ‘optimal areas’: single greater required adaptability trade-off: absorbing shocks through transfers reduced Over last few learned traditional textbook description insufficient Design failures inherently unstable fragile abstracto examine went actually during decade conflicting this: fundamentalist distinguished multiple-equilibria widening bond yields witnessed 2010 reflect serious deterioration countries’ fundamentals Saka et al (2010) camp profligacy accounts deficits surpluses diverging discarding special much compelling Many published contends function optimally equilibrium experiencing major observation lends itself devilish effects self-fulfilling dynamics De Grauwe’s fragility hypothesis Advocates deny sensitivity fundamentals: whole story Jones’ illustrates latter type position: Jones divergences root cause hit others; explanation grounded (badly regulated) 13 contrast Carlin’s ‘asymmetric shocks’ behaviour’ domain formation section) former crux 14 read radical (divergences ‘fundamentals’ mayhem adequately macroprudential sphere) emphasises beneficial; her propose take ‘fundamentalist’ ‘multiple-equilibria argument’ acknowledging debatable; constitutes departure policy-making deliberation Both signal design union; combined matters Grauwe neatly two failures: “On booms busts continued occur probably intensified very stripping away lender resort liquidity crises ”15 price crucial imbalance fundamentals) closely failure persistence intensification level) instability fully-fledged Banking (Jones exemplifies position see Schelkle); rehearse here link dimension; granted priority follow (including sphere macro-economic Pant present succinct survey distinguishing ‘fiscal position’ ‘competitiveness (2011) Erik 2014 2016) account; regime reasons; reach varieties ‘co-ordination robust demand economies’ ‘would require ECB insight NEED FOR AN EFFECTIVE VISIBLE HAND: WAGE BARGAINING COORDINATION intensify thus competitiveness? And hand? driver effect threefold: three ‘channels adjustment’: channel real exchange channel) distribution changes trading higher inflation reduces leads deteriorating balance; dampens activity inflationary pressure; classical channel’ relies fully underscores importance completing increase enhance considered stabilise however channels impede counter-balancing twice ‘real Higher booming reduce interest-rates (since nominal stimulate credit-driven consumption investment: boom reinforced Ederer Reschenhofer third ‘income unconventional Different productivity result divergent patterns rising stimulates deteriorate balances counteracts tends destabilise expect theoretical 17 practice stimulated amplified high-growth high-inflation rapidly expanding imports Contrarily lowgrowth low-inflation restricted export caused substantial Obviously pure difference Countries conscious (compared countries) thanks acts preventative industrial provides wage-setting consistent sustainable balance: either speculative Before decreased five) likely restrained private consequently weakened explanatory factor evolutions period add ‘golden rule’ stabilizing profits ‘pattern bargaining’ negotiations taken exposed sector ‘peak coordination’ all-encompassing Within seem split Benelux lower-tier settlements produce increases maintaining 18 Pursuing competitiveness: sheltered manufacturing arrangements preceded banks check; invites imbalances econometric ‘rigid’ centralised best weathered transition 20 Corporatism emerges advantage ironic insistence (I nuanced open-ended conclusions: scope ‘silver bullet’ negative positive maintain count perform worse compared structures resonating length Crouch: powerful defy logic 22 Recent Eurofound centralisation asset 23 Eurofound’s interesting distinction measured costs) (for key) finds characterised associated costs; exceeds sorts company- local-level unaffected positively influenced company moderation strategy medium term improving study suggests favoured wage-bargaining keeping findings suggest company-level 24 395; Traxler Brandl formation; (2012) (2009); 99 aware quantitatively Their “could shed factors shape outcomes: actors informal convictions long-term visions name (Eurofound 2015 Executive Summary 2) caveat viz-à-viz plea bargaining: objective achieving pay average concludes “introducing elements complement higher-level profitable firms great overall aimed aggregate ”25 substitute per se: rule guarantees preventing excessive argued drivers half 2000s recognise Annual Survey recommendation although message remains fairly vague terms; recommendations sense little developments? Watt proposes costs: grow equal sum medium-run plus allowance authority According implementing golden strengthening Macroeconomic envisages ‘grand bargain’ whereby (trade employers decision makers) interactions variety traditions highly implies countries: simultaneously ‘ideal’ template suit histories cultures Second straightforward responsibility wages; notion ‘rule’ expected Thillaye discuss risks Ibidem “Member line practices delivering job creation adjust erosion modest discourage skills distort incentives resource reallocation value added hinder (European 2016 11) starting indicated formula deficit surplus bring be: equals target bank plus/minus correction surplus/deficit points sensible apply (i cuts) cumulative deflation opposed disinflation) Koll dialogue-based Watt’s package Watt’ Stability Pact se Horn Lindner Tober Ireland restrictive obligation SGP At sluggishly prevented one-sided stimulus (Horn 6) difficulties implies; 30 ‘soft guidance’ strengthened 31 Implementing easier simpler tackle deal symmetric Macro- Imbalances Procedure modifying burden) my option diminish cooperative institutions? nutshell boils down following: producers keep losing import incur persistent current-account poor bankruptcy unless accumulating financed flows becomes unsustainable adequate banking accumulation bluntly ‘nice have’ ‘necessary’ accept odds mission following understood motivated ambition pursue POSSIBLE WAY FORWARD: MAINSTREAMING DISTRIBUTIVE CONCERNS IN MONITORING COMPETIVENESS pursued shown Visser illustrated Euro-Plus March 2011 supervisory ‘Six Pack’ governance adopted October Memoranda Understanding troika receiving assistance invariably direction weaken multi-employer units respect autonomy W usual disclaimer applies richness Source: selected Table Note: ranked (5) low (1) distinguishing: issuing (by agreement government these) ceiling maximum/minimum (=5); norms issued association (=4); negotiation (and conflict mediation) procedures lower-level bargainers (=3); examples (=2); none above (=1) Averages calculated ICTWSS database consequence disappeared hardest recession Great Recession sharpened divide smaller cohesive ‘markets policies’ divisive Is course synergy Eurozone? precisely institutionalise sketched ‘delivery’ imposing uniformity inspired Belgian experience; revisit 34 “All euro-area competitiveness-monitoring framework involving assessments definition problems example introduced 1996 preserve regularly reports fix norm round Although amounts non-binding guideline generally respected fail 0 BE IE FI NL SI GR DE ES IT LU FR PT SK EE LV LT legally worked well: kept untouched existed prior behaviour membership exactly copied typically ensure outcome councils recommend Eurosystem Competitiveness (ECC) consisting ECC’s primary task actions fixes significant and/or others fails corrective using MIP Semester change; Wolff’s deviations monitored corrected entrenched explicitly symmetric: addresses entail Two dialogue: assessed Economische Raad voor het Bedrijfsleven/Conseil Central de l’Economie; institution represents game ‘authority’ procedure related 35 operates shadow hierarchy: competiveness benchmark l’Economie June followed up ‘Competitiveness Authorities’ Authorities harmonise borders: “Based State decide exact set-up Authority National continue play follow-up report Recommendation requiring establish Boards boards to: competitors; ii inform information; iii advice field competitiveness; iv Country Specific Recommendations softened initial differs Sapir-Wolff proposal: putting independent moment writing legislating (further) constrains opposition jeopardizing minor controversies) functioned now Despite softer touch Report) criticised ETUC: instantiating attempts squeeze threat fear Committee 36 intractable How progress? strategic clearly embed processes strive ownership non-existent level; diminishing unthinkable reinforce exist? Looking efforts constrain ask: still invested corporatist sort (limited) tolerably well? medium-term credibility indexed indexing indeed debatable well-known pro’s con’s leave Maintaining ‘cost’ negotiators: episodes correct (notably oil prices) actual revised ‘insurance mechanism’ premium negotiators compromise nevertheless run bother level? introduce populism Buti Pichelmann “mainstream distributional designs”37; certainly his list practical combat late Atkinson included start ‘national conversation distribution’:38 Atkinson’s goes (it decline UK Suppose ask eye assignment: differ adjusted constant stances short maintenance complexity “The left interference outside guaranteed situation relation aligning ECB’s neutral fostered awareness giving rise 38 153-154 relevance ‘dual’ red indicates 2% year target); blue green (blue line) (green (more GDP growth); index 100 2002 show (hypothetical) assignment asked increased ECB’s declining complex: crisis; 40 80 120 140 2003 2004 2006 2007 2009 2012 2013 ULC Real AMECO; defines engage oriented dialogues targets yardstick assessing increase; ‘distributive’ constraint avoidance considerable leeway credible mid-term commitment ‘shadow hierarchy’ deliver) foreseen architecture builds states; reaching obtain ‘moderation’ ‘expansion’ (wage increases) Eurozone-wide Whether authorities bear 39 reluctant perceive encroaching give ‘unrestrained autonomy’ off societal downturns particular everywhere strike tactical mind survival inclusion RISK REDUCTION SHARING MORAL HAZARD: VACCINATION METAPHOR strand focussing Capital Fiscal union’ unions: centralise management opt downright (like Canada Germany) streamline really US insurance) rational reasons enhances resilience idiosyncratic se): externality; properly insures ongoing Nederlandsche Bank Dutch bank) Centraal Planbureau planning office) accelerate Financieel Dagblad remarks precarious demands (FD contains functions TARGET2 Optimal Currency Area theory) interdependencies additional longer housing urban planning) She feedback loops she warns steps generate tensions due hazard “[t]here opportunity sharing” (Schelkle loc 7427 Kindle e-book) ‘vaccination’ recognizes raise stabilizers; progressive schedule (loc 2675) contend (towards stabilizers states) unclear ‘diversity’ performing neighbours comparable vaccination: vaccines archetypal externalities: vaccine protect infectious diseases get purely efficiency subsidise compulsory analogy ‘compulsory vaccination’ subsidisation Prima facie suffices externalities supposed underprovision (our metaphorical vaccine) Since fluctuations salient “costly” 41 “contagion” “vaccination” requirements Which mandatory apply? From prudence requirement: accumulate ability downturn precondition; endogenous smooth Automatic size spending: bill inertia-effect So pension spending act instrument insurance: kicks lose crucially matter) shock’)42 Dolls zoom focusing progressivity issue widely unemployed) programme (short-term) participating Do cover employees groups remain uninsured traditionally stabilising country)?43 Are enough 1930s initiatives action; Simonetta Luigjes 42 (2012b); shock; (2012a) 43 ratio six; systematic Esser inactivity traps? metaphoric camel’s nose: shock-absorber Poor hysteresis resilience… ‘vaccination programme’ preceding drawing premised coincidence subsidised learns optimal associate (granting subsidy high) qualities ‘vaccine’ affordable) device fullyfledged illusion small organised? linking 44 imply fund disburses money affected consortium Centre Studies (CEPS) examined variants Unemployment Benefit Scheme 45 genuine complements underestimated scheme permanent favour redistribution instantiate covering affect meet implement takes ‘reinsurance’ Reinsurance mitigate below); complicated 46 rationale simple: prevention cure solidarity came intergovernmental Solidarity ex ante fabric occurred post Organising repeated ad-hoc burden conditionality easily polarisation electorates Ex expensive Bablevy Oksanen suggestions comprehensive bibliography Strauss http://ec eu/social/main jsp?catId=738&langId=en&pubId=7959 (2017 158 14) instability: swings driven expectations expectation doing severe ‘private mechanisms’ complementary ‘public International prone panics ‘sudden stops’ cushion recent IMF Eurozone: devices: ‘private’ ‘public’ inter-state 47 complementarity hitting American urgent solutions: x postpone discussion: day concurrent formidable socio-economic sufficient: reinforcing) self-evident organising ‘lax’ (re)employment generates obsessed Moral unavoidable you’re want eliminate faintest you’ll reap dismissive minimise deviates historic (national) profile long-lasting don’t High thresholds intervention intervenes (very profile) ‘Experience rating’ beneficiary 48 stringent though essential establishing states’ room somewhat intention state; endeavour considering managed Allard (2015); Furceri D Zdziencicka Experience rating ensures pay-in depending employers: finance companies laid volatile requested contribution provinces regions municipalities look Switzerland detailed implicit politics wide range financing etc 49 Ever 1997 ‘coordination’ Youth Guarantee connected assurance regarding ‘soft’ underpin trigger ambitious bite: Binding commitments differentiation concrete policies: complied elaborated detail homogeneous intrinsic Rights fields allow follows trends 2009) reductions dispersion 50 Figures display Selected Chart compare eight accountable 68-69 0% 10% 20% 30% 40% 50% 60% 70% 80% CY EL MT Source 65 ENHANCING RESPONSIVENESS MARKETS facilitate opening deregulating closed professions tape improve 51 channel; auf dem Brink Enderlein “reforms plant-level react upswings portability recognition” 52 mentioned Areas qualification analysis: nature Ji cycle 53 deliberately ‘eclectic’ 54 capital? container concept: ‘high road’ predominantly organisation ‘low mere deregulation sight Brinke (2017); easy ‘ready’ 100% irrelevant noted equally detrimental discipline qualifies den ‘wage plant level’ paragraph forms reliance non-standard coverage) reconcile well-organised advantages 55 coherent road to) facilitates responses (iv) benefits): intersection four Venn diagram counsel fulfilled agrees ‘degrees freedom’ generosity; limitations delineate Countouris Freedland reconsidered; chapter volume Capacity Stabilisation: Activation ‘adaptability’ quantitative ample adaptable parameters contextualisation 56 OECD Protection Legislation (EPL) (with France) EPL top-down steering (crude) promising Database indicator eprc_v2) cope cyclical Kurzarbeit unemployment’ AUT IRL ept_v1) POSTING WORKERS AS ADJUSTMENT MECHANISM: PROPER REGULATION crossborder discussed elsewhere 57 cornerstone Free (amongst principles) reside discriminate citizenship residing nationality delivery) well-balanced Posting58 controversial widespread feelings disruptive phenomena 58 ‘posted worker’ employee sent employer Posted host temporarily integrate contract recognised Commission; forward Commissioner Thyssen 59 Notwithstanding militate having regime; market: projects employed affiliated fits cushioning worker moves permanently (residing A) maximal posted immediately revenue seeking stylised counterfactual socially economically Imagine construct (say categories low-skilled workers) nondiscrimination application safeguard dumping; sending prevailing B; Limiting implies) allowing unfair full dynamic dumping: ‘non-dumping’ prefer option) unavailable ill-guided valuable home (‘sending’) entitled treatment nationals Press Release (http://europa eu/rapid/press-release_IP-16-466_en htm) resistance leading ‘yellow card’ settled Wispelaere persons provision services; hence uphold Sweden resisted wages: no-go subsidiarity Laval Justice61 unsustainable: imposed legal providers positions respective roles nationwide local Denmark reaffirm action: agreements enforced correspond Workers Directive 62 Swedish Danish concept plausible too: Together judgment64 establishment) merely requirement ‘predictability’ provisions Prior attempted settlement largely law deployed techniques (hierarchically superior) vigour ‘restriction’ breach foot defend strict justification proportionality freedoms expressly competence (strikes) legislative vacuum potentially struck express aspect Barnard Baere solve problem; 66 regulatory big argued; gives pause Feenstra’s review 67 Articles TFEU 61 ECJ December un Partneri C-341/05 EU:C:2007:809 Blauberger Union; holds statutory complies transparency predictability emphasized here; (sectoral) commission Ministry Health formally decides 64 Transport Workers’ Federation Finnish Seamen’s (‘Viking Line’) C-438/05 EU:C:2007:772 forthcoming) margin concerning Trade avail derogation “[t]he imposes States’ refusing entrust determining appears Directives partners) attain objectives” Unlike Laval’s conundrum) far resolved appropriate tool ECONOMIC SINGLE MARKET WIDER DEBATE ON SOCIAL DIMENSION 68 parallel announced respond stability-related identified assure initiative obviously stage agenda-setting definitely urgently sketches strengthen dimension: confine countries; EU27 satisfactory lacks analytical clarity Three illustrate ‘overlap’ posting: (moreover interdependent principles); ‘Eurozone’-arguments involved; level-playing (2017b 2017c) playing-field example: se; again playingfield problematic (even feasible dimensions Finally analyses prerequisites guide advocates concur emphasise adds 69 such; neither tied specifically abstract priori subset enhanced variegated CONCLUSION: POLICY POINTERS FUNDAMENTALLY POLITICAL QUESTION mainly flexibility; broader: ‘dual packages’ Rinaldi corollary: overstretching arguments: ‘called for’ expressions ‘need’ ‘necessity’ truly guidance; bothered presence indexation mechanisms); Stabilisation comply: short-term; ‘new’ v (to fight insurance); vi surveillance let (they programme’); re-insurance scenario subsidised) foregoing hands’ correcting adaptation coping shocks) coincide; (following judgment) lingering clarification universality militates markets: coordinating nation union) contributes regulated Unlimited productive imposition blueprint ‘across board’ perceived conceived? ‘a super-state? Resonating presumption dependent Solutions democratic Depression World War liberal democracies “had recurrent capitalist ‘global steering’ avoided interventions micro “a toward dirigiste transactions meso ”70 normally forward-looking: deadly embrace sovereigns exacerbated huge finally amplitude ‘steering’ selective well-identifiable measurable ones listed intrusive; 71 well- 70 42; references systems: notes insight; overly conclusions Finding supported policies; balanced resonate population J Bluedorn F Bornhorst Lessons crisis: minimal In: Cottarelli M Guerguil (eds) Designing Abingdon: Routledge H lists 184 January Institut Berlin Inequality Be Done? Oxford: Oxford Movement Squaring Circle? Cambridge Faculty Law Legal Research No 23/2013 G Towards Achievements Possibilities Current Constitutional Framework Euroforum Beblavy Marconi Maselli ahead CEPS Special 119 Luxembourg … remaking face jurisprudence Journal Public 19:1 109-126 EMU’s Problems: Asymmetric Shocks Behavior? Comparative 55: 387-403 Successful Concertation: Effects Pacts Alternatives British Industrial Relations 50:3 482-501 R Avoiding monocultures Union: recognition uncertainty LEQS 67/2013 K Integration & Populism Addressing Dahrendorf’s Quandary LUISS School Political Economy Brief Exchange Rate Adjustment Wage-Setting Policy: Decade CESifo 59:3 489- 519 Chr End Eurocrats’ Dream Adjusting Cambridge: N (eds ) Resocialising Capitalist Change Recombinant Governance Institutional Entrepreneurs Making Capitalism Fit Society Polity P Managing Fragile Forum (2) 40-45 Sovereign Debt Crisis Y Working Document 422 prerequisite HIVA (KULeuven) November Fuest Peichl Stabilisers Crisis: Economics 96(3-4) 279-294 (2012b) discretionary IZA Labor 1:4 S WIFO www foreurope T Ferrarini Nelson Palme O Sjöberg Benefits Inclusion Pay Statutory Opinion establishment COM(2015) 601 final Mobility EU: Opportunities Chapter II in: Developments Communication Parliament Regions COM(2016) 725 (2017a) Brussels: (2017b) Establishing COM 250 COM(2017) 206 Europe’s Jean- Claude Juncker close Donald Tusk Jeroen Dijsselbloem Mario Draghi Martin Schulz Viking/Laval resolved? Balancing social: bed dreams? Insurance Federal-State Partnership: Relevance Reflections Level 129 May Need Supranational Sharing Mechanism ? 13/198 German (4) 355-371 Varieties West Capitalism: Foundations Advantage missing Transfer Vol 89-101 Adjustments London Science London: LSE ‘Europe Question’ Series Uses Business History Review 84 (Winter 2010): 667–674 Where crisis? Interim stable IMK After Contingence Verfblog at: verfassungsblog de/after-the-eurocrats-dream-the-contingence-of-thehistory/ (2009) Inflation Unions 16(4): 601-622 Incompatibility 318-336 (13) 1771-1800 E Eurozone’s Goldilocks Solution Survival 229-236 21st Conference Europeanists Washington : Markets Matter Success Spectator 51:4 29-39 autonomous Dialogue-based Study Smoothing Redistribution Area: Simple Proposal Dealing Mistrust 5817 Ph Co-ordination Construction Historical Perspective L Magnusson Action Strategies Brussels – Peter Lang 37-82 Imbalance Capitalisms North South Convergence? 1-22 Between Efficacy Experimentation Wallace Pollack Young Policy-Making 7th edition 293-318 Fuertes A-M Kalotychou Fragility: Was Right? 397 it? Bruegel February Costs Non-Disintegration: Case Eurocrats’ Dream: (pp 29-49) solidarity: experiment Learn Intereconomics 142- 148 APPAM Inequalities: Growing Challenge Policymakers Worldwide 13-14 Kouba Sachs Reforming Network July Inter-sectoral heterogeneity performance: cross-national 50:1 73- 98 (1999) actieve welvaartsstaat Een Europees perspectief Den Uyl-lezing Amsterdam december 1999 (2002) Sustainable ‘Open Co-ordination’ Gosta Esping-Andersen (ed New Welfare viii-xxiv Tribune Notre September Reduction Hazard: Vaccination Metaphor May/June Number 154-159 inequalities Vision Summit Consortium ): Redesigning Ways Gütersloh 38-77 multi-tiered studies happened recession? 5:9 Austerity Contributions FEPS 97-118 PAPERS accessed address: eu/info/publications/economic-and-financial-affairspublications_ en?field_eurovoc_taxonomy_target_id_selective=All&field_core_nal_countries_tid_sele ctive=All&field_core_date_published_value[value][year]=All&field_core_tags_tid_i18n=22617 Titles from: eu/economy_finance/publications/economic_paper/index_en htm Alternatively copies ordered “Print-on-demand” offered Bookshop: http://publications eu/bookshop HOW TO OBTAIN PUBLICATIONS publications: • copy: Bookshop (http://publications eu/bookshop); copy posters/maps: Union’s representations (http://ec eu/represent_en htm); delegations non-EU (https://eeas eu/headquarters/headquartershomepage/ area/geo_en); contacting eu/europedirect/index_en calling (freephone anywhere EU) Priced eu/bookshop

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139Post-Print_Disappointing_Poverty_Trends_Vandenbroucke_Vleminckx_2011

Disappointing poverty trends: is the social investment state to blame? An exercise in soul-searching for policy-makers Frank Vandenbroucke University of Antwerp and KU Leuven Belgium Koen Vleminckx Federal Public Service Social Security Post-print-version paper submitted publication Journal European Policy; published in: JESP 2011 Vol 21 (5):450-471 DOI: 10 1177/0958928711418857 Summary Should we explain disappointing outcomes Open Method Co-ordination on Inclusion by methodological weaknesses or substantive contradictions ‘social investment’ paradigm? To clarify underlying concepts first revisit original ‘Lisbon inspiration’ subsequently relate it idea ‘new welfare state’ as proposed literature new risks post-industrial societies We then discuss two explanations trends suggested critical accounts state’: ‘resource competition’ a ‘re-commodification’ do not find these convincing per se conclude that jury still out However policy makers cannot ignore failure employment policies reduce proportion children working-age adults living jobless households EU they should deny reality ‘trilemma activation’ Finally identify conditions may facilitate complementarity inclusion Keywords: inequality Lisbon strategy protection 2 Introduction In March 2000 Council set strategic goal Union next decade Part parcel this objective was modernization model: ‘Investing people developing an active dynamic will be crucial both Europe’s place knowledge economy ensuring emergence does compound existing problems unemployment exclusion poverty’ Thus rhetoric referred quite clearly concept Aspirations were high conclusions spoke ‘the eradication within The Summit only promoted distinct focus attention co-operation; also laid foundations Europe-wide approach policy-making called ‘open co-ordination’ Fighting became one key ambitions process translated common objectives measuring rod specified agreed indicators (Atkinson et al 2002) Expectations ran after Now disappointment prevails Poverty has decreased (Social Protection Committee 2009) This sober assessment merits some among ‘believers’ back Have been naïve about potential open co-ordination even both? past ten years much scholarly work devoted methodology: whether proven effective matter research controversy (Heidenreich Zeitlin 2009; Armstrong 2010; Marlier 2010) Bea Cantillon focuses explanation rather than methodological: transition from old distributive more difficult expected at least part 3 responsible (Cantillon 2011) believe argument leading conclusion needs qualification Yet necessary refocus agenda contribution return initial inspiration dimension Agenda conceived because allows multiple interpretations: are one-sided other interpretations balanced ‘investment strategy’ (i e preventing materializing) ‘protection compensating have materialized) constitute twin complementary pillars second section argue analytically conflated with shift ‘old’ ‘new’ risks: true fact manageable through compensation prevention These conceptual clarifications important view understanding difficulties which points third formulate possible why 1 aptly described Jenson ‘quasi-concept’ (Jenson 2009: 41) Giddens’s chapter his book Third Way (Giddens 1998) often cited canonical reference strategies would come replace traditional Before repeatedly stressed – contra Giddens 4 substitute spending (Vandenbroucke 2002: x) our needed precisely did enhancing opportunities recipe fighting Since automatically lead less interrelated yet processes indicated: Employment Strategy ‘The New Welfare State’ written context Esping-Andersen argued: criticized its unduly selective appropriation [Nordic] democratic First tendency activation conventional income maintenance guarantees regarded optimism but worse counterproductive … [T]he minimization security precondition Second truly sustainable must biased towards preventative (Esping-Andersen 5) ‘preventative policy’ refers child challenges warning certainly holds education large: making vehicle equality opportunity inegalitarian society egalitarian So productive if virtuous circle can created whereby mutually reinforcing words indispensable For reason considered ‘active adequate umbrella term 5 But terminological battle us today highly relevant though Admittedly account personal one1 practice theory With hindsight clear received priority Target-setting unlike left Member States 2004 Kok (Kok 2004) report recommended overriding given growth change direction reflected Mid-term Review (Zeitlin Atkinson 2010: 14–15) many government warranted originally introduced copy paste extent believers variety adherents specific model states might seen Nordic where had traditionally lower Continental Southern Anglo-Saxon models Scandinavian either Portuguese presidency Ferrera Hemerijck Rhodes (2000) emphasized each there interesting examples successful adaptation Hence ‘hybridization’ ‘everybody becoming Scandinavian’ Nonetheless example succeeded combining low levels constituted source 6 three dimensions vast academic (Taylor-Gooby 2004; Armingeon Bonoli 2006; hallmark One distinguish architecture for: new-risk address risks) develop human capital passive cash transfers) service (welfare follow become service-oriented transfer-oriented) All linked changing nature challenge necessarily overlap Unemployment age ill health sickness disability financial burden raising increasingly catered since World War (2006: 5–7) defines follows: (i) reconciling family life; (ii) single parenthood; (iii) having frail relative; (iv) possessing obsolete skills; (v) insufficient coverage Overcoming skill deficits labour markets intrinsically i general training: respect risk’ ‘need coincide entirely Bonoli’s list 7 If considers them separately addressed systems transfers services little oriented benefits instance life pursued extensive parental leave generous investing childcare And reconciliation primarily based sector instrumental successfully socializing par excellence requiring quality alternatively no practical solution families their stay during working hours (Morgan imperative originate ground totally Moreover respond various another postulate priori governments focusing (i–ii) vice versa sure complex multifaceted History teaches problem pressure reform; comprehensive consistent reform responding all aspects hand Governments pursue goals others Or way inconsistent partially self-defeating Policies facilitating combination responsibility paid take once again ‘productive’ terms rates activating unemployed heterogeneous disparate 8 reorientation exemplified Scandinavia related deterministic Reconciling supporting long-term care (for leave) different Furthermore regard Looking closely prominent instruments market rightly asserts witness ‘varieties depending combine re-commodification (Bonoli when examine (supposed) results seem obvious stress impact unique inseparable sub-strategies (and well-defined instruments) never dissociated issue so pace very uneven far removed 2007; Nikolai Jensen 2007) It Our discussion Belgium’s Flemish Community Sweden (see Section below) illustrates importance observation Taylor-Gooby settlement Europe’ makes analogous starting broader perspective he describes search balancing economic justice directions 9 elements strategy: most countries mobility-enhancing distinctive parts effectively 2008) lack space criticism issues discussed below (notably ‘re-commodification explanation’) taken board full demerits paradigm Why trends? number States? Given historical experience relatively Cantillon’s hypothesis sight puzzling According Huber Stephens (2006) incorporated essential decades: already built up reduction programmes risk groups 1980 average national remain stable non-Scandinavian prompted emulate example? As population analysis start hardly despite rising actual implementation higher person ‘paradox additional upward poverty: They mechanisms reinforce adverse consequences stand-still associated intrinsic go resource competition greatest relevance postulates tight budgetary constraints 1990s 2000s moved resources away (social healthcare) redistributive (childcare elderly systems) discourse justification emphasis ‘making pay’ justified thus contributed retrenchment benefit (in nearly included); generated Put forceful fundamentally implied individual citizens’ rapport detrimental effect vulnerable Both ‘downside’ investment/new ‘upside’ creation jobs supposed lift Whether such enhances balance crucially depends type work-poor work-rich individuals who mostly belong (defined here 11 job2) those increase headcount improve (De Beer worst-case scenario increases relative threshold median household risk-programmes mainly cut Assessing prompts questions redistributive? witnessed significant programmes? reader object answer question negative rendered futile case Is Intuitively seems plausible Some typically enhance choice access jobs; obviously reduces value people’s own decision make use contrary distributed citizens entitled limitations hold compulsory real qualifications young acquire socio-economic cultural background 12 successive OECD PISA studies illustrated so-called Matthew effects cherished ‘Matthew effect’ phenomenon widely observed across advanced middle classes tend main beneficiaries moot Castles argues cross-national differences nations large degree function catering (Castles 2008; Goudswaard Caminada bivariate ex post assessing effectiveness versus primary distribution raises considerable inherent endogeneity between incomes argued Myles: ‘To really estimate redistribution need invent counter-factual ‘virgin’ unaffected altogether Myles 641) ‘all told generally albeit transfers’ (p 654) refer factors: aggregate size public expenditures according receiving (Marical judgement total vis-à-vis efficiency Relative euro spent assess look over categories 13 developed Ghysels Van Lancker (Ghysels policy; study budgets taking into parents’ contributions Referring (2011) bound generate stratification women’s roles employed (such flow double-income better educational backgrounds earnings capacity data provided (2010) allow somewhat reading formal Countries highest provision (Denmark Sweden) equal while lowest skewed high-skilled mother against skilled Denmark Norway female weak non-existent largely fulfilled show bulk Flanders allocated exact opposite quintiles twice subsidies addition consider gap low-skilled women 25–64 bracket: EU-15 36 percentage points; 44 compared 27 28 14 guaranteed places rate explains contrasting impacts suggests ultimately quasi-universal combined levels) beat persistence determination Belgian situated area adopted deliberate resolving adequately dependency atypical employment-contracts) Compared programmes’ see Table barely responsive ineffective skills achieve Marx van Vliet inconsistency blame relation difficulty foremost perseverance consistency notably linking That forces envisage fundamental and/or tax reforms constitutes identifiable political Returning 15 point made De (2007) (2009) reaches creates requires clever targeting impossible When comes confronted deep-rooted socio-cultural comparison harder translate any ready-made input system earlier formulating schematically driver vicious operates reproduce larger Within EU-27 remarkable illustrate divergent ‘reproductive’ Figure summarizes 2009 concerning students’ performance (OECD 2010a) heterogeneity students (by means difference 95th 5th percentile ESCS OECD’s Index Economic Cultural Status student’s family) (as measured variance student explained ESCS) appears four above statistically (Germany Hungary Luxembourg) (Finland 16 Italy) Finland ‘egalitarian functions’ (note superior added mean score brackets) 1: Background (PISA Austria (470)Belgium(506)Czech Rep (478)Denmark (495)Finland(536)France (496)Germany(497)Greece (483)Hungary(494)Ireland (496)Italy(486)Luxembourg(472)Netherlands (508)Norway(503)Poland (500)Portugal (489)Slovak (477)Slovenia (483)Spain (481)Sweden (497)UK (494)OECD Average (493)491419242 202 402 602 803 003 203 403 603 80% ( reading) ESCSSocial (difference percentile)Impact averageBackground averageImpact underscored Mean brackets Source: inequality-reproducing features 17 contribute greater advance evaluation how evolved time A shed light decline notable (except Italy Portugal further increased Perhaps interestingly observe able variability learning easily disentangle contextual changes matters appear Germany Poland diminishing hence improved equity same contrasted variation 2010b; 2011; forthcoming) overall coherence ‘capacitating quality’ Although confront deeply entrenched realities hard overcome scientist’s circumspection 18 overtake maker’s voluntarism Sabel 2010 placed perspective) Has period marked downward prima facie place? analyse information Expenditure database 1985–2007 US selected basis availability comparability data: five (Belgium France Luxembourg Netherlands) (Greece Spain) UK On detailed country constructed (‘old 1’) retirement survivor pensions 2’) except 3’) ‘old risks’ (‘new pre-primary (new 4’) finally secondary 5’) compares GDP 2005–7 1985–9 (rows A–H) Contextual added: L–M) 19 driven demographic (or reflect effort invest ‘budgetary effort’ calculated following ratios: • divided older 64 capita; younger ALMP capita row N–Q compare ratios (1985–9=100) indices read country’s willingness disinvest) functions note effort: imply development 20 3’ C) significantly Exceptions particular (though declining generosity undoubtedly story non-retirees under ‘competing claims’ competing claims originated predominantly increasing healthcare (with Netherlands Finland) (which too (row J ‘New 1–5’ 1) dominated Comparison I (the sum pensions) reveals however wrong say crowded category Leaving health: marginally Source periods allowing immediately preceding found A1 Appendix article Closer inspection evolutions sudden (but Koster EMU patterns) 22 Obviously N–Q) tell share demography pension catching spectacularly spectacular Greece Spain AMLP picture mixed diminished (most level observation) Nevertheless fair came spending) figures corroborate (2008) shows affects independently regime Technological consumerism ageing attach healthy well facing future (Hall Jones Murphy Topel 2006) retrenchment? assumption case: assured proper design He contrasts 23 people: lowering reservation wage (an option sociologists qualify ‘re-commodification’) reducing cost job (we latter achieved mobilizing resources) Complementarity assumed Over decades diverse United Kingdom conditional duration replacement (Scruggs 4; 2008 5; started before accepted Minimum wages 1990 (Van Mechelen therefore inevitable downside pessimistic imposes itself principle want types policies: improving essentially incentives move novelty current lies simultaneous application approaches By forcing fail grasp what ’ ‘much toolbox classified [these] binary classifications’ (pp 56–7) further: ‘Most tools 24 characterized peculiar mix principles policy: status) protection; (re)-commodification’ 58) conceptualizes continuum emphasizing (employment early benefits) extreme (retrenchment workfare deregulation) clearest investment-oriented refined instruments: ‘negative’ benefits; ‘positive’ net particularly bottom end distribution; ‘administrative’ offers training counselling strict follow-up individual’s accept offer sanctions follows ‘close monitoring’ ‘Making fixed formulated documents explicit positive Increasing entails short run scarce trade-off measures close monitoring Monitoring 25 easy undertaking Such intrusive: continuous interference daily lives frequently repeated personalized assessments ‘willingness truth dilemma How pay without scarce? readiness monitor trajectories strictly continuously impose administrative applied moderately predominant instrument Whichever struck inevitably aforementioned trilemma situation simultaneously entail wish pursue: poor; excessively intrusive cumbersome; order cuts realm denied thereby times austerity balanced) long structural reduced available invested 26 low-paid promise promoters deal link Atkinson’s analysis: mobilize mitigated targeted Conclusion: stability signals reinforced failure? Policy-makers seriously debate indictment allegations shifted allegation unconvincing substantial lay refuted old-age component pressures field segment outcome decrease preconditions Otherwise turn intergenerational circles disadvantage emancipation egalitarian: exacerbate inequalities genuinely empowering ambition creating presupposes sufficiently ambitious stresses Where potentially (growth inclusion) unified 4) mentioned childcare: reforming play role corroborated ones: organization workplace ‘life-long learning’ (Lundvall Lorenz Reforming Intelligent Kenworthy thoughtfully convincingly (Kenworthy Labour politically hurdle Fourth although ‘crowded out’ last cheap savings Simultaneously implementing fully-fledged require erosion base wake crisis 2008–2010 dangerous threat Believers convince opinion discipline destroy perspective: revenues necessity destroying (Liddle contained retain leeway youth: longer markets) 29 Fifth scarcity paramount selectivity areas convinced spending’ blind prone generating sub-question discussing hypothesis’ subject systematic testing’ adjustments methodology launched known (OMC) Many shortcomings OMC listed weakness bite now 2020 introducing Europeans million headline targets (Council Conclusions June Commission communication ‘European Platform Poverty’ unclear undecided fight success lost purpose ending quantitative insight thematic substance Presidency Frazer proposals governance concludes ‘feeding in’ expectation 30 interact Growth Jobs disappointingly corresponds condition Indeed frustration unable drive home message ambiguous allowed inclusive prevented regional partners buying bits pieces gestalt fortiori pushed better; continue friend enemy friendship well-conceived flourish community try Acknowledgements grateful Dirk Vandamme Olaf team Kim Lievens Lane Gøsta Anton Bruno Palier Jonathan Roger Liddle Kathleen Brempt Stijn Billet Antonia Carparelli W Klerck anonymous referee participants seminar organized Herman Deleeck Centre Policy helpful comments 31 References K G (eds) Politics Post-Industrial Adapting Post-war Risks London York: Routledge Governing Inclusion: Europeanization Coordination Oxford: Oxford Press B EU: Decade Macerata Lectures May Macerata: Universita degli Studi di E Nolan (2002) Indicators politics policies’ Boloni States: 3–26 ) ‘Postindustrialization State Adaptation Advanced Industrial Democracies’ Comparative Political Studies 40 (5): 495–520 ‘Varieties Investment Market Policy’ N Morel Palme What Future Investment? 55–66) Stockholm: Institute Futures Research Report O Patterns There Convergence? Onderzoeksmemorandum 06 Leiden: Universiteit Leiden paradox state: era’ 32 F ‘What Do: Disaggregated Approach’ 38 (1): 45–62 P ‘Why Work Not Panacea: Decomposition Analysis Countries’ (4): 375–88 ‘Economic Inequality Salverda T M Smeeding Handbook 639–64) Gallie D Need Europe: Recasting Economy Oeiras: Celta Editora H Nicaise Roadmap Europe Antwerpen/Apeldoorn: Garant Unequal Benefits Family Activation: Distribution Families Young Children’ Centrum voor Sociaal Beleid (CSB) Working Paper (available http://webhost ua ac be/csb) (1998) Way: Renewal Democracy Cambridge: Polity Redistributive Effect Private Programs: Cross-country Empirical Analysis’ International 63 1): 1–19 Hall R C Value Life Rise Health Spending’ Quarterly Economics 112: 39–72 33 Heidenreich Changing Regimes: Influence National Reforms London: ‘Combating 143–68) ‘Worlds Services Transfers’ (2): 151–62 ‘Redesigning Citizenship Regimes Neoliberalism: Moving Towards Investment’ 27–44) L Equality ‘Social Crisis: Choices Britain Implications Union’ 165–76) Lundvall ‘On Role Learning Economy: Perspective’ 79–98) 34 Marical Mira d’Ercole Vaalavuo Verbist ‘Publicly Provided Households’ Resources’ (1) Natali Dam 2020: More EU? Brussels: Peter Lang SA ‘Belgium: Quest Sustainability Legitimacy Out “Welfare Without Work”’ Schubert S Hegelich U Bazant Systems Moreira Activation Dilemma: Fairness Effectiveness Income Schemes Bristol: Morgan ‘Child Care Model: Conditions Reform’ 45–54) Longevity’ 114: 871–904 ‘Towards World’ 99–115) Organisation Co-operation Development (OECD) (2010a) Results: Background: Equity Opportunities Outcomes (Volume 2) Paris: 35 (2010b) Trends: Changes Student Performance Focus N°2: Improving performance: Leading Bottom (forthcoming) Strong Performers Successful Reformers Education: Lessons Saxenian Miettinen Kristensen Hautamäki ‘Individualized Provision State: Special Education Finland’ Prepared Sitra Helsinki Scruggs Rights Inequality’ Anderson Baramendi Representation Russell Sage Foundation Progress Contribution Evaluation Dimension DG Affairs Equal (ed (2004) Welfare: Transformation Settlement Societies 3–24 ‘Foreword’ viii–xxiv) Strategische keuzes het sociale beleid ‘Who Benefits? Childcare Flanders’ ‘Money’s Even Tighter Mention: Decline 8th ESPAnet conference Global Consequences Responses’ Budapest 2–4 September ‘Divergence Convergence: Policies’ Integration (3 May): 269–90 Ferry ‘Europeanisation Active Politics12 (2) Stronger Governance Architecture Coordination’ 253–73) Notes Minster 1999–2003 During half 2001 presided Ministers conform Beer’s define expression ‘work-rich’ (2011 issue) ‘job-rich households’ work-intensity EUROSTAT equals providing ‘dilemma minimum schemes right exception recipients’ freedom choose activities besides employment) falsify sketch moreover generalize limited cases TABLES 37 expenditure variables Statistics Detailed Data (Database) currency millions covering Different aggregated: ‘Old 1’: 2’: ‘retirement pensions’ age’ (including ‘early retirement’) ‘survivor’ (cash) 3’: ‘other incapacity-related excluding 2’ housing ‘parental leave’ maternity ‘elderly Care’ residential home-help ‘childcare’ day-care 4’: administration job-rotation job-sharing supported rehabilitation direct 5’: include OECD: ‘housing’ ‘family in-kind’ ‘capacity sources used: GDP: Expenditure: Reference series Database (Expenditure Nature Resource) Population Data: (Historical Data) (15–64): Factbook civilian force: Force (1000s): Annual Survey (ALFS Tables) 4’ (ALMP) estimations (1985) (1985–9) 5’ (Primary Secondary Education) (1985–93) (1985–94) (1985–93; 1997–8) (1991–3; 1997–2000) (1985–6; 1992–3) authors: Row A–K: (average period) L–M: N: (old aged >64 GDP/capita O: 3) <5 P: Q: 5–19 39 Spending « » 1985–1989 1990–1994 1995–1999 2000–2004 2005–2007 BELGIUM 1’ Healthcare 76 49 92 Retirement Pensions 50 00 93 Other 91 46 82 98 Parental Leave 0 07 Elderly 01 Child-care 45 96 09 Prim & Sec 51 57 08 Total 90 75 ‘Old’ ‘New’ 69 79 Rate 52 86 55 70 60 02 61 71 56 05 (‘Old / 65+)/(GDP/CAP) 65 62 53 (‘New <5)/(GDP/CAP) 4’/ UN)/(GDP/CAP) Q 5’/ 5–19)/(GDP/CAP) DENMARK 99 78 58 74 88 77 97 41 54 95 87 84 (*) 66 47 04 59 72 81 73 80 68 Estimations FINLAND 43 67 89 FRANCE 94 Educ 48 42 GERMANY 83 GREECE 85 ITALY 03 LUXEMBOURG NETHERLANDS PORTUGAL SPAIN SWEDEN

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Social justice and open coordination in Europe. Reflections on Dreze’s Tinber… Frank Vandenbroucke De Economist; Mar 2002; 150, l; ABI/INFORM Research pg. 83 DE ECONOMIST NO. 1, 2002 NOTES AND COMMUNICATIONS SOCIAL JUSTICE OPEN COORDINATION IN EUROPE. REFLECTIONS ON DREZE’S TINBERGEN LECTURE Summary In his Tinbergen lecture Jacques Dreze broaches two interesting themes. He argues, firstly, that we have failed to develop an efficient instrument for income insurance behalf of potentially low­ skilled workers; wage subsidies are such instrument. Secondly, he argues labour market inte­ gration economic union like the EU entails externalities, resulting underprovision insur­ ance; or matching grants could overcome second inefficiency. I largely share policy paradigm. Yet, believe enhancing social European Union requires, at this stage cooperation, a different methodology coordination, which has recently been coined ‘open coordination.’ will my argument favour coordination’ with refer­ ence themes discusses. 1 FIRST-BEST, SECOND-BEST THIRD-BEST WORLDS is right construing problem security 21st century as problem, where moral hazard considerations prevent us from choos­ ing first-best solution. Note that, context, ‘insuring’ given broader interpretation than usual. For myself, veil ignorance quite thick: it includes not only uncertainty specific contingencies illness premature death, but also ex ante about our abilities per­ sonal characteristics, decisive success society. So same, Rawlsian Moral one well-known problems world, econo­ mists solve by looking ‘second-best solutions.’ However, when comes cooperation second-best world might qualify ’third-best.’ Different views implementation – how run system coexist Europe today. Behind every member state lies distinct history. Each ac­ tually embodies welfare sui generis, nearly wants keep way. Thus, functions inform govern- Economist 83-94, 2002. 84 ments’ policies may be very different. Still national states face highly similar challenges. third-best design mechanism grants, proposed Dreze, cannot reduced mere calculus. It result political negotiation decision­ making process. use expression ’third-best’ since apart compro­ mise between commonly shared objectives individual incentives (this usual subject analysis) additional preceding com­ promise necessary level: need process establish common understanding relevant objectives, both level. opinion, importance so-called method coordination,’ first used March 2000 Lisbon Summit, should seen against background. Before turn relevance I’ll briefly comment idea subsidies, illustrate point. 2 THE NORMATIVE RATIONALE FOR WAGE SUBSIDIES much support case subsidies. My just aca­ demic, some measures implemented Belgian government illustrate. Now, choice particular makes alternative instruments instance, minimum wages cum unemployment benefits versus ’technical’ one; presupposes implicit explicit normative stance, is, conception distributive well-being. Therefore, useful assess examining conceptions well-being underpinning their use, without reference created tax benefit systems economies beset involuntary unemployment. Elsewhere presented model admits systematic discussion rationale behind instruments, mutually exclusive: negative taxation, creating unconditional basic income, hand other hand. The egalitarian aims worst-off citizens well off possible (maximin). Individual ‘productive talents,’ they held responsible. levels reward asso­ ciated productive talents; those est productivity. preferences ’time non­ activity’ hand, or, words, propensity work formal (below, summarize ‘individual preferences’). integrates opposite F. (2001), Justice Open Society. Equality, Re­ ponsibility, Incentives, Springer Verlag, Berlin, chapter 3. 85 personal responsibility one’s whole range person’s into single framework. hinge upon question whether responsible preferences. entail ‘metric’ citi­ zens’ government, relative weights attached non-market ‘income’ government’s metric One say reflect ‘burden working time.’ more considers ‘working time’ burden its citizens, higher value activity.’ assume taxes constant rate t (with t’.’S I). To scheme added possibility sub­ sidises individuals uniform way (i.e. independently earned income). That allow must, next taxes, all pay same receive benefit. Denoting fixed amount transfer B, follows complete studied here can take form tax, thus universal (in casu B > 0). subsidy, subsidy s proportional time spent paid work. hence boils down dif­ ferent vectors (t, s), function s. Given charac­ teristics population, then construct figure repro­ duced below. This displays ‘optimal track,’ i.e. locus combining optimal values preferences, model, responsibiliy captured ‘policy stance’ variable a. (I reproduced situ­ ation population characteristics maximin full equal­ ity a.)2 horizontal axis Figure earned-income t, vertical bold line track these instruments: each point a0 (lowest a) (highest combination rates rates. maximises position depending (a) responsi­ bility (b) well-be­ ing. conditions under yields equality described Vanden­ broucke (2001). 86 well-being, does hold people lower a, except limiting cases. following conclusions: (i) Other things being equal, propose sidy (ii) level responsibility, increases counts less people’s starting heavy burden, giving weight measurement At end track, thinks all. measuring maximising citizen’s amounts income. again increase well-being; An 87 becomes important govern­ ment’s yet ex­ clusive attaches ba­ sic be). Finally, points irreducible conflict level, searching policy; decrease (until meets upper limit) parameter rises. hope summary presentation suffices point: depends complex set conceptions; respect, generis. so, even restrict analysis ‘maximin’ governments, manipulate nega­ tive clearing market. real obviously differentiated. implicitly assumes governance differentiation, proposes mechanism, counter caused mobility. Such mecha­ nism requires regulation (‘hard law’) monality (or, ‘social functions,’ economist’s jargon), lacking therefore think engage based ‘soft law’ rather ‘hard law,’ create understanding. 3 METHOD OF AS A LEARNING PROCESS was 2000, although example already 1997 field employment ‘Luxembourg Process.’ pro­ cess explicit, clear agreed defined, after peer review enables examine learn best practices respects local diversity, flexible, simultaneously ensure progress sphere. Commonly indicators help find out stand. exchange information institutionalising mimicking,’ least certain extent. Intelligent mimicking needs actively managed put words Anton Hemerijck Jelle Visser ‘contextualized.’ Well thought­ ‘benchmarking’ three elements: A. J. Learning Mimicking: How Welfare States form, mimeo. 88 first, gathering results; second, evaluation light defined objectives; third, context pursued in. latter important, because otherwise benchmarking would soon ‘compulsive’ flavour actors who themselves completely lo­ cal situation. damage credibility consequently chance exercise. contextual element coordination. Mem­ ber states, regions civil society make vital contributions for­ mulation standards. On still decide (and quickly) want changes own acquired information. These (sub-) ad­ aptations tum basis round learning process, Commission organises means monitoring, reviews. renewed architecture directed ‘from top,’ made through intensive interaction states. Moreover, exercise systematically repeated, facilitates towards medium term si­ multaneously leaves scope development ‘at speeds.’ Vis-a-vis sceptics, stress applied turned substantive so happens guidelines constitute ‘wage subsidies,’ developed Dreze. what extent effectively encouraged imple­ ment various types whole, certainly had impact policies. 4 DEFENSIVE INSTRUMENT ‘open’ pragmatic approach lead progress, precisely pragmatic. found implies credible mitment Until recently, effective anything obvious field, contrary monetary coopera­ tion. So, send message citizen. We signal establishing countervailing power dumping.’ formulation agenda fact ‘defensive weapon’ retrenchment unification. With regard fear dumping,’ there nuances though. First all, unification many Today, adjustment be- 89 cause traditional fields protection, pensions health care, require resources new risks emerged. far history teach necessarily leads retrenchment. exemplified actual reactions Netherlands, Denmark, Ireland, etc. countries, mar­ ket led agreements partners rethinking states.4 Nevertheless, nai”ve extrapolate historical experience. grow­ factor mobility within leave bigger mark long run. Besides, short term, eve expansion Union. develop­ ments, definition so­ cial now greater ever.5 brings me consider principal 5 IS MORE THAN TOOL What kind possibly future protection Europe? goes beyond learn­ contribution ‘race bottom’ Eu­ rope. Defining ‘useful’ view intended Member Common essential, be­ translate discussed often unspecified batriers retrenchment, seems broad societal consensus safe­ guarding per se. (Cf. exainple T. Boeri, Bi:irsch-Supan Guido Tabellini ‘Would you Like Shrink Wel­ fare State? Survey Citizens,’ Economic Policy, 32). ‘Income Redistribution Labour Market’ (American Review, 81, 1991), David Wildasin pointed internalisation fiscal external effects arise fed­ eration decentralised redistributive pursued. increased fac­ tor mobility, stated ‘it interest devising mechanisms EEC (or perhaps means) activities order internalise externalities.’ expansion, plausible airange direct mutual compensation. (Wildasin gives Geiman unification). theory, bears close resemblance Coase theorem, including notice compensation effects. Contrary plainest principle ‘right ownership’ play role final outcome negotiations (see e.g. E.J. Mishan (1981), Introduction Normative Analysis, Oxford University Press, Oxford). If were apply issue stake, imply ‘straightforward confilmation model’ point, and, consequently, accession, compared situation ‘heritance.’ 90 ‘European entrenched ropean cooperation. time, thanks vague values, interpreted precise definitions. Echoing Hemerijck, cognitive tool.6 ‘cognitive’ tool, allows other. restricted practice underlying opinions state. ‘normative’ tool because, substantively, start conviction no citizen must left fend himselve difficult circumstances. pressurised belief practical gradually creates know ‘soft’ character scepticism. Yet co-operation consensus-building go solemn declarations Summits. stage, most promising give concrete shape Europe,’ large region sustainable thrive. am con­ vinced fulfil (hitherto maybe underrated) ambi­ tion, if judicious 6 FIVE KEY PRINCIPLES JUDICIOUS USE During last years, has, along others, advo­ cated dimension politics method. up inclu­ sion, wish pensions. underline recipe whichever issue. Our inclusion differs Luxembourg methodological proposals re­ gard somewhat different: fairly ‘light’ report four years include policy, yearly update en­ able integrate conclusions pension Broad Eco­ nomic Policy Guidelines, drawn year. (In defines ‘no1mative’ dimen­ sions ‘The Self-transfo1mation Model(s)’ G. Esping-Andersen et al. (to published, 2001), New Architecture Europe, Report submitted Presi­ dency 91 report, recommendations states). cookbook contains recipes, lighter heavier ones. judiciously, five key principles kept mind: Firstly, amongst others. magic formula issues. fly wing reach another wing, namely legisla­ refer to, reform 1408/71, guarantees rights move EU. simplification enlargement meet claimants im­ portant part defining commended freedom movement. contribute offsetting protection. Let empha­ size opposition approaches contrary, serve heuristic device discover tensions weaknesses legal focus specifically mix policy. Mixing elements spirit subsidiarity interwoven But reason why insist this. achieve something undeniably think­ ahead significant. aware trivial undertone, sometimes tends forgotten. debate dominated elabo­ comparative analyses pay-as you-as funded systems. analy­ ses tackle instance efficiency macro-economic demographic hypotheses. True, question. sure though get bogged instruments. When coordina­ really eye objectives. 7 respect third ‘comprehensiveness’: analysis, parisons Income redistribution achieved ideas challenge address Royal Netherlands Association, Sustainable Cooperation, Am­ sterdam, 12 October, 2001; available www.vandenbroucke.fgov.be 92 wages, benefits, … comprehensive impor­ tance Principle number concerns ‘benchmarks’ practice: define standards, realistic ambitious time. definitely process: feasible ‘standards excellence’ instead quired standards mediocrity. do not, presenting empty box. fifth application situated measure exclusion poverty comparable quantifiable indicators. reason, finalising top priority Presidency EU, po­ litical agreement 8 pensions, presidency prepares launching agenda.) litmus test readiness Any­ lip service method, action let insist, response interventions, purpose establishment naming shaming ‘rank tournament’ exclusively improving overall record through, things, identification shar­ practices. Indicators vehicle any pecking among Europe’s nations, preserve rejuvenate hallmark citizens. CONCLUSION Without considering formula, convinced extremely enhance deal well-considered intelligently man­ aged defensive tool. handle co­ ordination creative concretely rope’ firmly anchor expert group cmrently finishing proposal. excellent indicators, Atkinson, B. Cantillon, E. Marlier, Nolan, Inclusion Union, Oxford, (forthcoming). 93 good. identify justice. objective. path due speed. \Tandenbroucke* * Professor KULeuven (comparative policy), Minister Affairs Pensions, Government. thank Tom Van Puyenbroeck comments criticism. 94 POSTSCRIPTUM communication ‘Social Coordination pub­ lished elsewhere issue, suggests that: superiority over justice; advocacy commonality objective (welfare functions) plead ‘not guilty’ counts. (i), refers 2001 book, ap­ plies comparison agree judgement in­ strument subsidises whereas leisure bluntly. distinction comparison, conditioned willingness accept (at unskilled workers). ways protecting worker either claim instrument, prior op­ tion provide workers. Efficiency invoke Regarding (ii), recognises idiosyncratic distribution aggregate tween mobile immobile represented ‘welfare functions’ special restrictions imposed. show define, implement, allocation production risk-sharing while addition entailing gains Nothing Pareto invoked. Of course, realism assumption well-defined representable function. Po­ decisions ‘cannot calculus.’ remark applies noted broucke. Method needed levels. comforted careful thinking ‘some subsidies.’ May complementarity evidenced respective lec­ tures tomorrow adoption well! H.